0:02
Bitcoin moved so fast I thought I’d solved the wealth problem.
I would literally say things to my wife like God.
Think about everything I’ve learned in my life so far and all of my ancestors work.
0:18
And what if it was true that Bitcoin solves the wealth problem and that we’re so lucky to have found out about it?
A bunch of seemingly unconnected things all lined up to go, oh, this thing has value, and it was a wonderful place to experience.
0:37
But in hindsight, it was very similar to the story.
And I think it was Icarus who flew too close to the sun.
And what I didn’t realize is that I was in uncharted territory.
I was overexposed.
0:53
I was taking more risk than I realized.
But The upshot, of course, is lots of learning and my balance sheet today versus 12 months ago is in some ways it’s a horror show.
It’s like, Oh my God, what just happened?
1:11
But if I was to somehow have a metric for intellectual capital and the the way that I now think as a result of having gone through a large drawdown, it’s like, OK, well, intellectual capital is up hugely.
It, it’s a small win in a sense, but here’s the deal.
1:29
So mid 2023 through to mid 2025, the, the purchasing power of my investment allocation, it, it grew so fast that it was like, well, it’s, it’s, it’s economically unnecessary to exchange 50 hours a week for a salaried job versus making money from investment decisions.
1:55
And, and that was a fascinating, incredible, unbelievable feeling.
You know, in 2024 in particular, the, the speed of growth of value of my asset stack was more impressive than the best performing Wall Street hedge fund.
2:14
And I was like, well, I’ve killed it.
This is incredible.
I can homeschool my kids.
We can go on holidays, we can live in nice properties, buy nice clothes.
And it’s not those things weren’t possible before, but they just everything was getting more affordable.
2:31
All around me.
I’m like, this is, this is incredible.
This is, this is deflation.
And it’s not that it, it, it was wrong necessarily, but there were some key pieces of the puzzle that I was missing.
And, and that’s what I’m going to cover in this podcast episode today.
2:47
So the, the mistake that I made was I was asking Bitcoin to do every financial job in my life.
And I’m going to go on to explain what that means.
So it’s, it’s really like I, I got burnt big time in the last 12 months.
3:06
And this is a story as to at least one of the pieces of information that wasn’t previously available to me now coming out and going, OK, I, I really like how I now think.
And this is something I’m going to apply and use for the rest of my life So yeah, so 12 months ago, what are we July now so we were we were basically pumping into the all time highs.
3:31
I I had a price target of 150,000 Aussie dollars per Bitcoin August 2025.
So we were just hitting the timeline, we’d already hit the price target.
It was like, OK, cool, I’m going to take some profits off the table.
And Oh my God, do I wish that I’d had how I now think about things in mind then, because it would, it would make a big difference today.
3:55
But Fast forward six months from that and it’s suddenly Jan Feb of 2026 and the Bitcoin prices absolutely crumbled and we’ve gone back down to 60 K ish.
And I was like, whoa, I thought it would be like a bear market, but I really didn’t think it would be this aggressive and this fast.
4:12
It just happened so quick.
To use a phrase I’ve touched on before, if you listen to the podcast, I was like a rabbit in headlights.
I was kind of frozen and I, I was watching things happening almost in disbelief.
And there was even a lag of translation between reality to a conversation with my wife and Oh my God, there’s been so many things we’ve learned as a couple in the last six months and so many things I would have personally done so differently.
4:41
But we were in the middle of a renovation.
I’d taken no cash off the table.
We still had a family life to pay for.
I, I had, honestly, I had wasn’t even tracking my expenses.
So I didn’t, I didn’t know how much money we spend every month.
It was kind of like being drunk on your own success.
4:59
And I have had to sober up aggressively.
And it’s like I’ve been in rehab and a lot of the problem has been myself.
I’ve, I’ve almost been in denial about some of these truths, but where am I?
What am I trying to get at here?
5:14
So the, the bear market highlighted how Bitcoin was doing multiple jobs for me that over a long enough time horizon was actually something it wasn’t capable of doing.
My income, my emergency funds, my long term wealth and also Peace of Mind.
5:33
So it, it, it’s trying to do 4 things.
Now what I’m really trying to get to here is I realized that the, the architecture of My Portfolio was the problem, not necessarily the asset.
And So what has really happened here is I’m a private capital investor.
5:52
I received inheritance in my 20s.
