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Hey everyone, welcome to Fundamentals
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Unfiltered.
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I'm Matt with the Fundamental Investing
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Institute.
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We are recording this on December 2nd, 2025.
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And on today's episode,
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what's going on with Bitcoin,
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the risk of illiquidity,
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and remembering a stock market legend.
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So at the outset, I want to say
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I'm an investor.
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I'm a long-term investor.
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I look at assets that are producing cash flows.
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So that means businesses, the stocks of
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businesses and
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public and private markets.
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That means bonds and that means commercial
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real estate.
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And I really don't venture outside of that. So
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the 800 pound gorilla in the room over the last
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couple of weeks has been Bitcoin and
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Bitcoin, which reached a high of around 126.
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I want to say back in October and it was
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trading
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maybe even down below 80,000.
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I know as of yesterday, it was trading the
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high 80s.
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I checked it this morning.
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It's up over 90.
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It's always been an incredibly volatile asset.
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I was very hesitant to comment on it
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because I'm really just a spectator in this
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whole arena.
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But I was starting to read about,
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there's a company called
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Strategy, or it used to be called
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MicroStrategy,
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and this guy, Michael Saylor,
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And basically what this company
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pioneered is this idea of
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owning, of a corporation owning Bitcoin.
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So rather than owning Bitcoin through like
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a traditional investment fund,
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and it's called the treasury Bitcoin
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strategy.
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And it was always,
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it never made any sense to me as to how it
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was kind of working, but
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a few months back, Saylor looked like a
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genius.
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There was talk about strategy being
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added to the S&P 500.
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Now
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the talk is very much reversed, and one of
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the things,
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I think I mentioned this a few weeks ago,
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there was a short seller named Jim Chanos
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who had actually shorted Strategy stock,
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bought Bitcoin as a hedge,
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and although I don't know the details, he
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exited that position.
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It was reported that he exited that
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position with a very hefty profit, but
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basically the thesis was that
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Strategy has
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a software company
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that
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basically breaks even if not generates a
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modest loss.
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So the proceeds that they're
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using to buy
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Bitcoin is they're doing it through share
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issuance,
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they're doing it through the issuance of
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preferred stock, they're doing it through
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the issuance of debt.
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And that worked for a time because strategy
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shares were selling at a very large premium
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over their
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per share value of their Bitcoin holdings,
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which is really the only value of the
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company.
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Again, if they have an operating business
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that's not making money, there's really no
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value there.
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There might be some liquidation value, but
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there's really no value as an ongoing
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enterprise.
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So Strategy is just one big
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bet on Bitcoin, and
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this worked for a time.
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I think they
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own
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like 3% of all outstanding Bitcoin or
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thereabout.
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but it was working for a time because
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strategy shares were selling at two to
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three times
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the value of their Bitcoin holdings.
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And because the stock was so expensive, it
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was basically,
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in other words, selling at such a high
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multiple of their Bitcoin holdings,
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it was basically a very cheap currency.
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So Saylor was able to use that currency,
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issue more stock,
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buy Bitcoin,
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and for a time looked like a genius and it
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started to really unravel.
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The Financial Times had a good piece on
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this called the infinite money glitch
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meter arithmetic.
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The idea of the infinite money glitch comes
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down to what Saylor was talking about,
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as long as their stock price
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would sell at a high premium to their
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Bitcoin holdings, they had this discounted
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currency with which they could use to buy
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Bitcoin.
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And a couple of things was happening.
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One is
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you had a lot of imitators.
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So I know even
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Grant Cardone, who has
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some private real estate funds, is now
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advertising that he's using those private
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real estate funds.
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He's using
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the rental income or the dividend income
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from those private real estate funds
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to buy Bitcoin.
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So he's kind of selling this
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Bitcoin strategy.
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You're hearing more and more companies
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get on board with this.
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So it's kind of diluting
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the strategy in a lot of ways.
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But one of the things that this article
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points out
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is that right now strategy is
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part of the MSCI index.
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And this is a global
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stock market index.
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And like any index, they have a committee
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that will decide
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what will
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go into the index, what will be removed
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from the index, what will remain in the index.
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that committee meets periodically
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and they make those decisions.
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And there's a lot of talk about strategy being
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eliminated from this index.
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Now, what you have to understand is that
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when you have an index,
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because there's so many index funds
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and mutual funds that will buy a big part
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of the index and exchange traded funds that
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buy the index,
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you always have this level of artificial
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demand anytime a company is a component of
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an index.
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So if that stock gets kicked out and
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there's a good chance that it will,
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you're going to have a lot of forced
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selling.
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And what does that mean for strategy stock?
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What does that mean for Bitcoin?
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I don't know, but it's possible
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that this unwinds a little bit.
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Now, I will say,
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as a stock investor,
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if I really believe in a stock and that
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stock goes down,
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I'm actually happy because I can buy more.
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And over the years,
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our cost basis, or what I call, what's
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called the weighted average cost basis, has
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always been a lot lower than the initial
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buying point of a stock.
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In other words,
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if I buy a stock and that stock goes down
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and I still believe in that company, I've
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done my analysis, I think the market is wrong,
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I'll buy more and then my weighted average
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cost will be less than the initial price
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that I pay it on the first trade.
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And I think if there are
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true believers out there with Bitcoin,
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that'll probably happen, so I wouldn't,
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and I'm speaking ignorantly here just to be clear,
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but I just think that there are a lot of
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true believers, and it's also become a much more
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accepted asset,
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especially with the current administration,
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which has been very favorable to
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cryptocurrency.
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So my point is,
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I think you have a lot of potential risks,
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and I also think you have a lot of
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potential things that can stabilize it, but
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I would be very surprised if the whole
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Bitcoin treasury strategy, regardless of
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what one thinks about
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Bitcoin as a standalone asset,
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I would be very surprised if this Bitcoin
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treasury strategy
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is still a thing in any material way in say
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a year or year and a half from now.
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I could be very wrong,
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but when I look at strategy
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or what's what we used to be called micro
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strategy,
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I see this thing kind of breaking down.
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I could be wrong and I could be wrong
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quickly, but it doesn't strike me as at all
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sustainable.
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This company is trying to service debt with
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no income.
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I mean, they're trying to serve that they
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just issued some additional
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some additional equity and they're putting
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that money aside in order to service debt.
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So this looks like a very unsustainable thing.
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Just a warning to investors, but again,
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I could be wrong, and there are probably
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some true believers who still think Michael
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Saylor is
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a genius.
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One thing that I will
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point out, and this was in this article,
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MSCI is talking about dropping them from
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the index, this committee is talking about
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dropping them from the index, because
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essentially you can't have investment funds
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in the index, they have to be operating
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businesses.
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So Saylor's trying to say, I think he's
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made some tweets on this or wherever.
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He says, strategy is not a fund, not a
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trust, and not a holding company.
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We're a publicly traded operating company with
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a $500 million software business
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and a unique treasury strategy that uses
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Bitcoin as productive capital.
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The problem is, of course, that contradicts
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a lot of things that he had said before.
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So he's trying to
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deal with the true believers who are part
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of his shareholder constituency
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and he's trying to deal
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with the MSCI index committee
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and
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it's very hard to serve two masters so
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we'll see what happens but I'm certainly in
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the skeptics
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in the skeptic bucket here
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so
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that said
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you know another
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big issue that's been happening throughout
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the year that I've been talking about
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And that is this
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coming, I think it's gonna be a coming
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deluge of
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private funds are gonna be on offer
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to individual
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retail investors.
