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Hey, what's going on guys? This is episode something, MSTR True North. We've got a huge

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presentation we've been prepping for the last couple of days for you. Grant's going to give

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us an intro. Dan O, the brains behind MSTR True North is going to give a little disclaimer. We're

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going to hop right into it. There's a ton of material today. Super excited about all the info

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we have. Hopefully you're still hanging in there. I know the stock price has been terrible.

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Don't know what to say.

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Hey, guys.

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Sorry, I've got camera issues here, but I'm here with you.

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First off, we wanted to say that while the information here might be great, fun, entertaining, and awesome, it is not financial advice.

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Second of all, I just wanted to make mention of this.

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None of us, we're all independent analysts.

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None of us are on the payroll of Strategy, of Strive, or anyone else.

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We're just here sharing our independent thoughts and analysis.

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I know that's been a question flying around online. We're under no pressure or precedent to speak highly about any particular aspect of any of these companies we're going to be discussing.

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Totally agree. So we're just here to give you our view on the macro indicators. Look, we've already seen these slides that Dan has put together. This is a really, really packed presentation we're going to go through.

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We're going to try and do it within an hour.

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We'll try and read the comments as they come up and give you our feedback about that.

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But this is going to be different than a previous True North presentation, you know, talk, given the amount of slides and information that we're going to go through.

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So, Dan, take it away.

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I also just want to mention we've got a lighter team here.

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We've got everybody's traveling everywhere.

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So Jeff's over in Europe with Tim.

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Jeff's the speaker at Bitcoin Amsterdam coming up in a couple days here.

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I think they're in Prague today, the last couple days.

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Then they're going to Amsterdam.

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And then next week's London, I believe.

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Ben's been traveling as well and launching a preferred equity.

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So he's pretty busy.

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Mason's been down in Brazil.

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Soleil's in Nashville, I believe, at a Bitcoin conference there.

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And Adrian's cranking on the AIs.

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So you've got a grain of salt, Dan, Hillary, and myself tonight.

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That's exactly it.

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Yeah.

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Let me get started.

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I want to give a quick, and then you'll pull up the presentation and go right into it.

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I will be mindful of time.

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I'm watching the seconds here, so I'm not going to take longer.

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Look, if you believe that natural fibers were displaced by synthetic fibers,

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if you believe that in creative destruction,

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that if AI is going to basically the typical analysis that you see,

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we're seeing this in real time, what happened with Wikipedia.

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Wikipedia basically just got killed by AI over the past three weeks.

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It's been totally scraped by AI.

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I did a post about this.

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And so why am I talking about AI basically killing Wikipedia and Grokipedia?

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is because AI charged for it.

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So if OpenAI is charging $20 a user

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and they're taking in $15, $17 billion a year,

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they can hire the best engineers, the best people.

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They don't have volunteers curating the information.

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So what they've done is they made a moat

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and they have money to back that up.

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Not only that, they made a human-like interface

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to go in and scrape all the information off of Wikipedia.

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Right?

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And so Wikipedia does offer an enterprise version to charge for it.

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They didn't pay for it.

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Wikipedia has lost 8% of their viewership.

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It'll be down by 50% within a year, right?

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And so they're seeking donations.

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They didn't do, they were altruistic.

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They tried, they didn't want to do with any form of advertising.

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Why do I talk about this?

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Bitcoin is artificial or synthetic money.

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That's exactly what happened.

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Our current money today is controlled by Federal Reserve banks that have to balance deficits.

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And we rely on people to do this.

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Bitcoin is either artificial, synthetic money.

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It's the AI of money.

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And it has a very controlled emission schedule.

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It has a fixed supply.

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And it's written into the code.

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And so that's why Bitcoin is going to eat regular money.

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And that's why I talk about this as an example.

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If somebody hasn't seen Netflix put Blockbuster out of business, you'll basically see AI put Wikipedia out of business.

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And that's an example of creative destruction.

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And that's going to happen with Bitcoin in regular life.

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Totally agree, Brian.

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Dan, let's get this presentation rocking.

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I'm ready to rip.

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All right.

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Let's see.

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Go entire screen here.

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And you're on.

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Can you see that, Dan?

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It is loading.

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We are up and running.

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2026, the year of digital credit.

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All right, next slide.

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So again, this presentation for everyone, we're going to keep it short.

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We're going to keep it sweet.

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It's going to be quick.

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You can rewatch the recording if you do, in fact, want to.

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So I want to start it off.

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Gray and I are going to hop into the macroeconomic factors that are playing into both Bitcoin

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and the overall equities market over the past six months and looking forward into 2026.

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So you can see here the performance of the equal weight S&P 500.

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And you can see the actual performance has been relatively weak.

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The actual performance of the equal weight has been just over a double.

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And what this shows you is the real stock market performance over the past 10 years

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has been driven by the top seven performers.

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The index weighted, the market cap weighted ETF being the S&P 500.

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Next slide.

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Here is the performance of the equal weight relative to the MAG7 performance.

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So as Graham will hop in here, but over the past 10 years, the trade has been pushed to winners that are taking all the market share,

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that are destroying all the brick and mortar mom and pop companies and sell the losers.

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So that will play into our entire thesis around Bitcoin and then looking at preferred equities and treasury companies.

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Graham, you have anything to say here?

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Absolutely.

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Yeah.

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Yeah. So we've seen, you know, I think that the metric right now is 40% of the S&P 500 is made up of the MAG-7.

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So what my thesis has been in my investing for my whole career is, why would I want to increase the share?

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If you're looking at the equal weight, why would I want to dilute the winners with the losers?

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Now, if there are plenty of other companies in the S&P 500 that have done really well as a percentage of their cap,

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The problem is that they have a verification in the S&P 500 because it's market cap weighted.

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And so therefore, there's a few other companies.

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There's maybe 10 other companies that have done really, really well.

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Right.

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And obviously, we believe in MST are doing well.

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But the key part here is that because their market cap is too low, it doesn't affect the

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actual index itself.

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So going back to this comparison right here, it's the MAG-7 makes up 40% of the S&P 500

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why would you dilute it with the other 493 or why would you dilute it with the other 485?

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Totally agree.

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Let's jump right into this.

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Totally agree.

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And now we'll talk a little bit about just the PE ratios we've seen here.

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We can see the MAG7 PE ratios if that's of any interest.

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We'll talk about that a little bit later.

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And then furthermore, this is something, Grant, I think you should hop on to.

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We're looking at the forward price earnings ratios during different bubbles in the equity market

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in these specific sectors. So, Gray, you've lived a little bit more life than me. What do you think

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there and how are we looking out into the future? Yes. So for the people listening, I am not a

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boomer. I'm just an old Gen X guy. But what I could tell you from the internet bubble,

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there were some crazy statistics. I wanted to see what was the difference between what happened then

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and what happens now. So what happened back in the olden days in 1998, 99, 2000, 2001,

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there were 1,219 companies that went public in four years. The bulk of them went public in 98,

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99, and 2000. Basically, you got about 1,100 companies went public. Probably most of those

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companies went bankrupt a few years later because they weren't able to scale. So what are you left

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with? You're left with the dominant players. Now, so what's different about the internet bubble that

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happens today. The difference is the scale. Like open AI, if it goes public, it's going to go public

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at $500 billion or these crazy valuations because it's been private for so long. Same thing happened

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with Google. Google waited a really long time and just like Facebook before they went public.

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So these companies wait till they get huge. So the market dynamics from the internet bubble to now

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is different. And that's why looking at the past is important. It's not the number of the gross

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number of companies that go public, it's the fact that you have these large companies that have scale

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that end up being too big to fail. That's the part. Can they fail? Probably unlikely when they

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get to this size. But I think that this is a great comparison talking about the nifty 50.

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What this slide shows you is that in terms of the PE ratio, in terms of the dot-com bubble,

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we're not even close to that, right? I mean, that's exactly what it's saying here. We're not

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overheated. And on the flip side, Dan, you've talked about this before. If we don't have a

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euphoric blow off top in Bitcoin, then there's no reason in theory why we should have this massive

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drawdown. If you have a huge blow off top, then you're probably going to have a big drawdown.

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You can't assume that it tends to be your proportional gain on the top and your proportional

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drawdown should be similar. Now, and this time is different. Why do you think it's different?

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because in January, the spot Bitcoin ETFs are going to be two years old.

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And Ibit has, you know, $80 billion in it.

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Exactly.

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The price jumps up.

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It's $100 billion.

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Exactly.

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And one more note to just support this sort of,

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so we're talking about a change in sort of the price behavior of Bitcoin

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over a long period of time, a 30 CAGR,

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Sailor's referenced it, a lot of people have referenced it.

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Some of the statistics is over the past 10 years,

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we've seen a 25% CAGR from Apple, 22% CAGR from Amazon, 22% CAGR from Google, 19% from Meta,

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25% from Microsoft, 74% annualized from NVIDIA, and 40% from Tesla. That's annualized compound

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growth rate. And you just take the end price from the start price over a 10-year period.

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The blended compound annual growth of the Mag7 over the past 10-year timeframe has been 26.5%.

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So everyone's saying this 30 CAGR number is absolutely insane, but that's kind of the strike

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zone for the blended average of the most successful securities and publicly traded companies on the

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face of the earth. So that's where a lot of this thinking comes from. We're going to hop in now

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into talking about kind of the debt framework and why interest rates are going lower over 2026.

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Green, you want to explain these a little bit? Yeah, I want to make sure. And by the way,

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you can definitely hear me, right? Hear me speaking? Yeah. Okay. So there's two charts here

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and they're a little bit, let me zoom in, go to full screen. Okay. The top chart, what it's showing

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you is the federal funds rate. And so basically during the 1980s, the big spike in the middle

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and the federal funds rate, that jumped up because we had stagflation. Problem was you had persistent

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high inflation combined with a lot of people out of work. And so what they had to do is they had to

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make the interest rates really high to get that under control. But if you look at the green line

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on the bottom, we had very little debt. What's different now is the debt, as we all know, hit

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$38 trillion. Now, according to the big, beautiful bill that was already passed this year,

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the debt is allowed for the debt ceiling is allowed to go to $41.1 trillion. We're authorized

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for another $3 trillion. Now, if you look at the bottom slide, what you're seeing here is that

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the debt, basically the interest on the debt is growing at, the interest on the debt is a trillion

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dollars per year. That's just the interest on the debt. That's not paying down any principal.

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And we know that the budget is about a $2 trillion deficit. So basically in 18 months,

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sometime around June of 27, if not sooner, we're going to hit the debt ceiling again.

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That will be after the election.

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The election is November of next year.

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But sometime between March and June of 27, we're going to be at $41 trillion.

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And then the amount of interest on the debt will be more than a trillion dollars.

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So what's a trillion dollars?

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It's $800 billion.

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Sorry.

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It's what was my number?

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It's $80 billion a month.

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No, it's a trillion.

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It's $80 billion a month going forward to get to a trillion dollars.

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And that's what we're just paying on the interest payments each year.

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So this is just crazy.

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So this is going back to the S&P 500 performance.

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What we're talking before is that, so why is this important?

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They have to print about 6.5% of M2 money supply, and that's where you get this growth in the S&P 500.

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So when you take a look at this, this is the comparison we were talking before.

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All of the gains of the S&P 500, because it's market cap weighted, typically comes from the MAG 7.

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And then you can see the S&P 500 down here.

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So basically over the past 10 years, and why did I pick the past 10 years?

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Is because you had 2000, you had the internet bubble, 2008, 2009 financial crisis.

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We got quantitative easing, quantitative tightening.

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So if you want to go compare this previously, things are different now.

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You got $38 trillion in debt.

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They're not the same going back to where we were.

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There'll be a later slide talking about debt to GDP.

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We're at World War II levels, even though we're not at war.

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So that's why when you look at this chart, you can see the fundamental difference here

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is the MAG-7 is the biggest companies are getting the most flows into them.

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Exactly.

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Index forward EPS. We'll go over this super quick. Grant, any really, really quick points you want to talk about?

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Yeah, this was from Tony Carrera. Somebody said, oh, well, you know, why are the MAG-7 doing well?

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You should show the EPS. Well, this is your earnings per share. Now, why does the MAG-7 have big EPS?

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Well, they do stock buybacks. Why? They have a ton of cash coming in. This is what Saylor says.

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Why do you surrender your cash? They surrender their cash to buy back the stock because it's the most efficient way to boost EPS.

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Here's your 10-year CAGR or forward EPS for the MAG-7.

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It's 20%.

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The remaining 493 is 6%.

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It's more than three times that.

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They generate so much cash that instead of buying factories or hiring more people or paying a dividend,

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they just buy back the shares, which is a riskless way of increasing the EPS.

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This is financial engineering.

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Nothing illegal about it.

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If I was throwing off, if I ran one of MAG7 companies, I would do the same thing they're doing.

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There's no difference here.

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Totally agree.

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All super good kind of macro framing as to why the MAG7 performs like they do.

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I'm going to jump quickly into the PMIs.

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I think they're a super important story for why Bitcoin and really the equal weighted S&P is just underperforming as of late.

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And the PMIs are a diffusion index that weights 25% new orders, incoming customer demand across the manufacturing and service economy in the U.S. respectively.

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The services economy makes up about 85% of U.S. GDP.

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So we'll focus on that a little bit later.

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But new orders to weight 25%.

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Output level is about 25% production.

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Employment 20%.

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Supply delivery is 15%.

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And inventory is 15%.

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15%. So that's what the PMI survey is made up of. And it's a diffusion index. So it shows

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if we're above 50, it's in expansionary territory and below 50, it's in contractionary territory.