I’ve been investing for over 15 years in lots of different asset classes and, and it’s your own money like you do not want to get this wrong, but equally there’s no reward without taking risk.
6:07
And the, the, the painful truth is that you learn more when it goes wrong than when it goes well.
So what’s the bigger insight here?
A lot of investors will spend time thinking about what are you going to buy?
That’s obviously absolutely crucial.
6:23
And once you’ve figured out what then, well then when, when do you buy it?
And do you have a sales strategy?
So when do you sell?
But what I had not been doing enough of was asking what is the job of this asset?
Why do you want to own this thing?
6:42
And that question is something that we should all ask ourselves.
And so let me get to this now this, this concept of the four jobs that I actually need from my investment portfolio.
And, and this is like this, this is true capital allocation conversation.
6:58
And if you have listened to the podcast in, in the past, I like thinking about capital at a very, very high level, humanistic, intellectual financial capital.
And it’s through those three lenses that I view almost everything now, humanistic being, your relationships, your wife, your children, your health, intellectual, your skills, your wisdom, your knowledge, your expertise.
7:26
And it’s only with the combination of humanistic and and intellectual, you drive financial returns.
Financial much, much easier to measure because what’s the dollar figure or gold oz or or Bitcoin metric that you can attach to?
7:41
Like, OK, that’s the scorecard.
And, and the fact is the scorecard for me the last 12 months financially is very, very red.
It’s horrible.
But then if I look at now the, the stress test on my relationship, I look at the stress test on my intellectual capacity, they are actually both very much in the green in terms of how the, the, the, the, the cyclical nature of life.
8:08
You know, it is summer, autumn, winter, spring, and only through those phases do you realize, oh, that’s actually what I really wanted.
And so of course, life isn’t a permanent bull market.
It ebbs and flows.
And so here’s a, here’s a key framework that I will take going forwards as a result of going through this experience is I need an investment portfolio to do 4 things.
8:32
Give me growth, give me income, give me optionality and give me stability.
And, and so let me just break those down a little bit.
Growth, fairly obvious one, right?
You want capital growth.
This is actually much more effectively measured in purchasing power and preferably done over a long duration.
8:53
And, and you have to ask yourself these questions in a, in a world in which central banks control everything, the, the dollar figure, the euro figure, the GBP, yen, RMB, whatever it is you transact in daily life, it is expanding.
9:12
And no one really knows because they do it on purpose how many more Fiat currency notes there are today than there was a year ago.
And so you need to ask yourself, why do I own what I own?
And the real estate investment you might have or the equity purchase that you’ve made or the even classic car, you can own anything you want, right?
9:35
But is the amount of stuff that you can buy for that asset today the same as what it was 10 years ago, IE remove the money as the intermediary and you say, OK, I’ve got this classic Porsche 9/11 1991 and I want to sell it to someone else for, you know, the Apple stock that they own.
10:00
And not that Apple’s a good example from 1991, but exchanging today, right?
Would you get the same amount of Apple stock?
That’s actually, that’s something about this is a really bad example, but it it shows you the importance of money, right?
Money is the middleman, the the measuring stick in between every single trade. 50% of everything we do in trade is actually money.
10:21
So I’ve stumbled across an insight here which is like actually This is why money’s so important.
Because the measuring stick is changing, the denominator is eroding.
The house that’s changed hands five times down your Rd. over the last 10 years for apparently more money every time isn’t necessarily more valuable.
10:38
You can buy a, a a top of the range men’s suit on Salvo row for the same amount of gold as what it cost a higher class citizen in Rome 2000 years ago, like the, the, the S&P 500 priced in gold extraordinary metric.
10:55
There’s no growth.
So OK, where am I going with all this?
Capital growth is measured in purchasing power.
Now how you figure out how to measure purchasing power, that’s up to you.
But Long story short, you and you can then use different things.
Now Bitcoin is an excellent capital growth allocation, especially over 4 years plus.
11:16
But beware.
And as I now know, the the bigger exposure, the larger size you take on Bitcoin, the the more aggressive the volatility becomes.
Like that on the way up, epic on the way down.
That is what makes you grow a hairy chest.
11:34
You know, it’s like, wow, I’m thinking of my dad.
Wake up and smell the coffee, boy.
It’s like, oh Dad, yeah, that’s what it feels like to take a big position and a volatile growth asset.
Anyway, that’s capital growth.
