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Keep watching this video for a contrarian view on something I stumbled upon recently.

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So the common wisdom in investing today, and indeed something that I have followed myself,

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is the idea that software is a better bet than hardware. And I'm pretty confident you can go

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and ask 100 investors and 90, 95 of them will give you that same opinion, maybe even 99.

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and for so long I've thought you know that's definitely true because of xyz and the truth

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behind that is something that I'm actually starting to question and that's because of

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some recent experiences that I've had and when you're thinking about return of capital

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i.e trying to get your equity back at some stage as an investor versus return on it's like

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there's a big difference there right it's something more conservative approach I just want my money

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back rather than give me hockey stick growth. And this is something I've been thinking about quite a

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lot recently. What does it mean with artificial intelligence and the improvement that that brings,

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the efficiency gains on the back end of a business? Do you even need a business partner?

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Maybe that's not the case any longer. And why does it help to have a shared talent pool at the top

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of a business when maybe, maybe you just don't. So really, I've been questioning some of my

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previously strongly held opinions. And that's what this video is going to be all about. Basically,

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hardware versus software as an investment. Now, you might be wondering if this is the first time

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you've tuned into the podcast, why listen to me? Very briefly, I've been investing my own money for

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over a decade. I've made some great calls. I've also made some really bad ones. And I like making

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these videos because I can help people avoid the mistakes that I made. And also, it's a great way

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for me to learn new things. So if you find it valuable, give us a subscribe, give us a like,

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whatever platform you're on. If you want to get in touch, then reach out to me on email,

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hi at jakewoodhouse.io. And really cool, I'm a big advocate for NOSTA, right? Free speech online

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couldn't be more important in today's environment. So download a podcast player like Fountain,

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have a tune in on there, and you can send me some zaps or some boosts, which I highly recommend as

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experience. So let's get into the meat and potatoes of today. A brief history just to begin with. So

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I've been investing my own money. I'm not going to go into why I got that, but

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it's really difficult. You get this cash into a bank account. It's like, how do I know that 10

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years from now, I've got a good chance of not only having this still there, but being able to give it

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the next generation, you know, true legacy style inheritance planning. And therefore, I started

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investing. And this took me through a bunch of different things, such as an early stage investment

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group called the Green Angel Syndicate, which is based in the UK, looking for early stage clean

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technology startups. I invested in nine companies through that syndicate. I read a great book by a

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guy called Jason Calacanis called Angel, How to Turn 100 Grand into 100 Million. And that was

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fascinating. What's the playbook on angel investing and how does that work? And I went through some

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programs, one called Entrepreneur First and one called Antler, which are talent investment venture

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capital funds. So they throw 100 people in a room together, they pay for them to be there for three

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months, and they try and match people up saying, okay, you're the technical guy, you're the

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commercial guy, show me how you're going to build the next Google. And they would place bets on

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businesses that came out of those accelerator programs. The long story short of all of this is

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like software is a great bet. It didn't used to exist as a business model 25 years ago in the

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same way it does now. The cost of marginal production to fulfill a new customer is close

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to zero. And that's why you get this extraordinary breakout growth if a company gets super traction

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and hits product market fit. And the next step is then what you see today, which is actually what

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largely people think is the internet, which I would question itself, but digital monopolies.

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and they're able to defend those monopolies with all sorts of tactics that are very interesting to

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pull apart and not the point of this video. What I'm really getting into here is like the status

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quo has become such that, yes, software is great, hardware no. And there's tons of other reasons for

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that, but that's enough of an introduction to this now. So I have been putting money into software

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companies and some of them worked, some of them didn't work. I'm also, of course, a huge advocate

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The Bitcoin that changes the landscape of purchasing power over time is actually money rather than an investment per se.

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Saving and investing are not the same thing. Sound money. The Austrian School of Economics.

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Maybe I'll make another podcast on that because that is a huge moment as an investor when you realize that actually you can just save money in Bitcoin as the tool rather than having to invest in all these things to try and make a return.

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Anyway, lately, a friend of mine chatting away, if he ever watches this, he'll know it's him that I'm referring to, really, really is hitting me with some cool stuff.

