This Crypto Bull Market Is for Real

Shah Gilani|March 1, 2024

We’re doing something different today…

And I think you’re going to love it.

As you likely know, I’ve been spending my week in Ojai, California, presenting at The Oxford Club’s Annual Investment Conference.

And I was delighted to sit down for a chat with my colleague Robert Ross, Manward’s Speculative Assets Specialist.

He was fresh off his presentation about the biggest story of 2024… Bitcoin.

And I have to say… he’s got me convinced we’re in an incredible crypto bull market. And his prediction for where Bitcoin is headed left me stunned.

But that’s not all we talked about. We touched on small caps… investing in an election year… AI… and more.

You can find it all in today’s video.

Click on the image below to watch it.

 

Transcript

Shah Gilani: Hi everybody. Shah Gilani here with Robert Ross. We’re going to talk about Robert’s specialty today… speculative assets, how to play them, what they are. Robert just spoke at the Investment U Conference in Ojai Valley at the magnificent Ojai Valley Inn and Spa.

And Robert, let’s start our conversation with Bitcoin. You spoke at the conference about Bitcoin. You like Bitcoin here, where do you think it’s going to go?

Robert Ross: Yeah, so we couldn’t have had a better day to talk about cryptocurrencies than at this great conference we’re at right now. Bitcoin crossed $60,000 this morning. But as I talked about in my presentation, we were bullish in my own work on Bitcoin and crypto all the way back in early 2023, late 2022 after the FTX collapse. As that was really the sentiment low as I talked about in the presentation, for crypto last cycle. And we’re up significantly on Bitcoin already in our portfolios.

However, I do think that Bitcoin and crypto is probably in the fourth or fifth inning of this current cycle, which might be surprising to some since we’re already back near all-time highs.

Shah Gilani: You’re an early adopter, I believe you bought Bitcoin in 2017?

Robert Ross: Yes, so this would be my third crypto cycle, and I still hold Bitcoin that I bought for under $8,000 per coin. And not that we’re keeping score, but it’s at $60,000 now as I mentioned earlier. But again, I think Bitcoin really does go a lot higher this cycle.

You saw the presentation. There’s a few indicators that I look for to see where we are in the cycle. One being the net unrealized profit and loss indicator and Google search volume for Bitcoin and crypto. But also I have a pretty large social media following with 500,000 followers and I can get real time sentiment data there as well for my audience.

Shah Gilani: I got a lot out of your presentation, especially when it comes to Bitcoin because I’m not so sure where we are in the cycle. You made it clear exactly where we are and now I’m bullish on Bitcoin, thanks to you.

Robert Ross: Well, I’m happy to try and evangelize as much as possible. And really it’s not some sort of gut feeling that I think crypto is going higher. It’s really indicators that have worked for many cycles so far. And what they’re saying right now is that even with Bitcoin near all time highs, that we’re probably really at mid-cycle right now. And personally I have a target price for this cycle for Bitcoin of $165,000.

Shah Gilani: Wow. All right, I’m going to have to open up my wallet and get some Bitcoin. We also have been talking a lot about 2024, this being a presidential election year and where assets might go, whether they’re speculative assets, growth value, traditional, whatever they are, 2024 in my opinion is going to be a volatile year. What are your thoughts and where do you think the money’s best spent, or what’s going to shine and what’s going to tarnish in 2024?

Robert Ross: Yeah. And with speculative assets, I think everyone should have a diversified portfolio really when you’re investing. My book, A Beginner’s Guide to High Risk, High Reward Investing that came out 2022 with Simon & Schuster. It’s all about the risk management with these speculative assets, as I’m sure you know from your storied career on Wall Street, mainly in the options market…

Shah Gilani: Everybody knows. If they don’t, they should know. It’s about risk management. And I had a question from a subscriber yesterday at a cocktail party. He said, “I am afraid, what do I do? I want to get into…”

In particular he was asking about Nvidia and I said, “It doesn’t matter where it’s come from, it’s where do you think it’s going to go?”

And it doesn’t matter and maybe in the case of Bitcoin, this is true also, a lot of investors look at where things have come from and say, “Well, it’s already reached some… It’s up knocking on the door of new highs.” And Nvidia is making new highs constantly. And my recommendation is take it as a trade, put on a new position, it’s a trade. Imagine you don’t know where the price came from but you like this asset and you want to buy it, you manage the downside and whatever percentage you can afford to lose if that’s where you want to go. Or sometimes you add as things go down, you average down.

With your speculative assets, is that how you play them? Is that how you give people a comfort level as to how to get in and when to get in and what to do with them?

