Summary
Transcript
The investing black hole is growing fast. It’s sucking in nearby funds, killing portfolios that are using old investment strategies like Radialio’s funds, which have lost over $70 billion. And you have a choice to either use this black hole’s energy to grow your portfolio or risk getting sucked inside and never escaping to the portfolio, the retirement or the life that you dreamed of. And warning, this might be hard for you to understand because you’re going to have to throw out a lot of what you’ve learned from your financial advisor. So in this video, I’m going to break down what this investing black hole is, why Radialio’s and your financial advisor strategies, they’re all at risk and how you can invest in this black hole to stay ahead.
Now, real quick, if you’re new to the channel, my name is Mark Moss. I’ve been investing my own money and writing investment research reports and advising others now for about two decades. I’m a partner of a Bitcoin AI focused VC hedge fund. I’m also a strategic advisor to a brand new publicly traded company that’s focusing on the intersection of Bitcoin and AI. So when it comes to these topics, you could say that I have a front row seat. And more importantly, my time and my money is exactly where my mouth is. So let’s go.
All right, so we’re going to just jump right in and get right into it. The first thing we’re talking about is what the heck is this black hole that I’m even talking about. Okay. So, you know, a black hole is like in space and it sucks in all matter and energy. And that’s exactly what we’re talking about here. So what happens is we have these quantum waves, these quantum leaps forward and they are basically like this black hole. Now you might’ve seen this chart. I’ve been using this chart since I think 2021, something about the last four years.
So you’ve probably seen me use this, but these are the quantum waves. And so basically what happens is these are technological revolutions, not technologies, technological revolution cycles, K waves, they happen about on a 40 to 60 year time frame I’ve charted them out as 50 years. Okay. So every 50 years, we get one of the cycles. Now you’ve seen me use this chart, I’m going to break it down for you. And you’ve probably also seen me use this chart because there’s not just one, but there’s three cycles that are all happening, a 250 year political revolution cycle, an 80 year financial revolution cycle, and a 50 year quantum wave cycle.
And they’re all three converging right here, right now. But that’s a topic for a new video about that. Let me know in the comments down below, but we are talking about these quantum wave leaps that happen about every 50 years and we’re witnessing one right now. Now there’s a couple of things to know about this. Well, there’s a lot of things to know. I could do a whole video just on this. Maybe I should drop me a comment if you want that, but there’s a couple of things to know. There’s two main things that make these quantum waves different.
Again, they’re not technologies, they’re technological revolutions and it’s a cluster of technologies. But there’s two main things that matter. One, they change the course of humanity. So when we had steam engines, all of a sudden we could now move stuff across continents. When we had electricity, obviously I don’t have to tell you what that’s done. When we had an automobile, humans had walked for all of eternity and now we had transportation. So these change course of humanity. But more importantly, what I want to talk about is that during these quantum waves, or I call them Q waves for short, not only do they change humanity, but they drive all financial markets.
So what’s driven the markets for the last 50 years? Telecom, personal computers, and internet represented by Jeff Bezos. What drove the markets for the 50 years before that? Well, it was Ford, GM, GE. What drove the markets for 50 years before that? It was steel, it was railways, it was oil, and you start to get the drift. Now, of course, you can put your money wherever you want. You can put it into bonds, you can put it into whatever real estate. But the majority of the wealth was made here for the last 50 years, just like the majority of the wealth was made there for the last 50 years.
That represents the black hole. I’m going to break it down for you in numbers that you can understand. But just to kind of put this into perspective in the fifth wave, we’re now entering the sixth wave. But if we go back to the fifth wave to take a look at this, like I said, all the money, the big money was really made in that tech cycle. Again, it was represented by the microprocessors who brought telecommunications, personal computers, and the internet. And so we look at this. Now, of course, you could be in your diversified fund, and you could be making your 6% or 7% per year.
