Raoul Pal and Jaspreet Singh on saving, houses, and crypto

1. 0:00 – 2:10

   Intro

   1. SBSteven Bartlett0:00

      When I grew up, everyone said to me that to generate wealth, get a job, get money, then get a mortgage.

   2. JSJaspreet Singh0:04

      That's one of the worst pieces of advice you can give somebody.

   3. RPRaoul Pal0:07

      And your future self is gonna be poorer because of it.

   4. SBSteven Bartlett0:09

      But that's what everyone's doing.

   5. RPRaoul Pal0:11

      Because we're not taught this stuff.

   6. SBSteven Bartlett0:12

      So, what do you think the biggest money mistake the average person makes is?

   7. RPRaoul Pal0:15

      Being a saver.

   8. SBSteven Bartlett0:16

      So, just having your money sat in a bank account?

   9. RPRaoul Pal0:17

      Yeah.

   10. JSJaspreet Singh0:18

       It's a guaranteed loss. You're becoming poorer every single day.

   11. HYHumphrey Yang0:21

       But there are plenty of ways to retire early and be financially independent.

   12. RPRaoul Pal0:25

       And that's including secret hack that makes people fortunes.

   13. HYHumphrey Yang0:28

       So, let's talk about making more money. (cash register trilling)

   14. JSJaspreet Singh0:30

       This is the ultimate money-making master class. As we are joined by three financial gurus. With very different opinions and methods...

   15. RPRaoul Pal0:38

       ... to build future wealth.

   16. SBSteven Bartlett0:39

       So, I want to talk about pensions, credit cards, renting, bad money habits, debts, passive income, spending money to look rich. But first, what is it that rich people know that the average person doesn't know?

   17. HYHumphrey Yang0:50

       Rich people are more disciplined, and they're doing little things that compound into huge results.

   18. JSJaspreet Singh0:54

       Like investing. But, for example, the average American spends more money on Netflix than they do on their investments. And if I invest $1,000 a month for 30 years in something like the S&P 500, I will have about $1.9 million.

   19. RPRaoul Pal1:05

       Well, there's no asset in all human history that's ever generated as much wealth in the shortest period of time than Bitcoin.

   20. JSJaspreet Singh1:10

       But there's one problem. Bitcoin is high risk, and if any of those risks happen-

   21. RPRaoul Pal1:14

       Well, I don't dis-

   22. JSJaspreet Singh1:14

       Let me, let me finish. Do you want to have hope that you have the Bitcoin, or would you rather have more security?

   23. RPRaoul Pal1:19

       You can reduce risk.

   24. JSJaspreet Singh1:20

       I was about to-

   25. RPRaoul Pal1:20

       It's our job to educate them.

   26. SBSteven Bartlett1:22

       So, if someone has $1,000, what would you suggest they did?

   27. HYHumphrey Yang1:25

       I have a different take on this if you're trying to make more money. I would-

   28. SBSteven Bartlett1:28

       And what about bad money habits? Because when you look at the stats, money is the number one source of stress for Americans, topping work, family, and health.

   29. JSJaspreet Singh1:35

       Well, there's a three-step framework, so I want to get into that. Number one...

   30. SBSteven Bartlett1:40

       I see messages all the time in the comments section that some of you didn't realize you didn't subscribe, so if you could do me a favor and double-check if you're a subscriber to this channel, that would be tremendously appreciated. It's the simple, it's the free thing that anybody that watches this show frequently can do to help us here to keep everything going and this show in the trajectory it's on. So, please do double-check if you've subscribed, and, uh, thank you so much, because in a strange way, you are- you're part of our history and you're on this journey with us, and I appreciate you for that. So, yeah, thank you. (instrumental music)

2. 2:10 – 4:59

   How Do I Make More Money?

   1. SBSteven Bartlett2:11

      I think the, the first place to start is people want to know how they can make more money, because i- if you don't feel like you have money, saving and investing and these kinds of things appear to be pointless. I also understand that that's not necessarily true. I think you can, you can start investing and saving with very small amounts of money. But for those people that are asking that question, if they're listening to this now and going, "How does one make money? Like, you know, I've got this job, I'm working a 9:00 to 5:00. It's paying me £30,000 a year or $40,000 a year," whatever it might be. Is the right question to be asking, "How do I make more money? And if so, how do I do that?"

   2. HYHumphrey Yang2:47

      I always think it's- it's a combination of making more money and also saving more money, but let's talk about the making more money piece. I think that everyone is unique in their own way, right? You've probably spent more hours doing some sort of hobby that I have no idea about. You play paddle, for example.

   3. SBSteven Bartlett3:02

      Mm-hmm.

   4. HYHumphrey Yang3:02

      I've never played paddle in my life.

   5. SBSteven Bartlett3:04

      (laughs)

   6. HYHumphrey Yang3:04

      So, let's say you were Steve, Steven from age 20 and you're a really good paddle player. You can start to monetize this type of skill, which you have that I don't, but perhaps you know more than me. I could take lessons from you. Even if you're not, let's say, the pro paddle player that you are, I might still be willing to pay you £20, £25 an hour for a lesson, right? Just 'cause you're naturally better than I am. And so I- I would encourage people to- to kind of lean into what makes them unique and where- where they've spent a lot of their time. I think everyone has something that they're good at inherently. Figuring out what skills you have internally and how you can kind of monetize those.

   7. SBSteven Bartlett3:41

      What- what do you think, Raoul?

   8. RPRaoul Pal3:42

      I think one of the hidden things to do is you really are a function of who you're surrounded by. Invest in your network. And I don't mean that in a kind of cold-hearted, you know, "I want to network with these people," but just surround yourself by people who are- who are also trying to push themselves to push their income, push their opportunity set, and it makes it so much easier. If you're the only one doing it and you're around a group of friends, you're the odd one out and you're castigated for it. Find other people who want to do the same thing and you kind of help each other in that journey.

   9. SBSteven Bartlett4:15

      Mm.

   10. RPRaoul Pal4:15

       So, at an early stage, that's just one of the key things, is to find people who also want the same journey as you.

   11. SBSteven Bartlett4:20

       Mm-hmm.

   12. RPRaoul Pal4:21

       Uh, that really helps. Then it's still about the best leverage of your skill set and being honest with what your skill set is. Just because you're- you're a doctor doesn't mean you should be a doctor, just 'cause you graduated, because you can do other things. And it's- it's figuring that out. That's not an easy bit, but you figure it out over time by trying stuff. You know, we've all done multiple jobs and we know what we're terrible at and what we've been good at, and you kind of overindex on the things you- you're better at, and that works. So, if you- if you're early, it's the time to make bets in yourself-

   13. SBSteven Bartlett4:53

       Mm-hmm.

   14. RPRaoul Pal4:54

       ... and your network, and that gives you the foundational tools to then earn more income and then invest more.

3. 4:59 – 6:39

   Pointless Jobs That Actually Made You the Most Money

   1. RPRaoul Pal4:59

   2. SBSteven Bartlett4:59

      Was there a pointless, uh, seemingly pointless job you did that ended up, in hindsight, making you the most money? And what I mean by that is I think about my experience doing telesales between the age of 16 and 19. That's probably the most important thing I ever did. Like, not only do I spend a lot of time talking (laughs) now, but sales is a transferrable skill across raising investment, persuading employees to come and join you. And I think there's nothing I did that was more important than telesales.

   3. RPRaoul Pal5:19

      The single best skill you can acquire in life is- is to learn how to sell. To be comfortable around people and to be able to get a message across is the single most powerful tool you can have in life. Everything you do, finding a partner in life, doing... Anything you do is basically sales.

   4. SBSteven Bartlett5:35

      And it's all people.

   5. RPRaoul Pal5:36

      It's all people.

   6. JSJaspreet Singh5:38

      So, if I'm this 24-year-old or 25, and I'm ambitious.

   7. SBSteven Bartlett5:41

      Mm-hmm.

   8. JSJaspreet Singh5:41

      I want something big.

   9. SBSteven Bartlett5:42

      Yeah.

   10. JSJaspreet Singh5:43

       You gotta find more income.

   11. SBSteven Bartlett5:44

       Okay.

   12. JSJaspreet Singh5:44

       You gotta have more income to do it. If I'm a 25-year-old and I just want to be okay, I don't mind my job, I just want to invest, you know, whatever, you gotta find the right investments, you gotta have a system for your money, and then you gotta create a plan. Anytime you get paid, you know how much money you're going to save, you know how much money you're going to invest, and then you spend what's left. Because the difference between the person that becomes wealthy and everybody else is wealthy people...... save and invest their money first. Everybody else, especially in America, "I spend all my money. I wonder where all my money went."

   13. SBSteven Bartlett6:17

       (laughs)

   14. JSJaspreet Singh6:18

       "And then if there's anything left, I'll try to save and maybe invest and hopefully I'll get rich."

   15. SBSteven Bartlett6:23

       Mm-hmm.

   16. RPRaoul Pal6:23

       For me, it's all around, based around, what is your vision of your future self?

   17. SBSteven Bartlett6:28

       Mm-hmm.

   18. RPRaoul Pal6:28

       You know, how do you see yourself living? Because that is what we do, it's one of the sources of unhappiness is if your current state is not moving on the path of where your future self wants to be, how you imagine yourself.