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So here is the services PMIs, again, about 85% of the US GDP, overlaid with the Bitcoin price

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bubbles. And what you see is that the bubbles historically have occurred during periods of

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extreme expansion in the services economy. And we've been about neutral for the past three years

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in the services PMI. And I think this is a huge correlate to why Bitcoin, we haven't seen a blow

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off top. And I think this is also very, very correlated to kind of, we're going to see a

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decrease in interest rates over the next few years. And we're going to see kind of easing

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monetary conditions, especially with the ending of QT and potential move into QE. Same story with

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manufacturing PMI, a bit more pronounced. Manufacturing PMI has gone sky high over 60

258
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in an expansionary territory in positive sentiment. And over the last three years,

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we've seen expansion in Bitcoin or adoption in the price, a steady run up, but we haven't seen

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any expansion in the PMI. So these are just macro sentiment indicators that are showing you why

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maybe small caps aren't breaking out and why Bitcoin itself isn't breaking out either.

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We've got a little bit of consumer sentiment here. I want to give kind of a story. So obviously,

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the K-shaped economy story is pretty big. We've seen AI companies with their circular revenue

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generation completely screaming and pulling the entire index with them. Small caps in the S&P 493

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are totally lagging. Bitcoin is lagging with them. And you can see some of the sentiment

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during Q3 earnings. Lower income guests are declining nearly double digits with McDonald's.

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Households under 100K, 40% of sales are reducing their spend, ages 25 to 35 at Chipotle, Starbucks, frequent pressures on certain segments of their consumer base.

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And even Dollar General are saying low income consumers are being pressed by current macroeconomic conditions.

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So it all kind of leads to one thing, the jobs market's teetering as a result of AI.

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The government is not yet issuing money to the citizens, but there seems to be potential loosening monetary and economic conditions on the horizon as a result of what could be kind of, you know, an end to employment as we know it over the next year.

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Grant, any comments there on Dollar General or Starbucks?

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I think that we live in two economies.

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You know, I think that the consumer sentiment that you're seeing here is correct.

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there's nothing I think that what I could tell you is that I have phone calls with executives

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all the time and the most amazing thing I could tell you is that what they tell me privately

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is pretty much 99 the same thing they say publicly there not much of a difference so if they saying that this is the consumer sentiment I would believe this And I drink this protein shake I stopped by Joe the Juice

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They've got these protein shakes that are great.

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They have an app, download the app, go there.

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And the protein shake was $15.

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Believe me, I have plenty of money to spend.

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$15 for a protein shake that I can go make myself in the house.

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It's like $60 and I get a month's worth of protein shakes.

283
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So I was just blown away.

284
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And mind you, there's a line out the door to buy protein shakes and they're picking them up two or four or six at a time.

285
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But this is in downtown San Francisco in the financial district where they're probably buying it for corporate users or whatever.

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So the store is packed and busy.

287
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But I think when you look at those other companies, I think that those are all accurate.

288
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I think that those are more realistic.

289
00:20:06,878 --> 00:20:08,378
I mean, I'm like in a bubble.

290
00:20:09,278 --> 00:20:10,218
Yeah, you are, Grant.

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00:20:10,418 --> 00:20:10,758
You're definitely.

292
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I had one Joe the Juice.

293
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I had just one because I was like $15.

294
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Then they wanted me to put on tip on top of it, which I did for $2.

295
00:20:21,278 --> 00:20:22,898
$17 for a prank check?

296
00:20:23,039 --> 00:20:23,638
Give me a break.

297
00:20:23,738 --> 00:20:26,218
I mean, that was just – keep on going.

298
00:20:26,218 --> 00:20:27,258
That's insanity, yeah.

299
00:20:27,918 --> 00:20:31,698
So the next slide is a little bit of hopium or just MSTR explanation for people.

300
00:20:31,698 --> 00:20:36,998
So, you know, I've been bullish and bearish at times on MSCR, but I think it's important.

301
00:20:37,218 --> 00:20:39,058
This is a slide from Aenea B.

302
00:20:39,738 --> 00:20:44,578
He shows the reference of MSCR performance relative to Bitcoin over the last three years.

303
00:20:44,938 --> 00:20:48,058
You can see that MSCR has outperformed Bitcoin over a very, very long time horizon.

304
00:20:48,418 --> 00:20:50,298
That is true. I mean, it all depends on your entry.

305
00:20:50,398 --> 00:20:54,039
It all depends on how much Bitcoin per share they've accreted for their shareholders.

306
00:20:54,158 --> 00:20:55,158
This stuff really matters.

307
00:20:55,238 --> 00:21:01,539
If you enter at a negative MNAV and the Bitcoin per share increases and they had a very small number of Bitcoin per share to start with,

308
00:21:01,698 --> 00:21:05,878
you'll outperform Bitcoin. But the entry really, really matters. We're starting to get into value

309
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territory, in my opinion, for MSTR, and I'll explain why. So this is a sheet that essentially

310
00:21:11,158 --> 00:21:15,578
the entire MSTR business model, people like to say, there's no analysis anymore on MSTR,

311
00:21:15,718 --> 00:21:19,818
which kind of frustrates me. MSTR is amplified Bitcoin. That's exactly what the executives of

312
00:21:19,818 --> 00:21:24,058
the company are explaining to you. And you can quantify that amplified Bitcoin. Based on different

313
00:21:24,058 --> 00:21:28,298
Bitcoin price growths, what does a 20 or 25% leverage ratio, I use 25 in this case,

314
00:21:28,298 --> 00:21:37,418
What kind of amplification using perpetual preferred equities at about a 10% interest rate return to your shareholders in the form of Bitcoin per share?

315
00:21:37,778 --> 00:21:44,238
So I'm using a kind of power law bull case model, 6.4x in Bitcoin over the next five years.

316
00:21:44,718 --> 00:21:55,838
MSCR, based on my kind of modeling here, again, 20% expected, sorry, 25% debt to equity ratio on MSCR, common equity used to pay the PREF dividends.

317
00:21:55,838 --> 00:22:01,438
all of the liabilities are prefs and Bitcoin is on this growth path. Assuming a 1.3 MNAV,

318
00:22:01,778 --> 00:22:07,678
MSTR would perform at about 10.6x. So this is the power of the amplification. Everyone's saying,

319
00:22:07,778 --> 00:22:11,898
you know, now like screw MSTR, it's only going down. Well, yes, it is only going down. But at

320
00:22:11,898 --> 00:22:15,318
some point there will be a floor relative to Bitcoin. And once, if you're able to buy that

321
00:22:15,318 --> 00:22:20,678
floor, the bull case is that you have now perpetual leverage that you own as a common shareholder.

322
00:22:20,798 --> 00:22:24,158
And that is returned to you in the form of Bitcoin per share over a long period of time,

323
00:22:24,158 --> 00:22:25,958
so long as Bitcoin continues to go up.

324
00:22:26,158 --> 00:22:27,698
If you don't think Bitcoin will go up,

325
00:22:27,738 --> 00:22:29,238
it will be levered to the downside as well.

326
00:22:29,618 --> 00:22:31,518
MSTR is amplified or levered Bitcoin

327
00:22:31,518 --> 00:22:34,178
with perpetual non-callable liabilities.

328
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And that's the whole point.

329
00:22:35,578 --> 00:22:37,238
And I think people are, it's that simple.

330
00:22:37,398 --> 00:22:38,718
You can just do the math and figure out

331
00:22:38,718 --> 00:22:39,658
where likely it'll be,

332
00:22:39,918 --> 00:22:42,258
expecting different MNAS based on different Bitcoin prices.

333
00:22:42,598 --> 00:22:45,418
So this is kind of the case for MSTR in this.

334
00:22:45,898 --> 00:22:47,078
Now we're going to talk about digital credit.

335
00:22:47,078 --> 00:22:49,378
And everyone says, screw the press, whatever.

336
00:22:49,678 --> 00:22:51,278
The press are massively, massively important,

337
00:22:51,338 --> 00:22:51,778
in my opinion,

338
00:22:52,758 --> 00:22:54,018
for understanding the Bitcoin market

339
00:22:54,018 --> 00:22:59,378
and how it's going to evolve. These credit products, if Bitcoin is successful, they will

340
00:22:59,378 --> 00:23:03,658
also be successful. And I think they will help Bitcoin be successful. So this is just showing

341
00:23:03,658 --> 00:23:09,718
the liquidity and the accessibility over time of the four different press, not including the

342
00:23:09,718 --> 00:23:15,418
new Europref stream. We're going to jump into stretch, but I want Graeme to hop in and talk

343
00:23:15,418 --> 00:23:19,518
a little bit about maybe your journey on the press screen. You're hating me. I was a bond trader.

344
00:23:19,518 --> 00:23:23,218
I was a bond trader six months ago. And everyone's saying, what are you talking about?

345
00:23:24,018 --> 00:23:26,078
Yeah, look, I'm not a bond trader.

346
00:23:26,338 --> 00:23:28,378
I've never owned a bond in my whole life.

347
00:23:29,438 --> 00:23:32,838
Look, I totally changed my mind on the prefs.

348
00:23:33,538 --> 00:23:36,438
And I'll tell people why I changed my mind on the prefs.

349
00:23:36,498 --> 00:23:44,198
And I think that's one of the biggest takeaways that you can determine if you think somebody has some form of mental flexibility.

350
00:23:44,958 --> 00:23:49,718
My view on the prefs were, and this is two things can be true at the same time.

351
00:23:49,718 --> 00:23:57,778
It is a perpetual liability paid timeframe infinity that's paid for by the MSTR common

352
00:23:57,778 --> 00:23:58,338
shareholders.

353
00:23:59,098 --> 00:24:00,118
That's my belief.

354
00:24:00,278 --> 00:24:00,958
Is that true?

355
00:24:01,538 --> 00:24:02,538
Yeah, it is true.

356
00:24:03,398 --> 00:24:07,818
But then when I started thinking about this, I had a phone call with a few very special

357
00:24:07,818 --> 00:24:12,958
people and what they explained to me, and Dan knew this and I told him in the future,

358
00:24:13,158 --> 00:24:15,698
if I don't get something, you need to tell me, shut up and just listen.

359
00:24:16,658 --> 00:24:21,718
What outweighs that is the fact that the refinancing never happens.

360
00:24:22,218 --> 00:24:23,798
There's no refinancing event.

361
00:24:24,238 --> 00:24:29,818
So if you stick that into a Gaussian-Brown model, the problem is in those models, it says, what's the term?

362
00:24:30,398 --> 00:24:33,698
Well, the term is zero because it never refinances.

363
00:24:33,818 --> 00:24:35,018
You're like, okay, well, I'm not going to use zero.

364
00:24:35,098 --> 00:24:35,818
I'll use infinity.

365
00:24:36,118 --> 00:24:44,158
Once you use zero or infinity in that mathematical model that's used for Monte Carlo simulations and Gaussian-Brown models, it breaks.

366
00:24:44,558 --> 00:24:45,518
It just does not work.

367
00:24:45,698 --> 00:24:49,338
So, I'll give you a good example of this.

368
00:24:49,338 --> 00:24:54,738
If you buy a house and you own it outright, you have no refinance risk, okay?

369
00:24:54,738 --> 00:24:56,158
It's permanent capital.

370
00:24:56,158 --> 00:24:58,518
You bought that house, right?

371
00:24:58,518 --> 00:25:00,938
You can stay in it for as long as you live, right?

372
00:25:00,938 --> 00:25:03,358
You have to pay the utilities and your taxes.

373
00:25:03,358 --> 00:25:07,578
But if the house is paid off, the utilities and taxes are a very small amount.

374
00:25:07,578 --> 00:25:12,198
California taxes are 1% of the purchase price and they can go up a little bit each year,

375
00:25:12,198 --> 00:25:13,198
right?

376
00:25:13,198 --> 00:25:14,458
Does it suck to pay taxes?

377
00:25:14,458 --> 00:25:15,458
Sure.

378
00:25:15,458 --> 00:25:22,898
world works. So permanent capital, just like equity, and you have no refinance risk because

379
00:25:22,898 --> 00:25:29,038
it's paid off. That's an equity. Now, could you borrow against it? Sure. And that's called a home

380
00:25:29,038 --> 00:25:34,158
equity loan or a home equity line of credit. And you could borrow against it. And then, you know,

381
00:25:34,198 --> 00:25:37,778
then you have to pay that back at some point. If you don't pay it back, when you sell the house,

382
00:25:37,798 --> 00:25:43,118
it gets paid off. So the takeaway here from this is I changed my mind because once I realized that

383
00:25:43,118 --> 00:25:45,158
There's no refinancing going on.

384
00:25:45,298 --> 00:25:49,018
And you do not know what the interest rate's going to be in two years or five years.

385
00:25:49,218 --> 00:25:51,958
You do not know what the ability to get capital is.

386
00:25:52,018 --> 00:25:56,558
You don't know if they're going to change the terms, your ability to borrow, how you

387
00:25:56,558 --> 00:25:57,078
look at it.

388
00:25:57,118 --> 00:25:58,058
Are you credit worthy?

389
00:25:58,178 --> 00:25:59,978
What's going to happen to your FICO scores?

390
00:26:00,278 --> 00:26:01,978
Do you have a job, not have a job?

391
00:26:01,978 --> 00:26:11,558
So once you take the refinance risk off of a bond and it becomes perpetual, then it changes

392
00:26:11,558 --> 00:26:12,158
everything.

393
00:26:12,158 --> 00:26:14,838
mathematically and also perception-wise.

394
00:26:14,998 --> 00:26:17,558
So I've changed my view, how I view the prefs.

395
00:26:17,998 --> 00:26:20,018
Now, has that had a detrimental effect

396
00:26:20,018 --> 00:26:22,098
on MSTR common shareholders?

397
00:26:22,258 --> 00:26:23,358
I've been vocal about this.