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And I'm not going to say exactly who they are, but the structure of the conversation and the thrust of it is still valid for anyone else out there like me who's a retail investor trying to figure out, well, what's the best way of keeping what's mine, taking a sufficient amount of risk, and really hitting some good returns.

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um now the business case is interesting so it's a vertically integrated set of businesses for which

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he controls so they're his businesses and it's in the raw material production space

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so you basically you know the input is a raw material the output after a series of different

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refinements is then products for a market that other people can buy and what he's doing is he's

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using AI in a way that previously wasn't possible to write bespoke code for machinery in that raw

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production process that is basically it's faster, cheaper, and more bespoke than anything that's

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been possible before. So the major shift in the investment landscape here is this previously held

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viewpoint of Marc Andreessen, you know, software is eating the world. It's a good quip. It was a

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Great quote, and was very helpful for a lot of people to make a lot of money.

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But is that still true?

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And what if it's the case that AI is eating software?

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And so the trend is very clear, in my opinion.

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These big software engineering heavy businesses are either paying outrageous numbers for the

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talent that understands how to create the artificial intelligence, or they're sacking

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them.

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And so previously, a software startup had a moat in a sense, which is, you know, you've got a product, you've got a product manager, you've got a front end engineer, you've got a back end engineer, you've got a graphic designer.

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And those guys cost hundreds of thousands of dollars a year to put in a room together.

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And so for me, as an entrepreneur, following an idea in software, it was like, well, I've got the idea, I've got the business case, but now I need some money to pay hundreds of thousands of dollars to actually build this thing.

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So what if that moat, that talent moat is gone, right?

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Where is the defensibility in the software business going forwards?

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And so it's a really interesting change.

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Now, what does it mean?

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Some digital monopolies I wanted to mention that, you know, things like Uber, Lyft, Spotify,

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Snap, Twitch, what do they all have in common?

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Well, they're valued at huge numbers, but they're not profitable businesses.

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How does that work?

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And more and more, I see that the status quo venture capital industry, I would like to think of myself as someone who believes in the honor of venture capital.

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I believe it's an extremely important process.

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It's like capitalists taking large risk on early stage bets for potentially high payout.

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And it's exactly the same as what was happening hundreds of years ago when people were setting sail from Europe in search of new places to populate and to trade and to build businesses.

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There were people somewhere that took risk on those risk takers and gained a reward.

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And it's the same thing today.

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But with an inflationary monetary policy and central banks in their current guise, the funds that sit in an early stage, what was a seed stage is now a pre-seed.

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It may even be a pre-pre-seed.

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The valuations have gone up.

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The check size has increased.

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But what are they doing under the hood?

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What's actually changed?

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And it's basically a symptom of an inflationary monetary policy and cheap money.

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The venture capital industry has become what it is today.

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And so what does this mean going forward?

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How is it going to be possible to make the kind of returns that were previously made if the ability to create software bespoke to a business problem?

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So you're chopping the engineering cost out, you're chopping the time issue out, and you're getting something that's absolutely specific to the business problem you have.

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Well, that's a big, big change.

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So is the idea of hockey stick growth still valid?

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Big, big question.

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And so as I go through this it like all right so what going on now And I been researching it like okay so if you could own the physical supply chain of a product that becomes really interesting and so

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what is what another common thread i'm looking at currently is like the boomers are all retiring

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and that's fair enough they've been working for 40 years they want to sell their businesses

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so what's a really boring boomer business that i could buy with regular cash flows and at a at a

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reasonable net asset ratio, like I'm talking, you know, two to one or three to one, things like

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laundrettes, things like property management companies, things like accounting, because then

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the next tier is what industries are most ripe for automation through AI. So I could potentially

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become the business operator and then say, okay, let's look at how this business process actually

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works, document the whole thing. I go, okay, well, we can build some software for this. We can build

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some software for this we can build some software for this myself i no longer need the the expensive

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engineering heavyweights to come in and do these like fairly simple tasks big big shift okay so

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you're no longer actually competing with the technology businesses it's the physical assets

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underneath that are the most important thing that you're then competing against the boomer run

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laundrette around the corner that hasn't adopted these technologies now in five years from now this

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opportunity might not be quite the same, right? Because other people will have caught on. And the

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speed of which AI is improving is such that these tools will get better and better and better.