4. 6:39 – 7:30

   How to Visualize Your Finances

   1. RPRaoul Pal6:39

   2. SBSteven Bartlett6:39

      So practically and tactically, how do they do that? How do they create this, this financial vision board? Is there, do they need to know certain numbers? Do they, should they get clear on if they wanna be on a private jet or easy jet? Like-

   3. JSJaspreet Singh6:50

      Oh, man. I think, I think you know. If, i- if, er, if you have to ask yourself, "Hmm. Do I wanna fly on Spirit Airlines or do I wanna fly on a private jet?" I think you already know that question.

   4. SBSteven Bartlett6:59

      But is it important to be explicitly clear with yourself? Because actually, if I think of most of my life, I, I wasn't entirely clear, and so you either end up chasing just more and more and more.

   5. RPRaoul Pal7:10

      Because it's generally not a materialistic outcome, it's generally an emotional outcome.

   6. SBSteven Bartlett7:13

      Yeah.

   7. RPRaoul Pal7:14

      And that's why it's hard to, to pinpoint exactly what it is, but you need to position yourself in that future self and say, "What does it feel like? Do I feel secure? Do I feel this? Do I feel that?" So it's, it's an emotional thing, and not a material thing.

   8. SBSteven Bartlett7:29

      Is th- is that

5. 7:30 – 9:23

   Social Pressure Around Money

   1. SBSteven Bartlett7:30

      central to a lot of this? You talked about emotional elements, is being okay with what other people think of you. (laughs)

   2. RPRaoul Pal7:39

      Yeah, that's the other thing-

   3. SBSteven Bartlett7:39

      Yeah.

   4. RPRaoul Pal7:39

      ... is social pressure, right? So you might have a vision of yourself and you just say, "I want the, the three-bed house, you know, with the little strip of lawn and the barbecue." And that's great. And around you, people are like, "You should try harder."

   5. SBSteven Bartlett7:53

      Yeah.

   6. RPRaoul Pal7:53

      So they're questioning your own sense of happiness, and society does that at scale. And then even the whole media complex is about kind of how unhappy and how miserable you are and should be. It doesn't make it an easy place.

   7. SBSteven Bartlett8:06

      Well, we're talking about emotional and psychological barriers here. How do we get over people not just being scared of what other people think, but so many people are scared of their own money. When you look at the stats around avoidance, 82% of Americans admit they avoid thinking about their own finances, and one in four Americans have avoided medical care because they're afraid of the, the bill and thinking about how much it might cost. For Gen Zs, 67% of Gen Z and 58% of mille- millennials say they avoid checking their own bank account because it's too stressful, which is compared to only 30% of boomers. And on, in terms of mental health, money is the number one source of stress for Americans, topping work, family, and health. 36% of people with debt experience clinical anxiety, and 23% depression. So people avoid their own money.

   8. JSJaspreet Singh8:53

      Wow.

   9. RPRaoul Pal8:53

      A lot of people avoid it because the financial world's full of jargon.

   10. SBSteven Bartlett8:58

       Yep.

   11. RPRaoul Pal8:58

       You need to go to a professional for advice. That's what people think.

   12. SBSteven Bartlett9:02

       Mm-hmm.

   13. RPRaoul Pal9:03

       It's intimidating.

   14. SBSteven Bartlett9:04

       Mm-hmm.

   15. RPRaoul Pal9:04

       You don't feel like you've got enough money. You're gonna let them down, yourself down, your family down. So there's this whole kind of thing around it. It's the confidence that you can learn.

   16. SBSteven Bartlett9:13

       Mm-hmm, mm-hmm.

   17. RPRaoul Pal9:13

       Because a lot of people say, "No, no. Unless you're from an investment bank or you're an RIA or something, you can't do this."

   18. SBSteven Bartlett9:20

       Right.

   19. RPRaoul Pal9:20

       But just a little bit of confidence to say, "Yeah, you can

6. 9:23 – 13:18

   The Simple Money Tracking Hack

   1. RPRaoul Pal9:23

      do this."

   2. SBSteven Bartlett9:23

      A simple tip that I think people can do is just kind of figure out how much they spend on a monthly basis. Track your expenses for 30 days, 60 days, or 90 days, and you're gonna learn so much more about just your personal habits of what you do, 'cause sometimes I'll forget that I DoorDashed something for $30.

   3. RPRaoul Pal9:40

      (laughs)

   4. SBSteven Bartlett9:40

      Or I'll forget that $15 or $20 Uber charge, and I, I'll just kind of file it away 'cause I'm swiping my credit card. I don't really... I'm not aware of it. It's like if you're going to the gym and you're not aware of your weight, how are you gonna... where, where's your starting point? So you, I like to give people a starting point, because then they can kind of have that small step to kind of start working towards their finances in that sort of way.

   5. RPRaoul Pal10:00

      65% of Americans have no idea what they spent in the last month, according to the US Bank, and 60% underestimate their monthly spending by a significant margin.

   6. SBSteven Bartlett10:10

      Right, and that's exactly what I found. I tracked my expenses for a month in 2014. I thought I was spending 1,500 bucks a month. Guess what? I was spending $2,800. And I wasn't making that much, and I was like, "How am I off by an order of magnitude of, I don't know, 60, 70%?" And I find that even, like, all my friends I issue this challenge to, m- most of them don't make it to the three months. But I think as long as you have an approximation of what you're spending, that can help. Because that, that means then you're gonna have a little bit of a difference of what you make and what you spend, and then you can save that money. And I think that's one of the bad money habits of Americans is they don't save, right? So. It's a really good point, which is a p- a practical step to just r- heighten one's a- awareness.

   7. JSJaspreet Singh10:47

      Yeah.

   8. SBSteven Bartlett10:47

      'Cause you need to have sort of informational awareness of where you're at to even understand what you need to do t- to get to where you wanna go, so.

   9. JSJaspreet Singh10:54

      Yeah, I think you need to start with the mindset. You have to build the basics. You gotta get rid of the credit card debt. You gotta save a little bit of money. Like, you gotta have some breathing room, because investing is all about taking the extra money that you have-

   10. SBSteven Bartlett11:04

       Mm-hmm.

   11. JSJaspreet Singh11:05

       ... throwing it somewhere to grow that money. And this is where, uh, there's a three-step framework that I'll talk about, because there's a lot of ways to invest. At the very simplest is I could be completely hands off. I can work with a financial advisor. I can give them my money and they can do everything for me. If you don't have a lot of money, you're not gonna get a very good advisor. But there's a con and a cost to a financial advisor, which is the amount of money you have to pay because they're gonna charge a fee. So if I invest my money, $1,000 a month, with a financial advisor, I get a good financial advisor who beats the market, they get 11% a year, but I have to pay 1.5% a year. After 30 years, I'm gonna have $1.8 million after paying $600,000 to my advisor. Stage number two is I can be a completely passive investor. Just a little bit more involved than an advisor, but I can just put my money into s- the stock market, something like the S&P 500, which is a group of the 500 largest companies in the stock market. It's kind of like investing your money into the United States economy. This has historically averaged 10% a year.... which means if I invest $1,000 a month for 30 years, I will have about $1.9 million. A little bit more work than completely hands off, but still pretty passive. Then we have the people that wanna be more involved, what we call is a active investor. And an active investor is somebody who now wants to invest their money themselves. And I don't mean trading, I mean actually investing their money, and now I'm gonna be doing the research to find which investments I want to own. Maybe it's real estate that I want to own. Maybe I wanna invest in individual companies. So it's more risk for more potential return. A small edge can give you outsized return, because if now I don't get a 10% return, I can get a 13% return, which, you know, we're not talking about 200 or 50% returns. A 13% annual return means that about $1,000 a month over 30 years is now gonna grow to three and a half million dollars. So about $1.6 million more than before, just with a slight edge, and you gotta figure out wh- how involved you wanna be.

7. 13:18 – 18:20

   Best Form of Investing: Active or Passive?

   1. JSJaspreet Singh13:18

   2. SBSteven Bartlett13:18

      On this point of an- being an active investor and picking stocks yourself versus being a passive one, the data shows that passive investors who invest in the S&P 500, like you said, consistently outperform most stock pickers. Over a 20-year period, more than 90% of actively managed investors, so talking about funds there, underperformed the S&P 500 after fees. So, should people be actively investing, or should they just put the money in an S&P 500 and be, be patient?

   3. JSJaspreet Singh13:44

      I say most people should not be active investors. In fact, I say 98% of America should not be active investors. Just be a passive investor, because if you don't want to put in the work, if you're not willing to put in the time and the effort to research, you're probably gonna lose, and many people do.

   4. SBSteven Bartlett14:01

      So, why do people wanna be active investors if the, if the probability is stacked against them?

   5. JSJaspreet Singh14:05

      Well, if you get a little bit better returns, if you're willing to put in the work, you can get better returns, and it is possible. We do see people that are, are doing it consistently.

   6. SBSteven Bartlett14:14

      Is, is there an element of fun and, and entertainment to this?

   7. JSJaspreet Singh14:16

      Absolutely.