398
00:26:23,438 --> 00:26:25,098
I think that they sold too many shares

399
00:26:25,098 --> 00:26:30,358
with the 21 plan back in November of 24.

400
00:26:30,838 --> 00:26:33,978
I've talked about this for six months, right?

401
00:26:34,058 --> 00:26:37,478
And with that said, that's where we are today.

402
00:26:37,478 --> 00:26:40,338
So stretch, I think stretch is the iPhone moment.

403
00:26:40,538 --> 00:26:41,898
Let's jump right into stretch

404
00:26:41,898 --> 00:26:43,098
because I think stretch is awesome.

405
00:26:43,458 --> 00:26:44,358
And I'll say why.

406
00:26:44,438 --> 00:26:44,758
Go ahead.

407
00:26:45,278 --> 00:26:46,078
And I'll take it.

408
00:26:46,238 --> 00:26:47,718
I agree, not really.

409
00:26:48,058 --> 00:26:50,298
So I agree and we're jumping to stretch.

410
00:26:50,478 --> 00:26:53,598
I don't like the term iPhone moment from the execs

411
00:26:53,598 --> 00:26:55,458
because I don't think the company's going to have

412
00:26:55,458 --> 00:26:57,438
this like crazy outperformance of Bitcoin

413
00:26:57,438 --> 00:26:58,958
as a result of some sort of product

414
00:26:58,958 --> 00:27:00,018
that is equivalent to the iPhone.

415
00:27:00,338 --> 00:27:02,498
I think stretch has massive product market fit.

416
00:27:02,758 --> 00:27:04,898
I don't think the common's going to go like double overnight,

417
00:27:05,138 --> 00:27:07,418
but I think stretch will be very successful

418
00:27:07,418 --> 00:27:09,698
and will be a huge product in the financial landscape.

419
00:27:09,818 --> 00:27:10,558
So I think people,

420
00:27:10,658 --> 00:27:11,838
you have to keep those two things in mind.

421
00:27:11,898 --> 00:27:19,338
MSDR will perform. Wait a second, Dan. Let me go back to my Gen X date. When the iPhone came out,

422
00:27:19,658 --> 00:27:23,878
it was despised for a bunch of reasons. And this is what happened in the olden days.

423
00:27:24,078 --> 00:27:28,418
When the iPhone came out, it had no physical keyboard. First of all, that's the coolest thing

424
00:27:28,418 --> 00:27:32,238
in the world because you can make a keyboard for any different language. It could be for,

425
00:27:32,638 --> 00:27:36,818
it could be for obviously for English and you could also do a Chinese keyboard because it's

426
00:27:36,818 --> 00:27:41,958
the virtual keyboard. Back in the old days before the iPhone came out, BlackBerry owned the market.

427
00:27:42,438 --> 00:27:47,958
BlackBerry had proprietary servers. BlackBerry was sold to government because it was secure email.

428
00:27:48,458 --> 00:27:54,098
iPhone, when it came out, was a retail device for kids that were downloading app that were playing

429
00:27:54,098 --> 00:28:00,938
with useless apps. That's what it was for. Your kids used an iPhone, right? And who needs an iPod?

430
00:28:00,938 --> 00:28:05,158
A BlackBerry is what's used for business and for the government.

431
00:28:05,778 --> 00:28:10,798
So when the iPhone came out, most of the people that use BlackBerry says that's a toy.

432
00:28:10,918 --> 00:28:15,118
And a BlackBerry had a physical keyboard, which people love pressing the physical keys.

433
00:28:15,618 --> 00:28:21,578
So the iPhone basically, at that point, there's already been 100 million iPods that were already

434
00:28:21,578 --> 00:28:21,998
shipped.

435
00:28:22,338 --> 00:28:25,158
So the installed base went to this massive retail base.

436
00:28:25,518 --> 00:28:28,518
And then years later, who's got a BlackBerry?

437
00:28:29,098 --> 00:28:29,578
Nobody.

438
00:28:29,578 --> 00:28:34,398
The RIM, R-I-M-M, was part of the four horsemen of the apocalypse.

439
00:28:34,958 --> 00:28:39,758
If you want to talk about Jim Cramer before Fang, it was the four horsemen of the apocalypse.

440
00:28:40,318 --> 00:28:42,078
And RIM was one of those companies.

441
00:28:42,438 --> 00:28:43,298
Where's that company?

442
00:28:43,458 --> 00:28:44,338
It's dead.

443
00:28:44,878 --> 00:28:46,218
It got crushed.

444
00:28:46,598 --> 00:28:46,758
Okay?

445
00:28:47,318 --> 00:28:48,338
That makes sense.

446
00:28:48,598 --> 00:28:53,938
So as this ramps up, it doesn't happen in one year.

447
00:28:53,938 --> 00:28:58,798
Now, because the PREFs, there's no physical device to ship.

448
00:29:01,198 --> 00:29:03,018
This could ramp up even faster.

449
00:29:03,398 --> 00:29:05,518
This goes back to the analogy of AI.

450
00:29:05,658 --> 00:29:07,138
Explain how that relates to this chart.

451
00:29:07,258 --> 00:29:09,178
I mean, this chart kind of is illustrating that point, right?

452
00:29:09,958 --> 00:29:10,398
Right.

453
00:29:10,538 --> 00:29:15,378
So I posted a new pie chart showing, look, Jesse Meyer said there's $300 trillion of bonds.

454
00:29:16,238 --> 00:29:18,518
Okay, $300 trillion of bonds.

455
00:29:18,578 --> 00:29:21,378
If it takes 1% of that, it's $3 trillion.

456
00:29:21,378 --> 00:29:26,518
dollars. Then the foreign exchange market, because you've got stream in it now, denominated in euros,

457
00:29:27,118 --> 00:29:34,858
I calculated that to be $2.4 quadrillion. I'm not kidding. So as that goes up, it takes that

458
00:29:34,858 --> 00:29:39,358
market on the foreign exchange market. Saylor talked about this today, stream being in Europe,

459
00:29:39,758 --> 00:29:45,458
right? It's got a thousand basin points spread. It's the best carry trade ever. I didn't say it.

460
00:29:45,458 --> 00:29:51,758
sailor said at the canter event yesterday the video got posted today i posted that who do you

461
00:29:51,758 --> 00:29:57,718
think liked my tweet i'll just leave it like that so this over here let's go through stretch and why

462
00:29:57,718 --> 00:30:05,938
why this is different than uh strife and and uh stream yeah yeah the other press i'll tell you

463
00:30:05,938 --> 00:30:12,038
why i thought this was super cool this is what you see here is they have um due to the vwap they're

464
00:30:12,038 --> 00:30:17,778
able to change the, they're trying to go for a fixed price, $100 par, which we all know.

465
00:30:18,158 --> 00:30:24,018
And what they do is they have a variable interest dividend. So you see here, the rate has been

466
00:30:24,018 --> 00:30:29,398
ramping up from 9% to 10%, 10.25%, 10.5%. Let's go to the next slide.

467
00:30:30,618 --> 00:30:35,878
Here you can see the price. They've essentially gravitated the price using the increase in

468
00:30:35,878 --> 00:30:40,418
monthly dividend payments right up to that par. And they're hitting the ATM right above $100

469
00:30:40,418 --> 00:30:43,378
and normalizing, stabilizing that price.

470
00:30:44,158 --> 00:30:45,758
I want to back up for a second

471
00:30:45,758 --> 00:30:48,358
and be a little bit tough here.

472
00:30:48,858 --> 00:30:51,078
You know, I got some crap from Andy Constant,

473
00:30:51,278 --> 00:30:51,838
Damp Spring.

474
00:30:52,418 --> 00:30:54,798
It's like, oh, they launched this at 90 bucks.

475
00:30:54,878 --> 00:30:56,078
It trades down to 88

476
00:30:56,078 --> 00:30:59,058
and there's this $10 spread from IPO

477
00:30:59,058 --> 00:31:01,158
until it hits the $100 par.

478
00:31:01,658 --> 00:31:03,238
And he's critical of this.

479
00:31:03,238 --> 00:31:07,118
It's like, okay, you could launch this at $100, right?

480
00:31:07,258 --> 00:31:09,398
And then you could go buy advertisement

481
00:31:09,398 --> 00:31:13,098
to go get this, to go get the flywheel moving very quickly.

482
00:31:13,478 --> 00:31:15,698
Or what you could do is you could launch it at 90 bucks

483
00:31:15,698 --> 00:31:18,578
and tell people, look, par value is $100

484
00:31:18,578 --> 00:31:22,458
and you'll make a little bit over 10%, 11%

485
00:31:22,458 --> 00:31:25,398
to get it from 90 to 100 if you buy it now early.

486
00:31:25,818 --> 00:31:27,878
And then that will evaporate once it hits par.

487
00:31:28,278 --> 00:31:30,518
You don't wanna do the $90 launch.

488
00:31:30,978 --> 00:31:33,338
Then you launch it at 100 bucks

489
00:31:33,338 --> 00:31:35,938
and you go spend $50 million in advertisement

490
00:31:35,938 --> 00:31:37,178
to get your message out there.

491
00:31:37,598 --> 00:31:38,518
Which would you rather do?

492
00:31:39,078 --> 00:31:40,658
I would rather them do it this way.

493
00:31:41,218 --> 00:31:42,518
Totally agree, Grant. Totally agree.

494
00:31:42,678 --> 00:31:48,258
And to that point, you just see the major brokerage platform growth over the last five years.

495
00:31:48,418 --> 00:31:51,778
Obviously, Robinhood is just dominating the market in terms of retail trading.

496
00:31:52,198 --> 00:31:57,618
You can see the volume tick up, partly seasonality, partly due to the listing on Robinhood of the preferred stocks.

497
00:31:57,678 --> 00:31:58,598
I think that's a huge unlock.

498
00:31:59,018 --> 00:32:00,998
And we're going to talk about that in a couple of slides.

499
00:32:00,998 --> 00:32:08,318
But, Grant, maybe we preface, say what you're going to say about stable coins versus stretch, right?

500
00:32:08,518 --> 00:32:11,218
I think I have a slide on that later in the deck.

501
00:32:11,698 --> 00:32:12,938
Okay, we'll hold it off.

502
00:32:13,198 --> 00:32:14,438
We'll save it for there.

503
00:32:15,718 --> 00:32:20,298
This is just, yeah, I'm going to start, Grant, and then you finish here.

504
00:32:20,698 --> 00:32:24,938
This is just the trading liquidity as a percentage of market cap.

505
00:32:24,938 --> 00:32:30,998
So this is the liquidity or daily traded volume of each of these different stocks relative to their market cap.

506
00:32:31,518 --> 00:32:33,918
Red are equities, MSDR, Tesla, and Apple for reference.

507
00:32:34,138 --> 00:32:36,378
Again, that's a daily traded volume relative to market cap.

508
00:32:36,838 --> 00:32:37,578
Stretch is here.

509
00:32:37,578 --> 00:32:40,658
and then other comparable preferred equities are here.

510
00:32:41,138 --> 00:32:42,898
So maybe, Grant, say why that's...

511
00:32:42,898 --> 00:32:46,898
Yeah, so look, there's liquidity and then there's depth.

512
00:32:47,038 --> 00:32:48,478
You could have something that changed back.

513
00:32:49,478 --> 00:32:52,918
One of the hardest things for people to understand is volume in a given day.

514
00:32:53,718 --> 00:32:55,338
Volume in a day, right?

515
00:32:55,518 --> 00:32:58,758
Is it one share that trades 100 times back and forth

516
00:32:58,758 --> 00:33:01,098
or is it 100 shares that trade once?

517
00:33:01,098 --> 00:33:03,338
Or is it 50 shares that trades twice?

518
00:33:03,858 --> 00:33:05,098
So when you look at this,

519
00:33:05,098 --> 00:33:10,758
the trading liquidity as a percentage of its market cap, it shows you that Tesla, it's hard

520
00:33:10,758 --> 00:33:19,558
to read, is 2.51% and Apple is 0.36%. So Tesla trades eight times as much as Apple. But if you

521
00:33:19,558 --> 00:33:27,098
look at stretch already as a percentage of its market cap outstanding, it's 3.25%. It's basically

522
00:33:27,098 --> 00:33:34,338
trading 10 times as much as Apple relative to its market cap. So it shows not only is it highly

523
00:33:34,338 --> 00:33:38,298
liquid, it shows that there's greater depth given that the amount that's in here.

524
00:33:38,538 --> 00:33:40,978
And somebody can say, well, Apple is such a huge company.

525
00:33:41,078 --> 00:33:41,758
It doesn't matter.

526
00:33:42,158 --> 00:33:46,798
Well, what it's showing here is that there's enough depth in this for it to go through

527
00:33:46,798 --> 00:33:52,478
stretch to its market cap, where the volume can be that high because the pool is already

528
00:33:52,478 --> 00:33:52,958
established.

529
00:33:53,338 --> 00:33:58,798
Realize that stretch is the number one IPO 2025 for any stock, $2.5 billion.

530
00:33:58,798 --> 00:33:59,778
That's an insane statistic.

531
00:33:59,998 --> 00:34:00,078
Right.

532
00:34:00,078 --> 00:34:04,158
Is it at $2.8, $2.9 billion now market cap?

533
00:34:04,338 --> 00:34:05,138
Yeah.

534
00:34:05,678 --> 00:34:06,678
Just for stretch.

535
00:34:07,238 --> 00:34:09,178
So then you compare it against the other ones.

536
00:34:09,358 --> 00:34:10,718
People are excited about it.

537
00:34:11,058 --> 00:34:13,658
You know, the worst thing to have is a stock that doesn't trade.

538
00:34:14,178 --> 00:34:22,919
The only time that's helpful, if you're Berkshire Hathaway A, and you trade 300 shares a day because the stock price is $700,000 a share.

