Many experts say the housing market is in a bubble that’s about to burst. But this is B.S. My research tells me there’s a lot more growth ahead for housing. [00:30]
When you think of helium, you probably think of balloons… But David Johnson, CEO of Imperial Helium, explains why the gas is critical to our economy. (Hint: It has a lot more uses than you might think.) [31:33]
Then, Daniel and I discuss the blockbuster earnings from Best Buy and Dick Sporting Goods. There are two huge lessons investors should take away from these reports… [1:01:36]
Luke Downey’s The Big Money Report lets the data do the talking. Here’s why I couldn’t be more excited about our latest product. [1:10:00]
We also share what to expect from the Fed meeting in Jackson Hole, Wyoming later this week…
And finally, with bitcoin prices back up to $50k, we break down the “new normal” of big players getting into crypto… and a mayor who wants to give free bitcoin to citizens. [1:14:55]
Wall Street Unplugged | 788
This housing market thesis is B.S.
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 August 25th.
Frank Curzio: I’m Frank Curzio, host of the Wall Street Unplugged Podcast, where I break down the headlines and tell you what’s really moving these markets.
Frank Curzio: So, my two daughters started school already, which is a little weird, especially if you’re on the East Coast. In Pacific, California, I’m pretty sure you start a lot later. I’m not sure about Florida, I think it’s the East Coast Southern states that start really early. It was the first week in August when we started. It’s incredible when you think about it. I don’t understand the logic behind it because August is the hottest month and might be better to start Labor Day, after Labor Day, around there, a little bit before, like most schools do. To have him there is a little weird, but I’m used to, “Labor Day’s coming, after Labor Day, that’s when school starts.” That’s what I was used to when I lived in New York. Here, they start super early, which again, is kind of crazy. I don’t know why. I don’t know what the logic behind it. But anyway, they’re back at school.
Frank Curzio: My oldest, who’s 13, made it into a very prestigious school. So, definitely not following in her dad’s footsteps, since, grammar school was terrible. When, I went to St. Matthias in Queens, I got left back in the seventh grade. My parents chose to leave me back. I still don’t forgive them. All my friends moved on, because those grades go to high school. I basically got the same exact grades, because I was pissed off and in seventh grade.
Frank Curzio: And then, when I went to Christ the King. I went there to play basketball, and I was too chubby and didn’t make the team. And a lot of kids that made the team, their families worked for the school and everything. And I think, even today, when I see those kids that made the team over me, like if I’m playing a sport, I mean, pretty much it was a good 25 years, it was like my mission to destroy them, every single time I played them, which it’s just in my head, that’s what I’m going to do. That’s it.
Frank Curzio: And so when I didn’t make the team, I just pretty much got C’s, D’s, everything. And I think I graduated, I think it was like 370 kids, and they put a number, based on where you graduated, it was like 325 out of 370 kids or something. So, in college, I wanted to go to school. I liked it a lot more. It was really cool. And I wound up getting my degree with a 3.85, but I just didn’t like school.
Frank Curzio: So, my daughter that made the school, take the test to get in, it was a big deal. And this is one of the top schools. So, it’s exciting because she’s going into eighth grade, it prepares her to go into a great high school. So, it’s really exciting.
Frank Curzio: Now, my other daughter competes in state match competitions for gymnastics and the best teacher, this Russian guy who I love, had great conversations with, really great guy, told me like some amazing stories, but he’s the real deal. He’s in Georgia, which is… We’re on the East Coast, as north as you can go in Florida before the Georgia border. So, it’s about a 35 minute ride. But when we get to I-95, you have to make a right. You got to go towards Georgia, where the other way is Jacksonville. So, we’re talking about, they’re very far apart. So, the driving is absolutely killing us because our kids, my youngest goes to school pretty close to us, but my oldest used to go to school five minutes away. Now, it’s pretty much 50 minutes away. Hear me out. I’m getting to something here.
Frank Curzio: So, my wife and I have been driving like crazy, taking turns every single day. And it’s very far. It’s taking its toll on us and going to Jacksonville, there’s no school buses that drive that far. And they’re like, “Well, we’re going to charge you the full price for the bus,” but we still have to drive in 30 minutes there. They’ll take them like the next 25 minutes or whatever. And I’m like, “I might as well just drive her.” So, carpooling is very difficult. There’s only a handful of kids that actually live where we are and carpool. And we have like a day, sometimes two days set up, but it’s difficult because they’ll have activities afterwards. If they’re on the volleyball team, basketball team. So, it’s all over the place. We’re really not commuting. It’s pretty crazy, our carpooling.
Frank Curzio: It’s costing us about $800 in gas a month right now, at least that’s what it’s going to cost us. We’re in like two, three weeks, which is insane. So, more importantly, the amount of time it takes to drive them to schools, to gymnastics. I’m helping out as well and trying to do the early shifts and everything, it’s killing productivity. It’s health wise, you’re eating fast food because you have no time for anything. So, we’re look for changes, and again, all this happened right away when she made the school, which was a big deal.
Frank Curzio: So, where am I going with this? We started looking at homes in Jacksonville, be a lot closer to school, within like 15 minutes. Doing this over the past three weeks, different agents, using one who’s been fantastic, buddy Glenn. And we finally found an area that we like, but this area is… You have to buy a lot in it, and then build. So, if have any listeners out there that build homes, feel free to give me a shout, email@example.com. But, we’re going to be looking for builders. We haven’t gone through the process yet. This is just the first area that we like and the place that we’re looking, I just heard that Tim Tebow and Urban Meyer have homes there.
Frank Curzio: Urban Meyer, now the coach of Jacksonville. Etienne is out for the year. If you’re a football fan, which is terrible, that’s the running back, they drafted 25th, along with Trevor Lawrence, first round pick. That’s very frustrating, that he got hurt. Anyway, I’m not looking to move next to Tim Tebow guys. You have to buy a lot more subscriptions for that. So, keep buying them. But, they live in a certain prestigious area, but it’s in that whole complex, which is cool. And, it’s family-friendly.
Frank Curzio: The first area I looked at is family-friendly. And we don’t have that where we live now. It’s kind of an older community and the kids don’t have too many friends. But we want to be in those nice areas, where there’s lots of kids and they’re going over to everybody’s house and stuff like that. So, it’s exciting, but it’s tough because even if I build a house it’s going to take a while. What am I going to do, rent? Anyway, just everything going crazy.
Frank Curzio: So, the past three weeks, all in, you guys know how I get when it comes to research. I learn a ton about the housing market, something I covered extensively, maybe not so much in the past six, seven years, but extensively, even when I was with Jim Kramer. And you know how much I love to dig in, ask questions, talk to dozens of people, similar to when I was purchasing a car. You guys saw that, right?
Frank Curzio: I told you that, Ford, GM, these guys going to be in trouble. These guys who had record highs. Their talking about the EV portfolio, which isn’t going to come out until 2025 to 2030. They’re changing their accounting where they’re doing exactly what Tesla does, which everybody rails them for, accepting payments and all those payments going to turn into future orders for the F-150 and electric vehicles and all this stuff. But, that’s what they’re doing. And their stock price have gone higher and higher because that technology is great. Which again, going to consumer electronic shows, telling you how Ford is really spent billions and billions of dollars to be one of the leaders in this industry. Now, you’re seeing it. But still it’s not going to happen for a year.
Frank Curzio: There’s a reason those guys are talking up every time you listen to their conference calls, every time you listen to them on TV and they do interviews. Again, great marketing teams, but they were talking up EVs. What they weren’t talking about is the massive supply shortage, and how they’d have to cut production tremendously. And by talking to dealers and saying, “Hey, you know what, we couldn’t get a car for three months.” So, our specs, we got lucky. We went in, we had to buy a car exactly how it came in, which was fully loaded, which we paid probably an extra $15,000 for, for stuff that we didn’t need.
Frank Curzio: I have had these air shocks on my truck that when I get in and out, it goes almost like a roller coaster. It goes down, so everybody looks at me. I have no idea what they’re for. I had to buy the car like that, otherwise, I’m not getting a car. So, I bought it. It’s cool. Everyone’s like, “Wow, that’s cool. What is it used for?” I’m like, “I have no idea.” “Does it make a smooth transition?” “I don’t know. I had no idea.” I never saw it before, but that’s what we have. But we had to buy the cars as is. So, talking to these people and telling you guys, reporting back to you, saying, “Listen, their plants are going to be offline. Supply shortages are huge. Big lots that we went to that use to have 300 new cars on it, had 20.
Frank Curzio: And even recently, because now that I went on my podcast, talking to the dealers and everybody, I’m getting people in those fields that were emailing me, dozens, saying, ‘Hey, it’s really bad.” Sending me industry reports, sending me inventory things that they have. And that’s what leads to the research behind everything. And it’s awesome, right? Because, I was like, these guys are not announcing the cuts that they’re going to have. They’re not even projecting it, it’s like 50% plus, at least.
Frank Curzio: And now what happened, like a week and a half ago, finally, these guys are coming out and saying, “Hey, our plants are still idle.” “Well, you were telling us that it was a Q2 problem that was going to bottom and you’re going to be fine. We’re in Q3, and your plants are still idle.” This is going into 2022, guys. And what do you do with your 2021 car? Are you going to buy 2021 and then get a 2021 car delivered to you at seven, eight months from now, 2022? Is it a 2022? Are you going to get it? You don’t get to test drive it, maybe you do. I don’t know, but it makes things really difficult. And yes, they’re raising prices for used cars and the cars that their selling, no incentives. But, it’s resulting in finally… I was emailing Phil LeBow and saying, “Hey, this is a story that I don’t think anyone’s covering.”
Frank Curzio: And Ford, GM, Toyota and sure enough, consulting firm and this IHS Markit finally came out and said, “Listen, we’re projecting,” and this is last week, loss of 7 million cars. And those are lost sales. It’s not like, “Hey, okay, we’re going to put it off and buy a car next year.” They’re going to used car lots. They’re going different places. They’re going to AutoNation, which is a big deal. And now, Ford, Toyota… Toyota said, “There’s floods, and they’re closing plants, weather related issues, and then supply strain issues. Now, you have the Delta variant. I mean, this is going on longer and longer. And this supply shortage, like I said, “is going to last in 2022.” That’s a story that nobody was really telling everyone. Everyone was saying, “EV vehicles, these guys are great. Got to buy Ford, GM.”
Frank Curzio: You can buy Ford at $78, $79, telling you that, “Listen, these guys, I’m telling you, it’s crazy.” As crazy as it is, these guys are getting it done. They’re spending a ton of money like IBM, who nobody knows this, most people don’t know it, that IBM now, what are they, 50% of their profits come from Cloud. It took fricking nine years for the transition, but it’s a big difference. They should be having a cloud multiple. And it’s not, it still has 11, 12 multiple right now, which is crazy.
Frank Curzio: So, I think IBM is a good buy. Again, companies change. We’re programmed to think about the past. I got fucked on IBM. On Ford, I got killed. They’re terrible. It’s a stock. They don’t have feelings. They don’t care about you, but companies change, management teams change. And sometimes they get it right. When they do, that’s really good news because you’re going to see a stock that’s dirt cheap, out of favor, and then all of a sudden, you see… Apple went through the same thing. Apple almost went bankrupt. You see it with a lot of companies, Microsoft, 13 years of a stock that traded between what, maybe 20,30. Now, one of the biggest companies in the world, their market cap, whatever, 2 trillion these guys are approaching.
