Episode Transcript
Speaker 1 00:00:05 This is annuity Straight Talk. Since 2008, your host Brian Anderson, has helped clients nationwide navigate the complex market for annuities With Brian's assistance, hundreds of clients have achieved a profitable and secure retirement. I would know because Brian has answered many of my questions concerning annuities and retirement planning so that you can benefit as well. Let's get started. Here's Brian.
Speaker 2 00:00:48 Hello and welcome everyone to the Annuity Straight Talk podcast episode number 66. My name is Brian Anderson, founder n creator of Annuity Straight. Talk here for the 67th time cause we had an episode zero. Introduction is for those who don't know me, those of you who do know me and have been around, thank you again for joining me. Hopefully we can continue good content that is engaging and helpful to anyone who is navigating the challenges of retirement. This one in particular, some I thought about for a while now. I was gonna do a series, kind of a three part series of, we'll save that for next week, but cuz of some recent events, I thought I'd just pop this one in there. Cryptocurrency in retirement, cryptocurrency in general. Not gonna have anything with it. I thought about, hey, gotta put the word annuities in there so people click on it.
Speaker 2 00:01:36 And I think this is kind of one of those that classifies. I will tell you guys some of the best stuff I've written, some of the best technical things I've written and the research I've done comes without the title annuities in it and zero people read it. Not zero but very few. And so I'm always crazy. Everybody was like, oh we need to talk about annuities so much. But if I don't put annuities in the title, nobody wants to listen to it. This one, there's no way around it. I'm not gonna fake it, it's just cryptocurrency in retirement because we're talking about retirement and I'm talking about retirees and what they do. So it's kind of something that I'm gonna go to. So I wrote a newsletter already and you might wanna read that now I'm gonna tell you, tell you right now, this is not perfect.
Speaker 2 00:02:13 I do not understand every little thing about it. But I came a long way this week and I've probably done six or eight hours of reading. We are Saturday after Black Friday and Thanksgiving. I do not participate in Black Friday cuz I think it's a racket and I'm not that big a consumer, I don't need that much stuff. So anyway, but I'm in Eastern Montana, I'm hanging out at my sister's house cause I'm gonna watch my niece in the Nutcracker tonight. She is a little ballerina, she's cute and she's wanted me to come forever. I have me out with my way back from Kansas and thought, oh, I'll hang out with you guys for a few days and I'm testing out the camper that I brought some of or that I bought. Some of you guys know that I'm planning on doing a road trip this winter.
Speaker 2 00:02:55 I will still call it a tentative plan. I wanna test out how it works. So the studio today is my camper and I think it looks all right actually. So non-natural light cuz the sun's kind of going down now, but it's a close shot but I think it works. So anyway, cryptocurrency, the topic's been on my mind for well over a year. Obviously my learning about it, like anyone else goes way back before that. Everyone asks me about it. Lots of people ask me about it. I've had actually people make appointments in the memo line. If you've made an appointment, you say, what do you wanna talk about? And you type in whatever you wanna talk about. I've had more than one person say, I wanna know if you think cryptocurrency is a good investment for retirement. I've got several clients who participate in the market in one way or another.
Speaker 2 00:03:43 But I'd say most people who ask about it and approaching retirement, the ones who ride it, I wanna know if cryptocurrency is a good investment for retirement. A lot of 'em are trying to pay, play, catch for underfunded investment accounts. And I think a lot of people kind of look at what could have happened and are cautiously optimistic, Hey, maybe this is the next big thing and maybe the next 10 years will work out the way the last 10 did. And I'm not gonna tell you whether anything it's good or a bad idea. I'm gonna tell you kind of what I think about it, where it fits. But I can tell you that the next 10 years are not gonna replicate the last 10 years. So Bitcoin was the first and is the most well known kind of have largely been responsible for the craze.
Speaker 2 00:04:23 It became common knowledge in the past few years, four or five years. A lot of people really knew what it was in the beginning. Bitcoin was born of a distrust for the traditional financial system. This is post financial collapse in 2008. Libertarian minded people love the idea because you can participate mostly anonymously and outside of a system that a lot of people think is rigged. Oh, the dollar's gonna crash, financial system's gonna collapse. I wanna have Bitcoin because then I'll be wealthy and nobody else will have anything. But to remind you that the power has to be on. So we talk about collapse and the power grid failure, how you gonna log onto the system and trade your Bitcoins. But the problem with, you know with that is you've gotta use the monitored financial system to get into and out of it because it hasn't taken over as a stable alternative currency.