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Jason Sweig at the Wall Street Journal, he
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had a piece, and
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this is actually earlier in November.
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I wanted to discuss this
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earlier, but didn't get a chance.
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There's a
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little story about
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It's this guy that worked at
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Vanguard.
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He was like the head of their
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fixed income or something.
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But he's down in Florida.
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He's down in a small town in Florida.
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He's retired.
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So when he was at Vanguard, he oversaw like
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750 billion, according to the article.
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And he's now down in this small town of
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Florida.
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00:09:57,200 --> 00:09:57,840
And
287
00:09:58,400 --> 00:09:58,880
he's
288
00:09:59,840 --> 00:10:00,960
he's vice mayor.
289
00:10:00,960 --> 00:10:02,240
His name's Robert
290
00:10:04,240 --> 00:10:05,040
Owerter.
291
00:10:06,720 --> 00:10:08,240
But he used to oversee this huge
292
00:10:08,480 --> 00:10:09,960
portfolio of Vanguard, now he's over.
293
00:10:10,040 --> 00:10:12,680
overseeing this little $21 million
294
00:10:13,840 --> 00:10:14,960
municipal fund.
295
00:10:15,760 --> 00:10:18,680
And this municipal fund put some money into a
296
00:10:19,120 --> 00:10:21,680
private real estate trust, private real
297
00:10:21,680 --> 00:10:22,400
estate fund.
298
00:10:23,440 --> 00:10:24,800
And essentially, they're having a really
299
00:10:24,800 --> 00:10:25,600
hard time
300
00:10:26,080 --> 00:10:27,680
getting their money out because the way
301
00:10:27,680 --> 00:10:29,440
private real estate funds work
302
00:10:29,880 --> 00:10:30,560
is of course,
303
00:10:31,280 --> 00:10:33,840
they're investing in illiquid assets.
304
00:10:34,640 --> 00:10:35,280
So
305
00:10:35,920 --> 00:10:37,680
I think in $1,000,000 investment, it said
306
00:10:37,680 --> 00:10:38,240
they took
307
00:10:38,480 --> 00:10:41,520
64,000 out or something because the funds
308
00:10:41,520 --> 00:10:43,760
have the ability to close
309
00:10:44,240 --> 00:10:46,080
any liquidity off to investors.
310
00:10:46,080 --> 00:10:46,880
They can just,
311
00:10:48,880 --> 00:10:50,960
they can just say, we're going to limit you
312
00:10:50,960 --> 00:10:52,680
to a certain, taking out a certain amount.
313
00:10:52,680 --> 00:10:54,480
And this is one of the points that
314
00:10:55,680 --> 00:10:56,560
Zweig makes,
315
00:10:57,920 --> 00:11:00,160
is that institutions can bear that
316
00:11:00,160 --> 00:11:01,200
illiquidity risk.
317
00:11:01,200 --> 00:11:02,480
They can keep money
318
00:11:02,880 --> 00:11:04,920
tied up for a long period of time and
319
00:11:05,040 --> 00:11:06,600
individuals really can't.
320
00:11:07,280 --> 00:11:09,400
And I've never liked private real estate
321
00:11:09,400 --> 00:11:13,200
funds because unlike public REITs, public
322
00:11:13,200 --> 00:11:15,840
REITs can sell for below net asset value.
323
00:11:16,240 --> 00:11:18,480
So you can get a bargain with public REITs.
324
00:11:18,960 --> 00:11:21,360
Private REITs generally sell or
325
00:11:21,680 --> 00:11:24,320
offer shares at net asset value.
326
00:11:25,040 --> 00:11:26,560
And in addition, you're bearing that
327
00:11:26,560 --> 00:11:28,400
liquidity risk, you're bearing the risk of
328
00:11:28,400 --> 00:11:30,240
not being able to sell your holdings
329
00:11:30,880 --> 00:11:32,640
in that you have to wait for them to sell
330
00:11:32,640 --> 00:11:36,080
assets, or possibly the portfolio can go
331
00:11:36,080 --> 00:11:37,520
public or being taken over.
332
00:11:38,800 --> 00:11:41,040
But you've got to be able to tie up your
333
00:11:41,040 --> 00:11:42,560
capital for a long period of time.
334
00:11:42,960 --> 00:11:44,960
So there's a lot of concern, and as we
335
00:11:44,960 --> 00:11:46,640
highlights this, that
336
00:11:46,880 --> 00:11:48,720
individual investors are really not going
337
00:11:48,720 --> 00:11:49,760
to understand that
338
00:11:50,560 --> 00:11:52,160
illiquidity risk going in.
339
00:11:52,800 --> 00:11:54,480
as these things are more
340
00:11:54,720 --> 00:11:56,680
put together more on offer for individual
341
00:11:56,680 --> 00:11:57,200
investors.
342
00:11:57,200 --> 00:11:59,040
They're already on offer even for smaller
343
00:11:59,040 --> 00:12:00,640
investors through something called
344
00:12:00,640 --> 00:12:01,840
Regulation A+.
345
00:12:02,720 --> 00:12:04,240
And I know a handful of people who are
346
00:12:04,240 --> 00:12:05,360
doing this where they're
347
00:12:05,680 --> 00:12:07,520
offering shares to
348
00:12:08,240 --> 00:12:10,800
smaller retail investors in these private
349
00:12:12,080 --> 00:12:12,640
funds.
350
00:12:13,040 --> 00:12:14,960
The amount that can be invested in them is
351
00:12:14,960 --> 00:12:16,000
relatively small.
352
00:12:16,000 --> 00:12:17,600
So that's been one of the kind of one of
353
00:12:17,600 --> 00:12:19,040
the saving graces, but
354
00:12:19,600 --> 00:12:21,840
this is an area of concern as it becomes
355
00:12:22,560 --> 00:12:24,960
as it becomes wider, more acceptable.
356
00:12:27,840 --> 00:12:29,600
I was reading
357
00:12:30,920 --> 00:12:32,000
this book
358
00:12:32,320 --> 00:12:33,120
by
359
00:12:33,920 --> 00:12:34,960
Bob Pisani,
360
00:12:35,880 --> 00:12:37,600
and I'm in the process of reading this book
361
00:12:37,600 --> 00:12:39,440
because I'm developing a stock market
362
00:12:39,440 --> 00:12:41,440
investing course that we're gonna
363
00:12:41,920 --> 00:12:43,280
roll out in the spring.
364
00:12:44,320 --> 00:12:45,840
It's actually our second course, we're in
365
00:12:45,840 --> 00:12:47,840
the process of rolling out a few others,
366
00:12:48,640 --> 00:12:49,280
but this is a
367
00:12:49,920 --> 00:12:51,200
course that I'm working on
368
00:12:51,760 --> 00:12:53,200
and it's gonna take me a little while, but
369
00:12:53,200 --> 00:12:54,440
one of the things that I'm doing is I'm
370
00:12:54,440 --> 00:12:56,960
relying on some material to
371
00:12:58,800 --> 00:13:01,040
look at the evolution of the stock market
372
00:13:01,040 --> 00:13:01,680
in general.
373
00:13:02,560 --> 00:13:04,800
Bob Pisani's book is very good for this
374
00:13:04,800 --> 00:13:05,600
because
375
00:13:05,920 --> 00:13:09,200
Pisani was, up until recently,
376
00:13:09,680 --> 00:13:11,120
the senior
377
00:13:13,200 --> 00:13:16,160
market, I don't know what his exact title was,
378
00:13:17,360 --> 00:13:20,640
senior markets correspondent for CNBC.