Frank Curzio: You see it with every company, but you think about the past and what happens, how I lost money, that you don’t want to revisit it. I get it, It’s a tough lesson. We only know what we see. If we see something and something happens, we’re going to think that happens in the future, but sometimes that’s not always the case. But talk about that, probably four or five months ago, in cars, and my analysis was based on going to lots of dealerships, boots on the ground, talking to employees, managers, owners of these dealerships. And then when I started mentioning the podcast, the emails I got from so many listeners who were dealers, suppliers, it was amazing. We avoided buying these names when I think everybody was buying them, and they’re down off their highs. Four touched 15… GM was a little bit high. They’re down off their highs. I mean, these are serious problems.
Frank Curzio: Now, for housing, you see this big boom, which we’ve seen in prices. And this big boom, it’s been going on. But especially since COVID because easy monetary policies, buying 120 billion bonds every single month. Which is forcing rates to stay low, making credit easier, and borrowing easier, inflating asset prices like crazy. And everyone’s buying houses now. And we’re going out there, and people say, “Whoa.” This is going to result in a 2008, 2009 collapse. I’m going to tell you something, based on my research. We’re in the 2nd of 30, maybe third inning of this boom. That’s a baseball analogy guys, if you don’t know baseball, it’s nine innings. So, you got a pretty big boom ahead. And it sounds crazy because prices are up so much.
Frank Curzio: I’m going to break down Dick’s Sporting Goods later. Dick’s Sporting Goods just reported today, blew out the numbers, maybe blew out the numbers by more than any company I’ve seen in the past year, even more than Goldman Sachs. I mean, they issued a massive dividend. And I made a mistake because when they blew out the numbers last quarter and said, “We’re going to earn, $8 a share, $8.50 a share in 2022,” or whatever it was. I’m like, “Damn. I kind of missed it.” Because I know I go to Dicks Sporting Goods, and I shop there, and they’re kicking ass right now, and they’re coming back, and things are great.
Frank Curzio: And so, I didn’t buy the stock. And today the stock is up 15%, whatever, up tremendously, since that quarter. And you know, even sometimes I’m program, use this as an example to see what I did wrong. Because I’m programmed to see this… Like a lot of people say, “Well, I missed the housing boom and the housing stocks,” or “I didn’t buy a house.” And you think it ends and you don’t want to get in it because you’re looking at Toll Brothers up 150% over the past two years. And you’re looking at it, going, “Man, it’s up 150%. Man. I fricking miss. I don’t want to buy it.” And next thing you know, two years from now, it’s up another 150% because that growth is just starting, and we’re programmed to just look at it like, “Oh my God, we missed it.”
Frank Curzio: And for me, I wanted to buy Dick’s, and I didn’t. Sure enough, it came out today and you know what, that stock is cheaper today than it has been in the past two years. They raised their earnings estimates to over $12, $13, close to $13, from $8.50. And you’re looking at a company that’s trading at like 10 times forward earnings. Again, Daniel and I are going to break that down later, but it’s relevant to this conversation with housing because people feel like they missed the boat. And I even felt like I missed the boat. I made that mistake. When you’re looking at housing, holy cow, because I know you’re not hearing that housing is in the second and third inning. If you’re watching CNBC, a lot of people I respect there, I’m not saying in a bad way, other media outlets, just like they were pumping up Ford, GMC, EV portfolio instead of highlighting enormous production cuts, that were coming. It’s more than 50% now.
Frank Curzio: So, nobody’s really talking about that. I keep hearing how housing is going to crash again. Again, 2008, depression and home prices collapse. I’m going to be honest with you, dead honest with you, like I always am. People are telling you that we’re going to see something similar to 2008, 2009, it’s coming quickly, or maybe they’re trying to sell you something? They want to get on TV by making a bold call. Because that’s what you need. It’s entertainment TV, right? You can’t say, “Well, I think housing is going to go up and it’s going to be steady and trend high. Nobody wants to hear that. You either want to hear, “It’s going to freaking crash. You’re going to die,” or “It’s going to go through the roof and create tons of billionaires,” right? That’s what you want to hear. That’s what gets on TV these days and can’t blame them. That’s what everybody wants to watch.
Frank Curzio: We’re programmed to be entertained no matter what, even when it comes to our money, which is sad, but it’s truth. But people tell you this, try to sell you something, try to get on TV or are total fucking idiots. They don’t understand data. They’re just not looking at it. I mean, there’s almost zero supply in the market, demands through the roof. Interest rates are going to stay low.
Frank Curzio: Talking about Jackson Hole. There’s never been a major policy decision in Jackson Hole since Greenspan. I don’t know why… They make it a big deal because earning season’s over. There’s not a lot to talk about. So, Jackson Hole… Powell’s going to talk… Supposed to be this big meeting. Now of course, Delta, I mean they were having… Wyoming is a friendly business state, friendly tax state, friendly everything, crypto, laid back when it comes to COVID, and things like that. But Delta, whatever they change, they’re in the danger zone. So, now everything’s going to be an online conference, virtual and stuff like that. Powell’s going to speak. He’s going to talk about tapering. I’ll break down tapering, and what that means. But tapering is just reducing the amount of bond purchases by a little bit. And it takes 6, 7, 8 months to do. Maybe they raise rates a tiny bit, but it’s not going to result in a massive increase in rates to the point where they’re still injecting money into the market.
Frank Curzio: People are more richer than ever. And for me, some of the homes I looked at, they want to see a pre-approval first. So, I had to get pre-approved, and I got pre-approved and set them all… Again, pre-approvals not an actual approval, it’s pre-approval but they said, “Based on what you’re sending me, if this is all accurate, we can lock in a rate on a jumbo loan, which includes one point, which is 15 grand. They take care of 10 grand. So, it’s only five grand from me for that point, which isn’t bad. The rate is 3.15% for a jumbo loan. Are you freaking kidding me? I mean, that’s insane. I had no idea. This is my industry. I had no idea it would be that low. It was going to be higher.
Frank Curzio: I mean, think about the eighties and the rates you were paying on mortgages and double digits and crazy stuff. Holy cow, we have a Fed, that’s going to continue to print money. Even if they taper a little bit, they’re going to continue to print. They’re going to continue to keep rates low for a very long time. Maybe they start raising a tiny bit, but that’s going to be maybe 2022, 2023 story, maybe.
Frank Curzio: And now, they’re going to use Delta as a reason not to do it. Banks, you’re looking at banks, really it’s the same. We didn’t even know what was going on. Nobody knew what was going on. Nobody knew about mortgage backed securities. Nobody knew about cloud debt obligations. Nobody knew any of this crap. Subprime was just subprime. It was leveraged 20, 30 X of synthetic loans. You need a 5% collapse in housing, everything was done. The banks almost went out of business. Nobody knew they AIG took on all this risk and the banks are much better… They’re better capitalized today than they’ve been in the history of our country. The balance sheets are being monitored every 12 months through stress test from the Fed. They have to keep this money on the balance sheets. So, you have the Fed there, which will bail out in a heartbeat, but they are monitoring the banks.
Frank Curzio: And it’s not that easy because when I was looking for a loan to buy a house, I was a little worried. This is 2010. And I remember, we were looking in New York in 2006, 2007, before coming to Florida, where we finally bought a house, and thank God we didn’t buy a house because we would’ve bought it top of the market.
Frank Curzio: But I remember going to several loan officers. I’m like, “Hey.” I think me and my ex had 40 grand in the bank, and we’re looking to buy… which is average price back then. During the boom was 550,000. I’m like, “Holy shit, we’re not going to get approved. I mean, our mortgage is going to be huge. It’s a little bit more than what we’re making.” I mean, we were going to rent out downstairs, but we didn’t tell them that. And they’re like, “You’re going to get approved easily.” I said, “easily.” They said, “Yep, no problem, compared to the loans that were given out, holy cow, you got it.” Why, because they would just sell us the loan and then once they bought… What would they do? They would sell it off to Fed and Fray.
Frank Curzio: So, there was no risk to them, just sell low, make the money, pocket. Everybody makes out on commissions across the board. It’s not like that. I mean, my second house that I bought for my mom to live close to us is… I had to pay cash. Even though, I show records of, “Hey, I run my own business. I took a very low salary at the beginning, first few years to get this thing off the ground.” But still, you look at the money, and they’re like, “We don’t care. We can’t do it because the second house,” and I had to pay cash for it. So, to say that it’s going to be like 2008, 2009, when you needed a library card to get a $600,000 to a million dollar loan. I mean, come on, you really don’t know this market. You’ve got to be out of your mind. But even if you don’t believe this, because some of you are looking at prices. My home prices increased dramatically. I don’t expect it to increase dramatically going forward, but here’s some more stats.
Frank Curzio: These are stats, guys. These are stats that I don’t hear a lot. The monthly supply of homes, just four months, it’s normally six, none of them supply the market. Annual household formations, homes built, 1.2 million. That’s the average from 1990 to 2020. We’re looking at a very long period. It’s at 3.1 million almost triple, household formation. Household debt as a percent of disposable income, the average is 11.2%, that’s from 1959 to 2020. It’s at 9.1%, less debt, more money on the balance sheets.
Frank Curzio: Home price appreciation, average is 5% annually dating back to 1976. It’s currently 12%. It’s not going to stay there. But even at 4%, say it goes down to 4%, it’s higher than the rate you’re going to pay on your loan, making homes very attractive as a long-term asset. Along with all assets, the personal savings rate was 9.3% dating back the past five years. It’s over 20% today. Translation, that amounts to over 2 trillion XX savings, that consumers are sitting on. Where do you think that money is going to go? It’s not going to sit in savings forever. They’re going to be buying assets because rates are going to stay low.
Frank Curzio: And if they tamper, it’s going to result in… Instead of 120 billion a month in bond buying, they’re going to cut it to 110, 100, 90, again 7, 8, 9 months it could take. If they finally decide to do it. They’ll talk about it a little bit, but they’re still not going to do it. I’m saying that with Jackson Hole coming out Friday, with Powell speaking. These are facts, guys. I know your, “Debt’s through the roof.” So, you’re looking at household wealth, is the highest it’s ever been, record highs. Because the prices are surging.
Frank Curzio: You look at Toll Brothers reported, when Monday night after the close, it said, “Net side contract value was 3 billion, up 35% compared to 2020 Q3.” Again, this is for the quarter and contracted homes with 3,154, it’s up 11%. So, net sign contracts in both dollars and units, Q3 records. Backlog over 9 billion, the 3rd quarter. Up 55%, compared to last year’s third quarter. Homes and backlog, close to 11,000. So, it’s 10,600, up 47%. They say quarter and backlog, both dollars and units, all-time records. The CEO said, Doug Yearley, “Demand continues to be very strong. The housing market’s being driven by many strong fundamentals, including low mortgage rates, favorable millennial driven demographics, a decade of pent up demand, low new home supply, and a tight reseller market.” It’s not one catalyst that’s driving all this. “Because we expect strong and sustainable demand for our homes in the years to come.”