539
00:34:23,158 --> 00:34:24,778
That's the only time it helps you.

540
00:34:25,198 --> 00:34:29,038
But in this case, the liquidity here and the depth is really important.

541
00:34:29,798 --> 00:34:30,138
Exactly.

542
00:34:30,258 --> 00:34:32,578
Especially for people who want to enter this in size.

543
00:34:33,058 --> 00:34:37,439
These are institutional grade, investment grade, fixed income products that are fully liquid.

544
00:34:37,518 --> 00:34:38,398
And that's what this is illustrating.

545
00:34:38,479 --> 00:34:39,479
This is a real market.

546
00:34:39,778 --> 00:34:40,638
You want 10% yield?

547
00:34:41,178 --> 00:34:42,718
There will be buyers at $99.

548
00:34:43,198 --> 00:34:44,078
That's what this is illustrating.

549
00:34:44,078 --> 00:34:48,658
So you can go in there and be pretty, pretty confident that it's going to be staying at $100.

550
00:34:49,138 --> 00:34:51,158
This is the price relative to the volatility.

551
00:34:52,198 --> 00:34:53,939
The dotted line is the volatility.

552
00:34:54,358 --> 00:34:55,419
You can see the volatility is coming down.

553
00:34:55,618 --> 00:34:56,378
What is the point of stretch?

554
00:34:56,618 --> 00:34:59,999
The point of stretch is to have a 1% annualized volatility between $99 and $100.

555
00:35:00,278 --> 00:35:00,778
That's the point.

556
00:35:01,058 --> 00:35:02,278
That's where strategy is trying to take it.

557
00:35:02,578 --> 00:35:06,999
If they successfully do that, this will be a killer, killer product in the income market.

558
00:35:07,058 --> 00:35:09,439
I like to say it's putting the S&P 493 out of business.

559
00:35:09,878 --> 00:35:23,658
If your expected return is 8% annualized and instead you get a one with a 10 vol, you now are getting a product with a one vol that's giving you 10% where you don't pay taxes on the coupon payments.

560
00:35:23,959 --> 00:35:25,318
That is a massive unlock.

561
00:35:25,318 --> 00:35:29,518
If he's successful in pulling this off, which I believe in the growth rate of Bitcoin, I think he will be.

562
00:35:29,518 --> 00:35:32,959
these products have massive implications for the broader market for those who understand it.

563
00:35:33,778 --> 00:35:41,038
So I think we should go back to that other slide on the S&P 500 on the yearly returns based upon

564
00:35:41,038 --> 00:35:50,398
what you just said. If Stretch is paying, right, Stretch is paying 10.5%, right? And no, go to the

565
00:35:50,398 --> 00:35:55,919
right. Keep on going. I like how I'm going to the right. Right there. That's it. Right.

566
00:35:55,919 --> 00:36:03,118
Right. Stretch is paying 10.5% return of capital. The S&P 500 blended average is 8.3%.

567
00:36:03,118 --> 00:36:11,538
The remaining 493 is 6.3%. But all of these that you see here, right? If you sell this,

568
00:36:11,538 --> 00:36:15,698
if it's more than one year, again, not financial advice, more than one year,

569
00:36:15,878 --> 00:36:19,158
it's long-term capital gains. Less than one year, it's ordinary income taxes.

570
00:36:20,499 --> 00:36:25,439
Stretch is 10.5% return of capital. The important thing, the difference between

571
00:36:25,439 --> 00:36:34,218
Stretch and Misty, right? Misty was saying it has 89% yield, right? The problem was with Misty

572
00:36:34,218 --> 00:36:38,658
is that the price has decayed significantly. It's one fourth of where it used to be.

573
00:36:39,499 --> 00:36:45,678
Stretch is pegged at $100, right? And it's designed to save. Dan just said, look, there

574
00:36:45,678 --> 00:36:53,019
are buyers that come in at 99 or 99.50, 99.75 at scale because they could buy this and they're

575
00:36:53,019 --> 00:36:58,118
making, you know, a quarter, you know, 25 cents on a hundred bucks. And they could do that at scale

576
00:36:58,118 --> 00:37:03,698
with automated trading to them. It's got a pegged price and it closes above a hundred bucks.

577
00:37:03,999 --> 00:37:10,558
Right. And if it's paying you 10 and a half percent, right on a, think about this on a prep,

578
00:37:10,638 --> 00:37:14,979
which is basically a perpetual bond. If a bond is paying you 10 and a half percent,

579
00:37:14,979 --> 00:37:21,678
I know it's a perpetual prep and it's return of capital. Why are you in the other 493 blended

580
00:37:21,678 --> 00:37:33,979
average of the S&P 500 to make from 6.3 to 10.5 as sailors say, well, you got basically 420 bips

581
00:37:33,979 --> 00:37:39,758
there, 4.2%. And you don't have to worry about it if you entered at the wrong time. You know,

582
00:37:39,838 --> 00:37:46,698
you're getting your 10% next year. Anytime. I am not a bond guy, but I never buy the 493.

583
00:37:46,698 --> 00:37:52,338
You know, one of my best trades ever back in the old days was on Apple after they came out with the iPhone.

584
00:37:52,558 --> 00:37:53,878
I thought that it was a great stock.

585
00:37:53,959 --> 00:37:55,959
I still think Apple is a great stock, right?

586
00:37:55,979 --> 00:38:00,118
Because they have a billion and a half iPhones out there, right?

587
00:38:00,479 --> 00:38:01,919
So that's a great product.

588
00:38:02,358 --> 00:38:09,878
So when you look at this, and Dan just said it's got lower volatility, which means that the volatility is even lower on stretch.

589
00:38:10,439 --> 00:38:11,278
And it's going to still pay.

590
00:38:11,578 --> 00:38:15,118
Oh, so let's say they drop it in the future from 10 and a half to 10 and a quarter.

591
00:38:15,118 --> 00:38:17,558
Let's say they drop it to 10%, right?

592
00:38:17,558 --> 00:38:19,058
Because they can do that.

593
00:38:19,058 --> 00:38:33,357
So you only making 10 return to capital It doesn get you gotta I don know And by the way it pays the yield monthly and you don even need to think bitcoin going up they have 80 years worth dividend payments

594
00:38:33,357 --> 00:38:38,817
so for anyone who wants to if you want it to outlive you it's good it's going to outlive all

595
00:38:38,817 --> 00:38:44,037
of us so okay this this is the big thing here can i chime in on this slide yeah please please okay

596
00:38:44,037 --> 00:38:54,177
look at this. Tether is tokenized U.S. treasuries at 4%. Now that 4% goes to Tether. It doesn't go

597
00:38:54,177 --> 00:39:02,697
to the people that buy Tether. That's 4%. So Tether is $180 billion of Tether. Somebody can

598
00:39:02,697 --> 00:39:10,437
say it's all FUD. Everything is always FUD, right? Tether has got whatever, $180 billion worth of

599
00:39:10,437 --> 00:39:18,917
treasuries, right? Everybody knows that four times 18 is what? 72, right? Basically, they're taking

600
00:39:18,917 --> 00:39:28,457
in $7.2 billion a year, right? In revenue, in treasuries, it's 4% on $180 billion, right?

601
00:39:28,457 --> 00:39:33,757
They have 200 employees. They've got the most revenue per employee. And think about it.

602
00:39:33,957 --> 00:39:38,297
They don't have a data center. They don't have a warehouse. They got nothing. They've got 200

603
00:39:38,297 --> 00:39:43,317
employees, they probably have $100 million in servers. I don't say the fact they have nothing

604
00:39:43,317 --> 00:39:47,777
like this is bad, is that they never have to replace a roof, you know, quote Grant Cardone.

605
00:39:47,937 --> 00:39:52,717
They never replace a roof. Nobody trips over anything. It's like, it's not like they have to

606
00:39:52,717 --> 00:39:59,537
build another warehouse that's a million square feet. And they're bringing in $7.2 billion a year

607
00:39:59,537 --> 00:40:00,477
on 200 employees.

608
00:40:01,097 --> 00:40:03,717
So Tether is tokenized U.S. treasuries.

609
00:40:04,637 --> 00:40:05,897
What is strategy?

610
00:40:07,897 --> 00:40:11,057
Stretch is equitized Bitcoin.

611
00:40:11,717 --> 00:40:12,537
What did he do?

612
00:40:12,817 --> 00:40:14,177
There's Bitcoin over there.

613
00:40:14,357 --> 00:40:14,797
What did he do?

614
00:40:14,897 --> 00:40:18,117
He wrapped it in a preferred equity, right?

615
00:40:18,617 --> 00:40:19,417
That's what he did.

616
00:40:19,417 --> 00:40:22,917
It's bond-like, but they basically wrapped Bitcoin

617
00:40:22,917 --> 00:40:24,517
and he equitized it.

618
00:40:25,097 --> 00:40:26,537
That's the cool part of this.

619
00:40:26,917 --> 00:40:27,737
And he goes, by the way,

620
00:40:27,737 --> 00:40:31,217
We're going to pay 10.5% to the shareholders that buy it.

621
00:40:31,417 --> 00:40:34,417
If anything, you should call up Tether tomorrow and be like,

622
00:40:34,537 --> 00:40:36,297
and I'm a fan of Paulo Adarnio.

623
00:40:36,357 --> 00:40:37,297
I think the guy is great.

624
00:40:37,577 --> 00:40:40,317
I would call and be like, you know, dude, you're making 4%

625
00:40:40,317 --> 00:40:41,417
because I bought your Tethers.

626
00:40:41,597 --> 00:40:44,697
You should give me back a 1%, you know, 100 bips.

627
00:40:45,037 --> 00:40:48,737
Meanwhile, strategy is giving you back 1,000 bips.

628
00:40:48,817 --> 00:40:52,737
They're giving you 10%, or it's actually 10.5%.

629
00:40:52,737 --> 00:40:54,957
But they give you nothing.

630
00:40:54,957 --> 00:40:58,017
So Tether, what they did is Tether built a great product.

631
00:40:58,317 --> 00:41:00,557
That was for the rest of the world, right?

632
00:41:00,617 --> 00:41:02,997
Because Tether, they're really not usable in the US.

633
00:41:03,377 --> 00:41:05,057
So they went after the rest of the world.

634
00:41:05,157 --> 00:41:06,697
Hey, you want to have access to dollars?

635
00:41:06,877 --> 00:41:07,137
Great.

636
00:41:07,417 --> 00:41:11,897
We tokenized US treasuries, which you could never buy by buying Tether.

637
00:41:12,077 --> 00:41:14,477
But we're not going to give you the 4% that we get.

638
00:41:14,557 --> 00:41:15,357
We're going to keep it.

639
00:41:16,597 --> 00:41:18,917
Strategy, equitized Bitcoin.

640
00:41:19,517 --> 00:41:22,157
Once you see that, you can't unsee this.

641
00:41:22,157 --> 00:41:29,697
So now the question is, if you run this through AI, right, this is where Dan and I did this independently.

642
00:41:30,197 --> 00:41:38,617
In the past four to five years, Tether has gone from $5 billion to $180 billion, right, even though it started 10 years ago.

643
00:41:39,277 --> 00:41:45,637
So the crazy part about this is the CAGR is 90 – my calculations came back at 90%.

644
00:41:45,637 --> 00:41:46,277
Yeah.

645
00:41:46,357 --> 00:41:48,097
Your calculations were like 100%.

646
00:41:48,097 --> 00:41:51,357
I indexed 2021, so same thing.

647
00:41:51,357 --> 00:42:12,037
Right. So no matter how you look at this, STRC is basically going after the foreign exchange market, the treasury market, and the equity market. Those are all bigger, right, than what Tether is doing. And this is already easily buyable. It's already almost $3 billion.

648
00:42:12,037 --> 00:42:19,977
So the growth rate for this can be, just pick your number, 20% CAGR, 30% CAGR, 40%.

649
00:42:19,977 --> 00:42:23,477
I think the CAGR on this is higher than the CAGR of Bitcoin.

650
00:42:23,817 --> 00:42:24,397
Would you agree?

651
00:42:25,157 --> 00:42:25,657
I agree, yeah.

652
00:42:26,097 --> 00:42:30,477
Tablecoins are massive, and this product is going to be massively adopted, I think, in brokerage accounts.

653
00:42:30,817 --> 00:42:33,877
Let's just say it stretches around for five years, and the yield's still 8%.

654
00:42:33,877 --> 00:42:37,497
Bitcoin's up, and there's now 100 years worth of dividends remaining.

655
00:42:38,317 --> 00:42:40,357
You're going to buy that over every other bond, in my opinion.

656
00:42:40,357 --> 00:42:42,637
So I just think it either works or it doesn't.

657
00:42:42,817 --> 00:42:44,417
If it works, it's going to eat the market.

658
00:42:44,817 --> 00:42:52,077
So most likely, if you run an 80% CAGR on this, if you just do the math on this, it's going to base.

659
00:42:52,457 --> 00:42:53,377
There it is.

660
00:42:55,197 --> 00:42:58,637
Yeah, this is just money market funds, fund assets.

661
00:42:58,837 --> 00:43:00,477
Like this is the total addressable market for stretch.

662
00:43:00,937 --> 00:43:05,277
And it has been at a 9% CAGR since 2015, the total money market funds.

663
00:43:05,277 --> 00:43:08,217
and base case of 7% CAGR moving forward,

664
00:43:08,477 --> 00:43:12,517
money market funds in 2030 could reach $11 trillion.

665
00:43:13,217 --> 00:43:15,117
That is a pretty big addressable market

666
00:43:15,117 --> 00:43:17,237
considering that stretch market cap is 2.8 billion.