   8. RPRaoul Pal14:17

      And also-

   9. SBSteven Bartlett14:17

      For people like sports betting and-

   10. JSJaspreet Singh14:19

       That's the problem, because the fun is "I like researching" versus, "Oh, I wanna see my money go up tomorrow." If I buy a house tomorrow morning, am I gonna go onto Zillow in the afternoon and check, "What is my house price?" I'm gonna check in the evening, "What's my house price?" No, because you know that this is something I wanna own for the long term. Well, when I go into the stock market, because it's so liquid, I buy a stock in the morning, I'm checking it 15 minutes later, I'm checking it at lunch, I'm checking it when I'm in the bathroom, checking it in the evening, and now I'm getting anxiety 'cause if it's going up or down, I'm, I'm, uh, very emotional. And that's that emotional control as an investor which is just as important as the research that you're putting in.

   11. RPRaoul Pal14:57

       I, see, I fundamentally differ on all of this stuff, is people are so screwed. They are coming out of university with massive debts. We looked at the stat earlier, um, off camera when we were talking about the fact that th- percentage of 30-year-olds who have a mortgage and a f- and a m- and are married has gone from 52% in 1950 to 12%. Nobody can afford anything. So, if you look at the average Millennial in the US and a Gen Z, they generally have a 401 (k) if they've got a job, right? They have some sort of savings. But they're taking massive amounts of risk. A lot of us would look at them and say, "This is ridiculous."

   12. SBSteven Bartlett15:37

       Why are they taking risk, for anyone that doesn't know?

   13. RPRaoul Pal15:39

       Because there is no way of closing the gap between buying, getting the deposit on the house, getting into a house, realizing that future vision of themselves, however reasonable that is-

   14. SBSteven Bartlett15:48

       Why?

   15. RPRaoul Pal15:48

       ... it's so far away, because the as- the cost of assets has gone up so much versus their incomes don't go up.

   16. SBSteven Bartlett15:54

       You mean the cost of buying, like, a house, for example?

   17. RPRaoul Pal15:57

       Yes. Or even however much percentage share of the stock market the average salary does. You know, stuff like that, that y- you're, you're getting less for your money. So your future self is automatically gonna be poorer because of it, 'cause you could buy, uh, less of a house, et cetera.

   18. SBSteven Bartlett16:11

       Explain that to me like I'm an idiot, like I'm a, like I'm 10 years old, and maybe in the context of th- this mug here, in terms of the how, why is that worth less now based on what you said?

   19. RPRaoul Pal16:26

       The way of explaining it is money is the medium of exchange, the thing that you buy something with. If we all have a lot of money, if we've all got a stack of cash on this table, and you wanna sell that mug, we can pay anything for that mug 'cause we've got a stack of cash.

   20. SBSteven Bartlett16:43

       Mm-hmm.

   21. RPRaoul Pal16:44

       So that mug suddenly is worth not the $10 it's supposed to be worth. It's suddenly we're paying $150 for the mug. Why? Because that money has no value to us 'cause we've got excess money. So when you create excess money in the system, it's th- this, this debasement of currency, it's an optical illusion that the value of assets are actually going up. They're not. It's the value of your money is going down. And this is this pain point because your earnings only grow with economic growth generally, plus your progression of your career or whatever it may be. But those things, the scarce assets, are going up optically by the amounts they're lowering the thing. So what you find is salaries go up at about 2 or 3% a year, and the house of, uh, the cost of the S&P is about 12%, 13% up every year, and house prices about the same. Gold is about the same.

   22. SBSteven Bartlett17:39

       And that's because they're printing more and more money.

   23. RPRaoul Pal17:41

       Correct.

   24. SBSteven Bartlett17:42

       S- okay, that makes perfect sense to me. So I'm imagining you all have a big stack of paper in front of you, which you're using it to take some notes on, and if, if I was saying, "I'm gonna sell you guys this mug for some of the paper you have there," but then my team said, "You guys can have unlimited paper," this mug loses value because you can all just offer a gazillion sheets of paper for this mug.

   25. RPRaoul Pal18:02

       Well, it doesn't lose value. It optically will give you a gazillion for it as opposed to, you know, three she- sheets of paper 'cause we've got so much paper.

   26. SBSteven Bartlett18:10

       Yeah.

   27. RPRaoul Pal18:10

       It matters not.

   28. JSJaspreet Singh18:11

       ... so I'll be, I'll be thinking, "Wow, like, this mug-"

   29. RPRaoul Pal18:14

       Mm-hmm.

   30. JSJaspreet Singh18:14

       "... is worth a gazillion sheets of paper." But actually the, 'cause it, each sheet of paper's now worth nothing.
8. 18:20 – 20:54

   More People Joining Crypto

   1. JSJaspreet Singh18:20

   2. RPRaoul Pal18:20

      And this is the problem that people are finding, is they put money in a 401 (k) , you compound it at 10%. For my generation, yeah, that was, that was how the world worked and it was great. And it worked, and now it doesn't work. So they need assets that go up 50% a year, 100% a year, which is ridiculous, but luckily, we've been gifted a few. Um, and so that's helped.

   3. JSJaspreet Singh18:39

      Go on, say it. (laughs)

   4. RPRaoul Pal18:40

      Well, w- it's crypto. Simplistically, it just outperforms all other assets, even with the excess volatility. So bitcoin, for example, produces about, since 2012, it's produced about 145% a year returns, so that's 10X the stock market. And that's including three 70% drawdowns in the middle of it.

   5. JSJaspreet Singh19:02

      A drawdown being a drop.

   6. RPRaoul Pal19:04

      Yeah. Where you feel like you're an idiot, you're losing money-

   7. JSJaspreet Singh19:06

      Mm-hmm.

   8. RPRaoul Pal19:06

      ... it's all gonna go, you know, y- y- you, you've made the biggest mistake of your life, and it recovers, and it keeps going because it's a, it's a technological network a- adoption model that's happening. So it's just sucking in more and more people. So there's now 650 million crypto brokerage accounts in the world, which is more than all the stock market brokered accounts added together in the world. And we're seeing it all around the world because everybody can buy a share of something. So as opposed to being able to buy... nobody can buy a Fifth Avenue apartment here, everybody can buy a fractionalized share of bitcoin, which is, in theory, a $100,000 asset, but we can all put in 10 bucks, five bucks, 1,000 bucks, $10 billion.

   9. JSJaspreet Singh19:48

      Let me challenge you then. So bitcoin isn't based on anything, though.

   10. RPRaoul Pal19:53

       No.

   11. JSJaspreet Singh19:53

       Okay? I'm being, I'm being a fudder here.

   12. RPRaoul Pal19:54

       (laughs)

   13. JSJaspreet Singh19:55

       I mean, I know. That's my job.

   14. RPRaoul Pal19:56

       (laughs)

   15. JSJaspreet Singh19:57

       Bitcoin isn't based on anything. It, it is a database in the sky that isn't backed by gold or it doesn't produce any sort of valuable asset as its byproduct, so why... how can we have faith in bitcoin? It's essentially, i- in its essence... Before someone clips me, this is, I'm playing devil's advocate 'cause I know-

   16. RPRaoul Pal20:13

       Yeah, yeah.

   17. JSJaspreet Singh20:13

       ... they're just gonna clip this part out. It is essentially, many would say, a Ponzi scheme.

   18. RPRaoul Pal20:16

       Mm-hmm.

   19. JSJaspreet Singh20:17

       Which is, it only goes up if other people take part in it, and if everybody decides that it's, um, not worth anything, then it's gonna go to zero.

   20. RPRaoul Pal20:26

       So all money is social consensus. Everything. Gold has no real value.

   21. JSJaspreet Singh20:34

       I can build a table with gold, though. I could rest some things on it, and it's o- good. It doesn't rust.

   22. RPRaoul Pal20:40

       If you're building a table with gold, then the value's gonna be much less, if everybody's building gold tables.

   23. JSJaspreet Singh20:44

       Trump has. (laughs)

   24. RPRaoul Pal20:45

       We do. (laughs) Okay, that's true. Um, and so really, it's just social consensus. What do we, as humans, ascribe value to?

9. 20:54 – 28:17

   Bitcoin Is Too Speculative

   1. RPRaoul Pal20:54

      But the problem with the 145%, like you mentioned, bitcoin has fallen by 70-plus percent on multiple occasions.

   2. JSJaspreet Singh21:01

      Mm-hmm.

   3. RPRaoul Pal21:02

      If we... let's go back to the S&P 500. A lot of people invest in the SPY, the S&P 500, and still lose money. Why? Because when the, we go through any downturn, people panic- Mm.

   4. JSJaspreet Singh21:15

      ... and they sell.

   5. RPRaoul Pal21:16

      Yeah.

   6. JSJaspreet Singh21:16

      And, and if we look at, I mean, bitcoin's b- I think bitcoin's 2009 if, when it started-

   7. RPRaoul Pal21:21

      Mm-hmm.

   8. JSJaspreet Singh21:22

      ... i- if I'm-

   9. RPRaoul Pal21:22

      Yeah.

   10. JSJaspreet Singh21:22

       ... not mistaken.

   11. RPRaoul Pal21:23

       Yeah, yeah.

   12. JSJaspreet Singh21:23

       Um, if, if we look at the crashes from, you know, recent history, 2020, stocks fell by 30%, bitcoin fell by 50%.