The point being is you are growing your purchasing power over time.
11:51
Next number 2, income, cash flow, money through the front door, however you want to generate it could be through full time job with a salary, could be through some kind of business, could be through some kind of real estate yield, so some rent could be through a dividend yielding stock.
12:08
It could be through something I’ve more recently been looking at is some of the ETFs you can purchase that are professional options traders and they can create extremely good returns on an annual basis.
But the net asset value is eroding on the back end.
12:25
So there’s no capital protection.
You get high income but slow erosion of capital.
Now everything is of course a trade off that’s income.
This is this is the area that for me is the number one lesson from this year that I was missing is if your family’s month to month expenses are covered by income generating assets that you’re in in, in ownership of again, through a job or through some kind of business you might own, then the volatility of your, of your investment portfolio is less relevant because you’re not using that investment portfolio to pay for life.
13:04
And so cash flow is a natural hedge against the volatility of an income of an investment portfolio.
Huge lesson for me that it’s one of those funny things on the way out.
You want as much Bitcoin as you can.
And like I said at the start of this podcast, it didn’t make economic sense to exchange 50 hours of my week when I just made 10 times the salary I could get in a year in a couple of months.
13:29
Like it, it just it was a mind blowing experience.
It’s like, hang on, that’s like 10 years of work.
That is extraordinary growth, but with extraordinary growth has become extraordinary contraction.
Now, am I more bullish than than ever on Bitcoin?
13:46
Yes.
Is now a great time to buy in and around 60 K U.S. dollars?
Absolutely yes.
Do I have cash flow to start chipping away at that buy opportunity?
No.
Was IA for seller because I required income at prices that I knew were a buy not a sell?
14:03
Yes.
Is that a fail?
Yes.
Is that a big lesson for the future?
Yes, of course it is.
I think you get the point.
Income is a key job that my capital is required to do and I was missing that piece and, and in the future, like I’m never not going to be creating income.
14:24
Like I have been figuring out different angles and how to do it.
Haven’t yet quite touched on what’s going to be the best choice.
I’ve been looking at full time work again and I have been looking at selling digital products and I’ve been looking at even potentially purchasing a, a business from a retiring Australian.
There’s lots of different angles.
14:42
I’ll, I, I am sure I will explain in the future what I end up going with, but #3 optionality.
Another way of saying this is liquidity.
So cash, maybe you have a good access to credit, just generally available capital.
15:01
So it, it’s, it’s sitting there, it’s, it’s in some ways this is, this is your savings account.
It, it’s, it’s for surviving.
It’s for just keeping you just chilled.
It’s like, no, that’s we’ve got, you know, we’ve got 24 months of, of runway sitting in the bank.
15:20
And if we needed to spend it tomorrow, we could.
It’s not super volatile like Bitcoin.
Like I literally was sitting on Bitcoin thinking that was my, you know, emergency, you know, healthcare funds, if you, if you needed those.
And whilst that was good on the way up, on the way down it’s like everything just got twice as expensive.
15:39
Going back to the renovation, I mentioned my renovations cost me twice more Bitcoin than I expected.
Disaster.
And the big lesson there being if you’re going to take a big Bitcoin position and you’re considering a large CapEx in the real world, if you don’t feel rich enough to do it right now, I sell the Bitcoin right now to pay for the renovation or pay for whatever it is you’re thinking, then actually you’re not wealthy enough to do it.
16:05
It’s not like, don’t go, OK, I’m going to renovate in six months time and we’re going to pay for it in Bitcoin.
Then it’s like, no, take the money off the table right now, sit it in a bank and get it ready to to pay out whatever you need to pay.
So optionality, this is this is just this is flexibility, right?
16:23
And the final one, and it’s it’s very similar to optionality.
I call it stability, but this is much more around the the role that I now play as a father with three kids, which is obviously as a provider, but also more of a mentality of anti fragility, to use a good phrase, but more simply durability calm and and essentially what happened the last 12 months is the volatility of Bitcoin got in the family home and from that experience, I do not recommend it.
17:02
And so this is a really like we sleep safe at night and stability.
I would love in this bucket, for example, a, a piece of real estate fully paid off, no mortgage or equally gold bullion sitting in a vault that you know is yours with as little counterparty risk as possible.
17:20
It’s, it’s things that, that, that you just, you’re going to sit on as the base layer that you know are never going to be sold if you don’t have to.