667
00:43:17,757 --> 00:43:21,177
And if Bitcoin is digital credit,

668
00:43:21,297 --> 00:43:22,177
if it's pristine collateral,

669
00:43:22,817 --> 00:43:23,757
if it's fully auditable,

670
00:43:24,297 --> 00:43:27,197
then this is the future of money market funds.

671
00:43:27,517 --> 00:43:28,657
And what I think is so interesting

672
00:43:28,657 --> 00:43:30,077
is that moving forward,

673
00:43:30,117 --> 00:43:31,517
you're going to be able to in real time

674
00:43:31,517 --> 00:43:33,757
determine the risk of a product like stretch

675
00:43:33,757 --> 00:43:36,957
based on the verified Bitcoin holdings of a Bitcoin treasury company.

676
00:43:37,277 --> 00:43:38,317
Like, for example, strategy.

677
00:43:38,417 --> 00:43:41,337
I know there's not on-chain reserves, but they're audited by Big Four accounting.

678
00:43:41,477 --> 00:43:45,437
So you'll be able to tell like, oh, if Bitcoin falls by 20%, maybe the yield has to go up.

679
00:43:45,597 --> 00:43:48,637
But like Bitcoin just stays within a 20% range up or down.

680
00:43:49,117 --> 00:43:51,297
The risk profile of this product really isn't changing.

681
00:43:52,037 --> 00:43:52,777
There's no earnings.

682
00:43:53,057 --> 00:43:57,017
You don't have to wait for the earnings call and figure out if your bond's not going to get paid in five years.

683
00:43:57,317 --> 00:43:57,497
Right.

684
00:43:57,497 --> 00:43:58,577
You don't have to wait.

685
00:43:59,057 --> 00:44:02,357
If the company gets sued, I mean, there could be potential liabilities there.

686
00:44:02,397 --> 00:44:03,437
But you have the liquidation preference.

687
00:44:03,757 --> 00:44:05,197
protecting in the case of liquidation.

688
00:44:05,317 --> 00:44:09,497
So like there's a lot of investor protections that ensure you get that money,

689
00:44:09,597 --> 00:44:11,637
that return of capital for the foreseeable future,

690
00:44:11,737 --> 00:44:12,617
or you just get your money back.

691
00:44:14,157 --> 00:44:14,557
Yeah.

692
00:44:14,797 --> 00:44:15,257
So that's pretty,

693
00:44:15,337 --> 00:44:15,497
oh,

694
00:44:15,537 --> 00:44:15,957
let's go to,

695
00:44:15,997 --> 00:44:17,377
let's go to stream and,

696
00:44:17,457 --> 00:44:17,837
and we're,

697
00:44:17,837 --> 00:44:18,417
we're cruising.

698
00:44:18,517 --> 00:44:18,737
I mean,

699
00:44:18,737 --> 00:44:20,037
we're going through a ton of slides.

700
00:44:20,217 --> 00:44:21,417
So I think this is awesome.

701
00:44:21,577 --> 00:44:21,677
Oh,

702
00:44:21,677 --> 00:44:22,057
the European,

703
00:44:22,197 --> 00:44:22,537
you take,

704
00:44:22,657 --> 00:44:22,997
take it away,

705
00:44:23,057 --> 00:44:23,257
Dan.

706
00:44:23,537 --> 00:44:23,737
Sure.

707
00:44:23,797 --> 00:44:23,977
Yeah.

708
00:44:23,977 --> 00:44:30,237
I just looked at a couple comparable European bonds and we can first look at

709
00:44:30,237 --> 00:44:30,737
Siemens.

710
00:44:30,737 --> 00:44:31,057
I mean,

711
00:44:31,477 --> 00:44:33,637
this is a $500 million euro.

712
00:44:33,757 --> 00:44:42,877
So issuance in May of 2025, it's a 20-year fixed maturity, 4% coupon, 160 basis point spread relative to the 20-year swap.

713
00:44:43,437 --> 00:44:46,337
In Europe, we use swap rates to benchmark the risk-free rate.

714
00:44:46,337 --> 00:44:49,997
In the US, you use treasuries, whether it be UMass duration.

715
00:44:50,317 --> 00:44:56,457
So for a perpetual product, the Macaulay duration based on a 9% yield is roughly 10-year duration.

716
00:44:56,797 --> 00:45:02,257
But for a 20-year fixed rate bond, you're going to benchmark off the 20-year euro swap.

717
00:45:02,637 --> 00:45:04,417
That's roughly 2.6%.

718
00:45:04,417 --> 00:45:07,697
And what that gives you is 170 basis points spread.

719
00:45:07,697 --> 00:45:11,737
And just showing you kind of what corporate bonds in Europe are trading at.

720
00:45:12,117 --> 00:45:21,297
For reference, Stream was issued at a 12% or about a 950 basis point credit spread over the risk-free 20-year Euroswap.

721
00:45:22,377 --> 00:45:26,817
And so you're getting this crazy premium relative to other corporate bonds.

722
00:45:27,277 --> 00:45:28,917
You can look at the EDF green hybrids.

723
00:45:29,037 --> 00:45:30,697
It's a perpetual security yielding 4.3%.

724
00:45:30,697 --> 00:45:35,417
3%, same deal, 5.5-year non-callable at the beginning.

725
00:45:35,677 --> 00:45:39,597
This is a BBB minus rated company.

726
00:45:39,917 --> 00:45:41,637
There's no rating on this product yet.

727
00:45:42,177 --> 00:45:45,977
But essentially what it's showing you is that these are premium issuers.

728
00:45:45,977 --> 00:45:48,297
Strategy obviously is B minus rated by the S&P.

729
00:45:48,297 --> 00:46:01,697
But the credit spread between any sort of BBB or AA- company between that and Stream is close to 800 basis points.

730
00:46:02,037 --> 00:46:03,577
And that is just crazy.

731
00:46:03,737 --> 00:46:06,597
So I think anyone who wants to make that trade should.

732
00:46:06,817 --> 00:46:11,297
Stream is extremely mispriced, especially relative to other European bonds.

733
00:46:11,937 --> 00:46:16,837
You can see all of these different ratings relative to other bonds in the market.

734
00:46:16,837 --> 00:46:20,657
S&P rings, relative credit spreads, effective yield, and obviously the return of capital,

735
00:46:20,757 --> 00:46:25,517
especially in a place like Europe where taxes can be pretty atrocious, is extremely attractive.

736
00:46:27,057 --> 00:46:30,937
I'm just going to talk about why we use credit spreads and the swap rate.

737
00:46:31,077 --> 00:46:32,737
So I'm going to slow it down really quick here.

738
00:46:32,837 --> 00:46:34,537
I want to talk about how we benchmark these things.

739
00:46:34,797 --> 00:46:36,317
So referred equity is essentially a bond.

740
00:46:36,637 --> 00:46:42,877
Credit spread, it's a fancy word for the difference between the coupon payment on the bond and the risk-free rate.

741
00:46:42,977 --> 00:46:45,237
So in the US, we use US treasuries as a risk-free rate.

742
00:46:45,237 --> 00:46:46,437
You have to match duration.

743
00:46:46,437 --> 00:46:52,377
So if you have a 10-year bond, you look at the US treasury 10-year rate, and that's the credit spread, the difference between those.

744
00:46:52,657 --> 00:46:59,777
It's essentially the risk premium you're receiving for owning that corporate credit above what is a guaranteed payback by the US government.

745
00:46:59,977 --> 00:47:01,557
So that's the credit spread in the US.

746
00:47:02,317 --> 00:47:06,017
In Europe after 2008, sovereigns we saw could default.

747
00:47:06,517 --> 00:47:15,537
And so you use the interbank lending rate denominated in euros as the benchmark for the risk-free rate in Europe, in euros.

748
00:47:16,117 --> 00:47:18,597
So we use, it's called a swap rate.

749
00:47:18,677 --> 00:47:24,057
So the euro swap rate is roughly 2.6% for a 10-year duration.

750
00:47:24,257 --> 00:47:26,377
Obviously, you match duration to the perpetual liability.

751
00:47:26,637 --> 00:47:28,097
We use a 10-year benchmark.

752
00:47:28,097 --> 00:47:33,877
And this is how you determine the credit spread relative to the risk-free rate.

753
00:47:33,957 --> 00:47:35,037
So just different markets.

754
00:47:35,297 --> 00:47:36,217
It sounds confusing.

755
00:47:36,317 --> 00:47:38,837
All these finance guys like to use complicated words for simple concepts.

756
00:47:39,417 --> 00:47:41,717
So interest rate swap is exactly what we're looking at.

757
00:47:42,037 --> 00:47:42,837
There's deep liquidity.

758
00:47:43,257 --> 00:47:44,197
They're essentially risk-free.

759
00:47:44,957 --> 00:47:47,917
In the US, we also have swap rates.

760
00:47:48,017 --> 00:47:58,437
We have a interest rate swap and actually trade slightly below the risk-free rate because the government's been issuing so many short-term treasury bills into the market.

761
00:47:58,437 --> 00:48:04,297
So that's another form of a carry trade is the difference in these swap rates and the risk-free rates in each jurisdiction.

762
00:48:05,137 --> 00:48:07,637
This is illustrating that same thing I tried to break down.

763
00:48:07,717 --> 00:48:08,477
It's a little bit confusing.

764
00:48:08,697 --> 00:48:12,637
Again, when you think swap rate, think euro-denominated risk-free rate.

765
00:48:12,637 --> 00:48:15,677
That's all you need to know because they differ based in different jurisdictions.

766
00:48:17,197 --> 00:48:23,357
This, again, showing the credit spread, STRE yield while it's junior to STRF, so it should

767
00:48:23,357 --> 00:48:26,917
trade at a slight premium to STRF in terms of the coupon payment.

768
00:48:27,377 --> 00:48:32,017
It still has a higher credit spread at par than strife does to the risk free rate in

769
00:48:32,017 --> 00:48:34,997
the US because the risk free rate in the US is higher than that in Europe.

770
00:48:35,117 --> 00:48:39,257
So again, the overall concept here is that interest rates in Europe are lower than they

771
00:48:39,257 --> 00:48:45,037
are in the u.s making strategies euro denominated products that much more attractive especially we

772
00:48:45,037 --> 00:48:53,297
don't have to take on foreign foreign currency risk grant anything to say there anything talk

773
00:48:53,297 --> 00:49:00,397
about let's go let's go back another slide here nope one to the right here or uh here

774
00:49:00,397 --> 00:49:06,677
you're going so fast just go back one more to the left swap rates no one more

775
00:49:06,677 --> 00:49:08,537
One more.

776
00:49:09,677 --> 00:49:11,537
Okay, two to the right, three to the right.

777
00:49:11,857 --> 00:49:12,537
Close enough.

778
00:49:13,077 --> 00:49:15,377
Okay, look, these swap curves.

779
00:49:15,937 --> 00:49:17,717
Look, I did a posting on this today.

780
00:49:17,877 --> 00:49:18,817
I did this pie chart.

781
00:49:19,217 --> 00:49:24,097
Look, Jesse Myers made this great chart that Strategy uses, that Sailor uses, the global

782
00:49:24,097 --> 00:49:24,557
wealth.

783
00:49:25,117 --> 00:49:30,657
The part that was left out of it, and this is no dig at Jesse, because at that point,

784
00:49:30,657 --> 00:49:35,757
MSTR was only denominated in dollars and the prefs were all done

785
00:49:35,757 --> 00:49:39,497
denominated in dollars. Once they announced stream,

786
00:49:39,657 --> 00:49:43,557
and I thought that stream was going to be a Euro denominated version of

787
00:49:43,557 --> 00:49:46,017
stretch, right? And that's not what it was.

788
00:49:46,017 --> 00:49:48,977
It ended up being a Euro denominated version of stripe.

789
00:49:49,977 --> 00:49:50,137
Now,

790
00:49:50,137 --> 00:50:02,017
Now, it may go to $100.50.

791
00:50:02,357 --> 00:50:09,277
It's going to have a 1% spread probably at most 50 bips up and 50 bips down.

792
00:50:09,657 --> 00:50:10,357
Now, what does that mean?

793
00:50:10,397 --> 00:50:11,137
They could trade that.

794
00:50:11,237 --> 00:50:12,197
It's got a fixed price.

795
00:50:12,557 --> 00:50:18,377
The other ones, the other prefs are floating prices with fixed yields.

796
00:50:18,377 --> 00:50:21,637
The effective yield may be different, but they have a fixed yield.

797
00:50:21,737 --> 00:50:24,717
So you have a chart that compares the two in one of the slides.

798
00:50:25,277 --> 00:50:28,377
And so what happens is they're different products.

799
00:50:28,697 --> 00:50:33,177
Now, when you have this credit spread that is shown on the previous slide there, what

800
00:50:33,177 --> 00:50:37,697
happens is there's a difference between, as Dan said, the risk-free rate and what that

801
00:50:37,697 --> 00:50:39,297
euro trades for there.

802
00:50:39,837 --> 00:50:42,357
And so that's what Saylor talked about.

803
00:50:42,517 --> 00:50:43,677
I reposted today.

804
00:50:43,837 --> 00:50:44,917
What did I say about him?

805
00:50:44,917 --> 00:51:01,397
He's at the Cantor event yesterday and he said, look, if you could borrow at 2% for institutions in Europe, right, and he's paying 12% on stream, it was in BIPs.

806
00:51:02,497 --> 00:51:05,877
It's 10% that you're getting as a shareholder.

807
00:51:06,117 --> 00:51:08,077
That's the spread that you capture.

808
00:51:08,077 --> 00:51:14,657
And so that's why it's different in Europe because they've been reducing interest rates faster than in the U.S.

809
00:51:14,657 --> 00:51:16,517
and the U.S. has higher interest rates.

810
00:51:16,857 --> 00:51:18,697
So the effective ability to borrow money

811
00:51:18,697 --> 00:51:20,737
is easier in Europe, right?