   13. RPRaoul Pal21:33

       Mm-hmm.

   14. JSJaspreet Singh21:33

       2022, stocks fell by 20... the S&P fell by about 20%, bitcoin fell by 60%. So in those times, people who are in the S&P are freaking out, selling.

   15. RPRaoul Pal21:47

       Yeah, but here's the thing. This is the risk/reward that people don't understand. If you've got a time horizon, let's say the average drawdown in the S&P during a, a, yeah, a bear market is 25%.

   16. JSJaspreet Singh21:58

       A drawdown being a, a drop, right?

   17. RPRaoul Pal22:00

       A loss- Yeah, a drop, a drop in prices. You're getting compensated 15% a year returns for that, at best. In bitcoin, the average drawdown over the same period will be about 70%, but you're getting 150% return, so you- If you're on the winning side, though. If I buy it and I can sell it for a higher price- No, just hold it. Just hold it. That's the key. So all of these are in a nice trend channel. They go up. So anybody can buy something and hold it long enough, it'll go up. Well, what about... W- well, let's look at housing. We can say the same thing about housing. Um- 2008, housing crashed. Just hold it. I have too much debt, I'm underwater, my bank's taking it from me. People are buying bitcoin with debt- We could... Yeah, I mean, tha- that would- ... in 2020. I would not recommend that. But housing's different because you can endlessly create more housing. And we have a demographic problem in housing that makes it more complicated. Demographic problem is, A, everyone's leaving the cities now, B, the generational gap. Nobody can afford the boomer houses, we don't have enough cheap housing for young people, people are relocating, moving around. So i- we've got a very interesting mismatch in real estate now that makes it more complicated than it used to be.

   18. JSJaspreet Singh23:09

       Mm-hmm.

   19. RPRaoul Pal23:09

       Yeah.

   20. JSJaspreet Singh23:09

       Absolutely, and, and, and I do wanna say, I, I think the part that we fundamentally differ is not that there's value in crypto. I own crypto.

   21. RPRaoul Pal23:17

       Mm-hmm.

   22. JSJaspreet Singh23:18

       But the difference between you and I is you are all in crypto. For me, it's a speculative piece of my portfolio. So I invest in my own business, I have real estate, stocks, my speculative assets, and then a little bit of gold.

   23. RPRaoul Pal23:30

       I- imagine how difficult to replicate what you've achieved in your amazing career is for the average person listening to this-

   24. JSJaspreet Singh23:38

       They think that-

   25. RPRaoul Pal23:38

       ... versus buying one thing in your Coinbase account, your Robinhood account, and doing nothing.

   26. JSJaspreet Singh23:43

       Exactly.

   27. RPRaoul Pal23:43

       It's so e- there's no cost. It's not like buying a house, like servicing all that stuff, there's no debt involved. There's nothing.

   28. JSJaspreet Singh23:49

       In theory, but theory isn't reality. How many people end up losing money when things go down? How many people panic, especially with bitcoin? Because if we look at especially the early adopters of bitcoin, who are those people? These are the people that... Well, a lot, a lot of the average person is, "I want to get rich. I want to get rich quick." It's, "I want to make money fast."

   29. RPRaoul Pal24:11

       Mm-hmm.

   30. JSJaspreet Singh24:11

       Versus the, the average-... person who's buying the S&P 500-
10. 28:17 – 33:47

    Stocks vs Crypto

    1. JSJaspreet Singh28:17

       in Bitcoin, or really anything, a lot of the value is what some people refer to as, like, equity. It's, it's I bought it for... Like, I started buying Bitcoin when it was $3,000. That other stuff is equity. It's invisible money, which, in my view, is, is theory. It's not actual money in my bank account. It's sitting there waiting for me to sell, hoping that when I go to sell, there's gonna be a profit, versus cash flow.

    2. HYHumphrey Yang28:42

       Mm-hmm.

    3. JSJaspreet Singh28:43

       If I buy a dividend-paying stock-

    4. SBSteven Bartlett28:46

       What's a dividend-paying stock?

    5. JSJaspreet Singh28:48

       Some companies have big profits. For example, McDonald's has billions of dollars of profits. There's three things that they can do with their cash. They can save that money for an emergency, they can take some of that money and reinvest it and open more stores and create better burgers, or the third thing that they can do, which some companies do, not all, is they can just give this money away to their investors, the shareholders. It's called a dividend. So it's a cash payment for doing nothing except owning that investment. So if I buy something, whether it's an ETF, stock, or whatever, that's paying a dividend, or a rental property that's putting money in my bank account every single month or year, that's money I can use to buy food, go on a vacation, do something. Here's, here's what... Let me tell you, let me, let me-

    6. RPRaoul Pal29:28

       But if you're getting paid 4%-

    7. JSJaspreet Singh29:29

       Listen, so I-

    8. RPRaoul Pal29:30

       ... nobody cares.

    9. JSJaspreet Singh29:31

       ... I started buying Bitcoin at $3,000 a coin. When it was at... Uh, I went through multiple crashes. I remember when $20,000 of Bitcoin was the, "Oh, my God, we did it." And once it hit around $70,000, I looked at this and I said, "Wow, I have my real estate, my stocks, my speculative, which is crypto and startups, and then 2% gold, which is now looking extremely inflated. I need to lower this, that way I can have some more income." So what did I do? I sold some Bitcoin. I bought rental properties. That now rental property is putting money in my bank account every single month. The Bitcoin, it's a big number on paper, but it doesn't actually mean anything-... unless I do something with it.

    10. SBSteven Bartlett30:16

        Could you have staked it? Which means you can stake the cryptocurrency and make a monthly yield from it?

    11. JSJaspreet Singh30:22

        I'm-

    12. RPRaoul Pal30:22

        Get a loan against it?

    13. JSJaspreet Singh30:24

        Now, that's adding risk. Well, what happened into... Uh, if I take a 80% loan, 70% loan, let's, let's, uh, 50% loan.

    14. RPRaoul Pal30:30

        Yeah, you, yeah, it's-

    15. JSJaspreet Singh30:31

        Whatever.

    16. RPRaoul Pal30:31

        ... it's very volatile, so you don't take the 50.

    17. JSJaspreet Singh30:32

        So let's take, let's take a 50% loan and bitcoin falls by 70%, which it has, now I'm underwater. Now what? Now th- the bank comes knocking on the door, "Margin call." You're forced to sell and it's a foreclosure-

    18. RPRaoul Pal30:45

        M- my point being-

    19. JSJaspreet Singh30:46

        ... on my bitcoin.

    20. RPRaoul Pal30:47

        ... I mean, I don't disagree, and really speaking, people should have the ability to have cash flow or cash for if things go wrong, right? That's really a super important thing, to be able to have a long-term view, to be comfortable with drawdowns, to be able to invest in startups or to, to invest in crypto or technology and all of this stuff. Um, that makes sense, but I just don't think a dividend at 4% makes any difference to anybody.

    21. JSJaspreet Singh31:12

        Well, it does if you do it-

    22. SBSteven Bartlett31:13

        Okay.

    23. JSJaspreet Singh31:13

        ... consistently, month after month, year after year.

    24. RPRaoul Pal31:15

        But you need huge capital to start with to be worthwhile.

    25. JSJaspreet Singh31:18

        No. No. The, i- if, if you, if you start investing for dividend income, I call it a decade of sacrifice, and this is why it's so hard.

    26. RPRaoul Pal31:26

        Yeah, but if you're 33 years old now, you're sacrificing till you're 43.

    27. JSJaspreet Singh31:31

        You're going to become 43 at some point. And imagine if you're 43 and now you have the income to pay for that car, to pay for the house, you don't have to worry about it, well, do you want to have hope that you have the bitcoin or would you rather have more security? I'm... Again, bitcoin, in my perspective, high risk, high potential return. And I'm not saying don't buy it.

    28. RPRaoul Pal31:53

        No, I understand.

    29. JSJaspreet Singh31:53

        I'm saying allocate it in your portfolio in a way where you understand you are arguably one of the top crypto experts in the world. I'm not. I also am not the stock expert in the world. I'm also not the real estate expert in the world. What I do know is I'm probably gonna be wrong. If my stocks crash, I have my real estate. If real estate crashes, I got my stocks. Crypto crashes, well, that's part of my speculative portfolio, I really don't care. And if everything crashes, I got some gold. So for me, I have to diversify against myself, because I know stocks crash. I know crypto crashes. I know real estate crashes.

    30. RPRaoul Pal32:33

        But if you're not starting with a lot of money, your, y- your strategy is the strategy of a rich person. "Oh, I've got houses and I've got dividends and I've got some gold and I've got a bit of this." That's the strategy of being rich.
11. 33:47 – 41:59

    How Would You Invest $1,000?

    1. SBSteven Bartlett33:48

       what would, what would you suggest they did, Humphrey?

    2. HYHumphrey Yang33:50

       My take on $1,000 is, has, has changed over the years. I used to say you could invest $1,000, but as, as Raoul probably mentioned, 10% on $1,000 is, is not that much, right? So like, you know, if you invest 1,000 bucks in the S&P 500, you get 10%. Next year you'll have $1,100. That $100 is not gonna change your life dramatically. So if I had $1,000, I'm investing in myself, so trying to improve my skills to make more money at some point.