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And that trend is another thing that I would really highlight when it comes to this like

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status quo concept, like software is better than hardware. It's like, look at how good

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ChatGPT has got now versus where it was six months ago. So businesses raising money at the moment,

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being like, we're a software business, and we're going to go after this market. It's like,

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okay, how long until what you're doing can be replicated by an AI? And that is not return of

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capital, right? I could be investing into a business that's actually far higher risk

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than what I realize. This brings me then to this idea of like the idea of teams and also the fact

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that like as a physical business, let's use a laundrette as an example. Let's say you go and buy

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the local laundrette, you tart it up with a better website, you have some kind of like Google ads

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process where you're driving more business. You incorporate a bunch of things like membership

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programs. I don't know. You have an automated locking system on the front door. You have an

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automated process for actually using the laundrette. Whatever efficiency gains you might be able to

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bring in. But the key then is you build it on a Bitcoin standard. So you say, OK, all the excess

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cash flows from this business, we're going to accumulate Bitcoin. And so you get startup-like

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returns on your purchasing power, but with very low risk. That's a cool play. And the question,

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of course there being is how do you finance the purchase of the laundrette in the first instance

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such that you beat the pace of Bitcoin and that's where leverage on your Bitcoin becomes an

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interesting process as an investment skill and I'm going to do another podcast on that in the future

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and where that then gets me it's like okay well my previously held philosophy you know going

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through something like an entrepreneur first is oh you want to have shared skill sets at the top

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of the business because you can't do every simple role well that's true you know when I did that in

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2018, but it's now 2025. And what if I can actually completely outsource a CFO? What if I can actually

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completely outsource a CMO? And when I say outsource, I can ask ChatGPT or Grok or any of

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the other different AI tools, give me the best strategy for this specific business when I want

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to grow at this specific rate and I've got this much to help me do it or this much time. And it's

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basically a brainstorming process through which I can input information, the output, I still have

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to distill. But you can't let the AI think for you. And you also have to be very wary of its

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ability to lie. This has come up a few times for me recently. But maybe I just be the business owner

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myself. And it's like, okay, any gaps that I don't currently have, you don't know what you don't

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know, that's true. But I can be in control. I don't need to have to listen to anyone else. Most

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of the problems I've ever had in the startup space have been team issues, you know, falling out with

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someone for a piece of behavior or having a difference of opinion on a vision. And it's gone,

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right? Actually, I'm the business owner. I control this. I see the strategy is this. This is the

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operational requirement for year one. And this is what I think we're going to do. So, okay, this is

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really interesting. And you can make faster and better decisions. Cool. And so what's the rest of

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marketplace doing? Well, especially in this kind of boomerone space, they got their own retirement,

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right? They've been working for 40 years. They're not going to be sitting there going, okay, how can

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I improve this business? How can I make it more efficient? How am I going to out-compete everyone

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else? I keep control of the business myself. I finance it in a way that I think is effective

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versus Bitcoin as an ROI. And then I'm going to incorporate these efficiency tools. Again,

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these are just concepts, right? But it's really challenging the idea of software is better than

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hardware. Now, as I run through this side note, if you think this is interesting, drop us a comment,

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get in touch, find me an email, hi at jakewoodhouse.io. And as I said before, like a big

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fan of NOSTA, so jump on there, get in touch, send me some zaps, I'll get straight back to you with

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one myself. A great, great way of communicating online, and in particular, a better allocation of

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our capital, because we can't be switched off. The platform risk is significantly lower. Anyway,

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having pumped Nostra. The additional context for this is I did a deep dive on Satlantis,

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a business that's been built at the moment. And it's kind of the convergence of Nostra and AI

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and Bitcoin. And they're looking at the travel industry and disrupting that. And shout out to

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Alex and the team there, Jordi as well, who came on the podcast. Honestly, wishing you guys the

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very, very best of luck. I think they've got a great team. I think they've got a good chance.