But if you wanted to make the big money, you would be in that sector. So here, for example, is Intel. Intel started the microprocessor revolution, which led to this cluster of technologies. And you can see in the first part of the cycle, so there’s four different parts of the cycle. That’s a whole separate topic for a whole other video. Again, leave me a comment if you want that. But there’s four cycles in the first part of the cycle. Intel went up by 23,000%. In the second part of the cycle, which we’re going into now, I’ll show you that in a second, it went up by another 26,000%.
23,000% gain, 26,000% gain, which is much better than the 6 or 8% you’re making the S&P 500. So these are the investing black holes. Let me give you another couple of examples. Here’s Apple. So then the microprocessor led to the personal computer boom, which Apple got to participate in. And Apple during this part of the cycle, the second part of the cycle, again, I’ll show you that in a second, went up by 1.5 million%. So cool, make your 7 or 8% in the stock market. That’s cool, the S&P 500 index.
But if you want to make 1.5 million%, you have to be invested into the QAVE. And again, personal computers, Microsoft, 57,000% in the first phase, 57,000%. In the second phase, it went up by almost 1.5 million. So that is the power of this. This was the last, the fifth wave. Now we’re going into the six QAVE or quantum wave, as I call them, that’s causing this black hole. Now, why is it a black hole? Well, it’s a black hole because number one, that’s the place to invest. Number two, that’s where you make a lot of money.
But more importantly, there’s really nowhere else to invest. Like really, and what do I mean by that? Well, if we look at investing, we’re trying to make money, obviously, and the whole purpose that we have to invest is because they debase our money. If our money was able to buy more goods and services in the future, we could just save our stored energy and our money. But because they continue to debase that money by inflation, we’re losing our value, we’re forced to now become investors to beat that rate, beat the rate at which they’re stealing, which is the real rate.
Now the problem, or why I call it the real rate, is because they changed the definition in about the 1950s of what inflation is. It used to be like the rate of debasement. Now it’s like consumer price inflation. So the price of consumer goods. And the reason why that’s a problem is that right now CPI is somewhere in the three to three and a half percent range. So you’re like, cool. Well, the S&P 500 is making me seven percent. Inflation’s three percent. I’m doing pretty dang good, but that could be wrong.
So what am I talking about? We have something called a hurdle rate. A hurdle rate is the rate to beat as illustrated here. Now in business, the hurdle rate would be when I have to borrow capital for my business. So I have to buy some new equipment, a new truck, a new building, whatever. And I have to borrow that money and I’m paying six, eight, 10 percent interest on that money. When I was doing fixing and flipping homes and building, for example, I did over 100 properties fixed and flipped. I built this building.
We’re in here now. I would borrow hard money. So the cost of me borrowing that money was 10 percent for one year. I had to make more than that just to cover the cost of the capital. And then I had profit on top of that. That’s the hurdle rate. And so what we really have the hurdle rate is not CPI, the three, four, five, whatever the government tells you it is. The real rate of a hurdle rate is the actual rate of debasement. So let me show you what that looks like. Now this is the US.
I think a global liquidity is I’m going to show you that in a second. I think the global liquidity is a better number to look at. But here’s the Fed. It’s a pretty good representation. Since 2019, the rate of debasement or monetary expansion, however you want to call it, has been averaging 10 percent per year. So that is the start of the hurdle rate. I need to make at least 10 percent because that’s how much I’m losing every single year. On top of it, I have my 10 percent plus now I have the cost of goods going up.
So let’s call that 3 percent. So now I’m at about 13 percent hurdle rate. I probably want to put a risk premium in there, 2 to 3 percent risk premium. So now I’m at 15, 16 percent. That’s the number I have to beat. And the reason why that’s important to understand is because what you see is your index funds, you see your 401k, your mutual funds, going up in value in what we call nominal value. But you don’t feel more rich. You’re not getting ahead and that is why. This is a tweet that I just replied to from my friend Joe Calisari.
And he’s saying if you use CPI, inflation adjusted all-time high, he’s talking about Bitcoin. And he said, or if you use the actual inflation, that’s double the official government CPI data. And I said, I claim that the actual inflation is the rate of debasement. Not CPI, not double CPI, it’s the rate of debasement, which I just showed you. Now, the reason why this is a hurdle rate and where this becomes a problem is when we look at all of the different places that we can invest into. So this is where we get into the investing black hole.