812
00:51:20,817 --> 00:51:21,897
In a variety of reasons.

813
00:51:22,317 --> 00:51:23,677
But the point here is,

814
00:51:23,757 --> 00:51:26,137
is that things are different now.

815
00:51:26,237 --> 00:51:27,057
Why are they different?

816
00:51:27,197 --> 00:51:29,317
I did a post on the pie chart with Jesse Myers

817
00:51:29,317 --> 00:51:31,257
where I was talking about on my long rant

818
00:51:31,257 --> 00:51:35,977
and he made money be components in his original chart.

819
00:51:36,157 --> 00:51:39,777
But money was only the deposits, right?

820
00:51:39,857 --> 00:51:42,457
In the banks and cash and so forth.

821
00:51:42,457 --> 00:51:46,177
What I added to my pie chart, this is the chart I wanted to get to.

822
00:51:46,477 --> 00:51:50,337
This is where it says over here, the dividend type is fixed, but the price floats.

823
00:51:50,457 --> 00:51:54,517
And the effective yield is, it's showing it here is 10%, but it could be a little bit,

824
00:51:54,597 --> 00:51:59,497
the effective yield could be a little bit higher due to getting it to ramp up.

825
00:51:59,917 --> 00:52:06,497
So my takeaway here is, is that he left out the foreign currency exchange because it was

826
00:52:06,497 --> 00:52:09,117
not denominated, it was only denominated US dollars.

827
00:52:09,117 --> 00:52:16,717
Now that we have stream, there's a 2.4 quadrillion foreign exchange market.

828
00:52:17,377 --> 00:52:21,597
$2,400 billion is the foreign exchange market.

829
00:52:22,197 --> 00:52:29,177
What I did is I took 10% of it, $240 trillion, because you need to have a base value to trade

830
00:52:29,177 --> 00:52:31,597
it, and there's probably massive leverage on it.

831
00:52:32,097 --> 00:52:37,577
So basically, in Jesse Meyer's chart, he said there was $300 trillion in bonds.

832
00:52:37,577 --> 00:52:47,037
Well, I think there's at least $240 trillion worth of foreign currency swaps, which you could not do until STRE came available.

833
00:52:47,577 --> 00:52:50,417
And this is where the presentation builds on itself, right?

834
00:52:51,097 --> 00:52:52,877
This is what's different.

835
00:52:54,197 --> 00:52:57,597
Tether is tokenized U.S. treasuries.

836
00:52:58,657 --> 00:53:03,137
What strategy just did here with Stream, this is the key point.

837
00:53:03,137 --> 00:53:08,197
What they did here is he equitized the euro swap.

838
00:53:08,637 --> 00:53:11,397
That's the previous slide showing the credit spreads and the swaps.

839
00:53:11,857 --> 00:53:17,517
He equitized this in a, in a prep that shows here that pays 10% and the effective yield

840
00:53:17,517 --> 00:53:19,977
is higher and it's return of capital.

841
00:53:20,937 --> 00:53:27,697
And if the S&P 500 is 8% and that's just a straight equity, this is a bond like perpetual.

842
00:53:27,697 --> 00:53:32,197
This is where the presentation builds that never needs to be refinanced.

843
00:53:33,137 --> 00:53:34,237
Things are different.

844
00:53:34,937 --> 00:53:35,617
Things are different.

845
00:53:36,117 --> 00:53:41,197
So stream and strife, now you have two different currencies.

846
00:53:42,137 --> 00:53:43,797
Stretch is the 10-year number.

847
00:53:44,077 --> 00:53:49,157
That's the 10-year, when you see that in the U.S., the 10-year rate, it's whatever, 4 point something percent.

848
00:53:49,717 --> 00:53:50,837
That's what stretch is.

849
00:53:51,237 --> 00:53:53,757
Stretch is a variable rate with a fixed price.

850
00:53:54,377 --> 00:53:57,917
These are variable prices with fixed rates.

851
00:53:58,737 --> 00:54:00,617
And now they've got this triangle.

852
00:54:00,617 --> 00:54:05,757
maybe the triangle should be like this, where they trade. So this is why things are completely

853
00:54:05,757 --> 00:54:11,697
different. Now, if this is complex, I get it. Look at some of my posts. We could do a space.

854
00:54:11,797 --> 00:54:17,117
We could take questions on this, but this combining all of them together, strife,

855
00:54:17,937 --> 00:54:23,437
stream, stretch. I do get that there's strike and stride, right? But these three are most excited

856
00:54:23,437 --> 00:54:28,177
about are strife, stream, and stretch, right?

857
00:54:28,277 --> 00:54:30,897
Because of the duration and then the payment schedule

858
00:54:30,897 --> 00:54:33,577
on stretch being monthly, right?

859
00:54:33,837 --> 00:54:36,917
Do I think that they should be paid in euros?

860
00:54:37,597 --> 00:54:40,397
Heck yeah, absolutely, right?

861
00:54:40,537 --> 00:54:41,357
Because then you don't have to deal

862
00:54:41,357 --> 00:54:42,437
with the currency conversion.

863
00:54:43,057 --> 00:54:45,497
I mean, folks, this is the trifecta right here

864
00:54:45,497 --> 00:54:47,057
and it's gonna go to the quad factor.

865
00:54:47,757 --> 00:54:50,137
And so if we model this against Tether,

866
00:54:50,817 --> 00:54:52,657
these numbers, this should be able

867
00:54:52,657 --> 00:54:57,997
to double every year, the prefs, in my view. And if the prefs are doubling, that means they're able

868
00:54:57,997 --> 00:55:03,917
to acquire $8 billion this year in prefs. Next year, they acquire $16 billion in Bitcoin.

869
00:55:04,717 --> 00:55:08,817
What's the price of Bitcoin? Don't know. Exactly. And that's the whole thing. And a lot of,

870
00:55:08,897 --> 00:55:13,037
you know, people are like, the price is terrible. Look, I've been pretty vocal. I mean, I haven't

871
00:55:13,037 --> 00:55:19,037
owned an MSDR since August. I've been, you know, buying the IPOs on the preferreds. That's been a

872
00:55:19,037 --> 00:55:22,677
great way to make money. The SATA IPO over the past few days has been a great way to make money.

873
00:55:22,857 --> 00:55:28,157
So the trades or the way to make money here, it's a lot more boring than it was.

874
00:55:28,737 --> 00:55:32,317
Great. And we talk about it all the time. I wish we could just buy call options and make a gazillion

875
00:55:32,317 --> 00:55:36,557
percent in four minutes, but that's not how we've been making money, right? We've been conservative.

876
00:55:36,897 --> 00:55:41,257
We've been very risk averse, trying to buy these products at a discount, which we've been doing

877
00:55:41,257 --> 00:55:46,837
successfully, clipping the coupons. There is money to be made here. It's just a different sort

878
00:55:46,837 --> 00:55:50,737
of risk profile. And so we've been kind of tailoring our strategy to that. So I know a lot

879
00:55:50,737 --> 00:55:53,677
of people listening are like, why are you guys talking about this? It's boring. It's like, no,

880
00:55:53,717 --> 00:55:58,697
no, no, this is big for the Bitcoin market. These products have to succeed for MSTR common to

881
00:55:58,697 --> 00:56:03,437
succeed. And then three, there are ways to make money in them, especially using leverage. So like,

882
00:56:03,837 --> 00:56:07,897
that's why we're talking about this. And I encourage people who are pissed off the share

883
00:56:07,897 --> 00:56:14,197
price to sort of pivot or to think differently about how you can use these products to create

884
00:56:14,197 --> 00:56:21,257
portfolio. Yeah. Look, this has been complex. When you design a product, you look at the total

885
00:56:21,257 --> 00:56:29,177
addressable market. That's why Saylor always used Jesse Meyer's Croceus BTC, his chart showing the

886
00:56:29,177 --> 00:56:33,637
$300 trillion bond market, and they create the prefs. But now he's also going after the foreign

887
00:56:33,637 --> 00:56:38,417
currency exchange market, right? And you're like, oh, wow. And then this is equitized Bitcoin,

888
00:56:38,417 --> 00:56:43,617
and it pays this massive yield, which is better than Tether. Again, I have no gripes against

889
00:56:43,617 --> 00:56:48,477
tether, but I think that this is a much different place. Now let's switch over to Seda. I mean,

890
00:56:48,477 --> 00:56:52,757
we covered a lot in this presentation. There's a lot of information to think about, but we've been

891
00:56:52,757 --> 00:56:58,197
doing this for years and it takes a lot, you know, changing your thinking is not something,

892
00:56:58,617 --> 00:57:02,637
you know, when it happens, you're like, why didn't I get it before? Dan understood strike. I don't

893
00:57:02,637 --> 00:57:09,257
know, four months before me, five months, every, I don't know. Every other day, Dan tells me

894
00:57:09,257 --> 00:57:13,977
something about the press and I'm like, oh, I didn't know that. He's like, how did you not know

895
00:57:13,977 --> 00:57:18,857
that? I'm like, I didn't know that. So anyway, I want you to think that when we go through this,

896
00:57:19,097 --> 00:57:22,977
it's not like we read the prospectus and we get this all in the first read or the first three days

897
00:57:22,977 --> 00:57:27,697
or the first week. Sometimes you change your mind three months later. And there's a lot of guys out

898
00:57:27,697 --> 00:57:32,777
there who've like decided to use margin or take some sort of loan. I'm not advocating by any means,

899
00:57:33,277 --> 00:57:46,635
but there are people making lots of money with these products And granted it takes a lot of to make money with these products but there interesting ways to do it Now we going to SATA Full disclosure I never held ASST never wanted to

900
00:57:47,575 --> 00:57:48,795
I actually tried to short it.

901
00:57:49,215 --> 00:57:50,735
Couldn't because the bar was so high.

902
00:57:51,415 --> 00:57:52,855
Technically, this podcast is owned by

903
00:57:52,855 --> 00:57:54,875
ASST, but we're supposed to say exactly how we feel.

904
00:57:54,955 --> 00:57:55,455
That's how I feel.

905
00:57:56,555 --> 00:57:58,735
The point being is I did

906
00:57:58,735 --> 00:58:00,955
enter SATA both in the

907
00:58:00,955 --> 00:58:02,855
hedge fund and then personally aggressively

908
00:58:02,855 --> 00:58:04,655
because this product, the terms are just so good.

909
00:58:04,655 --> 00:58:11,035
And we're going to talk, Grant and I, about why those terms are so good and why this PREF product is really in the investor's interest.

910
00:58:11,315 --> 00:58:13,935
So obviously, ex-dividend date, that's really important.

911
00:58:14,255 --> 00:58:20,495
So with stretch, you have to be holding stretch on the morning of the 15th every month.

912
00:58:20,595 --> 00:58:23,335
You have to have it in your brokerage account to qualify for that month's dividend.

913
00:58:23,715 --> 00:58:24,835
You can sell it after if you'd like.

914
00:58:25,775 --> 00:58:27,995
Seda, they staggered with stretch.

915
00:58:28,135 --> 00:58:32,575
So you have to be holding it on the 1st of every month to qualify for the dividend.

916
00:58:32,575 --> 00:58:38,115
There is an opportunity to clip these dividends. Now, what is SEDA? So SEDA is essentially stretch,

917
00:58:38,435 --> 00:58:45,695
a monthly variable rate perpetual preferred product, but it's senior, right? Stretch sits

918
00:58:45,695 --> 00:58:52,395
below strife in the capital stack. Here, this is by the One Chair Podcast. Stretch sits below strife,

919
00:58:52,495 --> 00:58:57,255
which sits below the converts. So stretch isn't that senior relative to the other securities in

920
00:58:57,255 --> 00:59:04,015
the capital structure, right? Whereas SEDA is the uppermost security in ASST or Strives capital

921
00:59:04,015 --> 00:59:09,855
structure. It is the senior claim. They can call it, they can redeem it at $110, just like Stretch

922
00:59:09,855 --> 00:59:15,595
can be redeemed at a one-on-one. So there's more variability, but they pay out a 12% interest rate

923
00:59:15,595 --> 00:59:21,695
at par at $100, whereas Stretch pays out 10% or 10.5%. So these are the comparisons. I really want

924
00:59:21,695 --> 00:59:27,835
to break this down super, super simply. So again, stretch and SEDA are the two most comparable

925
00:59:27,835 --> 00:59:34,995
kind of comparisons. So again, $100 per share par, liquidation preference set at $100. That moves up

926
00:59:34,995 --> 00:59:42,675
to 101 for stretch and 110 for SEDA. 10.5% annual dividend payment at par versus 12% for SEDA.

927
00:59:43,535 --> 00:59:49,195
Monthly payments, no cap on the rate they can adjust every month, no cap on that.

928
00:59:49,195 --> 00:59:55,895
this is a really important covenant. So these companies can't change. They can't decrease the

929
00:59:55,895 --> 01:00:01,215
interest rate on a monthly basis, more than 25 bps plus the SOFR change. So SOFR went down 25 bps,

930
01:00:01,555 --> 01:00:06,995
they can adjust it down by 50 bps in a month. But the point being is, let's say there's a 10%

931
01:00:06,995 --> 01:00:13,155
effective yield. Next month, they can't just drop it to 10% effective yield and just smoke you.