Frank Curzio: Last month, D.R. Horton’s stock fell. There’s reported a 17% decline in orders for the quarter and people were like, “Why the decline, the housing market, it’s over, and we’re seen in starts, and this and that.” Got to look under the hood, guys. That’s how you find the best, “Look under the hood.” Don’t listen to what everybody’s saying. Don’t even listen to what I’m saying. Look under the hood, and do your own research. Because when you do, it’s a land development community projects, they can’t keep up with current demand. We cannot keep up with current demand, right now. Yeah, they’re going to be able to fix that. Again, that’s a major problem when you have a company. People always like, “Oh man, we want demand. We want to see more demand.” If you get too much demand, and you don’t have the people to handle it, that’s also a big problem you have to deal with.
Frank Curzio: And D.R. Horton, I wouldn’t classify as… It’s not Lennar or Toll Brothers. Lennar, I think reports in a couple of weeks, but I saw this, what they’re saying firsthand all over the Jacksonville area, massive building taking place. But if you look at it, the home builders, they can’t put up these homes fast enough to where the developers, where the sales agents on the properties are selling these things, they could only sell… They’re only selling two to three homes a month. So, you have to put your name on a waiting list to be considered for the following month as new batches of homes are getting built, and this is due to supply shortages, raw materials. I mean, the strategy makes sense because when you’re seeing raw material prices surge.
Frank Curzio: So, you have Toll Brothers, Lennar, and D.R. Horton, they’re only building a certain amount of homes at a time. Then they’ll come out with the next month or maybe 45 days, and they’re able to actually raise those prices, if they’re seeing raw material prices go higher or lower. Now, have they come up with this strategy because these guys been in business for decades and decades. They’ve been through all this crap. I mean, those who believe we’re in a bubble, and these home builders are smart. They lived through the credit crisis. Those declines in the nineties. They’ve been around for a while.
Frank Curzio: They were given a huge lifeline in 2008, 2009, with the whole stimulus package. And I remember, because I just started working at Stansberry, and I sent a note to Cramer, and Cramer was like, “Oh my God, this is a great thing.” And he mentioned me on Mad Money, a TV show, or whatever. They were able to carry back out a one year, it was three years. Basically, put a massive floor under the industry, because now you see a boom, 2010, 11, 12. And now, even though you’ve seen a bull, we had these losses it’s… These guys weren’t paying taxes or anything, it was huge. But right now, they’re not overbuilding. You’ll get suppliers to windows, roofs, floors, all that crap, they’re booked out for months.
Frank Curzio: Interest rates are low. People have more money than ever. Inflation is driving asset prices higher. You see any of those trends stopping anytime soon? In Florida, again, we’ll talk about Northern Florida, demand’s insane. I’m hearing that from numerous, numerous real estate agents, there’s more real estate agents there are houses for sale. I bet you a lot of you listeners can say that in your area. Because it’s not just Florida, I hear from you. I’m hearing that in many states, supply is low, homes are flying off the market, massive backlogs for any supplies, try to do anything on your house. If you’re looking at this trend, and you’re looking at on a lot of factors, you can’t see it slowing for years. You really can’t.
Frank Curzio: And, you look at Best Buy, I’ll talk about that later with Daniel, at-home categories, appliances remain very, very healthy. I mean, things that are underlying that you see, I mean, they’re still growing tremendously. I mean, you look at this industry, it’s what my newest Curzio Venture Opportunities recommendation came from. And you guys, if you’re listening to this, you should have probably already read it, and got that pick. But it’s in the housing industry, the small cap name got to be one of the biggest beneficiaries of this massive boom in new residential homes, also they do low-rise commercial real estate, which, that division in commercial, usually lags residential by 12 to 24 months. And it’s starting to boom right now. And then, you have the infrastructure package coming out.
Frank Curzio: But that pick again you’re getting tonight, you should have already got it if you’re listening to this, it’s a great name, I break down the research, talk about some of these stats. Really break it down in a video, you could see me going over there show you the sites I’m looking at, going over all the research, educating you. That’s what you get when you subscribe to my newsletters. You don’t just get a pick and a five-page report. No, you get me on there, going through my entire research process of everything, all the sites, providing free sites for you, charts, figures, what I’m seeing. Trust me, you will get educated. It will help you buy picks even outside the newsletter, which all of you do.
Frank Curzio: Anyway, hope we can get the process done ASAP, in terms of buying a new home, because it’s pretty crazy right now. Drive is absolutely killing us. But once we lock something in, I could sell my current home, at least rent something Jacksonville until a home is built or whatever, but holy shit it’s been crazier than ever, all over the place. Which is cool, I like to be busy. And right now as crazy as it is. Yeah. Wish I lived in New York. So, my kids weren’t going to school yet. Actually, no, I don’t wish that. I don’t wish that. No, I’ll never wish that on anybody, no way. To hell with that. New York is just a different place now. And it’s sad. I grew up there for close to 40 years, my friends live there and I just have no intentions of going back personal right now, or business, I just don’t. It’s really crazy.
Frank Curzio: So, no, I take that back. I wish I wasn’t here. But I hope we can resolve a lot of this because it is stressful, but a huge light at the end of the tunnel, right? My daughter is in a great school. That’s the way I always look at things. I always look at the future. Always look at the future, never look at the past. Never look at the past, never look backwards, never look at mistakes. Always look at a future. Getting a new house, whether we build it, whether we buy it, still haven’t decided yet, and my daughter go into a fantastic school. Great, great stuff. Kids are healthy. Family’s doing well. Yes, it’s a pain in the ass to drive a little bit like… Whatever. But, yeah, I’m always looking at the positives.
Frank Curzio: But, the research that goes into this stuff, that’s how I dig in. And the housing market… Man, I want to hear from you, frankcurzioresearch.com. I know a lot of you real estate agents, I hear from me a lot, but you’re looking at the underlying trends, the underlying factors, they’re going to change, and if they do, they’re not going to change by much. Where you’re not going to see interest rates come up tremendously. You’re not going to see… Just say, “Okay, we’re not buying bonds anymore, to ease credit. We’re not going to do that anymore.” Or, I’ll come in and say, “We’re not going to offer stimulus anymore.” No. Everything that is in the market today is going to exist for at least the next 12 to 18 months. Pretty close to where you’re going to see asset prices continue to rise. And that goes, well for homes.
Frank Curzio: Anyway, speaking of raw materials, commodities, things like that, bring on a first time guest. Curzio One members would be familiar with this person, and the name of the stock, since they’re offered to get into the financing, what is a private company, now it’s public, went public in May. The sector that I’m sure 99.9% investors would never ever think of investing in, because they probably can’t. And even if you want to invest, there’s only a handful of ways to do so. What am I talking about? Market which commodity? Helium. I know what you’re thinking, “Really, balloons? That’s what you’re telling me to buy?” Wait till you see the applications for helium, because it’s absolutely incredible. When you’re looking at semiconductors, and the secular boom in semiconductors, you’ll get cyclical and medical equipment. How helium is being used through these industries, how prices are rising, they’re surging. Very difficult to get into this industry, but you can do so by listening to my guest, his name is David Johnson, who’s a CEO of Imperial Helium, the symbol is IHT on a Toronto Venture Exchange, again, just went public.
Frank Curzio: David’s a 35 year vet. He worked at Shell, Exxon, Kuwait Oil, 35 year vet, could probably do anything he wanted, work anywhere, retire, whatever. But he chose to start a new company in a helium space, which to me is very attractive. And, at this interview you’re going to see why he’s doing this. As a stock, maybe one of the best risk/reward setups that you’re going to find. That’s why I invested a name and at financing. So, I did not plan on selling it for a very long time, but you know what, that’s my opinion. You can make your own judgment after you listen to the interview. You know what? Let’s get to it right now.
Frank Curzio: David, thanks so much for being on Wall Street Unplugged.
David Johnson: Really happy to be here. This is just great.
Frank Curzio: A lot to cover, right? Because, I’ll be honest with you before my buddy, Jeff Phillips introduced me to you. I knew very little about the helium market. And, just talking to you, your team, and seeing how engulfed you are in this, and your experience. I guess, let’s start there to bring everybody in, and go from maybe your background, 30 or plus year background. And what made you choose helium, because I’ve seen that you worked for some of the largest companies in the world out there. And, to really focus on this market, that’s something that interests me, it made me invest in your company.
David Johnson: Well, like everyone, I’ve just said, I’ve had a great career. It’s been a tremendous journey. I started out with Shell Canada Resources Limited here in Calgary. I am a Calgary boy. But then I went to ExxonMobil in Houston, down in the states. And, pretty much explored oil and gas around the world with them. Came back to Calgary with Husky Energy, was building frontier and international with Husky Energy, and then moved on from there, did my own startup. People did well out of that. I worked for a private company for a while. And then, I went to Kuwait for a short period of time. And, for about four years, really enjoyed my time in Kuwait, with both the KOC and with KUFPEC, their international group.
David Johnson: Came back to Calgary in the downturn. And so, helium that’s part of the journey. And, met with a good friend of mine who has a company called Petrel Robertson and they’re a consulting company here in Canada. But, part of what they’ve done is recognized good ideas and figured out, “Okay. Well, where’s the market going? And could this be a venture?” And, new ideas need a place to nurture and grow before we can actually generate seed capital. So, I came on inside Petrel Robertson at that point of time and helped build the helium idea inside the company and build it forward and begin to build the seed staff around it.
David Johnson: And, that’s how we got into helium. We’d noticed that what had happened with the BLM, and the notice in 2012, 2013, that’s when Petrel Robertson at first started looking at helium. But it was really as the market began to turn in, as we began to watch the reserve base go down with the BLM, so they were coming to the end of their time. The resources were going to be needed by the market. That’s when we really began to build out Imperial Helium, and looking for helium resources, and building those strategic database that we could build from to go forward.
Frank Curzio: Now, let’s get into helium because I think most people believe that, “Hey, helium, blimps, balloons.” Right? That’s normal. Yeah. But, where high value commodity here that we’re talking about? You saying your presentation is abundant, but rarely found economic quantities on earth. Go through some of these cases, because for me to invest in a company, I get pitched a lot. And, after speaking to you and learning so much about this industry, especially how it has ties to the semiconductor industry, which is growing enormously, and will grow enormously with new technologies. Talk about that this way. I think you’re going to educate a lot of people when you do, because you definitely educated me.
David Johnson: Okay. Okay. Okay. So, helium, abundant in the universe, but rare in concentration on earth. And where helium comes from is it’s generated in the earth and from the crust. And basically, an alpha particle goes out from uranium, it grabs two electrons, it becomes helium, and then it migrates upward, and it just keeps on migrating up. Because it is the second lightest element. And as it migrates upward, it bumps into hydrocarbons and it occasionally gets trapped with hydrocarbons, or there are other places where it gets trapped, with dominantly nitrogen, and CO2, and other gases, but it’s trapped in the earth, the same way oil and gas is trapped in the earth. Helium as a substance though has amazing uses industrially. So, about 30% of it is used for making pure environments. If you want to manufacture something, and you don’t want to have air or other things cause contamination in the space, then what you’ll do is you will basically use helium to flood that space. So, microchip manufacturing can’t do it without it. Fiber optics can’t do it without it.