So if we look at all the different asset classes, these are classes now within these classes, like for example, the NASDAQ is the number two asset class. The NASDAQ represents tech stocks. And of course, there’s hundreds and hundreds of tech stocks in there, but it’s an asset class. If we look at the asset classes, this is since 2011 until 2024. And this represents every single year, the return based off of these asset classes. And what we have, and this is ranked highest to lowest. So at the very top asset class, the best performing is Bitcoin.
Bitcoin has returned a 144% annualized return. Is that better than the 14% hurdle rate, 15% hurdle rate? Is it better or worse? It’s better. So if you bought Bitcoin, you are getting ahead. Now we have the next performing asset class, which is number two, which is the NASDAQ. And the NASDAQ has returned 17 and a half percent. Now, is that better than the hurdle rate of 14, 15%? Yes, by about two or 3%. So good buying the NASDAQ, I’ve done better. But then we have down here in fourth place, the S&P 500. And this is where most of you are buying into your index funds, your 401k mutual funds, if your financial advisor is advising you.
And we have that in fourth place, and that has averaged 12 and a half percent. So is that beating the real hurdle rate? And the answer is no. Now, everything else is below that. Here we have gold way down here, which has averaged a two to 4% return. It’s a little bit unfair because gold sort of had to pop over the last year. So maybe it pushes up to six, seven percent. I haven’t recalculated the last 14 years. So six, seven percent, it’s still way below the hurdle rate. So that’s the problem.
That’s why this is a black hole. So if none of this, if basically from here down, if none of this is beating the hurdle rate, why would you invest into it? This would make it clear there’s really only two different asset classes you should be considering into investing into. And therein lies the problem that assets, they all have different performance and they all kind of compete against each other. Now, as I said, it’s not just the US liquidity that we want to be looking at. We want to be looking at global liquidity.
So this is a chart from 2010 till currently. So this is the global, this is the amount of money or currency and credit that’s available in the globe, in the world. So China, Bank of Japan, European Central Bank, et cetera. And you can see this goes up. Now, nothing goes up and down a straight line. So we had some down here, we had some down here, et cetera. These move on cycles. That’s a whole other video. There’s about four year cycles. If you want that video, let me know in the comments down below.
But the reason why I want to show you this is then if we take the global liquidity and we map it or we overlay it with assets like the S&P 500, we start to see some very interesting things. For example, the black is the S&P 500 and the gold or the orange is the global liquidity. And you can see that they move in almost perfect lock step. Now, not perfect, about almost perfect, but somewhere between 90 to 95% correlated. And so that means that if you buy the S&P 500, as I already showed you, you’re averaging 12 and a half percent, you’re just keeping your nose above water, but you’re not actually getting ahead.
Now the same is true with US real estate. So if we look at the US median real estate, since here we have about 2014, here’s 2020. What we can see is that the US median real estate, the prices are going up. And what we have on the blue line is the debasement, the amount of monetary expansion. And you can see they move almost perfectly. Now the monetary expansion moved faster here. And now the homes are starting to catch up. And here we are, the homes are a perfect proxy for the rate of inflation.
Now homes do a little bit better because there’s other ways to make money with homes. For example, use leverage, right? You use a loan, you have tax efficiency, write offs, things like that. But on a straight monetary basis, you can see it’s a perfect proxy, but then we have other assets and this is where the black hole starts kicking in. So now we have a chart, the blue line is again, global liquidity. And now what we have in white is what we call inflation hedges as a basket of gold and Bitcoin.
And what we can see is that now the correlation is down to about 80%. Now what that means is yes, sometimes it moves in lockstep, but then it greatly overperforms. And what we can see is that these different assets have what we call different sensitivities. So gold has a sensitivity ratio of about 1.49. Bitcoin has a sensitivity ratio of 8.95. So what that means is for every 10% increase in liquidity, which is happening about every year, gold goes up by about 14%. And Bitcoin goes up by about 90%. Sounds pretty good.