932
01:00:13,155 --> 01:00:17,755
And the price declines, right? There has to be a gradual decline in interest rate. And it's

933
01:00:17,755 --> 01:00:24,395
written into perspectives to protect investors. There's also a compounding cumulative dividend

934
01:00:24,395 --> 01:00:29,995
clause, which means if dividends are missed, then the shareholders of these products are owed those

935
01:00:29,995 --> 01:00:36,555
dividends and more as a penalty for missing them. If a certain amount of dividend payments are missed

936
01:00:36,555 --> 01:00:41,415
by the issuing corporation, the holders of these preferred products can appoint board directors

937
01:00:41,415 --> 01:00:46,115
to enforce dividend payments over a set term schedule. And then finally, you have the liquidation

938
01:00:46,115 --> 01:00:52,395
preference. So if the company, in fact, winds up, ceases to exist, you are owed the unpaid

939
01:00:52,395 --> 01:01:00,015
dividends and the principal, which is around $100 per share before anyone's junior in the

940
01:01:00,015 --> 01:01:04,375
capital structure. So you get paid out much like a bond with the remaining assets of the corporation

941
01:01:04,375 --> 01:01:11,695
before the common. That's why it's a less risky investment prospect. Can you go back one slide?

942
01:01:11,695 --> 01:01:15,535
Look, this is something, when you look at this,

943
01:01:16,675 --> 01:01:19,615
Stretch is getting its volatility reduced.

944
01:01:19,795 --> 01:01:20,875
Dan put up a slide on it.

945
01:01:21,015 --> 01:01:22,135
The volatility is whatever.

946
01:01:22,615 --> 01:01:24,695
Five going to 3%, eventually going to 1%.

947
01:01:25,535 --> 01:01:29,795
In order for SEDA, and I want to be very clear,

948
01:01:30,015 --> 01:01:32,155
I don't own SEDA, I don't own Strive,

949
01:01:32,315 --> 01:01:35,355
and we have no conversations with Strive.

950
01:01:35,435 --> 01:01:36,835
We're allowed to say what we want to say.

951
01:01:37,035 --> 01:01:40,075
I don't get paid by them, not contracted by them,

952
01:01:40,075 --> 01:01:46,095
And I don't actually own any of the Stripe common stock or Seda.

953
01:01:46,595 --> 01:01:48,915
But let's just look at it from my perspective.

954
01:01:49,455 --> 01:01:55,095
What you see here is the target price range is $99 to $100 on stretch.

955
01:01:56,295 --> 01:01:59,955
Seda is $95 to $105.

956
01:02:00,455 --> 01:02:04,255
So it's $5 above $100, $5 below of the stated value.

957
01:02:04,775 --> 01:02:06,435
Now, why do I think they did that?

958
01:02:06,615 --> 01:02:08,215
It's because they're paying 12%.

959
01:02:08,215 --> 01:02:15,155
They need a little more volatility in it to eke out a little bit more of that trading range to pay the 12%.

960
01:02:15,155 --> 01:02:16,995
That's the way that I look at it.

961
01:02:17,215 --> 01:02:19,515
They give it a wider range, right?

962
01:02:19,715 --> 01:02:22,795
And the stated price is the same for both, 100 each.

963
01:02:22,795 --> 01:02:27,835
But they give a wider range, but they're also paying a higher yield at 12%.

964
01:02:27,835 --> 01:02:33,815
Now, 12% compared to 10% is a 20% difference, right?

965
01:02:33,875 --> 01:02:35,095
But it's only 200 bps.

966
01:02:35,335 --> 01:02:37,975
And so that's why I think it has the wider range there.

967
01:02:37,975 --> 01:02:39,235
in order to pay that.

968
01:02:39,755 --> 01:02:42,135
So for me, I think that you have to look at,

969
01:02:42,295 --> 01:02:43,775
you know, the preferred market,

970
01:02:44,015 --> 01:02:47,715
perpetual preferreds for equitized Bitcoin holdings

971
01:02:47,715 --> 01:02:49,495
is less than a year old.

972
01:02:49,895 --> 01:02:52,235
And this is the second company to do it.

973
01:02:52,635 --> 01:02:54,315
So I think first mover advantage

974
01:02:54,315 --> 01:02:55,695
is always critically important.

975
01:02:55,695 --> 01:02:58,075
I think the second mover is critically important.

976
01:02:58,435 --> 01:03:01,255
The fact that this was upsized from $125 million

977
01:03:01,255 --> 01:03:02,875
to $2 million.

978
01:03:03,615 --> 01:03:07,015
So I want all Bitcoin treasury companies to be successful.

979
01:03:07,015 --> 01:03:12,435
But when I look at this product, I'm like, it is a little bit different than Stretch, which is a good thing.

980
01:03:12,955 --> 01:03:15,175
And I think you have to look at why they did it.

981
01:03:15,535 --> 01:03:20,335
And I think that in the short term, the effective yield is higher.

982
01:03:22,715 --> 01:03:23,155
Exactly.

983
01:03:23,315 --> 01:03:26,335
And there's two more interesting points from the prospectus that I want to mention.

984
01:03:26,835 --> 01:03:31,955
So for Stretch, there can be no new preferred equity issued above Stretch.

985
01:03:32,595 --> 01:03:35,115
So Strife sits above it, and then the converts sit above it.

986
01:03:35,115 --> 01:03:38,355
They can issue more converts, but they can't issue any preferred equity above stretch.

987
01:03:39,575 --> 01:03:46,375
SEDA in the prospectus, SRIVE is unable to issue any new preferred equity above SEDA.

988
01:03:46,475 --> 01:03:52,355
So SEDA will be senior in the capital structure for the foreseeable future, barring any sort of converts, which they have said they won't do.

989
01:03:52,475 --> 01:03:54,635
So these are important terms in the prospectus.

990
01:03:54,735 --> 01:03:57,795
And it's really the reason why something like SRIVE is trading so terribly, right?

991
01:03:58,235 --> 01:04:01,615
SRIVE trades terribly because it doesn't have cumulative dividends.

992
01:04:01,615 --> 01:04:06,255
So there's no investor protections and they can issue as many preferred stocks above it as possible.

993
01:04:06,655 --> 01:04:10,675
And the Bitcoin ratings are very low relative to other equities, preferred equities.

994
01:04:11,235 --> 01:04:15,775
Strike, the same. They can issue as many preferred stocks above strike as they want.

995
01:04:16,195 --> 01:04:19,055
And so strikes yield. The investor sentiment is reflecting that.

996
01:04:19,335 --> 01:04:25,035
So there are protections in these perspectives that kind of provide a reason for why they trade like they do.

997
01:04:25,435 --> 01:04:31,075
This is showing the target range. So anything above one of five is going to be decreasing the interest rate.

998
01:04:31,075 --> 01:04:32,215
You're pretty much out at 105.

999
01:04:32,415 --> 01:04:36,715
So I'm holding this thing big time right now.

1000
01:04:36,875 --> 01:04:37,755
And we can look at the price.

1001
01:04:37,815 --> 01:04:39,755
It's performed quite well in the past few days.

1002
01:04:39,895 --> 01:04:41,015
This is price, green candles.

1003
01:04:42,515 --> 01:04:43,775
At 105, you're out.

1004
01:04:43,955 --> 01:04:45,335
At 100, you're probably out.

1005
01:04:45,755 --> 01:04:48,915
But right now, the effective dividend yield is so high.

1006
01:04:49,275 --> 01:04:50,655
The reason it's increasing.

1007
01:04:50,815 --> 01:04:55,515
You have 30 years of dividend payments right now based on the Bitcoin coverage.

1008
01:04:56,115 --> 01:04:57,695
And that's if Bitcoin doesn't increase.

1009
01:04:57,695 --> 01:05:00,655
So you're going to get paid for the foreseeable future.

1010
01:05:01,075 --> 01:05:05,195
And then, you know, they likely will reduce that interest payment.

1011
01:05:05,575 --> 01:05:08,575
But this is sort of the mechanism for how they're going to keep it stable.

1012
01:05:08,575 --> 01:05:11,455
And this is important for understanding kind of where you should sell.

1013
01:05:11,515 --> 01:05:13,315
If it trades to 115, you're probably a seller.

1014
01:05:13,435 --> 01:05:15,735
If it trades to 85, you're probably a buyer.

1015
01:05:16,075 --> 01:05:17,335
That's kind of how I'm looking at these things.

1016
01:05:18,295 --> 01:05:22,695
So, you know, look, we've already started trying to figure out how to reverse engineer

1017
01:05:22,695 --> 01:05:24,335
how they're hitting the ATM.

1018
01:05:24,575 --> 01:05:25,895
I already did a post on it.

1019
01:05:26,595 --> 01:05:29,775
I would tell people to watch the last 10 minutes on every Friday.

1020
01:05:29,775 --> 01:05:36,235
If there's a dip down, then that means they probably did a closing trade to whatever amount

1021
01:05:36,235 --> 01:05:37,715
given their liquidity.

1022
01:05:37,895 --> 01:05:41,335
Let's just put a stretch for right now because it trades at par.

1023
01:05:41,635 --> 01:05:44,375
If you see on Friday, I already posted this.

1024
01:05:44,495 --> 01:05:51,395
If you see on Friday that on Friday, 10 minutes into the close, it goes from $100.10, it drops

1025
01:05:51,395 --> 01:05:58,815
down to $99.20, and then it closes out at $99.25 or $99.30.

1026
01:05:59,695 --> 01:06:00,695
That was the ATM.

1027
01:06:01,255 --> 01:06:07,275
At that point, they looked at all the information Monday through Friday, and they're like, how

1028
01:06:07,275 --> 01:06:10,155
much do we want to ATM and announce on Monday?

1029
01:06:10,735 --> 01:06:14,415
And they're like, let's just hit it right now, because they know it's trading whatever,

1030
01:06:14,415 --> 01:06:18,055
$100 million a day we talked about, and that's when they hit it.

1031
01:06:18,475 --> 01:06:19,755
So now, what does that mean?

1032
01:06:19,995 --> 01:06:21,655
Well, it's designed to trade at $100.

1033
01:06:22,555 --> 01:06:27,695
So it's really not like you could figure out how to trade around this unless you're moving

1034
01:06:27,695 --> 01:06:29,435
like a billion dollars in and out.

1035
01:06:29,675 --> 01:06:31,615
So it really doesn't really help you that much.

1036
01:06:31,955 --> 01:06:35,555
But what it is, is it's showing that it's receptive to keeping its peg.

1037
01:06:35,995 --> 01:06:40,995
And then the ID on Monday is that record date where you get into this and then they got

1038
01:06:40,995 --> 01:06:42,435
to maintain that that peg.

1039
01:06:42,855 --> 01:06:47,575
So if you see a dip and then Monday, it's back at $100 and 10 cents.

1040
01:06:47,815 --> 01:06:49,115
You're like, well, I met its peg.

1041
01:06:49,295 --> 01:06:50,415
They're going to pay you.

1042
01:06:50,475 --> 01:06:51,475
They're going to pay it out.

1043
01:06:51,675 --> 01:06:53,035
And then you think about it.

1044
01:06:53,035 --> 01:06:58,955
Now, I'm not giving any, no financial advice, but, you know, if you sell it, you don't get

1045
01:06:58,955 --> 01:07:00,475
to keep that return of capital.

1046
01:07:00,615 --> 01:07:04,515
It gets deducted off from what you bought it because, you know, you did that part.

1047
01:07:04,735 --> 01:07:09,515
But, you know, then you can go buy Seda and then try and clip another coupon.

1048
01:07:10,515 --> 01:07:14,395
I'm not saying that I would do this, but, you know, if it's in an IRA account, then

1049
01:07:14,395 --> 01:07:18,535
you might not care about the ROC dividend, you know, the ROC treatment because you're

1050
01:07:18,535 --> 01:07:20,075
not taxed in an IRA account.

1051
01:07:20,075 --> 01:07:24,875
I'm just saying that, you know, some people might look at something like that, but I don't know.

1052
01:07:24,975 --> 01:07:26,075
You know, it's.

1053
01:07:26,755 --> 01:07:28,215
And that's this kind of scheme.

1054
01:07:28,315 --> 01:07:28,795
Yeah, you can.

1055
01:07:29,215 --> 01:07:30,215
And this won't last forever.

1056
01:07:30,215 --> 01:07:30,655
Right.

1057
01:07:30,695 --> 01:07:32,755
How to fix income products typically trade.

1058
01:07:33,175 --> 01:07:37,575
They'll trade up during the period until the dividend, the ex-dividend date.

1059
01:07:37,655 --> 01:07:41,075
And then they'll trade down in a really efficient market.

1060
01:07:41,155 --> 01:07:44,415
They'll trade down the principal trade down the coupon payment.

1061
01:07:44,415 --> 01:07:45,095
So in stretch.

1062
01:07:45,195 --> 01:07:46,815
So in stretch is an efficient market.

1063
01:07:46,955 --> 01:07:47,915
Very mature market.

1064
01:07:47,975 --> 01:07:48,095
Right.

1065
01:07:48,095 --> 01:07:49,355
It's going to have to be a very mature market.

1066
01:07:49,355 --> 01:07:51,155
There's not ATMs, all this shit going on.

1067
01:07:51,615 --> 01:07:58,055
It should theoretically trade down on the 15th of each month by the amount that month the dividend payment is.

1068
01:07:58,115 --> 01:07:59,515
So right now it's about 0.85%.

1069
01:07:59,515 --> 01:08:02,495
So you should see a 0.85% drop on the 15th every day.

1070
01:08:02,635 --> 01:08:03,635
Right now it's not happening.

1071
01:08:04,275 --> 01:08:04,835
That's the inefficiency.

1072
01:08:05,795 --> 01:08:06,995
Right, right.

1073
01:08:07,115 --> 01:08:09,875
And the other part I want to say, this is why it's different than Misty.

1074
01:08:10,535 --> 01:08:13,295
Misty, I believe, is one-fourth of where it used to be.

1075
01:08:13,295 --> 01:08:19,775
And with this, with Stretch, it's designed to trade between 99 and 100, which is only a 1% down.

1076
01:08:20,515 --> 01:08:23,655
And then SEDA is going to have a wider range.