David Johnson: A lot of unique research can’t be done without it. And that’s its second major application, but 21% of it gets used for research. So helium, it is the last thing to become a liquid. And as a liquid, it actually can be frictionless. So, you can create a pure environment that is frictionless and won’t react with anything for doing experiments, and it’s huge, just really important for research. But also important for the medical industry. So, Healox’s, you’ll see a lot around Healox at this point in time. And what that is, is helium is used in mixture with air, so it reduces the viscosity and the drag in a person’s lungs. So, they can breathe easy. So, people with COPD, or people that have challenges as an outcome of COVID, these are places where helium will wind up getting more use.
David Johnson: Then about 21% of it gets used for cooling. Now, helium as a gas has the ability to take on a lot of energy, and heat in the form of heat, so it can store heat. But then, it also is very good at dissipating heat, which means it’s really, really good for cooling. So, every MRI machine in the world, it uses helium. And then other things there are blimps and balloons, of course, they’re around. And then, but helium is also the smallest molecule. So, it can be used for detecting leaks when you’re commissioning a plant, or building things that have to be tight. So, those are the major uses of helium out there.
Frank Curzio: Yeah. And David, I have to say, I appreciate it. Because I know you have 35 years of experience working at Shell, ExxonMobil, Kuwait Oil company, and stuff. You can get on a podium and just say, “Hey, we’re developing all natural gas.” And you’re not going to get these questions, but when it comes to helium, I could picture you telling this story a lot, so.
David Johnson: I’m happy to answer.
Frank Curzio: No, and I appreciate that. Because the more people I think understand it, the more they’re going to realize why it’s an amazing market. And, there’s not a lot of larger players in this market, right? It seems like it’s defined by just a few companies.
David Johnson: Yes.
Frank Curzio: Why is that? There’s no spot market for this, I don’t think. So, when you look at commodities and things like that, nobody talks about it. But, I mean, this is an incredible market that I feel like could be easily penetrated if you have the right management team.
David Johnson: Well, helium is a commodity. It basically grew up in outer Texas, where the dominant resources were. And the dominant resources were held by the government. And so, there were public sales. So, the bureau of land management made these public sales, and the price of helium stayed low for a long period of time. And then, out of that, four major companies grew up dominating the market space. And this is Praxair, Air Liquide, Linde, and Air Products, really 80 to 85% of the global market, because the helium market grew out of the United States, and is just building out into the international market. Now, the government realized in 2013 that they wouldn’t have enough resources to supply the whole world. So, they brought in the stewardship act and said, “Okay, we’re going to stop selling helium to the world around 2018 or so. 2020, we’ll be finished.” Well, the reserves hit their limits at 2018.
David Johnson: And then the last sale for helium occurred. And that took 2.1 billion cubic feet off the market, out of a 6 billion cubic foot market. So, a huge chunk of the market was removed at that point in time. Now, there are other players that are in there as well. There’s essentially MATHESON, and there’s our TAWNY and Uniper, they’re trying to build into the market space. So, there is competition in the marketplace. And at that last BLM sale, the price took off. It went from about 150 for a 1000 cubic feet to over $337 for a 1000 cubic feet. So, in contrast, think about that for a moment. Gas sells for 2 to $3 for a 1000 cubic feet. Helium sells for $300 for a 1000 cubic feet. And that’s for raw helium. Refined helium, which is what’s used for many things, prices for pure helium, which is 99.999% pure, it could be as high as 600, $650 for a 1000 cubic feet. So, there’s this huge value for helium. Small commodity, huge value, because of the importance of its uses.
Frank Curzio: Right.
David Johnson: You have another question in there?
Frank Curzio: Yeah. No, no, no. And this is great stuff, because when I’m looking at the scale of this opportunity and how far you can take this, because one of the things I learned is, when it comes to investing in smaller junior companies, you always have exploration risk. Anyone who gives you a timeframe, you’re always going to pretty much double it, right? But this is a different way to explore this. Why don’t you talk about that and bring everybody in, because it seems like it’s a lot easier, where you go into places where natural gas is already discovered. If you can go over that process, to me, that’s attractive, where that’s always a major risk with junior miners and the amount of money that they’re spending, but this development process and getting to the exploration phase is a lot, lot quicker than what you would see in almost anything, gold, natural gas, oil.
David Johnson: Yeah. So, we’ve taken an approach, which we believe is an efficient approach for the use of our investors capital. And, it also reduces risks significantly. And, this is really where we differentiate ourselves a little bit. So, in Western Canada we have public databases. And the public database is basically mean you can drill a well and after two years they become public. And with that database of wells, there’s 650,000 wells in Western Canada. Now, 189,000 of those actually have gas analysis. So, we know where the helium is. So, we don’t have to explore for it, or guess, or have the idea where it is. We know where it is. Now, a lot of these are depleted and they’re indicators of where we can go. So, the map that you’re seeing there has 2000, those 2000 dots are where helium is greater than half a percent. And where the star is, is we’re in purely helium is identified an asset.
David Johnson: And, this is a great story, this is a great asset. But what we’re doing is we’re finding it where it’s already been found. And in our case, the asset was found in the 1940s. And it was a blow out, it was a huge blow out. It blew out for a hundred days at 50 million cubic feet a day, it was in the middle of a winter, it was cold. There was very little ice in any of the gas. So, we have this dry gas producing out. And, everyone thought it was going to explode, but it never did. And the reason it didn’t explode is because when they finally got the well under control and did a proper test, they did an analysis on the gas and it was 0.63% helium, 8% CO2, 3.5% methane, and the rest was nitrogen. So, it wouldn’t explode. It’s not flammable with that little amount of methane. So, everyone was very disappointed there wasn’t a gas well in 1940s. But it was also the warriors in Canada.
David Johnson: So, helium was usually important for listing. They looked at it to see if it was going to be concentrated enough at that point in time to make it economic to produce. And it wasn’t. They needed to meet a 1% threshold. So, they closed this thing up and walked away. Now, the structure itself is a big basement structure, and you can see this on seismic. And geologists from 1940 onwards came across this big structure. They drilled this structure in 1947, they drilled it in ’56, they drilled it, I think it was in ’69, and the last one was in ’74. So, this structure has been drilled multiple times. So, we know what the stratigraphy is across the structure. We know what the reservoir was across the structure.
David Johnson: So, what we’ve done is we’re appraising the asset. It’s already been found, the Helium’s there, the reservoir’s, there’s gas that’s proven that will come out of the ground. What we’re doing is we’re confirming the helium, and we’re confirming the production rate. And that’s what we’re doing right now. We’re in the process of drilling the structure, completing our second well, and completing our first production test. And, I’ll be bringing news of that to the market probably in the next week or so.
Frank Curzio: So, this is fantastic. So, we’re talking about finding asset, drilling results. Let’s put this in perspective for people who don’t know your company. So, Imperial Helium, you just went public, you put together the management team, this is in May. Full disclosure, I was in the financing. And, now you just went public in May, all of this is coming together. When I see something like this, it’s happening a lot, lot quicker than I thought. I don’t know if that’s the experience of your management team. I don’t know if it’s because it’s helium. And again, I’m comparing it to other commodities and other juniors and, and search for other commodities. But, putting this together so fast. I mean, is this how easy… I don’t want to say easy because nothing’s ever easy. But just to get these assets, it seems like, you’re going full throttle here. But, the advancements that I’ve seen in just the first couple of months is pretty amazing. And I don’t know if you’re setting high expectations up for yourself or not. It is pretty impressive.
David Johnson: Well, there are a combination of factors here that make the difference. First off, we’re in the Western Canada basin, where we’re used to drilling oil and gas. And so, all the infrastructure, and all the pieces that we need to do the exploration that we’re doing are already here. Another piece, we have an experienced management team. There’s myself, I have 35 years of experience. My COO is an engineer with about 45 years of experience. My senior geoscientist has about 25 years of experience. I’ve got another senior geophysicist, he has about 35 years of experience as well. So, we have this mature management team that knows where the assets are. We know what we’re doing, and we know what we’re going after, and why we’re going after it. So, it was easy for us to be ready, and to be ready to move into motion as we got the funding put forward.
David Johnson: So, in 2020, we went out for our seed round, and with our seed round, $750,000, we essentially captured our first asset. And then, we got the first asset moving, we realized it was much bigger than, than we initially had thought. So we did initial funding to raise more capital so that we could capture the whole area. The structure is over 95 square miles in area. It’s a big structure. So, we have captured all the land across that structure. Having captured the land, the next steps are really clear. There is seismic out there, but it’s already been shot, we’ve acquired that. We’ve looked at it and analyzed. It confirmed the best locations for us to go, but the structure is well defined. We knew that it was there. So, it was really picking the optimum spots, and then getting after drilling it. The industry is in a place where they’re looking for work these days.
David Johnson: And so, we were able to quickly secure some rigs, get them out there and drill our assets, and then quickly moved into production testing. So, this is actually a normal pace that you could go at. There are other assets around that we’re looking at. So, as we look forward into where we are now, really, we’ll finish up the work that we’re doing right now, this summer, the drilling, the testing by the end of September. And then, in October, we’ll move forward into a third-party resource assessment. And, just to think about this a little bit differently, in an oil and gas sense, if you wanted to have a reserve or bankable asset, you would have to have both the third party resource assessment and an off-take agreement. And that’s where we’re going. We’re going to get an off-take agreement, a lineup as well, hopefully by the end of the year.
David Johnson: So that by the end of the year, we have something that is really a reserve. We will have establish the volumes, we will have established producibility, we will have establish that we can create 59 helium, and we will have established an off-take agreement. And that will really take us to the place where we have, what would be called a reserve. So, we’re in full bore mode and moving forward. And then, as we move forward into 2022, that’s when we’ll move forward for the development of the field. So, these first two wells that we’re drilling, they’ll become producing wells, and we’ll tie them into our first plant, and that will begin the development of the field. Now the field is too big to deliver with just two wells. So, we’re going to have to drill more wells. So, there’ll be probably two more appraisal wells, and then four more development wells, something on that scope to develop the whole field.
Frank Curzio: Yeah. That sounds great.
David Johnson: And then, we’ll build the plant and get that moving forward, at that point in time, the larger plant.
Frank Curzio: Yeah. And I was bringing up, for those of you watch on YouTube, the 12-month milestones, and how already, subsequent lease payment in May, a quite 3D seismic over your asset in June, June 29 commence work pro, drilling. I mean, you’re just meeting all of these and everything seems like it’s happening so quickly. I guess, my question as well is probably people who are going to invest in this stock. So, now that you have the asset, seems like you have a lot of assets to go after too, you have the right management team. I know you guys live and breathe helium, everything helium when I talk to your management team, and I love that it’s-
David Johnson: My voice is a little high or something.
Frank Curzio: Yeah, I can’t tell you how many guys I talked to about oil and they’re like, “Frank, I got this biotech company or industry.” You guys are just all engulfed in this a 100% in. I can know anything just by talking to you. What is the next steps here? What can investors look for? I mean, we see the 12-month milestones that I just up…
Frank Curzio: What can investors look for? We see that the 12 month milestones that I just put up where your scale up commission pilot project in the field, that’s happening second half, but let’s go out like 2023, 24, 25. It seems like demand is going to be even stronger. How are you going to take advantage? How do you really turn this into a… For some companies, and it’s okay if you’re in junior miners, where you look for, hey, I just wanted to explore this asset a little bit and just make it look really prime this way. I could sell it. You guys are looking to explore this thing. Is it, hey, we want to become an industry leader. What’s the future say three years out.