    3. SBSteven Bartlett34:14

       How exactly would you do that?

    4. HYHumphrey Yang34:16

       When I was, uh, still coming up, I was trying to take a lot of courses online, so I'd try to figure out different types of skills that I could, that I could use in the marketplace. So I took a AdWords course back in the day for like 150 bucks that taught me how to do Google AdWords, and I would try to consult for, for businesses out there to try to make more of an hourly income on the side.

    5. SBSteven Bartlett34:35

       And Google AdWords, for anyone that doesn't know, is Google's advertising platform.

    6. HYHumphrey Yang34:39

       Platform. Yeah.

    7. SBSteven Bartlett34:39

       Yeah.

    8. HYHumphrey Yang34:39

       And now there's TikTok ads and Facebook ads, but, you know, anywhere where I could be more value to another business-

    9. SBSteven Bartlett34:45

       Mm-hmm.

    10. HYHumphrey Yang34:45

        ... I knew that, economically speaking, that I could command more in the marketplace. So something with that, like that would be great, but-

    11. SBSteven Bartlett34:51

        So, so right now, clearly, that is AI. Because what-

    12. HYHumphrey Yang34:54

        Right.

    13. SBSteven Bartlett34:54

        ... what you saw there is like a knowledge arbitrage with a new technology, where most people didn't un- didn't understand AdWords-

    14. HYHumphrey Yang34:59

        Sure.

    15. SBSteven Bartlett34:59

        ... and you could be the young guy bridging the gap for people's ignorance. So most businesses now would be dra- dramatically more efficient and effective if they understood even the basics of AI.

    16. HYHumphrey Yang35:10

        Yeah.

    17. SBSteven Bartlett35:10

        So a, a kid could take a, a course in AI. And f- do you know what's crazy? You, if you read the top 10 books on AI, you'd be in the top 1% in the world in terms of knowledge.

    18. HYHumphrey Yang35:19

        Yeah, I mean, if you just read the instruction manual of how ChatGPT or, you know-

    19. SBSteven Bartlett35:23

        (laughs)

    20. HYHumphrey Yang35:23

        ... Claude works, you, you could probably be in the top, you know, 1% of prompt engineers, right? And that could be a, that could be a value to a business or service, right? So...

    21. SBSteven Bartlett35:31

        That's probably where my career came from, was we were the w- kids, 18, 19, 20 years old, that knew social media-

    22. HYHumphrey Yang35:38

        Mm-hmm.

    23. SBSteven Bartlett35:38

        ... 'cause we'd messed around with it, so we sold it to companies.

    24. HYHumphrey Yang35:40

        Right.

    25. SBSteven Bartlett35:41

        And that started my first business, and then there was-

    26. HYHumphrey Yang35:43

        Yeah.

    27. SBSteven Bartlett35:43

        ... soon hundreds of us.

    28. HYHumphrey Yang35:44

        And there's, there's a lot of these apps right now coming out from 18, 19, 20-year-olds. Have you seen that, that one profile of that guy who created CalAI? Uh, CalAI is this, this app where you take a photo of your food and then, you know-

    29. SBSteven Bartlett35:56

        I've seen it, yeah.

    30. HYHumphrey Yang35:56

        ... it sends it to, to AI and it tells you how many calories are in it. Well, the guy's making 50 million bucks a year, or whatever it is.
12. 41:59 – 44:00

    The S&P 500 vs the Nasdaq-100

    1. RPRaoul Pal41:59

       but I'd remove the S&P.

    2. HYHumphrey Yang42:00

       You'd do all crypto?

    3. RPRaoul Pal42:01

       No, I'd just do NASDAQ.

    4. JSJaspreet Singh42:02

       Oh yeah, you'd do NASDAQ.

    5. RPRaoul Pal42:03

       So NASDAQ compounds at 18%-

    6. JSJaspreet Singh42:05

       18%.

    7. RPRaoul Pal42:05

       ... a year.

    8. HYHumphrey Yang42:06

       What is NASDAQ?

    9. RPRaoul Pal42:07

       The NASDAQ is, um, the, the NASDAQ 100, which is the top technology stocks in the United States. Right, we live in a world that tomorrow will be more digital than today, guaranteed.... um, and so therefore, these stocks tend to generate the most performance. And we've talked about many of these names. That is all in the NASDAQ. So, a little arbitrage is if you want to shorten your 7.8 years-

    10. SBSteven Bartlett42:31

        Sure.

    11. RPRaoul Pal42:31

        ... to five and a half years, six years, buy the NASDAQ 100. It's an ETF.

    12. SBSteven Bartlett42:36

        Yeah, QQQ.

    13. RPRaoul Pal42:37

        Zero cost, easy. And then I would say, and then do 70% that, 30% crypto and you don't have to care about anything.

    14. SBSteven Bartlett42:43

        Sure.

    15. RPRaoul Pal42:43

        You're fine. Now, if you have a different risk tolerance, you can tweak those dials, or if you are more risk-averse, then you up your cash dial or, or some other more stable flow, whether it's gold. Although gold is still driven by the debasement of currency. They're all the same thing, they're all driven by the same macro factors but... So yeah, similar kind of idea.

    16. JSJaspreet Singh43:03

        A- a- and the NASDAQ is great (00:03:59) if I could just say one thing, but just like with bitcoin, the difficult part with the 18% is you got to be willing to go through the downturns.

    17. SBSteven Bartlett43:11

        Mm-hmm.

    18. RPRaoul Pal43:11

        And I want to make sure that that's clear because, I mean, the big drop, 2000, the NASDAQ fell by 78% from its peak. During that time, the S&P 500 fell about 40%. So, it's a bigger drop. Not to mention, the NASDAQ didn't get to its level until 2015. 15 years later of no money- It has still compounded more returns than the S&P.

    19. JSJaspreet Singh43:37

        Absolutely, if you held on for 15 years of loss-

    20. RPRaoul Pal43:38

        So you can't live your life in fear of the drop.

    21. JSJaspreet Singh43:41

        100%.

    22. RPRaoul Pal43:41

        It's got to be in the risk-adjusted returns versus the gains.

    23. JSJaspreet Singh43:45

        But how many people can hold on for 15 years and say, "Year one, uh, no big deal. Year two, okay. Year three, year five, uh, it's gonna go up. Year 10, it's gonna go up." And by the way, year 10 was also another crash because-

    24. RPRaoul Pal43:58

        Right. All, all you have to do is dollar-cost average.

13. 44:00 – 46:58

    Dollar Cost Averaging Explained

    1. RPRaoul Pal44:00

    2. SBSteven Bartlett44:00

       What's that?

    3. RPRaoul Pal44:01

       So dollar-cost averaging is if you're young and you're, you've got a bit of excess cash now, you know, you've sold your income a little bit, as opposed to just chucking everything in, or you do, you put your large sum in, you've saved up your $10,000, but now you've got maybe $500 a month of, of free capital you wanna put into your savings. So when you have these drawdowns, you're actually keep buying. And what happens is it lowers your average cost over time, and you get to new all-time highs in your portfolio much before the market did. So for example, in the last crypto down cycle in '22, in '22, all I did was add as much as I could to my crypto. So, I was at new all-time highs in my portfolio well before the market was because I'd lowered my av- average entry. That compounds your profits over time sh- incredibly.

    4. SBSteven Bartlett44:52

       And is there something psychological there where if you commit to the habit of just putting $500 in regardless of what happens, um-

    5. RPRaoul Pal44:59

       You remove emotion.

    6. SBSteven Bartlett45:00

       ... you remove a bit of emotion from it?

    7. RPRaoul Pal45:02

       And em- emotion is the thing that people struggle with. If you're investing in things that are more volatile, um, you firstly understand that you will see larger drawdowns when markets go down. Usually they're all correlated, they all go down at the same time, all up at the same time.

    8. SBSteven Bartlett45:17

       Mm-hmm.

    9. RPRaoul Pal45:17

       So you're gonna do that, but if you tell yourself, "That's an advantage for me because I can buy more," that's a secret hack that makes people fortunes, compounding. This is Warren Buffett's thing. He buys-

    10. JSJaspreet Singh45:30

        I 100% agree with that.

    11. RPRaoul Pal45:31

        ... more companies in a bear market than in a bull market because-

    12. JSJaspreet Singh45:35

        I agree. I- i- it... Yeah, I-

    13. RPRaoul Pal45:37

        ... it compounds returns.

    14. JSJaspreet Singh45:38

        ... 100% agree with that part. I call it POOP.

    15. SBSteven Bartlett45:40

        (laughs)

    16. JSJaspreet Singh45:40

        Uh, panic leads to overselling, leads to opportunity, leads to profit. So, I am on board with that, but that requires a specific level of financial sophistication.

    17. RPRaoul Pal45:53

        No. Uh, even your Coinbase app can just, you can just have it-

    18. JSJaspreet Singh45:56

        Can dollar-cost average.

    19. RPRaoul Pal45:57

        Yeah.

    20. JSJaspreet Singh45:58

        But how many people can dollar-cost average down 70% for 15 years waiting to see that return?

    21. RPRaoul Pal46:04

        But it wasn't 70% in 15 years. It was, it was 70% in one year and then rallied ever since. Every single year after year after year, it went up.