379
00:13:20,640 --> 00:13:23,600
So anybody watching CNBC knows who Pisani is.
380
00:13:25,000 --> 00:13:26,360
He was on the floor of the New York Stock
381
00:13:26,360 --> 00:13:28,000
Exchange reporting for,
382
00:13:28,920 --> 00:13:30,720
I don't know, 27 or 28 years.
383
00:13:31,200 --> 00:13:34,880
This book came out in 2022, so it was 25 years
384
00:13:35,400 --> 00:13:35,680
of
385
00:13:36,160 --> 00:13:39,040
his experience because he started in 97.
386
00:13:40,000 --> 00:13:41,120
So the book covers
387
00:13:41,480 --> 00:13:44,040
all of his experience on the reporting from
388
00:13:44,040 --> 00:13:45,440
the floor of the New York Stock Exchange
389
00:13:45,440 --> 00:13:46,360
over that period.
390
00:13:46,360 --> 00:13:47,840
And I know 97,
391
00:13:48,200 --> 00:13:50,240
depending on how you look at it, feels like
392
00:13:50,240 --> 00:13:51,760
yesterday for a lot of us,
393
00:13:52,320 --> 00:13:54,480
but it's unbelievable how much the market
394
00:13:54,480 --> 00:13:55,240
has changed.
395
00:13:56,720 --> 00:13:59,680
When he starts reporting in 1997, 80% of
396
00:13:59,680 --> 00:14:02,000
the transactions that occurred on the New
397
00:14:02,000 --> 00:14:03,280
York Stock Exchange
398
00:14:04,000 --> 00:14:05,760
occurred actually on the floor.
399
00:14:05,760 --> 00:14:07,280
So when we think about the New York Stock
400
00:14:07,280 --> 00:14:08,880
Exchange, I think a lot of people think
401
00:14:08,880 --> 00:14:10,880
about that physical location on
402
00:14:11,720 --> 00:14:13,520
I think it's Wall Street and Broad Street
403
00:14:14,800 --> 00:14:17,600
and all of the traders, yelling at each
404
00:14:17,600 --> 00:14:18,400
other and
405
00:14:18,880 --> 00:14:21,120
the little pieces of paper everywhere and
406
00:14:21,120 --> 00:14:22,720
being swept up at the end of the day.
407
00:14:23,440 --> 00:14:25,680
They still do that, of course, and they still
408
00:14:25,920 --> 00:14:28,000
broadcast from the floor of the exchange,
409
00:14:28,000 --> 00:14:29,920
but the amount of transaction volume
410
00:14:30,400 --> 00:14:32,640
that is actually handled on the floor is a
411
00:14:32,640 --> 00:14:34,480
pittance compared to what it was
412
00:14:34,800 --> 00:14:36,160
just a few decades ago.
413
00:14:37,440 --> 00:14:38,800
So I'm reading through this book
414
00:14:40,000 --> 00:14:40,640
to
415
00:14:41,840 --> 00:14:44,240
really prepare for this class. And
416
00:14:44,760 --> 00:14:48,000
as Pisani tells a story, when he starts in 1997,
417
00:14:48,320 --> 00:14:49,680
it was a very closed
418
00:14:50,000 --> 00:14:51,120
group of people.
419
00:14:51,360 --> 00:14:53,040
The floor brokers and stuff,
420
00:14:53,800 --> 00:14:56,080
and the runners and everybody, they did not
421
00:14:56,080 --> 00:14:57,160
want to talk to reporters.
422
00:14:57,160 --> 00:14:58,640
And that's very different than the way it
423
00:14:58,640 --> 00:15:00,240
is today, where the markets are very
424
00:15:00,240 --> 00:15:01,120
integrated with
425
00:15:01,600 --> 00:15:02,640
the financial news.
426
00:15:03,680 --> 00:15:05,080
But at the time, that was not the case.
427
00:15:05,080 --> 00:15:07,040
So 2 of the people that he was able to
428
00:15:08,640 --> 00:15:09,800
develop friendships with
429
00:15:10,400 --> 00:15:11,000
One was a
430
00:15:12,320 --> 00:15:14,640
market maker for Berkshire Hathaway. I
431
00:15:15,200 --> 00:15:16,880
don't recall his name, but the other
432
00:15:17,680 --> 00:15:19,680
was a man named Art Cashin.
433
00:15:20,880 --> 00:15:24,080
Now I knew who Cashin was because Cashin was
434
00:15:24,320 --> 00:15:25,800
kind of a staple on the floor of the New
435
00:15:25,800 --> 00:15:27,760
York Stock Exchange and he was always on
436
00:15:28,240 --> 00:15:28,840
CNBC.
437
00:15:28,840 --> 00:15:30,800
He was on CNBC virtually every day. He
438
00:15:32,240 --> 00:15:34,240
was usually interviewed at market close.
439
00:15:35,120 --> 00:15:36,120
Cashin was the
440
00:15:38,400 --> 00:15:41,200
director of floor operations
441
00:15:41,520 --> 00:15:43,440
for Painewebber, and then Painewebber was
442
00:15:43,440 --> 00:15:45,440
acquired, so he became director of floor
443
00:15:45,440 --> 00:15:47,720
operations for UBS, which is a company that
444
00:15:47,720 --> 00:15:48,240
acquired
445
00:15:49,280 --> 00:15:50,480
Painewebber. And
446
00:15:51,760 --> 00:15:53,720
he was very much an old-timer, very
447
00:15:53,720 --> 00:15:54,240
interesting.
448
00:15:54,240 --> 00:15:57,440
So I'm reading this chapter four of this book.
449
00:15:58,640 --> 00:16:01,360
Chapter four, Pisani talks about his
450
00:16:01,360 --> 00:16:02,880
friendship with Art Cashin.
451
00:16:04,240 --> 00:16:04,800
And
452
00:16:05,200 --> 00:16:07,440
I knew that Art Cashin had died,
453
00:16:07,920 --> 00:16:09,280
relatively recently.
454
00:16:09,680 --> 00:16:10,640
So I looked it up
455
00:16:11,200 --> 00:16:13,360
and I kind of got goosebumps because
456
00:16:13,360 --> 00:16:15,120
literally as I'm reading this chapter, I
457
00:16:15,120 --> 00:16:16,880
hadn't thought about Art Cashin forever,
458
00:16:17,520 --> 00:16:19,280
but literally as I'm reading this chapter
459
00:16:20,480 --> 00:16:21,360
and I looked it up,
460
00:16:22,160 --> 00:16:24,200
it was the one year anniversary of Art
461
00:16:24,200 --> 00:16:25,320
Cashin's death.
462
00:16:25,320 --> 00:16:28,960
He died at 83, December 1st, 2024.
463
00:16:29,280 --> 00:16:31,000
So I'm reading this chapter on the one year
464
00:16:31,000 --> 00:16:32,720
anniversary and I thought I would mention
465
00:16:32,720 --> 00:16:34,320
something about him because he was a really
466
00:16:34,320 --> 00:16:35,040
interesting
467
00:16:35,680 --> 00:16:35,800
guy.
468
00:16:35,800 --> 00:16:37,840
I mean, I knew a little bit about him from
469
00:16:37,840 --> 00:16:38,800
all the reporting
470
00:16:39,720 --> 00:16:42,640
and all the commentary he provided on CNBC. But
471
00:16:43,200 --> 00:16:45,040
Cashin had never went to college.