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but what if what i'm highlighting here is true they might well raise a seed round and and then

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maybe a series a but like ai is improving at such a pace that that original use case of like okay you

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land in a new place and you need help with recommendations from a social graph that

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actually already exists like who's going to pay them what is the business model there now in some

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ways that's the risk of a startup investment you've got to just let that one happen but in other ways

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it's also like okay well maybe there's a different model that the true return on equity the true

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return of capital could be and i'm maybe i'm seeing it now maybe it's evolving and so okay

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let's think about this like the use case we mentioned of obviously the the laundrette

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the speed at which jack gpt is improving it's like okay you can take this physical process that

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you're pretty certain is going to be demanded in the future. Where is the puck going? Yeah,

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just to reiterate that point, as investors, that's what we want to be thinking about. It's like,

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what's happening right now that helps us predict where the future might be?

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And so ultimately, it's like, okay, hang on. So maybe we're measuring things wrong.

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Now, anyone that spent any time looking at Bitcoin knows that Bitcoin as money is measuring value.

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value ultimately is completely subjective based on human action and what the individual requires

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in any one moment but it's one of the reasons why i therefore love this concept of of like a three

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tiered approach to capital so you've got the humanistic capital you've got the intellectual

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capital and with those two you drive financial terms and so oh let's buy uber let's buy lyft

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They're really great businesses to end.

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They're not profitable.

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So because of the kind of warped way of money printing, the business looks like it's valuable,

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but is it?

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Well, maybe not.

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So the symptoms of broken money, they're everywhere, right?

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And so when a software development process can be done at a fraction of the cost, a fraction

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of the time, and totally bespoke, where does the value come from?

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And that's why I think the physical side of things is such an interesting place to now

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look.

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And hence, maybe hardware is the way to go.

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another example i want to bring up is is beef like grass-fed regeneratively grazed beef is

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in my opinion the best form of food we could possibly have and a brief shout out to brisket

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who he and i have talked about this in the past it's like okay so you want to you want to build a

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a beef business well you need a farm okay so you've got to own the land okay well the opportunity

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cost of not owning Bitcoin versus owning land is massive. You go and pay for a piece of land today,

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in five years time, you could buy five pieces of land. But you need food. And so in an environment

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where we're moving into an inflationary period, but there's no doubt in my mind that it's going

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to happen, right? The bankrupt, the level of debt to GDP of all the major countries around the world

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driven by the Fed is so high, they can't do anything but print more money.

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And so what that means is the price of hard assets is going to go up.

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And so maybe, just maybe, the comparison of the Bitcoin returns versus land,

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you making the wrong measurement like I touched on before Maybe we measuring the wrong thing So OK at some point you have to not think purely financially you got to think about that humanistic investment it like you got to live

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somewhere much like my last episode when i was talking about you can't live in a bitcoin you

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need shelter you need food you need to clean your clothes but maybe you'll do it yourself instead of

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going to a laundrette um and so okay so what does this look like well maybe you have to own the land

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maybe you have to rear the beef maybe you have to then process that beef yourself and if you can

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own all of that, then the value that you're actually creating is far higher than what some

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of the metrics we previously would have used to create are, especially if you can go into these

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physical supply chains and start implementing the AI that we've discussed so far. And again,

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like the average age of ranchers and farmers is well over 50. They're boomers. They're not going

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to do this stuff. Now, would it be difficult? Yes. But are you able to deliver value to the

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marketplace that is incorruptible from the likes of inflation. With something like beef, I believe

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so. And it's a set of competencies, right? Who else can create the beef? Well, there's only a

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handful of people that have the land to do it on, have the skill set to actually do it, have the

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herd in the first place to replicate. And so, yeah, conceptually as investors, maybe we're

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overlooking something here, or maybe I personally am overlooking something here. Now, this is where

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of things get a little in the weeds and again the friend that I was having this conversation with if

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he ever goes through this we'll know that it's him but he started sending me some stuff that really

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really hit home and this takes us back to like ancient Greeks and number one matter so matter

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is the potentiality of a thing it is that of which something is made and the substratum that can

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receive form. So for example, bronze is the matter of a statue. Flesh and bone are the matter of a

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living being. So matter by itself is indeterminate. It doesn't yet have the actuality of the thing

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until form gives its structure. Does that make sense? So the raw material is the matter, but the

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output is the form. And so to talk through form, so form is the actuality of a thing. It is the

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principle that makes a thing what it is rather than something else. So for example, the shape

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or design of a statue, the soul as the form of a living body. So Aristotle, form is not a separate

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realm, but is imminent in things. Does that make sense? And so there's something called

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hylomorphism. So hyl is matter and morph is form. So this is the unity of matter and form.