    22. JSJaspreet Singh46:12

        And to see that down-

    23. RPRaoul Pal46:13

        So you had one year...

    24. JSJaspreet Singh46:14

        I- uh, well, no, uh, after the 2008 crash-

    25. RPRaoul Pal46:17

        And so-

    26. JSJaspreet Singh46:17

        ... the NASDAQ also again crashed more than the S&P 500.

    27. RPRaoul Pal46:21

        And then step back and look at the returns of the NASDAQ versus the thing.

    28. JSJaspreet Singh46:24

        I agree.

    29. RPRaoul Pal46:24

        I think-

    30. JSJaspreet Singh46:24

        Over the long term, it's a great investment, but volatility is hard for the average person who doesn't have the emotional IQ and the financial sophistication to understand dollar-cost averaging.
14. 46:58 – 47:55

    Removing Emotion from Financial Decisions

    1. SBSteven Bartlett46:58

       the other thing that I've really pulled out from what you both were just saying there is you need to set up a system that removes emotion and requires you to not make decisions because it's in making decisions that your amygdala, the emotional center of your brain, is gonna do- make a bad one. And it's that, I think that, that self-awareness emerges from what you're both saying which is, "Okay, my brain is going to panic, it's going to poop or whatever you were talking about there-"

    2. JSJaspreet Singh47:19

       (laughs)

    3. SBSteven Bartlett47:20

       "... and I need a system which is panic-proof."

    4. RPRaoul Pal47:23

       So, you know that the best-performing brokerage accounts in the United States are dead people?

    5. SBSteven Bartlett47:29

       (laughs)

    6. RPRaoul Pal47:30

       It's true. It's a known fact. Because they don't do anything.

    7. SBSteven Bartlett47:33

       (laughs)

    8. RPRaoul Pal47:34

       So they have-

    9. SBSteven Bartlett47:34

       Yeah.

    10. RPRaoul Pal47:34

        ... these accounts that haven't been closed and they're inactive, they outperform all the active people.

    11. SBSteven Bartlett47:39

        You are 100% in crypto in terms of your investment portfolio.

    12. RPRaoul Pal47:43

        Yeah.

    13. SBSteven Bartlett47:45

        So you must be sat here thinking that, actually, when I ask that $10,000 question, "What, what, what would, should someone do with $10,000?" You must be thinking that the right

15. 47:55 – 49:22

    Should We Be Putting Everything into Crypto?

    1. SBSteven Bartlett47:55

       answer is to put it into crypto.

    2. RPRaoul Pal47:57

       The right answer for me is that, to his point.

    3. SBSteven Bartlett47:59

       But you th- you, you think that's-

    4. RPRaoul Pal48:00

       Look, I, I actually would say... But you know, this is... It's an audience of people and people misinterpret things, yes. The answer is, we've been given the gift of the greatest performing asset the world has ever been given. That's not just bitcoin, that's the, the crypto complex. If you're very careful in investing in like top projects, you can even have a more, a broader di- diversified portfolio of that. Like you've had Ethereum, uh, bitcoin, Solana, Sui, all of these things, great.... they will definitely outperform for a period of time, and that's based on macroeconomic factors, which is the debasement of currency, which we've talked about. That means all of these assets go up by a certain amount and some outperform it. The only two assets that outperformed the debasement of currency is the Nasdaq, uh, and, and crypto. This has been a persistent trend that is observable and measurable, so this is not a speculative asset. What it is, is a Metcalfe's law adoption model. Bitcoin is the adoption of, let's say, a money or collateral layer, like gold, digital gold we'll call it, while the rest of crypto is the new rails for the internet. So it's a tech- technological investment. It is growing at twice the speed of the internet in terms of adoption, and has been since the first five million IP addresses for the internet and the first five million wallets. Twice the speed of the internet makes it the fastest adoption of any technology the world has ever seen, aside from AI now, which is now outpacing it.

16. 49:22 – 54:12

    If Crypto Isn’t the Future, What Takes Its Place?

    1. RPRaoul Pal49:22

       So-

    2. SBSteven Bartlett49:22

       If, if we sit here in 20 years time-

    3. RPRaoul Pal49:24

       Yeah?

    4. SBSteven Bartlett49:25

       ... and you were wrong-

    5. RPRaoul Pal49:26

       Yeah?

    6. SBSteven Bartlett49:26

       ... (laughs) what happened, do you think?

    7. RPRaoul Pal49:30

       Well firstly, in terms of investments, you have to always, once you have a high conviction bet, your entire job is to question yourself, not to keep reaffirming yourself. Sure, you end up reaffirming by questioning and then you, you figure it out. For it not to have been true, what would have happened? The AI would have had a new system of money that it created. There's, there has to be a competitor to this because we're now in the game of nation. Nations are acquiring this, the Middle East nations, nations in Asia, the US wants to acquire it. So we've got, and we've got South American nations. So it's now the game of nations, geopolitics. This is a real thing. But what changes in 20 years' time? Well, in 20 years' time, we're in a very different world. The economic engine is driven by robots and infinite intelligence. We don't know how the economic machine works, we don't even know what the value of money is when we go into that world. So I've talked about this before, the economic singularity past 2030, the economic model breaks down. So the, the economy generally grows by a measure of population growth, how many people are in the economy, um, or coming into the economy or being born, productivity, how much output they create, and then debt growth is, is the other lever. What's happened here is the population of the entire Western world, plus Japan, plus China, has been aging, so the rate of change of population growth is shrinking. They tried immigration, but that became politically unacceptable, so that stopped. So you've got this slowing economy, GDP growth has been slowing over time. Productivity, old people make less things, so it makes less economic output. So we've got this mess and then we've got this debt, and we stopped that whole engine in 2008, and we need to service this debt. So okay, so that's the system we're in and this is why we're printing money to service this debt, 'cause we're not generating enough output in the economy. But after 2030, this population part changes. We've got infinite artificial humans.

    8. SBSteven Bartlett51:43

       You're talking about AI agents and robotics?

    9. RPRaoul Pal51:45

       Yeah. Infinite. So what does that do for that, that, the multiplier of that formula, you know, population growth plus productivity growth plus debt growth? It breaks, 'cause you can have 20% GDP growth, because you've had a huge rise in the number of AI agents creating economic activity, and robots.

    10. SBSteven Bartlett52:04

        And so what does that mean for, for me as an average person?

    11. RPRaoul Pal52:08

        For me, it's like the economic system starts changing. We get to this world of abundance, we don't know what has value. What we as humans do, we, we, we change and retool to become more humans, because AI and robots can't be humans, so we have to figure all of this stuff out. Investing, we were talking about this earlier, is like, well, does the, uh, the AGI, is that going to be a better investor than any of us? Yes. So-

    12. SBSteven Bartlett52:31

        Artificial general intelligence of bots and-

    13. RPRaoul Pal52:32

        Yeah.

    14. SBSteven Bartlett52:32

        ... smarts-

    15. RPRaoul Pal52:32

        So it's the next stage where it's smarter than any human that's ever existed, and we're very close to that. So in which case, well, how do markets work? And when businesses are agents selling stuff to other agents, where do we play a role? So all I'm saying is my job my whole life has been to look into the future, sort of 10 years out, and try and probabilistically understand paths. Here I get to like 2030, and it's like a dark curtain.

    16. SBSteven Bartlett53:04

        Just to flip that for a second, how could AI actually positively influence your hypothesis?

    17. RPRaoul Pal53:11

        I'm very positive about AI. I think humanity will come out of this just fine. I think economic growth that explodes is, we can work a way of accretion it to, to humans or society or whatever we want to do with it. So I'm not a- a AI doomer.

    18. SBSteven Bartlett53:26

        Specifically on Bitcoin's value and price, how could AI make it even more important in-

    19. RPRaoul Pal53:32

        Well, in the end, an AI is a ... it requires two inputs. It requires ... It's, it's Maslow's hierarchy of needs, is basically two things, compute and energy, and it needs to be paid. These agents can't, you can't build all these agents, billions of agents running around doing things without paying for them. And agents will use agents. So they will, one agent will get another 10 agents to do all this task. They're all gonna have to be paid. And the way of doing that is using crypto rails.

    20. SBSteven Bartlett54:02

        Stablecoins.

    21. RPRaoul Pal54:04

        Whether it's Stablecoins, whatever it is, but that whole crypto rail, you know, all of this-

    22. SBSteven Bartlett54:09

        The blockchain?

    23. RPRaoul Pal54:09

        ... new infrastructure for the internet, the, the blockchain, that's

17. 54:12 – 56:10

    Ad Break

    1. RPRaoul Pal54:12

       where it works.

    2. SBSteven Bartlett54:13

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18. 56:10 – 59:29

    What to Do When You're in Debt

    1. SBSteven Bartlett56:10

       I wanted to ask you a question.

    2. HYHumphrey Yang56:11

       Yeah.

    3. SBSteven Bartlett56:12

       I- I ... the reason I went and got my phone is because-

    4. HYHumphrey Yang56:13

       Yes.

    5. SBSteven Bartlett56:15

       ... um, I had someone contact me that I knew from my childhood, used to be one of my old best friends.

    6. HYHumphrey Yang56:19

       Mm-hmm.