472
00:16:45,040 --> 00:16:47,760
He started in the broker's world at 17.
473
00:16:48,160 --> 00:16:50,000
He was helping to support his family.
474
00:16:50,960 --> 00:16:53,680
And he was very much known for
475
00:16:54,160 --> 00:16:55,280
telling stories.
476
00:16:55,560 --> 00:16:56,240
And he was a
477
00:16:56,480 --> 00:16:57,920
great market historian.
478
00:16:58,560 --> 00:17:00,120
He was an astute student
479
00:17:00,440 --> 00:17:02,160
of market psychology.
480
00:17:03,040 --> 00:17:03,680
And
481
00:17:04,560 --> 00:17:07,920
it was said that he could convey more
482
00:17:08,240 --> 00:17:10,960
wisdom in a couple of stories than could
483
00:17:10,960 --> 00:17:12,640
the most learned economist
484
00:17:13,040 --> 00:17:14,720
in a thousand-page textbook.
485
00:17:15,360 --> 00:17:16,160
He was just
486
00:17:17,480 --> 00:17:18,800
a treasure trove of wisdom.
487
00:17:19,200 --> 00:17:21,840
He reminded me a lot of some old-timer
488
00:17:21,840 --> 00:17:24,000
stockbrokers that I knew
489
00:17:24,400 --> 00:17:25,680
relatively early
490
00:17:26,000 --> 00:17:27,520
in my investment career.
491
00:17:28,800 --> 00:17:30,040
Very much a dying breed.
492
00:17:30,040 --> 00:17:31,760
I don't think you find too many people.
493
00:17:32,800 --> 00:17:35,200
who can convey all these stories from back when.
494
00:17:36,720 --> 00:17:38,560
In chapter 4, Pasani
495
00:17:39,120 --> 00:17:40,080
talks about
496
00:17:40,960 --> 00:17:41,760
a story that Art
497
00:17:42,080 --> 00:17:43,120
Cashin tells
498
00:17:43,760 --> 00:17:45,920
about November 1963.
499
00:17:47,840 --> 00:17:48,400
And
500
00:17:49,280 --> 00:17:51,760
on this day of November 1963, November
501
00:17:51,760 --> 00:17:54,320
22nd, 1963, I think everyone knows where
502
00:17:54,320 --> 00:17:55,280
I'm going with this,
503
00:17:56,000 --> 00:17:57,840
Cash is on the floor of the exchange and he
504
00:17:57,840 --> 00:18:00,160
notices that there's a lot of heavy selling
505
00:18:00,160 --> 00:18:01,280
by Merrill Lynch.
506
00:18:01,880 --> 00:18:03,600
And of course, at the time, we don't really
507
00:18:03,600 --> 00:18:04,960
appreciate this today, but at
508
00:18:05,280 --> 00:18:07,040
the time, you did not have an instantaneous
509
00:18:07,040 --> 00:18:07,840
news cycle.
510
00:18:08,400 --> 00:18:10,480
When President Kennedy was in Dallas,
511
00:18:11,520 --> 00:18:13,080
that was a national news.
512
00:18:13,080 --> 00:18:14,800
I mean, that wasn't a huge event.
513
00:18:15,680 --> 00:18:17,760
It became a huge event later.
514
00:18:18,720 --> 00:18:20,880
So he notices Merrill is
515
00:18:22,080 --> 00:18:23,760
doing all the selling, but there's no
516
00:18:24,160 --> 00:18:26,400
news coming on the newswire or anything.
517
00:18:27,280 --> 00:18:29,120
Well, it turns out that Merrill had some
518
00:18:29,120 --> 00:18:30,960
brokers in Dallas
519
00:18:31,560 --> 00:18:32,880
They didn't know what happened, but they
520
00:18:32,880 --> 00:18:34,960
knew that the president's motorcade had
521
00:18:34,960 --> 00:18:35,840
been rerouted.
522
00:18:36,560 --> 00:18:38,360
And there was talk about
523
00:18:39,920 --> 00:18:41,720
the parade being canceled and everything,
524
00:18:41,720 --> 00:18:43,680
and they just kind of inferred that nothing
525
00:18:43,680 --> 00:18:44,720
good had happened.
526
00:18:45,240 --> 00:18:46,800
And of course, it came out later
527
00:18:47,520 --> 00:18:50,080
that the president had been assassinated, but
528
00:18:51,280 --> 00:18:52,120
this all happened.
529
00:18:52,120 --> 00:18:53,880
In other words, the market incorporated
530
00:18:53,880 --> 00:18:55,040
this before
531
00:18:56,240 --> 00:18:58,000
this ever hit the newswire. So
532
00:18:59,680 --> 00:19:02,200
Cashin conveys that story, and I think it's
533
00:19:02,200 --> 00:19:04,320
very interesting, about how efficient
534
00:19:04,640 --> 00:19:06,640
stock markets can be in incorporating
535
00:19:06,640 --> 00:19:07,440
information.
536
00:19:08,360 --> 00:19:10,040
One of the other stories about Cashin that
537
00:19:10,040 --> 00:19:11,080
I liked is there was a
538
00:19:12,160 --> 00:19:14,480
spaghetti dish that was named after
539
00:19:14,880 --> 00:19:15,680
Cashin,
540
00:19:16,720 --> 00:19:17,920
and he showed
541
00:19:18,800 --> 00:19:21,600
Pasani the menu from like the 1960s. So
542
00:19:22,000 --> 00:19:23,760
the spaghetti dish was available for like
543
00:19:23,760 --> 00:19:25,200
$1.50 or something.
544
00:19:25,920 --> 00:19:28,080
But the spaghetti dish was actually
545
00:19:28,640 --> 00:19:31,400
Cashin's breakfast because he would be out
546
00:19:31,400 --> 00:19:31,920
all night.
547
00:19:32,560 --> 00:19:34,160
He would be out all night drinking and he
548
00:19:34,160 --> 00:19:35,960
would eat this spaghetti dish at like 5 in
549
00:19:35,960 --> 00:19:36,560
the morning.
550
00:19:37,120 --> 00:19:37,680
So
551
00:19:37,920 --> 00:19:39,640
another thing that reminds me of some of
552
00:19:39,640 --> 00:19:41,760
the old timers because that's where I met a
553
00:19:41,760 --> 00:19:44,240
lot of them was I was worked at a bartender
554
00:19:44,240 --> 00:19:45,920
when I worked as a bartender when I was in
555
00:19:45,920 --> 00:19:46,480
college.
556
00:19:47,280 --> 00:19:49,200
Some of these guys would love their doers
557
00:19:49,200 --> 00:19:51,200
and on the rocks and other drinks, but
558
00:19:51,640 --> 00:19:52,880
it's very interesting. So
559
00:19:53,280 --> 00:19:55,840
yes, rest in peace, Art Cashin. He was
560
00:19:56,880 --> 00:19:58,080
Not many people like him.
561
00:19:58,080 --> 00:19:59,280
I don't know if there's anyone like him
562
00:19:59,280 --> 00:20:00,400
around anymore, but
563
00:20:00,640 --> 00:20:02,000
it's certainly a bygone era.
564
00:20:03,360 --> 00:20:05,200
That said, I hope everyone has a
565
00:20:05,600 --> 00:20:06,480
great week.
566
00:20:07,280 --> 00:20:08,880
Best of luck to you in your investment
567
00:20:08,880 --> 00:20:10,640
endeavors, and as always, focus on the
568
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fundamentals.
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Hey everyone, welcome to Fundamentals
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Unfiltered.