And that’s how you, you know, you can plan 6 months ahead, 12 months ahead, because you know you’re going to be in the same place with the same stuff underneath you.
17:37
Then you lay it back in the optionality.
It’s like, OK, well, actually we could spend this or we can’t spend this.
We’ve got only 12 months of from, We have six months of from.
And you can start to figure out like, where are you not feeling so great?
And then the income, it’s like, well, our burn rate versus our actual income, How are we getting on there?
Are we increasing our optionality stack?
17:54
Or actually are we slowly chipping away at it?
And then the final piece is then the growth.
And so in some ways, I basically set myself up in the reverse.
And like I’ve already mentioned, I was asking Bitcoin to do too many things.
So it’s not that buying Bitcoin was a mistake, it’s the concentration that I had and assigning one asset for, I’m going to say incompatible jobs.
18:22
It worked, right?
I was growing my purchasing power.
I was paying for an amazing life.
I felt super safe and secure and like I hit my all time high net assets in January of 2025.
Like what can possibly go wrong 18 months later?
18:39
That’s what happens.
Bitcoin chops in half.
You’ve got overexcited and your lifestyles got more expensive.
You’ve bought lifestyle assets.
So my, my safety move in this time last year was I’m going to buy a house for us to live in.
We’ve been moving around for four years, renting very, very stressful.
18:57
I think we, we moved house 20 times or something and it was all justifiable because we had this great Bitcoin investment that just paid for everything and then suddenly it wasn’t a great investment.
It’s like, was it all worth it?
And, and like I mentioned it, it brings into highlight what is it that I really want.
19:15
And, and this is, this is what I would prefer to have right is a, is a, is a much cleaner balance sheet of like these are the jobs.
These are how they’re being covered.
OK, cool.
Now we can start to think about things that are more adventurous.
Throw in the mix, actually took some leverage to buy that real estate.
19:32
That leverage now looks very risky because instead of being only kind of 10 or 20% of my net assets, it’s now if I had to pay it back tomorrow, over 50%.
Now it’s still on a OK loan to value ratio with the real estate itself.
So that’s OK.
But it’s only a two year long high interest loan because I didn’t have a job.
19:52
I, I was, I was taking it a loan against my assets.
And it’s like, oh, another lesson like taking on liquidity at the top of a bull mark, taking on debt at the top of a bull market in hindsight.
I could have bought it out, right and that would have been a much better move.
An even better move on top of that would have been OK.
20:10
I’m going to take profits off the table because I’ve hit my price target and I’ve hit my duration.
And that is going to then funnel into less volatile income generating assets.
And therefore you would be able to cover your rent, you’d be able to cover your lifestyle expenses.
And you could start thinking about where else to reallocate into with those bases covered.
20:30
So that those are.
Yeah, my, my friend Andreas, shout out to Andreas if you ever listen to this.
But Captain hindsight is the best investor.
And So what are the things that you wish you’d done?
Write them down because next time we hit bull market, whether it is 2028, I don’t know, we’re going to see or 2027 we’re going to see an outrageous new all time high set.
20:53
And when that happens, it’s about coming back to these moments, the dark depth of the bear market and going, oh, I wish I’d done this.
I wish I’d done that and thinking about that and OK, when we next get into that position, almost like like a battle, right?
21:10
You might have a a military position, a hill.
You take that hill, you hold it for a period of time and you push the enemy back.
And then actually they, they really want it and they, you didn’t have strong enough supply lines and they retake the hill and you have to retreat back to where you were before.
21:26
And it’s kind of similar here with investment allocations and capital growth and purchasing power and, and wealth management so that you want to get back on top of that hill, but next time make sure you don’t ever give it back.
And that is, that’s the game.
21:41
That’s essentially what I’m trying to do here is learn from my mistakes and get back to a place where it’s like, no, no, now I’m back at this all time high number that I hit before.
But look how much more stable I am because I’ve got growth over here, I’ve got income over here, I’ve got optionality here and I’ve got stability here.
Bang, that’s, that’s the role I’m going to try and get to.
22:00
And so where am I going with this?
It’s the mistake wasn’t buying the Bitcoin that the mistake was the overexposure, the concentration.
And it was, it was assigning one asset for incompatible jobs in hindsight, because of the volatility, like if Bitcoin just carried on going to the moon the whole time, then I wouldn’t be having this podcast, right?