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Every natural substance is a composite of matter and form, i.e. potential and actual.

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Neither exists independently in the natural world. So pure matter is never found without form,

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and pure form exists only in immaterial things.

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Pretty crazy, right?

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To think that humans have been thinking about this stuff for so long.

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So to give another example, a wooden bed,

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the matter is the wood structured by the form,

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which is the bed arrangement.

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As we carry on through this, like Aristotle's categories,

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and this is where the modern business comes in,

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it's like the matter is the underlying substrate,

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the stuff that can take on form.

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And in modern business, that's the commodities,

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the raw materials, the hardware, the energy, the land,

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the logistics capacity, so the competencies,

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so anything physical, finite, and slow changing.

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And then the form, the structure and principle

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that makes the matter what it is,

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in modern terms, that's then the software,

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the data, the AI, the design, the brand,

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the user experience.

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the pattern that extracts value from matter.

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So to re-highlight that,

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so the matter is anything physical,

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finite and slow changing.

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And the form is the pattern

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that extracts value from matter.

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Interesting.

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So this is very much like form and matter,

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the business principles I'm talking about today

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of software versus hardware.

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And in particular, this idea of form,

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i.e. the software layer.

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So what if our access to complex form

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is now so cheap and so fast

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that any individual can do it on an iPhone

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from wherever their business problem is.

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And how is that defensible?

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If you're just investing in form,

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I don't know.

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It's a great discussion,

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and that's why I wanted to make this podcast.

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And so the tension in modern economics

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on the matter side of things,

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aka commodities,

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it anchors you in real assets

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with scarcity and intrinsic durability.

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Costs are not collapsing.

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if anything they're rising with scarcity or logistics shops so an example being you know

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the energy industry metals real estate right and on the form side of things aka information

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processing software the costs collapse rapidly that's moore's law that's ai models that's cloud

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scale the marginal cost of applying new form to old matter is approaching zero so using ai to

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design or optimize your physical production process of raw materials right this is really

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interesting stuff isn't it it's like okay so so the point is it's like how are you ever going to

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get return of capital when you're only investing in form you still need the underlying matter

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in order to drive equity value long term so form is cheap and accelerating matter is finite and

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anchoring. So Aristotle's hylomorphism is alive in business today. Both are necessary, but they

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behave differently under time and market pressures. Interesting. Okay, well, this is just the kind of

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stuff I like to learn about. Incidentally, I'm pretty certain that this investigation into

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Aristotle's way of thinking is using AI. So we can build on the shoulder of giants, right, the

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previous thinkers of multiple, like whatever that is, like 2000 years ago, we're now reapplying that

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to business today. That makes us in some ways, the most sophisticated business operators the world's

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ever known. So how are we not driving more value? How do we not have better businesses? How do we

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not see more abundance all around us? My number one answer to that is money printing. And that's

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where it's so important to dig back into the history books and see what happened in the past

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and how people reacted. So let's apply this concept to a business model. It's like, okay,

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so going back to my friend that I originally touched on that we had this conversation with,

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secure the long-term control of physical assets that others cannot replace digitally or cannot

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replicate. So examples, forests, land, logistic fleets, so my old area of expertise, shipping,

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manufacturing um these assets you want to hold or grow in value because they're scarce slow moving

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and immune to the collapse of digital costs so you know that is the primary means of production

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basically like how do we get our hands on that as equity investors to then build on top of that

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better form so stay exposed to form form that we mentioned before of like the drop in cost of

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building software is reducing so fast it's collapsing okay and place those on top of these

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physical processes so you know there are a bunch of examples that we can probably think of where

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this could be true i always already mentioned the laundrette right and having a more automated

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process through that am i confident that a laundrette is enough of a basic necessity that

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it would be inflation proof well that i'd need to think about some more my hunch is yes people still

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need to wash their clothes right um but who knows what could happen you know if the energy prices go