Speaker 2 00:05:08 I'll try to, you know, touch on that Again, to this point, it's only been a speculative investment. So maybe a foreshadowing of, I don't think it's a suitable investment for retirement, but whatever. When Bitcoin was created, it was basically an idea, an algorithm, an encrypted code for each Bitcoin that's in as layman a terms as I can make it. And for a while nobody was willing to pay more than a few cents for it. It was kind of a novel idea, Hey I created this thing. If everybody thinks it's valuable, like that's what it takes. Takes people thinking it's valuable for it to trade. But had you been a believer in the idea of 13, 14 years ago, just a few thousand dollars would've put you on the billionaire's list today. Wow. I first read about it in 2009. It was in the Wall Street Journal.
Speaker 2 00:05:51 I kind of thought, oh maybe I'll throw a little bit of money at it. I think the coins were worth 60 cents, 70 cents at the time. I never did it and I've never done it since. And to be honest, or I don't spend a lot of time regretting my hesitation because you know, when would I have sold, you know, a good trade? It goes from 60 cents to a dollar 20, hey it doubled my money. That's a really good trade. Or it goes 60 cents to 10 bucks, you know, then I got 16 times my money. That's even better. I doubt I didn't have the technical skills capabilities to read the charts, gauge the hysteria that was surrounded. I don't know that I even would've stayed in it this long and maybe you wouldn't have either. Most of the people who got in it at the right time, they're like financial quants analysis analysts or computer experts, combination of the two.
Speaker 2 00:06:41 Now there are some people that got lucky but I, I get the feeling that's the exception rather than the rule. And if you think about it, you know, if it's born from the financial collapse and the idea of not trusting the financial system, think about how many banking employees were laid off during the financial crisis. It's kinda easy to imagine that a lot of them would be a little jaded, maybe eager to pursue something that work against a system that failed them. Those same people understood a little bit more about how databases run the financial system. So an encrypted form of digital currency wasn't that big a jump for them. One person I know well who profit of substantially from Bitcoin is a retired institutional trader from New York. He has an intricate knowledge of the financial systems algorithms that run it and an added skills.
Speaker 2 00:07:26 He is an expert at programming financial models. So money and computers are kind of his thing. He bought 100 coins for summer on a hundred bucks a piece. He might have put 10 grand into it sometime. I think it was a 2018, he sold half of it for about 1.8 million. That was a really good trade. But he was in a unique position to understand all aspects of the opportunity and had the luxury of not caring whether he won or lost. So where he normally might have doubled his money in any other trade and said he's like well you know this is just 10,000 bucks, let it ride. I don't know what he has with the rest of it. So from its all time high, Bitcoin is down more than 70%. I think it topped out at $67,000 a coin. It's somewhere around 16 or 17,000.
Speaker 2 00:08:09 Now I wanna tell you like it became something that people asked about, right? As it like as a catch up tool for retirement when it was near the peak or kind of either side of its maximum value, they're on the way up or coming on its way back down. I don't really know any of my clients who have done it have not put a significant amount of money into it, but several people who put a little money in just to learn how it works, right? Hey, I'm gonna figure this out and kind of dabble and see what happens. I do sure hope that none of my subscribers were seriously damaged with but with so much value being wiped from the books, it is a possibility and I hope it wasn't you. Now I'm not trying to talk you outta participation, but I'd suggest that you fully research and understand exactly how it works Bloomberg just cause like I'm gonna get to this big exchange that just failed and went bankrupt.
Speaker 2 00:08:58 So Bloomberg pushed a bunch of articles out. One guy Matt Levine wrote a really great article, it was very long, I think he said somewhere in there that it's 40,000 words. It took me, I read the whole thing and I gained a better understanding of how it all works. But it kind of explains the early days, the beginnings of Bitcoin all the way through how the entire crypto system works now and all the different currencies that are out there and the exchanges. It took me several hours to read it, reread it, kind of absorb it and it's still complex enough. I can say I pretty well understand it, but I can't take that and translated into my own words in simple enough terms where it will fit in the context, you know, within a couple paragraphs in a newsletter or a couple minutes in this.