    7. SBSteven Bartlett56:19

       Frankly, not spoke to them in 10 years. Sent me a text message, and the text message they sent me is ... I wanted to get your opinion on this, 'cause I, I said, I ended up saying to him, I said, "I'm not the guy to ask about this."

    8. HYHumphrey Yang56:33

       (laughs)

    9. SBSteven Bartlett56:33

       "I think you've misunderstood who I am."

    10. HYHumphrey Yang56:34

        (laughs)

    11. SBSteven Bartlett56:36

        (laughs) "Hi, mate, I hope you're well. I got myself in a bit of trouble with some debt, about 40,000 pounds, so more than a bit of trouble. After s- I'm after some advice and direction in terms of maybe passive income/an avenue to try and work my way out of it. Is there some material I should be reading, watching, that you might know of?" And I asked him, I said, "What kind of debt is it?" And he said, "Personal loans and credit cards, mate." Um-

    12. HYHumphrey Yang57:01

        Yeah.

    13. SBSteven Bartlett57:01

        And I said, like, "How ... I need to ascertain how urgent those debts are, and if it's causing any, any immediate issues." And he said, "Well, they're not super urgent, but as a result of the high monthly outgoings, I'm a month behind my mortgage payment this month, so it like is, but it's not, because I don't want to keep being in that position moving forward. It's costing me circa 1,000 dollars, so 800 pounds, a month in repayments at the moment, and I can't get a consolidation loan. It's a perfect storm starting, because I've just started a new job, and my partner is on maternity leave, and I have-

    14. HYHumphrey Yang57:34

        Oh, God.

    15. SBSteven Bartlett57:34

        ... this debt mountain. It's starting to affect my family-

    16. HYHumphrey Yang57:38

        Hmm.

    17. SBSteven Bartlett57:38

        ... if I can't pay the mortgage, you know? So I've got to change moving forward, and figure out what to do, and you're the man to ask for advice." I was like, "Fuck me, I'm not that guy." (laughs)

    18. HYHumphrey Yang57:49

        (laughs)

    19. SBSteven Bartlett57:49

        And then he messaged me again within a m- an hour and said, "Hey, sorry, man, if you're busy, just wanted to nudge this." Then messaged again an hour later, 'cause I was on a flight, and said, "Hey, I really need some help and direction, man. I'm quickly running out of places to turn."

    20. HYHumphrey Yang58:01

        He's kind of in a hard spot, because 40,000 pounds in debt with the interest payments of, let's say your interest rate is 15 to 20%, that starts to spiral out of control a little bit.

    21. SBSteven Bartlett58:11

        Mm-hmm.

    22. HYHumphrey Yang58:11

        Like if he was under 10,000 pounds in, in debt, it's a little bit more manageable. But at 40,000, the interest starts to compound quite quickly. So, you know, h- you said he had a mortgage. He might even have to consider moving, selling, selling the home to at least get the interest payments under control, or like reduce that amount of debt. It's kind of th- one of those situations where you just need to reduce every single expense possible and start really pouring all your money into the highest interest rate debt that he owns. So like, you know, you can rank your interest rates of all your debts from highest to lowest and start, start at the very top, right? If it has 22% interest rate, you want to get rid of that first, because that's what's killing him. At those levels of debt, it's really tough, because I think a lot of people consider bankruptcy at that point, just to kind of clear that amount of debt, uh, depending on what his income is. I know, I've known, let's say, a waitress or a server that had 50,000 dollars in credit card debt and was just unable to get over it, because the interest payments were as much as their salary. So in those cases, unless you can get a personal loan from, let's say, a family member, and you know, kind of clear that debt, you're in a really tough spot. Reduce your expenses as much as possible, put any extra money you have towards that debt at the highest interest rate possible, the first, the highest interest rate thing, and then consider selling some assets, if he has assets.

    23. SBSteven Bartlett59:27

        Bankruptcy.

19. 59:29 – 1:02:00

    Bankruptcy: When Should Someone Consider It?

    1. SBSteven Bartlett59:29

    2. HYHumphrey Yang59:29

       Bankruptcy.

    3. SBSteven Bartlett59:30

       When should someone consider bankruptcy, and what's the trade-off?

    4. HYHumphrey Yang59:34

       The trade-off is seven years, uh, I believe your credit is shot in America. So, um, but I, I believe that, uh ... (laughs) Actually, I think if you pull up a chart, someone sent me a tweet the other day of like bankruptcy s- lawyer searches in America on Google, and it's like been kind of like going up and to the right, which is not a great thing. Uh, bankruptcy just, you know, there's different types of bankrupt- bankruptcy that you can file for, but I do know that it usually clears some, if not all, your debt, and you basically have to start over. But as a result, you lose a lot of your privileges, like for example, no credit score.

    5. SBSteven Bartlett1:00:08

       I read some stat, and I'm not ... you might know if this is true. But I read a stat that-It said something to the effect that people avoid going into bankruptcy because of the stigma associated with it.

    6. JSJaspreet Singh1:00:19

       Mm-hmm.

    7. SBSteven Bartlett1:00:20

       But when they looked at the financial performance over 10 years, of people that did go into bankruptcy, those that did typically were better off than those that tried to avoid it for the next-

    8. JSJaspreet Singh1:00:32

       Interesting.

    9. SBSteven Bartlett1:00:34

       ... 10 years. Um, so, yeah.

    10. JSJaspreet Singh1:00:35

        I don't know, that could be anecdotal. I don't know. That's tough because if you have $50,000 in debt and you make $50,000 a year, it's, yeah, it's different.

    11. RPRaoul Pal1:00:43

        But bankruptcy, in some ways, is a good thing 'cause it forces you to do crisis-

    12. SBSteven Bartlett1:00:47

        Yes.

    13. RPRaoul Pal1:00:47

        ... crisis control. It's like, your expenditure, what you're doing-

    14. SBSteven Bartlett1:00:51

        Mm-hmm.

    15. RPRaoul Pal1:00:51

        ... what, everything becomes hyper-focused. Like, you- you led, in the beginning, with about, you know, how people should look at their expense-

    16. JSJaspreet Singh1:00:59

        Yeah.

    17. RPRaoul Pal1:00:59

        ... expenditure, right?

    18. JSJaspreet Singh1:01:00

        Yeah.

    19. RPRaoul Pal1:01:00

        When you're $40,000 in debt, you've not been doing that.

    20. JSJaspreet Singh1:01:03

        Correct.

    21. RPRaoul Pal1:01:03

        And bankruptcy actually forces you to, to actually discipline that for a p- extended period of time, where it becomes a habit. So Stephen, that's why they outperform in the end, because you've created the habit that you talked about right in the beginning of this discussion.

    22. SBSteven Bartlett1:01:17

        Yeah, so I- I just found this stat here, it said, "Yeah, this is one of the uncomfortable truths in finance, and the answer is often yes. Those who file for bankruptcy end up in a better place long-term than those who try, for prolonged periods of time, to avoid it." And the research shows, um, that people who file for bankruptcy typically get their debt wiped out and cleaned, and they, um, removing unpayable debt, um, and it's, bankruptcy can bring immediate mental relief, removing the crushing stress of unpayable debts. People who avoid it often live in chronic financial stress, which spills into their health, relationships, and work.

    23. JSJaspreet Singh1:01:48

        Mm-hmm.

    24. SBSteven Bartlett1:01:48

        So in short, those who face, face bankruptcy head-on often recover faster and end up in a long- a stronger position than those who keep limping along trying to avoid it.

    25. JSJaspreet Singh1:01:57

        And I think, uh, somebody who's listening who may be

20. 1:02:00 – 1:03:41

    Alternatives to Filing for Bankruptcy

    1. JSJaspreet Singh1:02:00

       in a similar or the same situation ultimately wants to know, "How do I get relief?" Bankruptcy is one option, but at the end of the day, there has to be change. And that change is difficult. And that's the part that I think a lot of people have hard time talking about or comprehending. There is relief, but it comes with severe, extreme, and quick sacrifice. What do I mean? Number one, you've got to cut back your expenses as fast as possible in that situation. You have to sell as much stuff as possible. I mean, bankruptcy absolutely works, but you also lose your house. You also lose other things along with it. There's a lot of emotional toll with it. You have a family, you have a kid. I mean, it's also a big reason people end up getting a divorce. So it can also impact your life in many different ways. So you have to make extreme sacrifices, and I mean get rid of the Netflix subscription, not because it's just costing you $15 a month, but because the average American is spending more than two hours a day watching Netflix. And if you're in that type of situation and you're spending two hours sitting there watching whatever the heck is on Netflix, how do you sleep at night? You shouldn't be sleeping eight hours a night. You better be getting up, go and try to get some more money. I don't care if it's Uber, I don't care if you're working at McDonald's, find some extra money and learn how you can earn some more money. And, eh, I mean, it sounds harsh, but the reality is, if you want extreme change, it's not gonna happen without extreme change.

    2. SBSteven Bartlett1:03:24

       So could he sell his house, do you think, though, assuming he's making the 50K, which I- I think is probably accurate, like having-

    3. JSJaspreet Singh1:03:29

       Mm-hmm.

    4. SBSteven Bartlett1:03:29

       ... a vague understanding of his job and where he lives, et cetera.