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I'm Matt with the Fundamental Investing
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Institute.
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We are recording this on December 2nd, 2025.
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And on today's episode,
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what's going on with Bitcoin,
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the risk of illiquidity,
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and remembering a stock market legend.
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So at the outset, I want to say
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I'm an investor.
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I'm a long-term investor.
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I look at assets that are producing cash flows.
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So that means businesses, the stocks of
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businesses and
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public and private markets.
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That means bonds and that means commercial
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real estate.
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And I really don't venture outside of that. So
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the 800 pound gorilla in the room over the last
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couple of weeks has been Bitcoin and
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Bitcoin, which reached a high of around 126.
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I want to say back in October and it was
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trading
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maybe even down below 80,000.
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I know as of yesterday, it was trading the
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high 80s.
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I checked it this morning.
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It's up over 90.
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It's always been an incredibly volatile asset.
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I was very hesitant to comment on it
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because I'm really just a spectator in this
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whole arena.
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But I was starting to read about,
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there's a company called
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Strategy, or it used to be called
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MicroStrategy,
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and this guy, Michael Saylor,
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And basically what this company
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pioneered is this idea of
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owning, of a corporation owning Bitcoin.
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So rather than owning Bitcoin through like
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a traditional investment fund,
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and it's called the treasury Bitcoin
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strategy.
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And it was always,
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it never made any sense to me as to how it
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was kind of working, but
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a few months back, Saylor looked like a
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genius.
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There was talk about strategy being
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added to the S&P 500.
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Now
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the talk is very much reversed, and one of
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the things,
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I think I mentioned this a few weeks ago,
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there was a short seller named Jim Chanos
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who had actually shorted Strategy stock,
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bought Bitcoin as a hedge,
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and although I don't know the details, he
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exited that position.
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It was reported that he exited that
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position with a very hefty profit, but
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basically the thesis was that
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Strategy has
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a software company
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that
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basically breaks even if not generates a
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modest loss.
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So the proceeds that they're
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using to buy
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Bitcoin is they're doing it through share
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issuance,
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they're doing it through the issuance of
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preferred stock, they're doing it through
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the issuance of debt.
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And that worked for a time because strategy
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shares were selling at a very large premium
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over their
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per share value of their Bitcoin holdings,
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which is really the only value of the
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company.
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Again, if they have an operating business
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that's not making money, there's really no
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value there.
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There might be some liquidation value, but
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there's really no value as an ongoing
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enterprise.
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So Strategy is just one big
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bet on Bitcoin, and
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this worked for a time.
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I think they
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own
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like 3% of all outstanding Bitcoin or
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thereabout.
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but it was working for a time because
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strategy shares were selling at two to
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three times
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the value of their Bitcoin holdings.
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And because the stock was so expensive, it
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was basically,
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in other words, selling at such a high
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multiple of their Bitcoin holdings,
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it was basically a very cheap currency.
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So Saylor was able to use that currency,
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issue more stock,
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buy Bitcoin,
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and for a time looked like a genius and it
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started to really unravel.
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The Financial Times had a good piece on
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this called the infinite money glitch
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meter arithmetic.
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The idea of the infinite money glitch comes
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down to what Saylor was talking about,
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as long as their stock price
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would sell at a high premium to their
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Bitcoin holdings, they had this discounted
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currency with which they could use to buy
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Bitcoin.
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And a couple of things was happening.
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One is
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you had a lot of imitators.
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So I know even
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Grant Cardone, who has
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some private real estate funds, is now
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advertising that he's using those private
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real estate funds.
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He's using
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the rental income or the dividend income
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from those private real estate funds
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to buy Bitcoin.
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So he's kind of selling this
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Bitcoin strategy.
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You're hearing more and more companies
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get on board with this.
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So it's kind of diluting
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the strategy in a lot of ways.
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But one of the things that this article
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points out
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is that right now strategy is
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part of the MSCI index.
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And this is a global
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stock market index.
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And like any index, they have a committee
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that will decide
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what will
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go into the index, what will be removed
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from the index, what will remain in the index.
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that committee meets periodically
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and they make those decisions.
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And there's a lot of talk about strategy being
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eliminated from this index.
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Now, what you have to understand is that
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when you have an index,
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because there's so many index funds
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and mutual funds that will buy a big part
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of the index and exchange traded funds that
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buy the index,
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you always have this level of artificial
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demand anytime a company is a component of
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an index.
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So if that stock gets kicked out and
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there's a good chance that it will,
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you're going to have a lot of forced
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selling.
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And what does that mean for strategy stock?
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What does that mean for Bitcoin?
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I don't know, but it's possible
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that this unwinds a little bit.
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Now, I will say,
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as a stock investor,
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if I really believe in a stock and that
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stock goes down,
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I'm actually happy because I can buy more.
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And over the years,
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our cost basis, or what I call, what's
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called the weighted average cost basis, has
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always been a lot lower than the initial
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buying point of a stock.
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In other words,
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if I buy a stock and that stock goes down
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and I still believe in that company, I've
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done my analysis, I think the market is wrong,
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I'll buy more and then my weighted average
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cost will be less than the initial price
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that I pay it on the first trade.
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And I think if there are
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true believers out there with Bitcoin,
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that'll probably happen, so I wouldn't,
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and I'm speaking ignorantly here just to be clear,
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but I just think that there are a lot of
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true believers, and it's also become a much more
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accepted asset,
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especially with the current administration,
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which has been very favorable to
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cryptocurrency.
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So my point is,
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I think you have a lot of potential risks,
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and I also think you have a lot of
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potential things that can stabilize it, but
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I would be very surprised if the whole
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Bitcoin treasury strategy, regardless of
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what one thinks about
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Bitcoin as a standalone asset,
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I would be very surprised if this Bitcoin
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treasury strategy
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is still a thing in any material way in say
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a year or year and a half from now.
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I could be very wrong,
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but when I look at strategy
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or what's what we used to be called micro
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strategy,
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I see this thing kind of breaking down.
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I could be wrong and I could be wrong
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quickly, but it doesn't strike me as at all
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sustainable.
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This company is trying to service debt with
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no income.
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I mean, they're trying to serve that they
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just issued some additional
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some additional equity and they're putting
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that money aside in order to service debt.
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So this looks like a very unsustainable thing.
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Just a warning to investors, but again,
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I could be wrong, and there are probably
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some true believers who still think Michael
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Saylor is
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a genius.
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One thing that I will
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point out, and this was in this article,
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MSCI is talking about dropping them from
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the index, this committee is talking about
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dropping them from the index, because
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essentially you can't have investment funds
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in the index, they have to be operating
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businesses.
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So Saylor's trying to say, I think he's
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made some tweets on this or wherever.
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He says, strategy is not a fund, not a
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trust, and not a holding company.
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We're a publicly traded operating company with
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a $500 million software business
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and a unique treasury strategy that uses
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Bitcoin as productive capital.
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The problem is, of course, that contradicts
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a lot of things that he had said before.
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So he's trying to
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deal with the true believers who are part
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of his shareholder constituency
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and he's trying to deal
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with the MSCI index committee
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and
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it's very hard to serve two masters so
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we'll see what happens but I'm certainly in
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the skeptics
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in the skeptic bucket here
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so
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that said
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you know another
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big issue that's been happening throughout
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the year that I've been talking about
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And that is this
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coming, I think it's gonna be a coming
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deluge of
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private funds are gonna be on offer
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to individual
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retail investors.
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Jason Sweig at the Wall Street Journal, he
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had a piece, and
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this is actually earlier in November.