David Johnson: Okay. So, there’s a couple components to that. But the future three to five years for us is all growth. That’s really where we are. So, in terms of the growth mode, in three to five years, Steville asset itself will be fully developed and we’ll be generating the revenue from that. We will have taken some of the revenue already, because we’ll have the first pilot plant gets on at 2022, we have our first production, the full field gets developed and the whole field will be in our production. So, the revenue stream will climb up significantly with that. That revenue will get put back in to new assets. So, the company begins to look or operate in its mechanics, like a resource company that’s producing gas. So, I build a reserve and then I begin to deplete my reserve. My value is in my reserve and my production, right?
David Johnson: But you need to know what’s going to come next to replace that reserve. So, it’s the next assets that come along that are important. So, the cashflow will go into capturing the next asset and building that reserve pile as a whole. So, we’ll build the reserves and the company as a whole will be in growth mode. And it’ll be strongly in growth mode at that point in time. And when we think about what’s going on with the market, there’s a bunch of things going on with the market. And I should’ve mentioned this when we asked about the supply and demand side. Globally, right now, when you there’s a lot going up, you’re hearing about, okay, there’s this big helium project in Russia, Amur, that’s going to bring on the BCF’s of helium and Qatar has its next stream coming on and it’s going to bring on a VCF of helium.
David Johnson: So, the other side of the story here is that helium as a commodity is perishable and that’s because it gets transported as a liquid and to be a liquid, it has to be lowered to minus 272 degrees. So, that’s like a degree and a half above absolute zero, which means there’s nothing else in it. It is absolutely pure helium. It gets put in something called an ISO container. You can go to the website and look this up. An ISO container has about a 40 day 42 day shelf life. So, seven weeks and it’s in something that’s about the size of a sea can. And that’s how Helium’s transported. It’s transported as a liquid in something the size of a sea can. So, it goes on a container ship. Now, there aren’t ships full of helium. It goes on a ship of opportunity. So, it’s a container ship that takes the helium to its next place.
David Johnson: Now, it only has seven weeks before that container begins to vent the helium. So, you can see it’s a perishable commodity. You have to actually use the helium. The end result of that is that the market begins to act more like the natural gas, liquid natural gas market. There’s no way to efficiently store large volumes of helium. So, you have to use them, which means there’s localization of the market. So, that’s why the price of gas is $10 for liquid natural gas. And in Australia is because they’re selling to China.
David Johnson: In Canada, we can’t get $2 for our gas because the Permian basin generates so much gas. It floods the market. And anything that China may need, you can’t take it to China fast enough to make the price rise. So, there’s isolation to the marketplace. Same thing happens with helium. So, in Canada, we’re looking to sell into the United States. The United States has got, is that 2.1 billion cubic feet that’s coming from abroad in tankers in these ISO containers coming across we’re displacing part of that market. That’s what we’re looking to do. So, there is this short-term demand for helium, which should ensure a higher price for helium and the price will stay high. So, we’re building in to a market into that higher price market. We’re building our asset as the market remains high. And that’s what we’re doing.
Frank Curzio: Wow, that was incredible. Thank you for explaining that because I didn’t know some of that stuff either, but it just, it does make sense, right? I didn’t know, it was seven days, basically seven days-
David Johnson: Seven weeks.
Frank Curzio: I know. That’s, just thinking about shipping that someplace and it has to be used at that. That’s incredible. And being able to cut that market off.
David Johnson: Yeah, no, we’ve talked to people in there. They were like some of our gas off taker buddies, so we’ve spoken with they’re sort of like, yeah, well, you know, my ship went out and it was supposed to go to Hong Kong, but it got rerouted to Taiwan. And now, I have to get my container back, and you’re thinking, it’s seven weeks and it’s got to go this and it’s got to be a week or two here and there. Someone’s got to be concerned about that so.
Frank Curzio: Even now, shipping delays, we’ve seen all over the place, right? I mean, that kills it, right? So, that’s incredible. So, okay. So, here’s your stock Imperial Helium trader on Toronto Venture. It’s just again, you just came out in May. Really great stuff. And I have to tell you from, and that symbols the IHC guys, from someone that’s travels the world, try to find the best stories. This really is an incredible story to see a management team, especially if you’re experienced 35 years again, with a background in Exxon, Shell, Kuwait Oil and come together to go into helium. To me, that’s very, very, very exciting. It’s a market that I know a lot of people don’t understand.
Frank Curzio: So, appreciate you coming on and dialing it down, which, but, I think there’s got to be a lot of people attract this. I would attract this. That’s why I’m investor. And I think you’re going to be surprised at how many people do jump into this. Because this is exciting. And the fact that I think your management team, well you guys can work anyway you want to really go all in on helium here is very, very exciting.
David Johnson: Well, watch the news. We hope to be delivering some exciting news for you in the not too distant future.
Frank Curzio: All right. That sounds great. Thanks so much for joining us. And hopefully, you can give us update in a couple of months.
David Johnson: Tremendous. Looking forward to it. That’s great.
Frank Curzio: All right. Take care.
David Johnson: Thanks a lot.
Frank Curzio: Yeah, it’s great stuff from David. Knows everything helium doesn’t ever want to talk about anything else. And I love that. I mean, one of the things I do hate is when I mentioned in an interview is yeah, people pitch me an idea and I love it gold, silver industry. And then six months later, they’re like, hey, you know this biotech company I’m investing. I don’t want to hear that shit. I want you totally be involved especially if I’m bringing to investors and my people who trust me, who follow me, you need to be 100% focused. This guy, anything helium. Here, I talk to several people, some of them managers, directors, just, it really is incredible how all in these guys are. And I like it when I see people looking at an idea. For me when I look to go into the security token industry, not once did I think about the money?
Frank Curzio: In fact, I’ve never made a decision on money in my life. Probably at least in the last 20 years or whatever, right. When I started having a little bit of money. I never did, and I always felt like that gave me an advantage over people because I feel like 99% of people do and money creates emotion. It’s easy to figure people out when that’s a motivation you see from a mile away. And I always felt like that gave me an edge with people who I talk to, especially business. What I spoke to David, he’s not doing this for the money. He’s not, this is something that he truly believes in that it could disrupt the market. That’s why I like it so much. Is it risky? Of course it’s risky. It’s very, very risky. Encouraging all members. I’m in, we’re into financing at a little bit low of a price. We’re locked up.
Frank Curzio: You know, and that’s full disclosure. This is something I don’t plan on selling anytime soon, because I want to see this guy, see where he could take it. I’m excited about it. I mean, he’s not a guy, as you could see that fluffs, anything. Jeff Phillips is the person that gave this to me. Jeff Phillips is a friend for close to 10 years. One of my trusted source of private placement deals in the resource space next to Marika Tusa. And when Jeff goes in, he doesn’t go in small. He takes huge positions, and he stays there very, very long. And I’ve invested at Jeff. I did great with Jeff. And in some situations I didn’t do well with Jeff, but Jeff never sold out before anybody. Pretty much. He’s still in a lot of those stocks that had performed bad that actually came back that I was like, yeah, you know, I just got sick of, but he’s a fantastic source.
Frank Curzio: And I’m saying this because there’s not a lot of great sources in the resource industry. It really is an industry. You have to be very, very careful, very, very, very, very carefully, because a lot of it is bullshit. A lot of people are going to tell you bullshit stories. They’re going to try to hype it up, especially in newsletter people and say, this is a great story. So, they could do financings, right your freaking face and right down your investors throats that you’re trying to help. I’ve seen a lot this of shit. I was able to avoid a lot of it by knowing the right people, by moving up that chain, getting into deals very, very early compared to when a lot of other people are getting them and learning about these names. Imperial Helium, amazing risk-reward. Again, of course it’s risky. It’s a small company.
Frank Curzio: But it’s disruptive. There’s only a handful of helium players and they can take huge market share if they get it right. Demand for helium. You look at the semi-conductor market. I mean, come on. The auto industry, they still can’t get chips for their cars. We just talked about that in the intro. I mean, Taiwan, sent me building, new fabs, Intel building new fabs, Samsung. This is a secular growth trend in technology. Continue to grow. Helium’s a major player there. I mean Samsung. It’s all these guys, the fab plants say they’re going to continue to build and meet the demand, they need to. They’re opening some of the US but this is an A. You’re looking at medical devices as well. Secular growth market. And for me, I really liked this name based on risk-reward. Could you lose? Absolutely. This doesn’t go down a lot. The helium price could crash.
Frank Curzio: You could see a recession happen, whatever. If that goes out and raises interest rates on Friday by 1%, which is not going to happen. But you don’t know. You know, you never know. I mean, people look at uranium. Uranium seemed like it was a great buy in 2014, 15, 16, 17, and 18 and 19. And finally, it started going higher, right? I mean, at least the stock started going higher. Uranium prices, still relatively low at $3 compared to well over a hundred before Fukushima, but it could take longer than time than expected. But the helium market right now is very, very hot. There’s not a lot of places to invest in it. And this is a company that you can, and it’s pretty cool. And I like bringing ideas like this to you. But again, there is a lot of risks. Don’t go all in on it.
Frank Curzio: But I think it’s idea to put a little bit of money into and full disclosure. Again, I’m an owner, I’m in financing. I’m in a little bit lower than the prices today, but I’m locked up as well as some of the Curzio One holders at and subscribers that invested in it. And I don’t know what they’re going to do, when they plan to do with their shares. But for me, I want to see this guy. I want to see where he takes it, because if he takes it to the right place, this is going to be a massive, massive, massive winner. And that’s the upside you want when you’re taking on a lot of risk, right? From someone who’s been doing it their whole entire career. However, that said, let me know, you like that interview or not like bringing on early startups and stuff like that.
Frank Curzio: This pockets about you, not about me. I said it all the time. Let me know what your thoughts are at firstname.lastname@example.org. That’s email@example.com. Now, let’s bring in Daniel Creech, senior analyst at Curzio Research. What’s going on, buddy?
Daniel Creech: Frank Curzio, what’s happening. Happy Wednesday, everybody.
Frank Curzio: So, a lot going on, man. I mean it’s earning season just about over but lots of news. I want to talk about two companies that we kind of discussed already a little bit offline. I mean, Best Buy’s numbers. Holy cow. I mean, you got best buy, just blew out, blew out, blew out these numbers. And what they’re doing is just pretty incredible to me. And I know you saw the numbers like you’d see best buy and just, I love looking at Best Buy as something I follow because you could see almost every single electronic device, you could see appliances, you could see, phones, TVs, what’s selling what people are spending. What are the trends are at smart homes? Is that developing more faster? It’s just, yeah, it’s a great quarter to listened to, and the numbers were fantastic.
Daniel Creech: Yeah, absolutely. And not to be out done, Dick’s Sporting Goods then just absolutely blew it out. But Best Buy, we talked about, man, they got it’s very simple. You said they partnered with Amazon. You’ve been in it. We were talking about just the concept for the consumer. Like, they have the products you want, but they have a great system and installing it for guys like me that know zero about hands-on, stuff like that and are not even interested in it, but the stores are nice. They’re clean. They’re easy to navigate. Man, they’ve done it right. They got the geek squad. They got Amazon. It was a beaten raise, right?
Frank Curzio: I mean, the numbers are, so-
Daniel Creech: What’s the stock doing?