That’s what we have. And the reason why you have to understand this is because if you’re going to be investing your money, you should know what asset classes you’re going into for the black hole. And that brings us to Ray Dalio, one of the most famous investors in the world and how he’s losing billions of dollars. Now, I just want to say here, Ray Dalio is absolutely brilliant. I’ve read several of his books. I admire his work. He’s obviously made billions of dollars. So I’m not trying to discredit him. What I’m trying to say is that something I learned a long time ago during the great financial crash is that there’s no such thing as good and bad timing.
There’s good and bad strategies. So that means no matter what the timing is going on, if you change your strategy, it could work. And the point is, is that his strategy worked, as in past tense, but today it’s not. And this is just factual, not taking anything away from him. He’s way richer than I have ever could ever be. But let’s take a look at this. So he founded the largest hedge fund in the world, Bridgewater Capital, again, made a lot of money. Now he’s famous for basically two portfolios. One’s called an all weather portfolio.
And one’s called like a risk parity. They’re both basically the same. And the goal is to buy a whole bunch of different assets that are all supposedly uncorrelated. And that way, no matter what happens, this goes down a little bit, these go up a little bit over here, this goes down, this goes over here. It’s sort of like if I went to Vegas, and I wanted to play, I don’t know, roulette, and I can bet on red or black. So I’m just going to bet on both. Well, I went on one, but then I lose on the other.
So I’m basically even, except for the green, that once in a while happens, I lose everything. And that’s sort of what this does. It bets across the board to sort of give you this risk parity. Now, this is an investment strategy designed to perform across all economic conditions. And it’s basically 30% stocks, a whole bunch of different equities, a bunch of equities, 40% long term bonds, 15% short term bonds, 7.5% gold, and 7.5% commodities. Now that’s the allocations to each asset category. But again, there’s lots of assets within that. So it gets very complex.
But let’s just see how this did. So this is just factual. So here’s what the hurdle rate is, right? 14, 15%. So during this period, as of August 20th of 2024, so pretty current here, it returned 7.65% year to date. So this year, and 5.29% over the last 10 years. So in the last 10 years, what was the real hurdle rate? 14%. What did this make? 5%. It means you’re losing massively. Now, Mark, you’re cherry returns. We can look at this compared to now just the S&P 500. Forget Bitcoin, forget the NASDAQ, let’s just look at the S&P 500, which is already losing to the hurdle rate.
So year to date, S&P 500 has done 17.5, and that portfolio has done 7.6. Over a five year return, S&P 500 has done 13.9, and his portfolio did 4.3. And over a 10 year period, 10.9 versus 5.29. So pretty much over any timeframe, compared to the S&P 500, which is already losing, it’s losing big. We can see over 30 years, it’s averaged about 7.43. And it also has had max massive drawdowns. So it’s not just perfectly stable all the time. As a matter of fact, it had a drawdown of over 20% that took almost three years to be recovered.
So it’s just because it has low returns doesn’t mean it’s necessarily safe. And that’s why investors are losing faith in his strategy, right? It’s not in him, he’s brilliant, but his strategy is wrong for this time. The lackluster five years, they’re pulling all their cash out. It’s been disappointing for a long time. And we can see this in this article right here, it says that after five years of sub par returns, they’re yanking out their cash, 70 billion from the peak three years ago has been taken out. In orange, I put here, it’s unlikely that the next decade in markets, or it says the next decade in markets is unlikely to resemble the last, right? So it worked really good in the last decade, but it’s unlikely that the next decade is going to resemble this.
It says down here, the only time the risk parity was really successful was in the time of the great financial crash. So we’re great. I’m not saying it didn’t work. It worked amazing. But what these people are saying point $70 billion out is that the next decade is unlikely to resemble the last. Okay. Now, why is it important for you to understand that you probably don’t have any money in Bridgewater capital or with Ray Dalio, but that’s because your financial advisor is also telling you the exact same thing. So they’re probably advising you to go into a well rounded portfolio, a 60 40 portfolio, 60% stocks, 40% bonds.