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I wanted to discuss this
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earlier, but didn't get a chance.
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There's a
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little story about
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It's this guy that worked at
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Vanguard.
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He was like the head of their
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fixed income or something.
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But he's down in Florida.
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He's down in a small town in Florida.
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He's retired.
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So when he was at Vanguard, he oversaw like
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750 billion, according to the article.
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00:09:54,480 --> 00:09:56,080
And he's now down in this small town of
285
00:09:56,080 --> 00:09:56,720
Florida.
286
00:09:57,200 --> 00:09:57,840
And
287
00:09:58,400 --> 00:09:58,880
he's
288
00:09:59,840 --> 00:10:00,960
he's vice mayor.
289
00:10:00,960 --> 00:10:02,240
His name's Robert
290
00:10:04,240 --> 00:10:05,040
Owerter.
291
00:10:06,720 --> 00:10:08,240
But he used to oversee this huge
292
00:10:08,480 --> 00:10:09,960
portfolio of Vanguard, now he's over.
293
00:10:10,040 --> 00:10:12,680
overseeing this little $21 million
294
00:10:13,840 --> 00:10:14,960
municipal fund.
295
00:10:15,760 --> 00:10:18,680
And this municipal fund put some money into a
296
00:10:19,120 --> 00:10:21,680
private real estate trust, private real
297
00:10:21,680 --> 00:10:22,400
estate fund.
298
00:10:23,440 --> 00:10:24,800
And essentially, they're having a really
299
00:10:24,800 --> 00:10:25,600
hard time
300
00:10:26,080 --> 00:10:27,680
getting their money out because the way
301
00:10:27,680 --> 00:10:29,440
private real estate funds work
302
00:10:29,880 --> 00:10:30,560
is of course,
303
00:10:31,280 --> 00:10:33,840
they're investing in illiquid assets.
304
00:10:34,640 --> 00:10:35,280
So
305
00:10:35,920 --> 00:10:37,680
I think in $1,000,000 investment, it said
306
00:10:37,680 --> 00:10:38,240
they took
307
00:10:38,480 --> 00:10:41,520
64,000 out or something because the funds
308
00:10:41,520 --> 00:10:43,760
have the ability to close
309
00:10:44,240 --> 00:10:46,080
any liquidity off to investors.
310
00:10:46,080 --> 00:10:46,880
They can just,
311
00:10:48,880 --> 00:10:50,960
they can just say, we're going to limit you
312
00:10:50,960 --> 00:10:52,680
to a certain, taking out a certain amount.
313
00:10:52,680 --> 00:10:54,480
And this is one of the points that
314
00:10:55,680 --> 00:10:56,560
Zweig makes,
315
00:10:57,920 --> 00:11:00,160
is that institutions can bear that
316
00:11:00,160 --> 00:11:01,200
illiquidity risk.
317
00:11:01,200 --> 00:11:02,480
They can keep money
318
00:11:02,880 --> 00:11:04,920
tied up for a long period of time and
319
00:11:05,040 --> 00:11:06,600
individuals really can't.
320
00:11:07,280 --> 00:11:09,400
And I've never liked private real estate
321
00:11:09,400 --> 00:11:13,200
funds because unlike public REITs, public
322
00:11:13,200 --> 00:11:15,840
REITs can sell for below net asset value.
323
00:11:16,240 --> 00:11:18,480
So you can get a bargain with public REITs.
324
00:11:18,960 --> 00:11:21,360
Private REITs generally sell or
325
00:11:21,680 --> 00:11:24,320
offer shares at net asset value.
326
00:11:25,040 --> 00:11:26,560
And in addition, you're bearing that
327
00:11:26,560 --> 00:11:28,400
liquidity risk, you're bearing the risk of
328
00:11:28,400 --> 00:11:30,240
not being able to sell your holdings
329
00:11:30,880 --> 00:11:32,640
in that you have to wait for them to sell
330
00:11:32,640 --> 00:11:36,080
assets, or possibly the portfolio can go
331
00:11:36,080 --> 00:11:37,520
public or being taken over.
332
00:11:38,800 --> 00:11:41,040
But you've got to be able to tie up your
333
00:11:41,040 --> 00:11:42,560
capital for a long period of time.
334
00:11:42,960 --> 00:11:44,960
So there's a lot of concern, and as we
335
00:11:44,960 --> 00:11:46,640
highlights this, that
336
00:11:46,880 --> 00:11:48,720
individual investors are really not going
337
00:11:48,720 --> 00:11:49,760
to understand that
338
00:11:50,560 --> 00:11:52,160
illiquidity risk going in.
339
00:11:52,800 --> 00:11:54,480
as these things are more
340
00:11:54,720 --> 00:11:56,680
put together more on offer for individual
341
00:11:56,680 --> 00:11:57,200
investors.
342
00:11:57,200 --> 00:11:59,040
They're already on offer even for smaller
343
00:11:59,040 --> 00:12:00,640
investors through something called
344
00:12:00,640 --> 00:12:01,840
Regulation A+.
345
00:12:02,720 --> 00:12:04,240
And I know a handful of people who are
346
00:12:04,240 --> 00:12:05,360
doing this where they're
347
00:12:05,680 --> 00:12:07,520
offering shares to
348
00:12:08,240 --> 00:12:10,800
smaller retail investors in these private
349
00:12:12,080 --> 00:12:12,640
funds.
350
00:12:13,040 --> 00:12:14,960
The amount that can be invested in them is
351
00:12:14,960 --> 00:12:16,000
relatively small.
352
00:12:16,000 --> 00:12:17,600
So that's been one of the kind of one of
353
00:12:17,600 --> 00:12:19,040
the saving graces, but
354
00:12:19,600 --> 00:12:21,840
this is an area of concern as it becomes
355
00:12:22,560 --> 00:12:24,960
as it becomes wider, more acceptable.
356
00:12:27,840 --> 00:12:29,600
I was reading
357
00:12:30,920 --> 00:12:32,000
this book
358
00:12:32,320 --> 00:12:33,120
by
359
00:12:33,920 --> 00:12:34,960
Bob Pisani,
360
00:12:35,880 --> 00:12:37,600
and I'm in the process of reading this book
361
00:12:37,600 --> 00:12:39,440
because I'm developing a stock market
362
00:12:39,440 --> 00:12:41,440
investing course that we're gonna
363
00:12:41,920 --> 00:12:43,280
roll out in the spring.
364
00:12:44,320 --> 00:12:45,840
It's actually our second course, we're in
365
00:12:45,840 --> 00:12:47,840
the process of rolling out a few others,
366
00:12:48,640 --> 00:12:49,280
but this is a
367
00:12:49,920 --> 00:12:51,200
course that I'm working on
368
00:12:51,760 --> 00:12:53,200
and it's gonna take me a little while, but
369
00:12:53,200 --> 00:12:54,440
one of the things that I'm doing is I'm
370
00:12:54,440 --> 00:12:56,960
relying on some material to
371
00:12:58,800 --> 00:13:01,040
look at the evolution of the stock market
372
00:13:01,040 --> 00:13:01,680
in general.
373
00:13:02,560 --> 00:13:04,800
Bob Pisani's book is very good for this
374
00:13:04,800 --> 00:13:05,600
because
375
00:13:05,920 --> 00:13:09,200
Pisani was, up until recently,
376
00:13:09,680 --> 00:13:11,120
the senior
377
00:13:13,200 --> 00:13:16,160
market, I don't know what his exact title was,
378
00:13:17,360 --> 00:13:20,640
senior markets correspondent for CNBC.