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sky high and i'll touch an example in a minute that really gets you thinking the point is the

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cost of form keeps falling so your competitive edge increases as the tech costs collapse and this

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is what i touched on before where basically you're competing against other business owners in

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traditional physical businesses that haven't adopted any software in the way that you're

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envisaging. If you anchor too heavily in matter, you risk becoming a commodity business where price

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competition erodes margins. If you anchor only in form, you float in a space where entry barriers

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collapse and competitors scale infinitely at lower cost. The hybrid is obviously the base case of

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those two combined. So matter is the scarce base, form is the multiplying layer. I mean, isn't this

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cool, right? This is the kind of stuff that really gets me pumping. It's like, oh, for so long, I've

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overlooked physical businesses is just not the way to go because of the lack of ability to scale.

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And therefore, software is just a much better bet. But what if I'm wrong now that software is eating

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now that AI is eating software? So the hybrid is matter is the scarce base, form is the multiplying

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layer as I just touched on Your business owns finite substrates and you continuously apply ever cheaper forms i you constantly upgrading the software the AI and the data approaches to how you running those companies or to how you

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providing those services. And so the result being is the assets you control are worth more in your

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hands than anyone else's. And that, I think, is the key insight for how do we beat the Bitcoin

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hurdle rate? One, are we measuring things correctly? And two, what if there is a humanistic

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capital here that's been completely overlooked given the capability of building something like

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what I'm just discussing. Now I want to make some shout outs to some previous episodes that I've done

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which will be interesting to have a look at. One is with Pete Wynn and Pete is talking in great

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detail about how he could potentially build a platform for completing micro tasks with AI

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and Nostra is a part of how he would build that. Point being is it's a way of becoming more efficient

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and he's really thinking about like we talked in the past about the high street and how you might

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make a cafe more efficient or how you might make a florist more efficient so that's a that's a fun

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rabbit hole to head down and Pete's absolutely at the forefront of what's going on here.

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Rupert Faust who is working on a project in Australia and really thinking about like what

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happens when shit hits the van right this inflationary environment that we know is coming

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Land is scarce.

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Where are you going to live?

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Where is your shelter?

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Where's your food coming from?

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And perhaps I know that Rupert's already doing this with the marketing he's doing in the podcast and really layering on this more efficient stuff above the underlying asset he's managing is a really cool thing to think through.

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And finally, Sam Benson, who came on the podcast recently talking about Oceanbit and how to harness ocean thermal technology to run data centers.

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And I've just written it off hardware too hard.

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But then you think, actually, shit.

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if that's successful

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the

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access to energy

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and the ongoing

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ability to provide value to the marketplace

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a technology business like what Sam

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envisages is

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huge

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and he can also

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layer on this AI

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so maybe that is the edge

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he needs to actually get together

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a project that makes sense from a hardware

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perspective

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so those are really cool conversations go and have a look at those and as i thought further

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about this i also like the idea of a physical product sold digitally so you know the classic

364
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set you go on instagram right and just get pounded with adverts and people just selling all sorts of

365
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crap i i bought i bought a uh i had some cracked heels and i bought something called helilulia

366
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which is a really cool little product where basically you have some cream on your heels

367
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and it sold you these like mini socks to wear.

368
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Is that something I'd buy in a hyperinflation environment?

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No, but the concept applies.

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Like sell stuff people need and fulfill the supply chain yourself if you can.

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And some background reading, like go and read When Money Dies.

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You know, the hyperinflationary Weimar Republic, it's crazy, right?

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But if you were selling eggs, you did okay.

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And, you know, I'm quite bullish on real estate, especially here in Australia, given all the things I've learned recently.

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But beware, because, again, I started reading just last night the diary of Benjamin Roth, an American guy in Ohio during the Great Depression, has written this really fascinating diary of his experience and watching financial markets.

376
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And there was a quote I came across.

377
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It was basically saying real estate investors got hammered and they couldn't even collect rent.

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And when that was the case, they couldn't afford the interest payments.

379
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And all of the financing businesses were under the pump as well.

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So the reclaiming by the banks and banks became huge real estate owners.

381
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And the tax position was such that it was often better to knock the real estate down than keep it there for the future.