Frank Curzio: So, the revenue, the revenue was up, yeah check the sites. Revenue was up 24% operating income, more than doubled to 800 million. And people say, well, it’s an easy to compare against COVID. No, this is one of the stocks that were doing well during COVID because people had to buy computers. They can office furniture, they bought a whole bunch of stuff to stay at home. And so that revenue up 24%, I mean that number’s huge comps up 20% year over year, again, not against easy comps. This is a company to thrived during COVID right. 242% surgeon, domestic comparable, online sales, which online sales. Right? So, this was a big box retailer that was supposed to be pulled out of business by Amazon and Walmart and all this technology. This is something I’ve been talking about for a long time. It’s a stock that I liked.
Frank Curzio: I remember when I first recommended fifties people were just like you crazy, crazy, and said is, this is someplace I go to. I know that every electronic retailer that’s a pure play electronic retailer has failed. It was a crazy circuit city. I mean, nobody could get this, right. Here, these are the guys that got it, right. It’s the only company that makes selling electronics or retail work. All right. So, what do they do with Amazon? They knew Amazon had hardware, and they had to sell it and it makes it easier to sell through the store. So, instead of looking Amazon and being like, oh my God, they partnered with Amazon, which is fantastic. How they separate the Walmart… You try going into a Walmart and electronic section and just ask any mildly, mildly difficult question. Just mildly difficult question. If you’re looking at a game, you want to know anything about a video game.
Frank Curzio: If you want to know anything about a TV and some of the specs and everything and whatever. They don’t know, they’ll take the box and read the buck of box. Right? That’s what they do. And it’s so funny. Because I’m like, you know I know how to fucking read. I can read the back of the box, right? That’s what they do at these places. You go into best buy. First, your experience is fantastic. When you go in there, it’s an exciting store. They know what people want. They’re putting the best products up front. You see these massive TVs that used to be super expensive. Now, you can spend a couple hundred dollars to get a 40 something inch TV, again, not with your high specs and stuff like that. But it’s a high definition.
Frank Curzio: The experience is great when you’re there. And then when you’re there, you buy a TV. You’re like, holy shit. I don’t really know how to set this up. Well, here’s Geek Squad because Geek Squad will help you in here. Pay them a couple hundred dollars. They’ll come to your house, they’ll set everything up. They’ll teach you everything, whatever you ask those guys a question. And every time I go there, I’m talking to those guys for at least 20 minutes because they know every single trend in real time, they know what’s selling. They know what TVs are selling and what phones are saying. They know every single thing, that’s their job. They have to be educated on the technology, on everything they sell on their departments. And it’s really cool. As you guys know, to talk to someone that knows what the hell they’re talking about, instead of just having a person to say, oh, wait, and look at the back of the box and read it to you. Right?
Frank Curzio: You see it the all the time. But when you’re looking at these number, margins will hire. These guys are now a digital company, right? I mean, they’re competing with the Amazons and the Walmart’s and stuff. And yeah, it’s just incredible to see what they did and how they disrupted when everybody was calling for this company 10 years ago, seven years ago saying goodbye, Best Buy has done. That’s pretty cool.
Daniel Creech: Oh, it’s great. I mean, if you like to kind of geek out or nerd out like we do about this kind of stuff, it’s just a great story. It’s a great success story. And the big investor takeaway here is listen, pay attention to management. I mean, management matters. I mean, it’s boring. It’s not exciting to say, hey, find a great company trading at a solid price or even a good price with great management and ride it. But that’s the big takeaway.
Daniel Creech: So, pay attention to management and boots on the ground research. Frank, not to be more informative for our listeners, another investing lesson, we got to hit on Dick’s real quick. Because then I got two things I want to touch on, but Dick’s, so can we explain to people how Dick’s is probably the most beautiful chart from January of this year until now.
Frank Curzio: Well, what is the price? Hold on let me bring it up again just so I can show everybody. Go ahead.
Daniel Creech: 133-ish. But from basically year today from January of 2021, the stock has gone from the bottom left to the upper right. And I mean, there’s been some ups and downs, but damn like you talk about set and forget it. What’s that infomercial where you remember those, put this in the 20 minute cooker set it and forget it.
Frank Curzio: Set it and it’s done.
Daniel Creech: I love that. So, that’s incredible in the lesson here is the emotional toughness, the mental toughness that it takes to be in investing in general. Frank, why don’t you explain why Dick’s is a better cheaper buy today than it was four months ago?
Frank Curzio: I know, and you know what? And I mentioned that in the opening because I was talking about housing and how everyone thinks housing is over and that housing prices are up. And I mean, this is stuff I wanted to buy last quarter when they reported it. I thought it was fantastic. And it was well below a 100. And you know, I felt like, oh shit, I missed it. Because I’d go to Dick’s Sporting Goods. I like this name. I’m like, wow, you’re seeing more demand. And plus, I’m seeing numbers coming from the retails that sell their stuff in Dick’s. Dick’s sells all the good stuff, right? They don’t sell. It’s not like an outlet. Right. They sell all the new stuff from Nike to Under Armour to all these brands, Columbia, whatever, whatever. And I found myself going there. I found inventory there.
Frank Curzio: It was great. I found, I saw the people online were waiting online. Yeah, they had the points program. They just went through the COVID thing. It was really tough. You’re shutting all the stores, and now, people want to go out. They’re going out to these places. You’re seeing retail and apparel with Nike, Under Armour. These numbers going crazy. I’m like, man, I really liked this. Let me see the quarter first. They blow out the quarter. It takes off. And I’m like shit right? I’m like, damn it. I missed it. And that’s the mistake I made. Yes. I make mistakes. Yes. I address my mistake. You’ll see me address my mistakes on this podcast more than I address the winners that I have, which easily, easily outweigh the losers or I wouldn’t be doing this. Right? But you’re going to learn the most from your losers.
Frank Curzio: And the point here is you’re seeing a stock that was pretty much crashed and this is 2020, and just keeps going up and going up and going up. And if you look at the last year and even the last quarter, I think they reported in May went from 84 to 90, 95. And I’m like shit. I’m like damn, I missed it. I missed. I used to had all this time. Now you’re looking at these numbers, Daniel. And I’m just showing you the chart here. But you know, let’s go over some of these numbers, which is pretty funny. It’s one of the best quarters that I’ve seen in terms of how much more that they beat. So, the earnings of $5.08 Where $2.26 better than the estimates 2.82, right? So, revenues were 20% year over year. Store sales for second quarter increased nearly 20%. They raised guidance.
Frank Curzio: Their 2022 full guidance was around 8.50. They raised it to $13. They’re expecting this year’s coms to be up 20% compared to 10%. And they also issued a $5.50 per share dividend special dividend 21% increase in its coy dividend as well. And an increase in its plan, sherry purchases to a minimum of 400 million. Now, you look at a stock and you look at the earnings, right? Because when you look at an earnings and you’re looking at PE ratio, you want to see, okay, forward, P’s what they’re going to earn 2022. That’s the full PE, and they’re going to earn around $13. So, if you take price divided by earnings or where it is, this stock is trading at around 10 times forward earnings. So, even though the stock is up tremendously, tremendously, it’s cheaper right now than it was at almost any time over the past year because of how they blew out the earnings.
Frank Curzio: So, you know what? Daniel, for me, that’s the mistake that a lot of people make. It’s one of the newsletters that we have out there that focuses on this and focuses on the bigger trends. And they’re going to be buying stuff that you think you might’ve missed. And it has history of doing it. It is The Big Money Report, and Luke Downey, and people have been following him. That newsletter is selling like crazy. It’s a newsletter. It’s under a hundred dollars. I didn’t even plan to mention now, but this is a newsletter that focuses on this because it’s very hard to do this on your own. It’s even hard for me to do it, to buy something when you like it at a cheaper price and you see it go up a lot. That’s usually one of the best times to buy it because you see, this is a growth market.
Frank Curzio: It’s been like this for almost 10 to 12 straight years. That’s what people want to see. That’s why, if you’re looking at the Russell 2000, the stocks that are going hard, the ones that aren’t generating earnings that have the best stories, that have the best growth potential, that’s what people want to see. It’s like IBM. IBM has, has 11, 12 PE. Now, it’s turning into a cloud company. 50% of the that earnings come from Cloud. Cloud is what? Most cloud companies you’re looking at trading at 28 to 32 times forward earnings. So, that’s the multiple you get. So, if you’re in the right industry and the right growth industries, that’s what it’s all about, but you tend to miss these stocks. And a lot of people invest in Apple when it’s trading at 80 times earnings. They didn’t invest in Netflix at 125 times earnings 15 years ago.
Frank Curzio: Look what the stock is now. I mean, the stock is probably at $34 on a split adjusted basis. It’s 550. Netflix… Because you’re like, wow, this is expensive. But you have to look at things like that. And the underlying trends and the growth trends, with that newsletter, we have, again, you can buy that for under a hundred dollars for the year. We have a 30-day money back guarantee. If you don’t like it, you can ask for the money back. We give it back to you right away. That’s a newsletter that focuses on something, individual investors and even professionals like myself. We have a difficult time doing is buying something when it goes higher. And I made that mistake because I really liked Dick’s and I didn’t buy it though it was smart to wait until the quarter. They blow out the quarter, it went up and I could have still got under a hundred. And now it’s 133. And the funny thing is I should be buying it right now because it’s cheaper now than it was almost any time of the past year. Right?
Daniel Creech: Exactly. And you can look at this as a, this is more of an investment, not a trade in my opinion, because there’s so many tailwinds there, you have A, management is clearly executing and just man showing other retailers how it’s done. They’re in a massive growth trend in sports in general, because even with the coronavirus and the cancellations and yes, sporting events have gotten canceled and all that being outdoors is better than being indoors when it comes to the coronavirus. They sell all kinds of stuff like that. Frank, did you see what they said about GOLF? They expect the tailwinds in GOLF to continue. That’s exciting because A, we have a very good GOLF play in our CRA membership-
Frank Curzio: Which is doing well on. Yeah.
Daniel Creech: Advisory. Yeah. So, that was good to see, but yeah, I mean the investor takeaway is, hey, it’s, let’s be honest. Investing is hard. I’m not, I don’t want this to sound easy. I’m not rich yet. But the point is, is that it’s difficult to look at this stock in this chart and to follow this and to stay on the sidelines and not let the numbers tell you. So, it’s easy to say set your emotions aside, but this is just another great example on, if you haven’t done this yet, start doing it going forward. Don’t be the definition of insanity and not make any changes when it comes to your investing style. When you have solid numbers, backing this up, believe the data more than your emotions. I guess that’s the easiest way.
Frank Curzio: And two things here, guys. Like I always do, I like to provide new ideas for you Under Armour and Footlocker are great place off of this quarter. That weren’t up as much. Those numbers are going to be fantastic going forward. Much better plays that they could get more upside out of those names then a Nike, but that’s how you breakdown Dick’s which I love. Because it’s a retail sells a bunch of, there’s probably a good 50 companies I could almost give you, if you give me 10 minutes off the top of my head that you’re going to find publicly traded at satellite, and same with Best Buy?