379
00:13:20,640 --> 00:13:23,600
So anybody watching CNBC knows who Pisani is.
380
00:13:25,000 --> 00:13:26,360
He was on the floor of the New York Stock
381
00:13:26,360 --> 00:13:28,000
Exchange reporting for,
382
00:13:28,920 --> 00:13:30,720
I don't know, 27 or 28 years.
383
00:13:31,200 --> 00:13:34,880
This book came out in 2022, so it was 25 years
384
00:13:35,400 --> 00:13:35,680
of
385
00:13:36,160 --> 00:13:39,040
his experience because he started in 97.
386
00:13:40,000 --> 00:13:41,120
So the book covers
387
00:13:41,480 --> 00:13:44,040
all of his experience on the reporting from
388
00:13:44,040 --> 00:13:45,440
the floor of the New York Stock Exchange
389
00:13:45,440 --> 00:13:46,360
over that period.
390
00:13:46,360 --> 00:13:47,840
And I know 97,
391
00:13:48,200 --> 00:13:50,240
depending on how you look at it, feels like
392
00:13:50,240 --> 00:13:51,760
yesterday for a lot of us,
393
00:13:52,320 --> 00:13:54,480
but it's unbelievable how much the market
394
00:13:54,480 --> 00:13:55,240
has changed.
395
00:13:56,720 --> 00:13:59,680
When he starts reporting in 1997, 80% of
396
00:13:59,680 --> 00:14:02,000
the transactions that occurred on the New
397
00:14:02,000 --> 00:14:03,280
York Stock Exchange
398
00:14:04,000 --> 00:14:05,760
occurred actually on the floor.
399
00:14:05,760 --> 00:14:07,280
So when we think about the New York Stock
400
00:14:07,280 --> 00:14:08,880
Exchange, I think a lot of people think
401
00:14:08,880 --> 00:14:10,880
about that physical location on
402
00:14:11,720 --> 00:14:13,520
I think it's Wall Street and Broad Street
403
00:14:14,800 --> 00:14:17,600
and all of the traders, yelling at each
404
00:14:17,600 --> 00:14:18,400
other and
405
00:14:18,880 --> 00:14:21,120
the little pieces of paper everywhere and
406
00:14:21,120 --> 00:14:22,720
being swept up at the end of the day.
407
00:14:23,440 --> 00:14:25,680
They still do that, of course, and they still
408
00:14:25,920 --> 00:14:28,000
broadcast from the floor of the exchange,
409
00:14:28,000 --> 00:14:29,920
but the amount of transaction volume
410
00:14:30,400 --> 00:14:32,640
that is actually handled on the floor is a
411
00:14:32,640 --> 00:14:34,480
pittance compared to what it was
412
00:14:34,800 --> 00:14:36,160
just a few decades ago.
413
00:14:37,440 --> 00:14:38,800
So I'm reading through this book
414
00:14:40,000 --> 00:14:40,640
to
415
00:14:41,840 --> 00:14:44,240
really prepare for this class. And
416
00:14:44,760 --> 00:14:48,000
as Pisani tells a story, when he starts in 1997,
417
00:14:48,320 --> 00:14:49,680
it was a very closed
418
00:14:50,000 --> 00:14:51,120
group of people.
419
00:14:51,360 --> 00:14:53,040
The floor brokers and stuff,
420
00:14:53,800 --> 00:14:56,080
and the runners and everybody, they did not
421
00:14:56,080 --> 00:14:57,160
want to talk to reporters.
422
00:14:57,160 --> 00:14:58,640
And that's very different than the way it
423
00:14:58,640 --> 00:15:00,240
is today, where the markets are very
424
00:15:00,240 --> 00:15:01,120
integrated with
425
00:15:01,600 --> 00:15:02,640
the financial news.
426
00:15:03,680 --> 00:15:05,080
But at the time, that was not the case.
427
00:15:05,080 --> 00:15:07,040
So 2 of the people that he was able to
428
00:15:08,640 --> 00:15:09,800
develop friendships with
429
00:15:10,400 --> 00:15:11,000
One was a
430
00:15:12,320 --> 00:15:14,640
market maker for Berkshire Hathaway. I
431
00:15:15,200 --> 00:15:16,880
don't recall his name, but the other
432
00:15:17,680 --> 00:15:19,680
was a man named Art Cashin.
433
00:15:20,880 --> 00:15:24,080
Now I knew who Cashin was because Cashin was
434
00:15:24,320 --> 00:15:25,800
kind of a staple on the floor of the New
435
00:15:25,800 --> 00:15:27,760
York Stock Exchange and he was always on
436
00:15:28,240 --> 00:15:28,840
CNBC.
437
00:15:28,840 --> 00:15:30,800
He was on CNBC virtually every day. He
438
00:15:32,240 --> 00:15:34,240
was usually interviewed at market close.
439
00:15:35,120 --> 00:15:36,120
Cashin was the
440
00:15:38,400 --> 00:15:41,200
director of floor operations
441
00:15:41,520 --> 00:15:43,440
for Painewebber, and then Painewebber was
442
00:15:43,440 --> 00:15:45,440
acquired, so he became director of floor
443
00:15:45,440 --> 00:15:47,720
operations for UBS, which is a company that
444
00:15:47,720 --> 00:15:48,240
acquired
445
00:15:49,280 --> 00:15:50,480
Painewebber. And
446
00:15:51,760 --> 00:15:53,720
he was very much an old-timer, very
447
00:15:53,720 --> 00:15:54,240
interesting.
448
00:15:54,240 --> 00:15:57,440
So I'm reading this chapter four of this book.
449
00:15:58,640 --> 00:16:01,360
Chapter four, Pisani talks about his
450
00:16:01,360 --> 00:16:02,880
friendship with Art Cashin.
451
00:16:04,240 --> 00:16:04,800
And
452
00:16:05,200 --> 00:16:07,440
I knew that Art Cashin had died,
453
00:16:07,920 --> 00:16:09,280
relatively recently.
454
00:16:09,680 --> 00:16:10,640
So I looked it up
455
00:16:11,200 --> 00:16:13,360
and I kind of got goosebumps because
456
00:16:13,360 --> 00:16:15,120
literally as I'm reading this chapter, I
457
00:16:15,120 --> 00:16:16,880
hadn't thought about Art Cashin forever,
458
00:16:17,520 --> 00:16:19,280
but literally as I'm reading this chapter
459
00:16:20,480 --> 00:16:21,360
and I looked it up,
460
00:16:22,160 --> 00:16:24,200
it was the one year anniversary of Art
461
00:16:24,200 --> 00:16:25,320
Cashin's death.
462
00:16:25,320 --> 00:16:28,960
He died at 83, December 1st, 2024.
463
00:16:29,280 --> 00:16:31,000
So I'm reading this chapter on the one year
464
00:16:31,000 --> 00:16:32,720
anniversary and I thought I would mention
465
00:16:32,720 --> 00:16:34,320
something about him because he was a really
466
00:16:34,320 --> 00:16:35,040
interesting
467
00:16:35,680 --> 00:16:35,800
guy.
468
00:16:35,800 --> 00:16:37,840
I mean, I knew a little bit about him from
469
00:16:37,840 --> 00:16:38,800
all the reporting
470
00:16:39,720 --> 00:16:42,640
and all the commentary he provided on CNBC. But
471
00:16:43,200 --> 00:16:45,040
Cashin had never went to college.