382
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Like, how crazy is that?

383
00:32:07,535 --> 00:32:12,275
But real estate investment, oh, yeah, it's totally fine to put down a deposit, take on some leverage.

384
00:32:12,835 --> 00:32:14,416
And, you know, you can always just rent it out.

385
00:32:14,935 --> 00:32:16,435
But what if you don't get paid?

386
00:32:16,896 --> 00:32:17,015
Right.

387
00:32:17,035 --> 00:32:18,435
What if no one's got any money?

388
00:32:18,935 --> 00:32:27,335
Like, I prefer to be selling eggs than selling housing in that incredibly unlikely, but also it's happened before scenario.

389
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Right.

390
00:32:29,835 --> 00:32:31,995
And so it really gets you thinking, doesn't it?

391
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It's like, shit, this whole like, maybe I need hard assets.

392
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You know, that's what I want to get involved in.

393
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Now, time will tell, of course.

394
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But the final thing I want to touch on is another amazing book

395
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that you've got to go and check out.

396
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There's a Guy Swan Bitcoin Audible podcast series

397
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where he actually just reads the whole thing.

398
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It's called The Great Taking.

399
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And it's an incredibly in-depth look into what could be going on under the hood

400
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if there was some kind of debt jubilee.

401
00:33:00,015 --> 00:33:04,555
And the threat is debt is a weapon that will be used by central banks

402
00:33:04,555 --> 00:33:07,636
and the securities law that they've created

403
00:33:07,636 --> 00:33:10,156
and the enormous derivatives markets

404
00:33:10,156 --> 00:33:13,695
to hoover assets onto their balance sheets,

405
00:33:13,995 --> 00:33:17,736
which are ultimately private people, right?

406
00:33:18,075 --> 00:33:21,116
The Federal Reserve is a private institution.

407
00:33:21,455 --> 00:33:22,075
Who are the shareholders?

408
00:33:22,455 --> 00:33:23,355
We're not entirely sure.

409
00:33:23,935 --> 00:33:25,015
That's the crazy thing.

410
00:33:25,156 --> 00:33:27,095
It is not a government institution.

411
00:33:27,236 --> 00:33:28,595
Let's be very clear about that.

412
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And when this is playing out,

413
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you've really got to consider that, right?

414
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because, oh, let's take on some leverage.

415
00:33:34,736 --> 00:33:35,535
We'll get into real estate.

416
00:33:35,616 --> 00:33:36,476
That's a hard asset.

417
00:33:36,575 --> 00:33:37,616
We'll always get paid to rent.

418
00:33:37,955 --> 00:33:39,555
But hang on, what happens if the rent dries up?

419
00:33:39,636 --> 00:33:41,435
Well, suddenly you're on the hook for the interest payments.

420
00:33:41,916 --> 00:33:44,515
Okay, well, fuck, you don't have any money, mate.

421
00:33:44,896 --> 00:33:45,775
Oh, you've got to sell them.

422
00:33:45,896 --> 00:33:46,815
Or maybe I'll just keep them.

423
00:33:46,935 --> 00:33:48,455
Oh, no, the land tax has gone up

424
00:33:48,455 --> 00:33:49,815
because the government's bankrupt as well,

425
00:33:49,896 --> 00:33:51,976
which is what's caused this problem in the whole first place

426
00:33:51,976 --> 00:33:53,595
because of inflationary monetary policy

427
00:33:53,595 --> 00:33:56,555
and loose spending and complete unaccountability

428
00:33:56,555 --> 00:34:00,335
from the people that supposedly run our economies for us.

429
00:34:00,335 --> 00:34:06,916
so just beware right there's risks everywhere a counterparty is a massive problem and i think

430
00:34:06,916 --> 00:34:11,196
it's completely overlooked so yeah just to shout out some of those resources that for me are really

431
00:34:11,196 --> 00:34:16,936
important go and study the history books is it i mean recent times have really made me question a

432
00:34:16,936 --> 00:34:23,436
lot of history that i've ever read but it can still inform thought today you know the so to

433
00:34:23,436 --> 00:34:29,416
recap when money dies the diary of benjamin roth and the great taking like those three things

434
00:34:29,416 --> 00:34:34,696
combined, you're like, wow, I've got to be super, super careful with counter-party risk. I've got

435
00:34:34,696 --> 00:34:39,175
to be super, super careful about what it means if it's actually a hyperinflation. I've got to be

436
00:34:39,175 --> 00:34:46,115
super, super careful about how I actually navigate this process and get return of capital. Anyway,

437
00:34:46,436 --> 00:34:50,235
that's going to bring to conclusion today's episode. I hope you found that useful.