Frank Curzio: Again, tons of companies and by going through those conferences, you don’t have to buy foot… you don’t have to buy. I mean, I buy Footlocker, Under Armour you don’t have to buy Dick’s Sporting Goods. You don’t have to buy Best Buy, but listen to those calls because you will be able to get tons of ideas, tons of ideas from them just along so many different trends. That’s first thing, the second thing is GOLF. And you mentioned GOLF by the way, Daniel has been hitting balls a ton and now has, I don’t even think you shoot over 80 anymore, right? They shoot like 77.
Daniel Creech: Oh, I do. Yeah, I do. I do shoot over 80, but I have broken it lately, so that’s good.
Frank Curzio: Yeah. So, the only thing I have to think of is I got to give you a lot more responsibility because I can’t get out there as much and-
Daniel Creech: It’s a lesson in time management. I got enough on my plate now. No, I’m kidding.
Frank Curzio: Yeah. I got, yeah. Yeah. I got to go hit pause. Well, actually, this is what you need to do.
Daniel Creech: Actually, if your latest pick sucks, you ain’t hitting balls.
Frank Curzio: Exactly. But man, you hitting the ball good. That’s fantastic. Now, let’s get to a couple other things. The big story right now, and I guess we did have earnings with Best Buy and Dick’s, but earning season’s mostly over.
Frank Curzio: Not too much to talk about. But there’s Jackson Hole, which is coming up next two days. Powell is going to be speaking on Friday. They did make this virtual now, right? Because they are a danger zone, people getting COVID. Nobody is really dying, death rates are down tremendously. But if you’re in a danger zone, whatever, and Wyoming is kind of like a friendly state when it comes to stuff like this. Listen, whatever it is, you want to keep people safe. But the bottom line is, talking about Jackson Hole, Friday, Powell is going to talk again virtually, and a lot of people are like, is he going to talk tapering? Is he going to taper? What’s going to happen? I mean, what are your thoughts?
Daniel Creech: Yeah, we need to spend no more than 60 seconds on this. And I won’t even take all that time. It’s just going to be in the headlines. So, be prepared for tapering talks. And just remember my big takeaway from this is, this has much to do about nothing, because tapering or cutting back is totally different from the headlines that are probably going to come across your computer screens and cell phones about, less loose monetary policy. Just because you have a little bit less, doesn’t mean that you’re not having the ridiculous environment that we’ve been talking about. And you have been talking about it even longer, Frank, of easy money. So, it’s not the end to anything they’re way behind the curve. And you should know that by listening to us, but that’s the world we live in. So, if there’s any volatility, nothing is changing in the short-term. This is all just fun headlines. So, that’s my take on it.
Frank Curzio: In Jackson Hole. I mean, you got to go back to the Greenspan days, when any major policy announcements, that they use Jackson Hole. They really don’t. It’s usually, it’s next month, September, what where you’d hear a little bit more, and they’re meeting. But, yeah they make a big deal about this and Jackson Hole and all this stuff, but they will talk about tapering. I think he has to right? And we’re looking at GDP growing what at 6%? We’re looking at, get at, we’ll slow to whether 3% next year, earnings are up 15% expected, by the end of this year, which is record highs. So, 15%, I mean, they’re up tremendously, right? So, we’re seeing that bounce back employment rate is falling. Asset prices are surging. Everyone’s raising prices, inflation’s getting crazy now, right.
Frank Curzio: Seeing 5% on the CPI. And just to put that in perspective, if you look at the fed and I found a really, this is on Charles Schwab’s website, this was really, really cool, man. I got to send this to you, Dan. This is really cool. So, they just have a chart of like the expectations, and they talk about tapering and anything going to show it. You know, if you’re not Curzio Research YouTube page, you got to change your real GDP. They have, the median estimates and the change from 2021, 7% going down 3.3%, they expect 2.4% in 2023, but employment rate 4.5% 2021, they’re expecting 2022, 3.8%. And then 3.5% in 2023. Inflation they’re expecting, and let’s look at a core inflation at 2%. It’s says it’s expected 3% at the end of 2021. It’s 5% now. And they’re expecting to be 2% in 2022, 2023.
Frank Curzio: That’s going to be interesting, but just looking at this chart in the expectations, they just don’t make sense because there’s no way you’re going to get that unemployment rate down at 3.5% or even 3.8% without incentivizing the employee without providing more stimulus. Because if you’re going to taper, it’s going to result in margins being squeezed less borrowing is probably going to result in less hiring. So, I think it’s going to be very difficult if you’re looking to raise rates, taper and talk about all this stuff and try to get that unemployment rate low, not only getting it to that level. It’s going to be hard when you still have incentives for people to make more money, and that’s a fact it’s still going on right now, a lot of states. So, I look at this whole thing, there’s a couple of things really.
Frank Curzio: I know we want to spend five minutes on it, but it’s important.
Daniel Creech: I said a minute, Frank, we’re way over my timeline.
Frank Curzio: Historically low rates, we continue to have them and why do they keep them? Even though almost every metric is showing growth, that we’re back and we’re fine. And we don’t really have to worry about COVID as much as we did, right? Why? It’s, because we haven’t seen the consequences of these policies. We haven’t, it seems like you could do this. And there’s no consequences we did in 2008, 2009, 2010. Okay, we keep doing it. Okay. 120 billion, a monthly bond purchases. We’re starting to see a little bit inflation. They using the word taper because if they don’t say taper or not taper, transitory for inflation, if they don’t say transitory, meaning, short-term, they kind of have to raise rates and no longer buy bonds.
Frank Curzio: So, at which they don’t want to do, and 120 billion, monthly bond purchases is going to extend this easily through 2022. Because once they start reducing this, it’s, it’s going to be by 5 billion, 10 billion here. When they taper, even in the past, when they taper, it’s done over six to eight, nine month period, it takes a long time. Maybe raise rates, tiny bit, but still credit’s going to be dirt cheap. It’s going to inflate every asset, but, Jackson Hole guys, I will look at it, as it’s not really a big deal. And, they’re going to make a big deal out of it. Let’s see if they talk tapering. But we’ll see. I just know that, looking at the Fed’s balance sheet has grown tremendously and continues to grow and showing that on the chart right now. Okay.
Frank Curzio: And this is a Charles Schwab, just go into, Fed’s balance sheet. And so this is a pretty good article that I found, which I like to share. They just go over, Fed’s balance sheet composition in 2013, compared to 2021, how 70% treasuries now, when it was only 60% and 40% was more mortgage backed securities in December, 2003, compared to 31% now. But it’s just, the Fed’s there for you. They have that protection and you know, this whole Jackson Hole thing, I agree. It’s not a big story, but when it comes to tapering, that’s a big story. That’s going to happen in the future. But just know, like Daniel said, it’s not like, hey, everything’s going to get a raise, increase tremendously, no longer buying bonds. It’s a whole entire process. Usually when they start, you see rates rise a little bit and historically then they start going down.
Frank Curzio: That’s usually the process. So, don’t expect rates to skyrocket. I still expect assets to do well. I still expect stocks to go higher. And a lot of companies have pricing power, but we’ll see going forward.
Frank Curzio: Dan, one last topic here I want to talk about. And, we always mentioned pretty much on this because we have a big audience when it comes to Bitcoin. Now that we have a Curzio Equity Owners token, again, lots of stuff happening behind the scenes there, can wait to announce a lot of stuff to you, but it broke 50,000 again. And, I think that’s a really, really big deal. I want to hear your thoughts because this is somebody who went to 60, even the first one or the close to 20,000 went all the way down to 5,000, 4,000 around wherever it was. And then, we saw another wave when it went to 66,000 and then crash, right? So, 29,000 I think was a low. And now, you’re back up to 50,000. What are your thoughts on Bitcoin right now? Because I’ll give you my thoughts after, but I think going to 50 is, is very, it’s a very, very big deal.
Daniel Creech: Yeah. I think it’s a good emotional level investors like round numbers. You know, you always see headlines about the Dow at 20,000 or 30,000 and all that kind of stuff. So no doubt, no argument that Bitcoin taken 50 after being what, 30 and 29, I think it dipped under 30, a few months ago, you get all your naysayers. This is just the new normal. And I think that’s really powerful. And just like what we were trying to explain to listeners about the lessons you can learn from Dick’s and data and looking at earnings and stuff like that. I think you have to pay attention to this new normal can Bitcoin go back to 20,000 or even under sure can anything can happen. But boy, the odds are getting a lot more in the favor of the new lows are going to be previous highs like the twenties and all that kind of stuff.
Daniel Creech: And you have continued people. So, we talked about this last week. Real quick, galaxy digital reported was talking about how institutions and big players are starting to come in. That’s a new normal versus just retail. Michael Saylor from MicroStrategy who is either loved or hated no offence on that guy. They announced they bought another 3,907 Bitcoins that brings the total to 108,992. Their average cost basis is 26,769, Frank. So, when it’s volatile, and it’s on the downside, everybody points to him and says how he’s leveraging his company. And it’s silly. Now, he’s a genius because he’s increasing his investment on his balance sheet. The big takeaway is you’re going to see more of them.
Frank Curzio: You say 108,000 Bitcoin. They own?
Daniel Creech: 992 for 2.918 billion at an average price at 26,000. He tweeted that yesterday.
Frank Curzio: So, how many coins do they own total though? Right now, would you say?
Daniel Creech: 108,992.
Frank Curzio: 108 thousand.
Daniel Creech: 992. Should be under 3 billion. Just under three billion.
Frank Curzio: No, that’s more like 5.4 billion at 50, at 50,000 at the current price. So, he’s talking about the average price. They have it. But right now, looking at that 108 thousand, 5.4 billion. Wow, that’s incredible. That is incredible.
Daniel Creech: Crazy, but it’s going to change by the time we publish this, it’ll be up or down 10%.
Frank Curzio: But here’s the deal, here’s the bigger point here. He’s not selling anytime soon.
Daniel Creech: Right.
Frank Curzio: And when you look at that and you look at the holders, right? And you hold on for dear life, you see that from a lot of Bitcoin. I don’t know if they always do that. They say they do. I think, some of them do. And when I see something like this happen, where you go to 20,000, and then go all the way down to 4,000, 3000, right? You see that whenever 2018, 19, and you’re still able to hold on, you’re going to have some of the people sell and whatever and say, okay. And then all of a sudden you have this massive move to 66,000, and then it comes down again. And I’m sure people, I mean, if you’re normal and if you’re human, you’re looking at it. And it’s a big difference because if you own Bitcoin, you’re looking at maybe a portfolio of 5 million and it, all of a sudden it goes down to 2 million.
Frank Curzio: It’s a really big deal in like three month period. I don’t care who the hell you are and say, oh, you’re going to look at and be like, holy shit man, that was 5 million not long ago. It’s 2 million. It’s normal. If you’re still holding on after this, and it comes back to 50,000, you’re going to be holding on, you’re going to create more holders, right. That you’re just going to do it. You’re going to create, because even if people have sold it kind of like, shit, I shouldn’t have sold. It’s going back up. And the people that held it, if they held it through that, they’re holding it forever. What does that mean? Right now you’re talking about $2 trillion market. Every institution is getting in. Citi just announced that they’re looking at trade, you know, CME futures on Bitcoin. They have no choice.