22:19
But that volatility inevitably means that using it for your savings account or using it for cash flow is not, is not a good idea.
And so I got confused.
And that’s created huge stress in the family home and in the investment portfolio itself.
So it’s like a building, right?
22:36
You want the foundations, the frame, the roof, the plumbing.
Each one has a purpose.
Or equally you could say like, you know, you have a football team.
You don’t play your goalkeeper as a striker, even if they’re your best athlete, because that’s not their best role in the team.
22:54
You know a ship the engine is repelling, the anchor is for stopping you.
You don’t you don’t say, right, we’re off guys and put the anchor down.
OK.
And and you know, those are just silly examples, but you get the point, right?
23:10
So you have different jobs and they need to be done by different things because that’s what that particular asset or, or expertise is best at.
Now there’ll be some bitcoiners out there and they’re going to say, you know, diversification, right?
23:26
And this is a, a point that I bought in many ways.
And that’s totally fair.
If you want to be 100% Bitcoin, go for it.
But the key piece in that instance would be that they’re generating enough in their day-to-day life to cover their costs.
I was paying for my cost with my Bitcoin position, and that was a fail.
23:43
And so actually it’s about setting up your, your, your, your portfolio in a different way.
And yes, like, am I bullish Bitcoin long time?
Of course I am.
But do I think that Bitcoin can perform all the four jobs that I’ve described today?
Maybe, And that only is if you see a more linear growth target or growth trajectory.
24:05
The volatility means that for the average person wanting a rainy day savings fund, it just needs to sit there in case something happens when they go to use those funds.
If it’s 50% less purchasing power, that’s actually a real problem.
And so whilst the, the volatility in Bitcoin remains, I think it’s difficult for it to do these four jobs.
24:25
And, and, and although I feel like it’s an absolutely integral part of a family’s wealth strategy, it’s, it’s also about recognizing, well, hang on, what do we actually need?
And then what jobs are required and then you allocate.
So it’s just about, you know, different architecture essentially.
24:44
OK, I’m going to pretty much pull this to a close down, but I’d love to, I’d love to challenge you.
It’s like, OK, what what do you own and what are your net assets?
Cool, that’s first step.
Step number 2 is why do you own what you own?
25:01
And I’ve said this many, many times, making Bitcoin content for five plus years now, Bitcoin forced me to ask the question, why do you own what you own?
And really that’s from a capital growth perspective, but also from a counterparty perspective, like is it actually yours?
25:20
And maybe you earned some Bitcoin, a house, cash, retirement fund, a business, some shares, whatever it might be doing.
But what job is that asset then doing?
And if you can’t answer what the job is doing, well, that is already the weakest allocation that you have.
25:35
So I would absolutely be revising that and thinking through, OK, well, maybe this could be doing a better job somewhere else.
And the next point would then be if you find that you’ve got one asset in your portfolio that’s doing multiple critical jobs, well, just really start thinking about, OK, Jake had that experience when he was trying to do the same thing.
25:55
And just be conscious that you’ve raised the stakes because if that asset underperforms in some ways and you don’t get the, the job return that you’re hoping for, then it it hurts.
Yeah.
Like my, my little child in my head, like big out.
26:12
She’s like.
But in adult terms, like, fuck, that is not the place you want to be.
So what, what, what’s this all about?
As a, as a investor, I put my own money on the line.
And you live and die by your own decisions.
26:30
And in this case, I made a series of decisions that really hurt.
And it’s been the most challenging 6 months of my marriage, most challenging 6 months of my investment career, most challenging 6 months.
Well, actually lowest net asset count today for 10 years.
26:48
Now, do I know that I can make it back?
Absolutely.
And am I sure that when I do, it’s going to be stronger and better than before?
Absolutely.
But it takes time and it takes a process of crushing the identity like I was so connected to myself worth was connected to my net worth.
27:05
Like, whoa, dangerous place to be, especially when it goes the wrong way because you oh, you hate yourself.
The shame, the guilt, the anger, the fear.
But yeah, look, challenge to you.
Try some of this.
What jobs are your assets doing?
Is it doing too many?
27:20
Is it not doing a good enough job?
And if you have anything interesting that comes out of that, I’m always keen to have a conversation with people.
So please do reach out.
But otherwise, that’s all I’m going to say for today.
Keep asking yourselves these questions and enjoy the rabbit hole.