438
00:34:50,835 --> 00:34:58,095
Let me just highlight a few things. Where is the puck going? I don't know, right? No one knows.

439
00:34:58,095 --> 00:35:04,535
do you know like 100 reach out get in touch i'd love to hear your view i'm going to make some bets

440
00:35:04,535 --> 00:35:09,956
on decisions and decisions that i can make with information in hand and the key is information

441
00:35:09,956 --> 00:35:15,055
travels unfairly through markets so if you think you know something that other people don't and you

442
00:35:15,055 --> 00:35:20,175
can benefit from it why haven't you acted on that and what's your strategy for not acting on that

443
00:35:20,175 --> 00:35:25,456
or what's your strategy for acting on it document it and and keep in mind you're always like what's

444
00:35:25,456 --> 00:35:30,995
the portfolio allocation? Where's my real risk coming from? Where's the reward going to come from?

445
00:35:31,115 --> 00:35:36,595
Am I managing to keep my head above water from real inflation? And what's my purchasing power

446
00:35:36,595 --> 00:35:40,535
year after year? You've got to track it, right? Track your net wealth against gold, track your

447
00:35:40,535 --> 00:35:45,135
net wealth against Bitcoin. You'll be extraordinarily surprised to see how differently things look when

448
00:35:45,135 --> 00:35:50,696
you start changing the way that you measure value around you. Now, I'm not quite sure what the

449
00:35:50,696 --> 00:35:55,595
structure is. Let me be very clear. I'm not quite sure what the business opportunity is I'm going to

450
00:35:55,595 --> 00:36:01,735
go after. I'm always going to be considering the Bitcoin hurdle rate. And what is my cost of

451
00:36:01,735 --> 00:36:05,155
capital? So perhaps that's an episode I'll do in the future. Keep an eye out for that.

452
00:36:06,115 --> 00:36:10,235
Some things are worth more than money, right? Financial returns doesn't measure everything.

453
00:36:10,235 --> 00:36:17,095
And that's where this becomes really interesting. So always review your predisposition to things.

454
00:36:17,095 --> 00:36:24,196
Why do I think that? Am I now wrong? How might things change in the future? And, you know, see where it takes you.

455
00:36:24,396 --> 00:36:29,916
Ultimately, you've got to take some risk. You've got to make some bets. And without doing that, without getting your hands dirty.

456
00:36:30,275 --> 00:36:33,755
This is kind of how I feel in a way. It's like, oh, that business is way too hard basket.

457
00:36:34,255 --> 00:36:39,135
But in some ways, getting involved is how you learn. And that's where the reward is. Follow that.

458
00:36:39,135 --> 00:36:43,575
oh, that work scares me. It's like the only way you're really going to understand what it's like

459
00:36:43,575 --> 00:36:49,956
to understand risk, let's just use Australia as an example today, is are you running a business

460
00:36:49,956 --> 00:36:55,295
in Australia? Are you paying payroll tax? Are you paying land tax? Are you paying whatever else they

461
00:36:55,295 --> 00:36:59,735
come up with to do that? And how badly does that actually affect the ability of the business?

462
00:37:00,095 --> 00:37:05,275
And through that experience, that helps you improve as an investor. Anyway, that's enough

463
00:37:05,275 --> 00:37:10,496
for me today. Give me a shout on email. Hi at jakewoodhouse.io if you've got anything to share

464
00:37:10,496 --> 00:37:15,295
or if this makes sense, drop us a comment. And most of all, just get into Noster. It's absolutely

465
00:37:15,295 --> 00:37:20,195
awesome innovation. I think it's the future of online communication. Send me a zap. I'll send

466
00:37:20,195 --> 00:37:21,635
one straight back. Thank you.