Speaker 2 00:09:44 It's a complex subject and mostly because especially for the average person who doesn't think in terms of computer algorithms and cryptography, encryption and doesn't understand that our life is made up of databases. As Levine points out, everything we have is recorded in a database and so it kind of takes a shift in perspective just like a lot of things do. So recently the company called FTX went bankrupt and that's kind of what gave me the motivation to finally get this on the website and the topic. I tried to have a couple people I know who I've considered to be experts in this, although they're not necessarily experts. A lot of people can claim to be experts of it cuz they've wor played with it for a while. But anyway, I try to get a couple people to join and maybe be, you know, more of an expert than me.
Speaker 2 00:10:34 Cuz even the things that I explain, I'll give you the disclaimer that I don't fully understand all of it anyway, but when FX FTX went down, the losses are big enough that regulators are even trying to figure out whether they can hold some celebrities liable for an endorsement of that. Now, if you don't remember, and I was reminded of it when I read the articles, FTX ran a big Super Bowl ad last year with Larry David, the guy that created Seinfeld and had a bunch of celebrities basically suggesting that if you weren't gonna get on the crypto bandwagon, then you're living in the dark ages, you're essentially an idiot for missing out on something big. So we're not even a year past the Super Bowl, we're looking at the end of the NFL season, the, you know, coming Super Bowl in another two, three months and not a year later.
Speaker 2 00:11:19 Fdx owes its 50 biggest creditors, more than $3 billion. Thousands of people lost a lot of money. So FTX was an exchange that allows you to purchase cryptocurrency that allows you to trade money in the bank for the cryptocurrency of your choice. Most exchanges offer separate tokens that are kinda like a money market fund. One token is worth $1. This is an example. So you go to FTX and this is not exactly how they work, but you give 'em a thousand dollars, you get a thousand tokens and a thousand tokens translates to X amount of Bitcoin and then you trade the Bitcoin, you buy the tokens with your dollars and trade the tokens for an equivalent amount of cryptocurrency. They hold the crypto on their books and use it as leverage to issue more tokens, raise more money and buy more cryptocurrency. So there's a little danger of potential self dealing here, correct?
Speaker 2 00:12:07 So long as the value of crypto keeps rising. So there's a little bit of leverage there for my understanding. And as long as crypto keeps rising, not everyone wants all their money back at once, then the game can continue. Ponzi scheme, anyone, a lot of critics have suggested it's nothing but a Ponzi scheme and I did learn enough, Bitcoin is not like that. So these are exchanges that allow you to access the crypto markets. It's another player in the game, it's an intermediary if you will, without an exchange. You essentially need to know someone who owns the cryptocurrency that you want and meet up with them and give them cash or a check or do a bank transfer and then they can send you the code or the private key to access the account that holds the currency, right? And without that, if you wanna do it in bulk or if you want to trade in and out of it, you gotta use an exchange.
Speaker 2 00:12:55 So cynics like me are gonna notice this sounds a little like the banking system, but the banks aren't dealing with volatile assets like crypto. So the exchanges are in a far more precarious position and in addition to being leveraged or being overextended to certain investors, whatever the specific case may be, there might have been, you know, some yachts, Lamborghinis, maybe some champagne and crab legs as well, some extravagant living. The guy who was kind of in charge of it, MIT grads, maybe a sharp kid, but as a lot of 30 year olds might do when they become billionaires, then you got a little ahead of himself. And I think the most recent, I mean the as of two weeks ago, it was considered to have no material assets. So he is worth 8 billion maybe a month ago. So I mean gimme a break if this is kind of a basic explanation, it may not be perfect, but it's close enough for our purposes.
Speaker 2 00:13:48 In short, you not only have to dig into the details of each currency, you also have to scrutinize the exchange you use to make sure they do it the right way. So Bitcoin, from everything I've learned about it, I think is a fairly viable deal, but people still have to believe that it holds value. But you know, everybody's gonna chase, they want the same results as Bitcoin had. They wanna start a coin. Now Bitcoin started as a computer program and a software system that identified specific codes that, number sequences that are unique in a certain way as you know, whatever. Anyway, it's again, I'm trying to put it into my own words. I kind of understand it, but I'm missing it a little bit. So if you wanna talk about it, you can call me and we can chat about it. So they didn't raise any money, it just had to do with like that's what you get these bitcoin minds, they didn't raise any money, they just had guys that were working this software and this algorithm to find these unique strings of numbers and encryption.