Frank Curzio: It doesn’t matter if they like it. If they believe in it, their clients want it. And it’s a $2 trillion liquid market that they’re going to be left on the sidelines. Instead, now, they could throw algorithms all over it and make their fees just like Goldman Sachs does. And Morgan Stanley is going to do. That’s why JP Morgan’s getting in. Even though Jamie Dimon said, listen, I don’t give a shit about Bitcoin. And it’s a fake all this bullshit, but he’s like, well, my clients want it. It’s a $2 trillion liquid market. It’s not going away. It’s going to get bigger. And you brought up a story with, the Missouri governor, right? I mean not a governor, I think it might’ve been a mayor or something.
Daniel Creech: Just a mayor. But real quick, the other allocation thing. So, Coinbase made a big deal because they announced previously that they’re investing $500 million dollars in a diversified crypto assets at diversified portfolio. And then they were pledging about 10% of quarterly net income to also be invested. My all-point to that is, the more money you see on a consistent basis, this dollar cost averaging type buying this steady buying over time by these massive players. That’s only going, I mean, I don’t know, but the odds are that that’s going to only grow and continue to happen. Which means the entire space is going to continue to be a lot higher in price. So, that tells you the individual investor. Just make sure you have exposure to this. Like, yes, it’s volatile. Yes, it’s crazy. But you should have some exposure even through direct crypto holdings and or stocks that give you exposure, like MicroStrategy, we’ve talked about galaxy digital, et cetera, et cetera. But just the individual guys sitting on the sidelines do not sit on the sidelines anymore, done preaching Frank.
Frank Curzio: And even like you’re saying, the Missouri, right. That the mayor of Missouri.
Daniel Creech: Yeah. So, this is funny because the mayor of Missouri, I don’t know which town, but I think there was a thousand or 1500 residents and he wanted to give up to a thousand dollars in Bitcoin to all of the residents there. He said he had some backers, some donors that were going to cover the cost. I forget what it was. Right. I mean, you know, that’s a couple million bucks at the most, depending on what they actually decide to give out and things. But we were joking earlier about the office because, leave it to the government where you kind of screw up, take Bitcoin, a store of value, independence, diversification from via government control, independence, responsibility. And then of course the government’s going to muck it up and give it away for free and try to just, do whatever they do with everything else.
Daniel Creech: However, he was talking about doing it over a vested time. So, you talk about being bullish and a politician kind of hinting, hey, if this is the future, let’s get in front of this. You have all your residents as Bitcoin, of course, that makes you popular on the voting side. You make them hold it for about five years. And again, there’s a lot of gray area here because this could never happen. This was just, I believe I grabbed one point, Telegraph, Frank, if you’re looking for a site or a news article over there, but it was interesting because he said, hey, it would be terrible for citizens to receive a thousand dollars in Bitcoin, pay off a car note or something only to see the price of Bitcoin go to like 500,000 in years and then be disappointed. That just caught my eye. And anything’s possible, again, that’s more bullish for crypto. If you have governments started giving this stuff away or people trying to buy it to do that, that’s only going to increase adoption, increase popularity. Again, it’s, I’m not a permabull, but it’s hard not to be bullish on a couple of exciting sectors, including crypto, right now.
Frank Curzio: Like you mentioned, if you’re doing this, this isn’t like even dollars to people that, that you’re constantly printing more money and destroying the value of it. Right?
Daniel Creech: Right.
Frank Curzio: So, there’s a limited supply. So now, you have like the guys that I’ve interviewed on this podcast. Dan Held, I mean, there’s a lot of, my network of people in the industry, there’s a lot of them that just believe in Bitcoin. They don’t like the shit coins. It’s Bitcoin, Bitcoin, Bitcoin, Bitcoin, Bitcoin. They’re never going to sell. You’re looking at more adoption, and it’s not just adoption by institutions. One of the most important place to be adopted is in the media, in social media, right? That’s how you get these massive, massive, massive trends. And you look at Sacramento Kings accepting Bitcoin, where the first day they’d been doing it since 2014, you have the Oakland athletics announced in March, 2021.
Frank Curzio: They’re going to set Bitcoin for Susan suites, which will have the six people. You look at Dallas Mavericks, and they started selling it. You’re looking at athletes. There’s several athletes that saying, hey, I want to get paid or a portion of this in Bitcoin. Once you do that and they have their Bitcoin, a lot of these people are holding it, right? So, you’re not having a lot of sellers in the fact that every time this thing goes down, all those holders, a lot of those people continue to buy. And even the ones that sold it and said that they were out, did not. And now that they’re regretting the fact that, wow, this thing’s pushing the 50,000 again, but you’re just seeing this worldwide adoption. There’s tons of stories. Go read them, after Afghanistan, and Bitcoin of what happened there and how think about this lines around the banks.
Frank Curzio: They’re probably never going to get their money. A lot of those people with Taliban taken over. Again, I won’t get into politics there, but you have to see how many people spoke out and said, I know they can’t touch my Bitcoin. And I have my Bitcoin. I establish accounts. And you’re looking at this, especially with all the world problems, especially what we’ve seen at a grand scale of how politicians on both sides cannot be trusted at all. They don’t give a shit about anybody except themselves across the world. Not just here, but everywhere. This is the way to say, hey, you know what? F you, flipping off the government. You’re not going to touch this. I’m going to own this. This is my money. This is my, this is a cult. This is something that’s not going away. You’re not seeing people. You’re not seeing Daniel… You’re not seeing a management team saying, actually, you are, let me take that back. I was saying, you’re not seeing athletes out. I’m buying gold. I want gold. But didn’t we have someone come out and say that they bought gold bars. What’s the balance here? Right?
Daniel Creech: I always butcher that. Yeah. Yep.
Frank Curzio: Palantir actually came out and said gold bullion.
Daniel Creech: I think it was 50 million worth.
Frank Curzio: Amazing. But you know, when it comes to athletes, you’re not really seeing that, but overall Afghanistan, what’s going on there. It’s also good for gold. So, you’re looking at gold. I know gold has been shit. I know it’s, you thought it was going to go a lot higher under the current conditions. I think it eventually will, I think it will. And when I say eventually I’m not talking about five years from now. I think it’s a great investment. I have a lot of money in gold. It’s not my biggest position, but I also have a lot in Bitcoin and also cryptocurrencies. So, diversify guys by a little bit, even again, don’t be afraid, oh, it’s 50,000. It was just 29,000. And I made the mistake with Dick’s Sporting Goods buy a little bit here, if it comes down.
Frank Curzio: You can buy a little bit more, but you should have allocation to this because you don’t have a lot of people selling Bitcoin right now. You just don’t hear it. And the fact that it keeps going higher, almost on every dip major dips. So, it’s 40 to 60% pullbacks. It’s going to create even more fans and you’re seeing it in sportswear. He’s seeing it everywhere. I mean, it’s adopted it’s here. It’s not going away. It’s 2 trillion dollar plus market altogether. Bitcoin probably accounts for about 40, 45% of that. And Ethereum is getting huge as well, especially with the new update, but, cryptocurrencies here we’re involved in it tremendously. We built our company security tokens. That industry is absolutely taking off right now beyond belief. And I’m really happy for the people that invest in our company through this security token, we get an equity stake.
Frank Curzio: I’m happy of, a lot of the things that are coming up of how there’s more adoption. We’re getting tons of calls now. There’s going to be more platforms, trading, security tokens. They’re all coming out now. And regulation has been eased and it’s took a little while longer than expected, but being one of the first to the market here, it’s very, very exciting times, but the cryptocurrency guys, listen, we have a Crypto Intelligence newsletter, a little bit expensive. We have unbelievable returns in that. We’ve helped you tremendously. We’ve got great contacts in it, but even if it’s not the newsletter, if it’s too expensive, try to learn as much as you can about this mark follow guys like Dan Held. I mean, he’s great. I love him, got to have him on the podcast. He has a pretty cool newsletter, comes out once a month and it’s not expensive at all. Again, I don’t make any money by saying that, but just people that are really cool in this industry is a lot you could find through your Twitter or your Facebook, your Instagrams, your TikToks or whatever, and start learning about it and, take a little piece of it. Because right now this trend I think is super, super, super early and it’s not going away. And I think Daniel, not to speak for him, I think you feel the same way.
Daniel Creech: Oh, absolutely. Yeah, this is a new normal. So, make sure you have exposure and yeah, until next week that’s a lot of fun.
Frank Curzio: No, that’s cool. Covered a lot. Thanks Dan, for coming by, we like talking about, just what’s going on in the markets. We’re going to have a new format and it’s going to come out a couple of weeks from now where it’s going to be separated into three different days, 30 minutes segments each. And I think from us, we hear from our customers is a few people are like, yeah, I kind of like the format, but having someone listen for an hour and a half, to a podcast we know in this industry and we’re seeing even the drop off and stuff like that in transit, we track, we’re bringing lots of information, Dale and I talked about a lot of stuff today and it probably leads at least 20 different ideas. And some people aren’t even getting to that because, they’ll listen to the monologue and they’ll listen to the interview.
Frank Curzio: So, separating these things out into three days, we’ve heard from our clients, most of them want it, we hear some people saying, well, I just wish it was one day. It’s simple. If you go on iTunes, it’s automatically, if you subscribe to our podcasts, it’s automatically going to upload the next version and let you know if you set an alert. So, it’s not too difficult. And also you can get on a mailing list, go to curzioresearch.com and get on a mailing list where it’s not that we’re going to market the shit out of you or whatever, but we’re going to tell you when the next podcast is available, we’re going to have notes for your timestamps and things like that, because it’s good. There’s a lot of valuable material that I just feel like is not getting listened to.
Frank Curzio: And we don’t want that to be lost because there are lots of ideas and sometimes a monologue was great. You’re going to have ideas. And sometimes it’s a rant. Sometimes, I’ll get a little personal or whatever, and people get pissed, whatever. Sometimes, I have a fantastic interview and that person is mentioning tons of ideas, which those ideas go directly into The Dollar Stock Club newsletter, which is $4 a month, a fantastic newsletter, which Daniel pretty much runs the show on that thing, which is awesome. Getting a pick from, the smartest people around and talking to them and throwing that in that newsletter provide a research report. And in that last segment, I mean, you know, we talked about a lot of ideas, so that’s going to be the changes coming up. Love to hear again, feedback. Most of it has been overwhelmingly positive.
Frank Curzio: We did have some say, ah, kind of like the original format, but from what we hear, you’re not going to please anyone, but listening to an hour and a half taken a full hour and a half out of your schedule in this industry where I know you guys, demographic and you’re working your ass off and shit like that. A lot of people don’t have an hour and a half in a day. And some of that, content that Daniel, I just mentioned, it might not be relevant on Friday or Monday. And you know, you’d probably have to listen to it, especially a lot of ideas.
Frank Curzio: So hopefully, we can listen to you guys, love to hear your feedback and enough talking cause that’s it for me. I say, thank you so much for listening. Love you guys really appreciate all the support really, really do of where we took the company, where it is now from the past few years continue to grow. It’s a lot of fun right now. Great employees, people working their asses off it’s just humbling right now where it’s, it’s just cool just to see it and sit back and watch this thing grow. And you know, we’re having a lot of fun right now and going to hire lots more employees and, and doing lots and lots of things and lots of plans in the future. So, you know, and that’s all made possible from you guys and from listening to this, so appreciate everything. Again, comments or questions. firstname.lastname@example.org. And as always, I’ll see you guys 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.
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