    5. JSJaspreet Singh1:03:31

       Mm-hmm.

    6. SBSteven Bartlett1:03:32

       Sell his house, and then move and rent an apartment? Would that free up capital?

    7. JSJaspreet Singh1:03:37

       I mean, that would have alleviate his current problem immediately, sure.

21. 1:03:41 – 1:05:37

    The Myth of Passive Income

    1. JSJaspreet Singh1:03:41

    2. SBSteven Bartlett1:03:41

       He says here, offers some advice/direction in terms of maybe passive income. This word passive income, I know... (laughs)

    3. JSJaspreet Singh1:03:47

       Oh, it's-

    4. RPRaoul Pal1:03:47

       It drives me nuts.

    5. SBSteven Bartlett1:03:48

       Why does it drive you nuts?

    6. RPRaoul Pal1:03:50

       It is a, there's like a passive income industrialization complex that is, I mean, it is literally every millennial's dream, is, "I'm gonna get passive income."

    7. SBSteven Bartlett1:03:59

       Mm-hmm.

    8. RPRaoul Pal1:04:00

       And it doesn't exist. We talked about property. Property is the least passive income you can imagine. It is awful. Every time I've tried to rent out property, there are so many costs, everything goes wrong. It's just endless. You're paying fees. And people think there's this, there's a magic passive income. Everything comes with effort. There is no such thing as returns without effort. That's, well, even robbery comes with effort, you know? There's n- there's no way of making money without effort or risking something. And so, when you're 40 grand in debt, how on earth do you think passive income is going to rescue you? But he's seen that on TikTok and, uh, on Instagram. "Oh, we're, we're, um, millennials in our, in our 30s-"

    9. JSJaspreet Singh1:04:43

       (laughs)

    10. RPRaoul Pal1:04:43

        ... "and we're now living in, in the, in, in Lisbon-

    11. JSJaspreet Singh1:04:46

        Yeah.

    12. RPRaoul Pal1:04:46

        ... and we've got passive income from our house." And it's like, it's bullshit. It's socium- social media dream that doesn't really exist. And that's never gonna save him from £40,000 debt.

    13. JSJaspreet Singh1:04:57

        Passive income can exist. The perception of what it is is the problem. "I am struggling with money. I have no money. I got bills to pay. I need passive income."

    14. SBSteven Bartlett1:05:09

        Mm-hmm.

    15. JSJaspreet Singh1:05:09

        Well, that's not how it works.

    16. RPRaoul Pal1:05:10

        (laughs) That's not how it works.

    17. JSJaspreet Singh1:05:11

        Yeah. The, the way it works is, y- you take an extra money, right? I- I- I have, I'm going to work and I'm, I'm, I'm saving and investing some money. I take the extra money that I'm gonna put into my investments, and I can put it into an asset, an investment that can pay me for owning it without actually working, without going to work to own it. Now, let me ask you about your real estate, 'cause I gotta, I gotta keep coming back to you, man. Did, did you, did you manage your real estate yourself?

    18. RPRaoul Pal1:05:36

        I've done both.

    19. JSJaspreet Singh1:05:36

        Or

22. 1:05:37 – 1:10:21

    How Profitable Are Property Investments?

    1. JSJaspreet Singh1:05:37

       did you have a management company?

    2. RPRaoul Pal1:05:38

       I've had management agent and I managed it myself.

    3. JSJaspreet Singh1:05:40

       Managing yourself is probably a- a absolute nightmare.

    4. RPRaoul Pal1:05:43

       It's horrific.

    5. JSJaspreet Singh1:05:44

       And managing it with a manager is also probably a nightmare, just in a different scene.

    6. RPRaoul Pal1:05:49

       Yeah, and because your yield is massively reduced as well.

    7. JSJaspreet Singh1:05:51

       It is reduced.

    8. RPRaoul Pal1:05:52

       And then you take the trade-off between whether you're gonna do short-term lets or longer-term rentals. And there's the volatility in the short-term lets that you don't know what your yield's gonna be. Long-term, different as well. Then you've got the tenants and-

    9. JSJaspreet Singh1:06:06

       Sure.

    10. RPRaoul Pal1:06:06

        ... how bad the tenants have been and the damage that they've done.

    11. JSJaspreet Singh1:06:08

        Yep.

    12. RPRaoul Pal1:06:08

        And by the end of it, you walk away and think, "Really, it was, just wasn't worth the effort."

    13. JSJaspreet Singh1:06:12

        Well, I- I would disagree with the end part.

    14. RPRaoul Pal1:06:14

        Unless you're... Yeah, I mean, obviously people can do really well out of property.

    15. JSJaspreet Singh1:06:16

        The work in real estate investment...... is learning the process. When I first started investing in real estate, it was a complete nightmare. And it was not passive, anything close to passive, it was a nightmare. What you don't know when you start is that there's a good property manager, there's also a bad property manager. How do I find good property managers? By going through a lot of bad property managers and learning that process, and that is a painful process, a very time-consuming process. But when you do have the right team, it can be extremely passive. So, I, I invest in real estate.

    16. SBSteven Bartlett1:06:52

        What kind of properties are we talking about?

    17. JSJaspreet Singh1:06:54

        Single family houses and multi-family s- apartments.

    18. SBSteven Bartlett1:06:56

        And do you have lots of them?

    19. JSJaspreet Singh1:06:58

        Not lots, but I have a decent amount.

    20. SBSteven Bartlett1:07:00

        And how much of your portfolio is in buying properties and then renting them out to families?

    21. JSJaspreet Singh1:07:04

        50%.

    22. SBSteven Bartlett1:07:05

        And what have your returns been like over year-over-year for the last decade?

    23. JSJaspreet Singh1:07:08

        So, the way I look at returns when I look to acquire property, is I want 7% cash on cash on the money that I put in. So, when I look at return, I don't care about equity. We talked about this kind of a lot that if I buy a house for, let's just call it $100,000 and it goes up to $200,000, I don't care. My goal when I acquire real estate is not to sell it and flip it for a profit. My goal is to grow the cashflow that I'm generating month after month after month-

    24. SBSteven Bartlett1:07:35

        From rental payments.

    25. JSJaspreet Singh1:07:35

        ... from rental payments.

    26. SBSteven Bartlett1:07:36

        It's really difficult though, 'cause if I, as someone that hasn't done a lot of, uh, property rentals and stuff like that, the chance that I'm gonna fuck up-

    27. HYHumphrey Yang1:07:45

        (laughs)

    28. JSJaspreet Singh1:07:46

        Absolutely.

    29. SBSteven Bartlett1:07:46

        ... like is so high.

    30. HYHumphrey Yang1:07:47

        Oh, I did.
23. 1:10:21 – 1:11:08

    Should You Buy Rental Properties for Passive Income?

    1. JSJaspreet Singh1:10:21

    2. SBSteven Bartlett1:10:21

       So, what do you think then in terms of passive income, and i- is it real? But specifically, let's do this point of housing. Do you advise people to buy rental properties and then generate rental fees from them as a source of income?

    3. HYHumphrey Yang1:10:33

       Well, you just heard Jaspreet on how much work it would take. So, I, I generally don't advise people to, to get into that business just because of the steep learning curve. And not everyone is built for that, and not everyone has capital for that. So, if you're just trying to get started and actually make some money, I just think the stock market is the most liquid and easiest place to get started. I personally rent, and I, I plan on renting and just instead investing the difference of what my mortgage payment might be and my, my rent. I think in, on the coasts like San Francisco, New York, I think Miami, that might actually be the more reasonable thing to do.

    4. SBSteven Bartlett1:11:07

       I was reading

24. 1:11:08 – 1:13:19

    Why More People Are Renting in the U.S.

    1. SBSteven Bartlett1:11:08

       a New York Times article-

    2. HYHumphrey Yang1:11:09

       Yeah.

    3. SBSteven Bartlett1:11:09

       ... that just came out yesterday, and it said more millionaires than ever are renting in the United States, and that it's tripled between 2019 and 2023.

    4. HYHumphrey Yang1:11:19

       Mm-hmm.

    5. SBSteven Bartlett1:11:19

       So, in just a couple of years, millionaires are choosing to rent more than ever before. What's going on?

    6. HYHumphrey Yang1:11:27

       My guess would be a lot of the millionaires are probably living on the coast because they invest a lot or they have higher-paying jobs, and maybe it's slightly unaffordable for them to buy a house in, say, San Francisco, Seattle, New York, Los Angeles.

    7. SBSteven Bartlett1:11:40

       In the New York Times article, it says they're choosing flexibility and liquidity over ownership. Um, and they don't want to be bothered with the inconveniences of homeownership, which includes paying a real estate tax and insurance, especially in markets like Florida and California where we're seeing a lot of natural catastrophes.

    8. HYHumphrey Yang1:11:55

       Yeah. Yeah, so the US is a p- peculiar market 'cause there's this high real estate tax in owning real estate.

    9. SBSteven Bartlett1:12:02

       Mm-hmm.

    10. HYHumphrey Yang1:12:03

        So, all the time your returns are being reduced by that you pay. So, whether it's like 1.5% or 2%, whatever the number is. There's that, and then there's the other real estate taxes that come on top of it. Interest rates have been high. They've been high for a while now. So...

Episode duration: 2:09:55