Okay, well, that’s been absolutely horrible. You’re buying a whole bunch of stocks that are all in asset classes that are underperforming the real hurdle rate. Bonds have been even worse. So you’re well diversified. You bought 20, 30, 40, 50 positions. What do you even own? Right? I deal with investors all the time. I have coaching and I have a consulting that I do hit me up if you want some of that information down below in the description. But most people I talk to, they said, well, I have it in a 401k or I have it in mutual funds.
Okay. Well, the 401k, the IRA, the mutual fund, that’s just a vehicle that you have assets inside of. What do you even own? And most people have no idea. And part of the reason why is you’re so diversified. I own, I don’t even know all these different stocks. I’m not even sure what they are, some biotech fund, whatever, like, what do you know about biotech? The answer is probably nothing, probably not a good place to have your money. And then the second question is, do you even have any interest in biotech or whatever it is? So you should only be investing in things that you know and understand and at least have some interest in that you’d want to learn more about.
So maybe you don’t know a whole lot about real estate, but you’re interested in real estate. Maybe you don’t know a whole lot about Bitcoin or AI, but you want to. So at least you can put time in there. But what do you even own? And do you even have any interest? Now, the reason why I have this picture right here is because your financial advisor is driving your yacht, the yacht that you don’t have. And what do I mean by that? We know that based off of what I’ve broken down, 76% of equity mutual funds are underperforming.
Now it’s actually worse than that. 90 to 95% are underperforming when we look at mid cap and large cap. So it’s even worse. But why are they driving your yacht? And the reason why is the fees. So the average investor, you put about $45,000 into your fund. Over the next 30 years, it turns into about 140,000, which is great, except for they take about a hundred of it and you get about 45. Now turning 10 into 45 is pretty good, but not when they take a hundred K. Okay. So now that we know all this, hopefully this makes sense.
I went really fast. Probably make a whole bunch of videos off of this. Like I said, drop me comments, let me know what I should expand onto. But now that we know this, we understand that there is an investing black hole. Every 50 years, a quantum wave window opens up a Q wave. And the only place to invest is in that if we want big returns, of course, we can make the seven, 8% over here. But if we want to make the 20,000, 50,000, 100,000 returns, that’s where we have to be.
Number two, we know that all the other types of investments, everything below the Bitcoin and the NASDAQ is not keeping up with the rate of debasement. So why would I diversify into that? We can see how radially those funds are losing. So how do we win with the black hole? Okay. The first thing to understand is it’s not a single technology. It’s a cluster of technologies. It’s where they converge. It’s how all the sudden Bitcoin and having a decentralized wallet that can be personless, all of a sudden opens up a whole new world with AI and robotics and autonomous vehicles.
So it’s this combination that wasn’t available before. It’s the cluster. It’s what I’m also calling Bitcoin 2.0. And I don’t mean altcoins. What I mean is now there’s a whole slew of, of publicly traded vehicles around Bitcoin. There’s all types of companies. That’s what my fund, my hedge fund invests into my new public company invests into is companies that are building on and around this in this intersection, this cluster and with AI. So it’s these things and decentralization. So it’s the combination of all these that are building new technologies. We never had the building blocks to build before.
And also what I call hidden backdoors, hidden backdoors are, for example, in order for AI and all this to work, we need massive amount of data centers to be built. And in order to get massive amount of data centers to be built, we need a lot of copper. We’re way short on copper. And so those are some of the hidden backdoors that we have here as well. But this is where you want to invest right here. Now, if you want to know six or eight different specific names on buying, you might want to watch the full presentation and breakdown of this.
I’m going to go ahead and just link it right here. It’s a private video. It’s not listed, but you can watch it by clicking right here. Otherwise, let me know what you think about the black hole. Are you following your advisors through a diversified account or are you going to concentrate for maximum growth? Leave me a comment down below. Let me know what you think. Of course, as always, give me thumbs up if you like it. If you don’t thumbs down, that’s okay. That’s what I got. All right. To your success. I’m out.
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See more of Mark Moss on their Public Channel and the MPN Mark Moss channel.
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