Speaker 2 00:14:46 If they find the right sequence then they call it, it's a Bitcoin and that's identifying code for it. Again, very, very simple terms. So other companies, ftx, they raised money to do this. Ethereum is like kind of the next biggest one. After Bitcoin, they raised money to get started. So a whole different game when you've got investors and profits and people sharing in, you know bitcoins, the best thing it's got going for it is the users own it to the extent that they own whatever Bitcoin they have. There's no centralized control of it. So, but my instincts tell me the days of the astronomical profits are mostly gone for cryptocurrency to become a mainstream alternative to traditional financial system and the price is going to have to stabilize. You can't have a wildly fluctuating asset value that you use to buy a sandwich or a car or shop for groceries or pay your power bill, right?
Speaker 2 00:15:42 Once it's stabilized, I think it might be a good alternative to store wealth outside of a traditional currency based system. But for the time being, it's very, very speculative. It's funny, a lot of the people I know that were bragging about Kryp, oh I bought, I bought Bitcoin. A lot of people are doing it. Were doing it in like 20 18, 20 19 just when you know, my buddy who's the expert institutional trader and programming specialist was like, Hey, I don't like what the charts tell me. I'm getting out, right? They were buying it, it was kind of cache, it was sexy. Oh, I got Bitcoin, I buy Bitcoin and it went from 18,000 to 30. Oh, I made all this money. I wonder what they're doing now. But everybody that thought they were gonna get rich were the ones that got in way after the fact. You had to get way back in 2009 and literally we'll just take a few hundred bucks thousand bucks, you would be unimaginably wealthy now compared to where most of my clients are who are just plain old well off.
Speaker 2 00:16:38 So gonna be speculative. Is it suitable for retirement? If you do participate in it, I suggest you do it in a very insignificant amount of money. But I would, I'd say contact me if you wanna know what the article is from Bloomberg. I may link in in the newsletter I haven't decided yet, but read the newsletter and check it out. If it's in there, start there and make sure that you understand every aspect of it. And then you also have to do a lot of vetting on the exchange you're going to use as well. And even then, I would say probably a very small part of your assets can be used for that, but you need to have the technical knowledge first. Now I'm good at reading legal documents, I'm good at reading annuity contracts, even fund prospectuses, variable annuities, securities offerings. I can read legal information in those types of contracts and I can translate that pretty simply into layman's terms.
Speaker 2 00:17:30 There's a lot to unpack with this one, and I'm not gonna be consider myself to be an expert. This is not a recommendation to go do it. It's actually a recommendation to be damn careful if you do because a lot of people have been burned and some people have got lucky. But that kinda is the way something else works out. My bet is to throw a few hundred bucks at the next big thing and maybe you'll get lucky. But if you wanna talk about it, you can gimme a call. So I appreciate you joining me for episode 66. Hopefully you learned a little bit about it. I'm gonna continue researching it so I can really wrap my head around it. I may do more, but if you want to talk about how cryptocurrency works or share your thoughts with me, some of you out there might know more than I do.
Speaker 2 00:18:06 You might have noticed that I made a little mistake in here. Everything's tried intentionally general enough that I don't make too many mistakes. But if you wanna chat, you can gimme a call at (800) 438-5121. You can schedule a call using the button that says schedule a call on the top right corner of any page on annuity straight talk.com. So thank you so much for joining me. I will be back in the office next week By the time you see this, I will be back in Montana. Um, a couple people mention, oh, I thought you were elk hunting. I'm like, I recorded that a week before when elk hunting, it didn't get released for 10 days after that. By the time it was released, I'm home. So by the time you see this, I'll be back home and back to normal operation before the Christmas holiday. Anyway, thank you again for joining me. My name is Brian Anderson. It's been a pleasure to be here with you. I look forward to episode 67 next week. Gonna be a good one. So come back and check it out. All right, thanks. Have a great day. Bye.
Speaker 1 00:19:12 You have been listening to annuity straight talk. The preceding information is for information and educational only. It does not represent texts, legal investment advice. The views expressed by guests on program are their own and do not necessarily reflect the view talk or his partners. No information presented to today should be acted upon without leading with the qualifi and license profess. It's important that you all insurance contract disclosures and before a purchase decision GS are based on the financial and paying of the insurance.