472
00:16:45,040 --> 00:16:47,760
He started in the broker's world at 17.
473
00:16:48,160 --> 00:16:50,000
He was helping to support his family.
474
00:16:50,960 --> 00:16:53,680
And he was very much known for
475
00:16:54,160 --> 00:16:55,280
telling stories.
476
00:16:55,560 --> 00:16:56,240
And he was a
477
00:16:56,480 --> 00:16:57,920
great market historian.
478
00:16:58,560 --> 00:17:00,120
He was an astute student
479
00:17:00,440 --> 00:17:02,160
of market psychology.
480
00:17:03,040 --> 00:17:03,680
And
481
00:17:04,560 --> 00:17:07,920
it was said that he could convey more
482
00:17:08,240 --> 00:17:10,960
wisdom in a couple of stories than could
483
00:17:10,960 --> 00:17:12,640
the most learned economist
484
00:17:13,040 --> 00:17:14,720
in a thousand-page textbook.
485
00:17:15,360 --> 00:17:16,160
He was just
486
00:17:17,480 --> 00:17:18,800
a treasure trove of wisdom.
487
00:17:19,200 --> 00:17:21,840
He reminded me a lot of some old-timer
488
00:17:21,840 --> 00:17:24,000
stockbrokers that I knew
489
00:17:24,400 --> 00:17:25,680
relatively early
490
00:17:26,000 --> 00:17:27,520
in my investment career.
491
00:17:28,800 --> 00:17:30,040
Very much a dying breed.
492
00:17:30,040 --> 00:17:31,760
I don't think you find too many people.
493
00:17:32,800 --> 00:17:35,200
who can convey all these stories from back when.
494
00:17:36,720 --> 00:17:38,560
In chapter 4, Pasani
495
00:17:39,120 --> 00:17:40,080
talks about
496
00:17:40,960 --> 00:17:41,760
a story that Art
497
00:17:42,080 --> 00:17:43,120
Cashin tells
498
00:17:43,760 --> 00:17:45,920
about November 1963.
499
00:17:47,840 --> 00:17:48,400
And
500
00:17:49,280 --> 00:17:51,760
on this day of November 1963, November
501
00:17:51,760 --> 00:17:54,320
22nd, 1963, I think everyone knows where
502
00:17:54,320 --> 00:17:55,280
I'm going with this,
503
00:17:56,000 --> 00:17:57,840
Cash is on the floor of the exchange and he
504
00:17:57,840 --> 00:18:00,160
notices that there's a lot of heavy selling
505
00:18:00,160 --> 00:18:01,280
by Merrill Lynch.
506
00:18:01,880 --> 00:18:03,600
And of course, at the time, we don't really
507
00:18:03,600 --> 00:18:04,960
appreciate this today, but at
508
00:18:05,280 --> 00:18:07,040
the time, you did not have an instantaneous
509
00:18:07,040 --> 00:18:07,840
news cycle.
510
00:18:08,400 --> 00:18:10,480
When President Kennedy was in Dallas,
511
00:18:11,520 --> 00:18:13,080
that was a national news.
512
00:18:13,080 --> 00:18:14,800
I mean, that wasn't a huge event.
513
00:18:15,680 --> 00:18:17,760
It became a huge event later.
514
00:18:18,720 --> 00:18:20,880
So he notices Merrill is
515
00:18:22,080 --> 00:18:23,760
doing all the selling, but there's no
516
00:18:24,160 --> 00:18:26,400
news coming on the newswire or anything.
517
00:18:27,280 --> 00:18:29,120
Well, it turns out that Merrill had some
518
00:18:29,120 --> 00:18:30,960
brokers in Dallas
519
00:18:31,560 --> 00:18:32,880
They didn't know what happened, but they
520
00:18:32,880 --> 00:18:34,960
knew that the president's motorcade had
521
00:18:34,960 --> 00:18:35,840
been rerouted.
522
00:18:36,560 --> 00:18:38,360
And there was talk about
523
00:18:39,920 --> 00:18:41,720
the parade being canceled and everything,
524
00:18:41,720 --> 00:18:43,680
and they just kind of inferred that nothing
525
00:18:43,680 --> 00:18:44,720
good had happened.
526
00:18:45,240 --> 00:18:46,800
And of course, it came out later
527
00:18:47,520 --> 00:18:50,080
that the president had been assassinated, but
528
00:18:51,280 --> 00:18:52,120
this all happened.
529
00:18:52,120 --> 00:18:53,880
In other words, the market incorporated
530
00:18:53,880 --> 00:18:55,040
this before
531
00:18:56,240 --> 00:18:58,000
this ever hit the newswire. So
532
00:18:59,680 --> 00:19:02,200
Cashin conveys that story, and I think it's
533
00:19:02,200 --> 00:19:04,320
very interesting, about how efficient
534
00:19:04,640 --> 00:19:06,640
stock markets can be in incorporating
535
00:19:06,640 --> 00:19:07,440
information.
536
00:19:08,360 --> 00:19:10,040
One of the other stories about Cashin that
537
00:19:10,040 --> 00:19:11,080
I liked is there was a
538
00:19:12,160 --> 00:19:14,480
spaghetti dish that was named after
539
00:19:14,880 --> 00:19:15,680
Cashin,
540
00:19:16,720 --> 00:19:17,920
and he showed
541
00:19:18,800 --> 00:19:21,600
Pasani the menu from like the 1960s. So
542
00:19:22,000 --> 00:19:23,760
the spaghetti dish was available for like
543
00:19:23,760 --> 00:19:25,200
$1.50 or something.
544
00:19:25,920 --> 00:19:28,080
But the spaghetti dish was actually
545
00:19:28,640 --> 00:19:31,400
Cashin's breakfast because he would be out
546
00:19:31,400 --> 00:19:31,920
all night.
547
00:19:32,560 --> 00:19:34,160
He would be out all night drinking and he
548
00:19:34,160 --> 00:19:35,960
would eat this spaghetti dish at like 5 in
549
00:19:35,960 --> 00:19:36,560
the morning.
550
00:19:37,120 --> 00:19:37,680
So
551
00:19:37,920 --> 00:19:39,640
another thing that reminds me of some of
552
00:19:39,640 --> 00:19:41,760
the old timers because that's where I met a
553
00:19:41,760 --> 00:19:44,240
lot of them was I was worked at a bartender
554
00:19:44,240 --> 00:19:45,920
when I worked as a bartender when I was in
555
00:19:45,920 --> 00:19:46,480
college.
556
00:19:47,280 --> 00:19:49,200
Some of these guys would love their doers
557
00:19:49,200 --> 00:19:51,200
and on the rocks and other drinks, but
558
00:19:51,640 --> 00:19:52,880
it's very interesting. So
559
00:19:53,280 --> 00:19:55,840
yes, rest in peace, Art Cashin. He was
560
00:19:56,880 --> 00:19:58,080
Not many people like him.
561
00:19:58,080 --> 00:19:59,280
I don't know if there's anyone like him
562
00:19:59,280 --> 00:20:00,400
around anymore, but
563
00:20:00,640 --> 00:20:02,000
it's certainly a bygone era.
564
00:20:03,360 --> 00:20:05,200
That said, I hope everyone has a
565
00:20:05,600 --> 00:20:06,480
great week.
566
00:20:07,280 --> 00:20:08,880
Best of luck to you in your investment
567
00:20:08,880 --> 00:20:10,640
endeavors, and as always, focus on the
568
00:20:10,640 --> 00:20:11,280
fundamentals.