1077
01:08:24,195 --> 01:08:28,095
So from that perspective, that's where the foreign exchange comes.

1078
01:08:28,275 --> 01:08:31,395
Why can they trade $2.4 quadrillion?

1079
01:08:31,735 --> 01:08:32,395
I'm not joking.

1080
01:08:32,515 --> 01:08:37,495
It's $2,400 billion because it doesn't move that much as a percent.

1081
01:08:37,495 --> 01:08:43,895
I guess if you're talking about currencies like Argentina or Turkey can move a lot.

1082
01:08:44,295 --> 01:08:52,095
But if you're talking in dollars and in euros, they don't really move that much in a given day.

1083
01:08:52,495 --> 01:08:59,275
And that's why they have to take massive amounts of leverage in them or massive dollar amounts to generate a nominal yield.

1084
01:08:59,955 --> 01:09:01,615
The percentage is incredibly small.

1085
01:09:01,755 --> 01:09:04,955
So you got to do billions of dollars in order to make money on it.

1086
01:09:04,955 --> 01:09:11,895
So I think to wrap up what we did here, Dan, we covered what, 50 slides?

1087
01:09:12,235 --> 01:09:12,935
We did it in-

1088
01:09:12,935 --> 01:09:13,535
An hour and 12 minutes.

1089
01:09:14,695 --> 01:09:16,075
Hour and 12 minutes.

1090
01:09:16,775 --> 01:09:19,035
Look, I could do a space tomorrow.

1091
01:09:19,135 --> 01:09:20,195
We could take some questions.

1092
01:09:20,875 --> 01:09:22,575
I want to thank everybody for listening.

1093
01:09:23,615 --> 01:09:26,995
This stuff is, there's a combination here of-

1094
01:09:26,995 --> 01:09:30,635
There's some math involved in this.

1095
01:09:30,635 --> 01:09:35,135
It's understanding the difference between something has a fixed price and a variable rate.

1096
01:09:35,255 --> 01:09:37,935
Something has got a variable price and a fixed rate.

1097
01:09:38,915 --> 01:09:40,935
Different currencies come into it.

1098
01:09:41,275 --> 01:09:42,135
It's perpetual.

1099
01:09:42,635 --> 01:09:46,695
So that doesn't make a lot of sense because you're like they have a perpetual liability,

1100
01:09:46,695 --> 01:09:48,495
but they never have to worry about refinancing.

1101
01:09:49,015 --> 01:09:52,455
So then you have permanent capital because it's equitized, right?

1102
01:09:52,535 --> 01:09:59,395
So it's equitized Bitcoin, similar to Tether being tokenized treasuries.

1103
01:09:59,395 --> 01:10:15,575
So they're designed for different markets. And I think what we built here is I really think that in one year from now, digital credit is 2026. One year from now, people will be like, wow, I'm not a bond trader, but that was surprising that they raised.

1104
01:10:15,575 --> 01:10:27,615
I would have to guess that strategies guidance for next year has got to be the prefs have got to double in value next year with a raise, not not the value.

1105
01:10:27,615 --> 01:10:35,115
So if they're at $10 billion in prefs on December 31st, my belief is net new.

1106
01:10:35,295 --> 01:10:41,475
They have to have at least $10 billion in prefs and then the $10 billion in prefs that exist.

1107
01:10:41,475 --> 01:10:49,435
right? Obviously, stretch won't go up because the dollar amount's the same, but as they ATM that,

1108
01:10:49,815 --> 01:10:55,015
they can increase that by $5 billion. That's my thought. I know that there's limits in each one

1109
01:10:55,015 --> 01:11:00,375
of those that they come out with, but once they start changing those limits, that will change the

1110
01:11:00,375 --> 01:11:04,595
pressure on MSTR common shares. Everybody's going to be like, oh my God, you're so bullish on the

1111
01:11:04,595 --> 01:11:11,715
prefs. What about MSTR? Well, we have to have the prefs be successful. That runs up. They acquire

1112
01:11:11,715 --> 01:11:18,955
more Bitcoin by ATMing the prefs. Exactly. That's it. That's it. We're just trying to,

1113
01:11:19,415 --> 01:11:23,935
you know, we're not giving you the trade ideas. We're giving you the data and, you know, the

1114
01:11:23,935 --> 01:11:27,855
analytics on strategy. Like these are the products they're selling, right? You could say they're not

1115
01:11:27,855 --> 01:11:31,615
products, but they're financial instruments. You can make money, hopefully, in MSTR over the next

1116
01:11:31,615 --> 01:11:36,115
five years, you can also make money in these things and you can use them as parts of your

1117
01:11:36,115 --> 01:11:40,575
portfolio. You may not even want to touch the common, but even if you're bearish on the common,

1118
01:11:41,155 --> 01:11:44,895
you can still be bullish on the press because of the different investor protections. Much like

1119
01:11:44,895 --> 01:11:50,515
during a bear market, you'd want to be holding bonds, right? You won't want to be holding

1120
01:11:50,515 --> 01:11:54,935
common equities, but in a bull market, you want to hold common equities and bonds will underperform.

1121
01:11:54,935 --> 01:12:19,035
This is a story old as time. The dichotomy between owning a fixed claim over the assets, a senior fixed claim over the assets, and owning a speculative claim over future cash flows of the corporation. These are bonds versus equity. This is like capital markets 101, right? And people are freaking out. It's like, oh, we don't want to. These are high yield Bitcoin back bonds. They're incredible, right? I think they have huge implications for the Bitcoin market.

1122
01:12:19,035 --> 01:12:21,815
And then I want to leave you with another idea.

1123
01:12:21,995 --> 01:12:27,295
It's like, so, okay, Dan, so you got all these, Dan and Green, you got all these crazy pref products.

1124
01:12:27,375 --> 01:12:27,795
What do you do?

1125
01:12:27,895 --> 01:12:28,715
How do you create a portfolio?

1126
01:12:28,915 --> 01:12:29,475
Do they matter?

1127
01:12:30,375 --> 01:12:32,095
Right now, I'll leave you with my thoughts.

1128
01:12:32,355 --> 01:12:44,915
If I were a new market participant and I wanted to create a long on MSTR or a structured Bitcoin product, the two things I would do is I'd have a portfolio of largely strike and some strife.

1129
01:12:45,335 --> 01:12:48,715
And the reason I would do that is because there's a risk in strife in the capital structure

1130
01:12:48,715 --> 01:12:49,475
because it's senior.

1131
01:12:49,955 --> 01:12:53,075
If there's a zero interest rate environment, that price could balloon.

1132
01:12:53,455 --> 01:12:55,995
It could potentially push down the Bitcoin per share for all of the equities.

1133
01:12:56,075 --> 01:12:58,955
I'm not saying that'll happen at ATM a lot, but that's one risk.

1134
01:12:59,595 --> 01:13:02,635
Strike, on the other hand, is a really interesting product because you're getting this.

1135
01:13:03,215 --> 01:13:06,335
Graham, we talked to Tad a little bit sometimes, and he says, I love strike.

1136
01:13:06,475 --> 01:13:08,215
I get paid 9% annually.

1137
01:13:08,315 --> 01:13:09,255
It's a cumulative dividend.

1138
01:13:09,435 --> 01:13:10,315
So you have all those protections.

1139
01:13:10,955 --> 01:13:14,615
And you have this equity component baked into this product.

1140
01:13:14,615 --> 01:13:15,755
So you get paid to wait.

1141
01:13:16,315 --> 01:13:17,135
You also have a high yield.

1142
01:13:17,395 --> 01:13:21,895
And if strategy, MSTR, goes up, if Bitcoin goes up, that yield, that credit spread will

1143
01:13:21,895 --> 01:13:22,215
tighten.

1144
01:13:22,575 --> 01:13:26,335
So not only do you get the equity participation, you get the tightening of the credit spread.

1145
01:13:26,515 --> 01:13:29,795
So you get massive upside in the case that all this stuff goes in your favor.

1146
01:13:29,895 --> 01:13:34,675
So I really like strike over common at some of these really, really depressed prices.

1147
01:13:36,275 --> 01:13:36,375
Yeah.

1148
01:13:36,575 --> 01:13:38,295
Look, I can't disagree with what you're saying.

1149
01:13:38,595 --> 01:13:40,675
I think it all depends what your entry price is.

1150
01:13:40,675 --> 01:13:53,815
So I think for me, because I acquired so much MSTR back in late December 22 and January of 23, I have a very low entry price because they also did a 10 for one split.

1151
01:13:54,195 --> 01:13:56,395
So I had good timing on that.

1152
01:13:56,675 --> 01:13:59,335
With that said, I'm still sitting on a huge amount of that.

1153
01:13:59,395 --> 01:14:01,055
So I want them to be successful with this.

1154
01:14:01,375 --> 01:14:02,955
What do I think is going to happen next year?

1155
01:14:03,135 --> 01:14:07,195
I think they're going to come out with probably a euro stretch.

1156
01:14:07,195 --> 01:14:14,355
It just seems to make sense that the people in Europe want it because right now Stream gets paid quarterly, just like Strife does.

1157
01:14:14,475 --> 01:14:15,615
Those get paid quarterly.

1158
01:14:16,135 --> 01:14:17,075
So now they have a monthly.

1159
01:14:17,495 --> 01:14:21,395
Now, I think that they'd want to attack the money market funds in the euro.

1160
01:14:21,635 --> 01:14:24,115
So I think that a euro stretch would just be great.

1161
01:14:24,235 --> 01:14:29,195
Just do that and have it pegged at, you know, 100 bucks or 100 euros.

1162
01:14:29,515 --> 01:14:33,375
And that would be a great with a movable rate.

1163
01:14:33,515 --> 01:14:34,675
I think that that would be great.

1164
01:14:34,675 --> 01:14:39,255
They also hinted that maybe the Canadian market for Canadian dollars, right?

1165
01:14:39,775 --> 01:14:44,935
I think the Canadian market is kind of small, but if that's easy for them to do it because

1166
01:14:44,935 --> 01:14:49,055
the Canadians, maybe it's easier for them to buy US equities.

1167
01:14:49,355 --> 01:14:53,075
And maybe that makes sense because they don't want to have to deal with the currency conversion.

1168
01:14:53,495 --> 01:14:54,355
I'm not Canadian.

1169
01:14:54,495 --> 01:14:57,835
I don't live in Canada, but they already wrote this into their deck.

1170
01:14:57,895 --> 01:14:59,455
So I think Canada's on deck.

1171
01:14:59,815 --> 01:15:02,175
So I think they'll probably have a euro stretch.

1172
01:15:02,175 --> 01:15:05,535
they'll probably do Canadian dollars of these two also.

1173
01:15:06,335 --> 01:15:07,895
And I think combining that,

1174
01:15:08,115 --> 01:15:11,515
I think for them to give a forward guidance, right?

1175
01:15:11,555 --> 01:15:12,455
I'm just guessing.

1176
01:15:12,915 --> 01:15:15,635
It would have to double next year to be exciting.

1177
01:15:16,075 --> 01:15:18,635
And if these products do well through the end of the year,

1178
01:15:19,075 --> 01:15:20,215
what do we have left?

1179
01:15:20,315 --> 01:15:22,995
We've got today's November 12th.

1180
01:15:22,995 --> 01:15:27,235
We got what, 47 days to the end of the year or something, right?

1181
01:15:27,835 --> 01:15:30,175
And so I think that in that timeframe,

1182
01:15:30,175 --> 01:15:34,535
we're going to see how successful they are. And then they have to do their guidance, you know,

1183
01:15:34,535 --> 01:15:39,415
a month after this. So I think this looks great. The other thing is it looks like the shutdowns,

1184
01:15:39,735 --> 01:15:43,215
you know, I believe is probably ended tonight. I don't know. I haven't seen if the president

1185
01:15:43,215 --> 01:15:49,415
assigned it. I just want people to realize that the shenanigans on the shutdown, it's only extended

1186
01:15:49,415 --> 01:15:56,615
to January 30th, 2026. They're going to repeat the same thing. This is a continuing resolution

1187
01:15:56,615 --> 01:16:01,155
until they agree on appropriations, the pain will continue.

1188
01:16:01,755 --> 01:16:02,555
You'll have a continuing.

1189
01:16:02,675 --> 01:16:03,975
I hope they sign off on this.

1190
01:16:04,355 --> 01:16:05,535
I hope that this is stable.

1191
01:16:05,635 --> 01:16:08,935
The market does not like when the government is not functioning.

1192
01:16:09,155 --> 01:16:11,155
I don't care if anybody says, oh, the government's not functioning anyway.

1193
01:16:11,635 --> 01:16:14,055
It's not good for the government to be shut down,

1194
01:16:14,055 --> 01:16:17,155
to not have the data that comes out from the jobs reports and so forth.

1195
01:16:17,575 --> 01:16:20,335
But the takeaway is there's a lot of instability,

1196
01:16:20,335 --> 01:16:24,415
and people, when there's instability, tend to hold either cash and money markets.

1197
01:16:24,415 --> 01:16:30,075
We know that number $7 trillion in money market funds. And we know that people like bonds because

1198
01:16:30,075 --> 01:16:36,255
you get this typical coupon in a real bond or you get a yield with the prefs. So to wrap up there,

1199
01:16:36,295 --> 01:16:40,595
I want to thank everybody for joining. I know that this was a lot that we blasted everybody with.

1200
01:16:40,855 --> 01:16:45,235
We will post the deck. I want to thank everybody for listening. Dan, you have any final thoughts?

1201
01:16:46,075 --> 01:16:49,375
No, I'm glad we did that, Grant. We're just trying to keep it honest,

1202
01:16:49,475 --> 01:16:53,255
keep it simple and get the info out there. So thanks for listening, everybody. Appreciate all