Robert Ross: 100%. And I think the goal with any high risk, high reward investment is to take a little money and turn it into a lot of money. You want to be able to size these positions correctly so that if you are wrong and with high risk investing as I’m sure you know, a lot of the trades are not going to work. So you want to have that defined risk before you go into it, which is exactly what I do with both small caps and crypto, especially in my service with Manward, Breakout Fortunes.

Shah Gilani: Let’s talk about small caps. Small caps of 2024 are certainly undervalued currently. Do you think that they pick up the slack where the Magnificent Seven have led us and maybe fill that gap or do you think that do we have to wait and see?

Robert Ross: I think it’s a case by case basis. I don’t know about IWM, the broad small cap, the Russell 2000 Index, but I do think that there are some great opportunities in small caps right now.

Specifically like I talked in my presentation with crypto specific equities, we talked about a company called Bitfarm which is a Bitcoin mining company. I know many in the audience are probably familiar with investing in gold miners. So think about then gold miners are a leveraged play on the gold market. It’s the same thing with Bitcoin where Bitcoin miners are a leveraged play on the Bitcoin market because when Bitcoin prices rise, not only are they continuing to mine these Bitcoins but the value of the Bitcoin they already hold is going up in value as well. So I really like those crypto equities here right now.

Shah Gilani: In the universe that you cover with these speculative assets, is there anything overriding in terms of the general market? Do you say, “Well, I’m only going to play from the long side if the general market is going up?” Or do you have parameters that whether interest rates are going up or down or anything that defines this trend or that trend? How do you look at the speculative universe within the regular markets that everybody’s more familiar with, let’s say at least institutional benchmarking, the S&P 500?

Robert Ross: Yeah, and I think small caps if the general market, the broader market’s not doing well, small caps are probably not going to do well either. But I am actually still very bullish on the broader market as well, which I think if you own the right small caps in a time like this, when we have falling interest rates over the next year, much of Wall Street despite Nvidia’s wild run, going into the year Wall Street was still very bearish. The average Wall Street target price for the S&P 500 was only a 1% gain this year. And if you look historically when Wall Street has these low target prices, those are usually the best years for stocks, which is counterintuitive but we see that over and over again in the markets.

Shah Gilani: I think we’re starting to see now analysts are raising their expectations for earnings. They’re raising their profit targets for a lot of companies and they’re also raising their expectations for the S&P 500. Now I see most analysts are moving to the 5,200 to 5,500 range and you’re right, and at the beginning of the year they were nowhere near that. Last year, let’s not forget last year the banks got it wrong. Everybody was looking for a recession in 2023. We had a bumpy year but a fantastic year in markets.

Robert Ross: Yeah, and I think 2023 is another prime example of you want when everybody’s thinking one way. Even crypto last year too, after the FTX collapse and the bear market we had in 2022, nobody wanted to hear about buying crypto or anything like that. But unfortunately – I only talked about in my presentation – I was telling anybody who would listen that I thought it was a great time to at least dollar cost averaging a small percentage of your portfolio into crypto because prices hadn’t been that low in so many years and the outlook and growth for crypto was so strong.

And now that we have lots of institutional money flowing into crypto as well from likes of BlackRock and Fidelity with their Bitcoin ETFs, there’s this new catalyst in the market which is one reason I think that we go well above previous all time highs this cycle.

Shah Gilani: A lot of your stuff is, well, they mean a lot but certainly a fair amount seems to be contrarian. Do you generally lean into the contrarian side of an argument as far as an asset being maybe overvalued? It’s time to sell, undervalued. No one’s paying attention to it. It’s off the radar. I know because you’ve been writing, in the presentation you showed why when you do that it’s not just guesswork. You have all these mechanics that you look at to figure out this is the time, it’s undervalued for a reason. I call it catch a falling knife sometimes.

I like sometimes going and taking a contrarian position and when no one wants a particular company or asset or sector, to go in there. And yes, it’s bottom fishing, but then your downside is fairly limited and I like that. And I think risk reward wise that makes sense. You do a lot of that with all of your speculative stuff.

Robert Ross: Yes, and I’m not contrarian just for the sake of being contrarian either. I think you really have to pick your spots when you want to be contrarian. But if you really want to outperform the market, you have to hold some sort of out of consensus ideas because you have to get in before the rest of the market kind of realizes that they were wrong or that they maybe misjudged what was happening. Whether that was going into 2023 when all of Wall Street, the major hedge funds Stanley Druckenmiller and Ray Dalio all calling for a recession. But what happens when everybody is sitting on that side of the boat, you usually end up swinging the other direction or at least the risk reward is favoring the other side in that type of situation.

Shah Gilani: So 2024 presidential election year. I’m nervous about what can happen, what might happen because of AI. I have been cautious about my thoughts on how the election might turn out because I’m not so sure we’re going to know where this messaging is going to come from that we get into closer to November. We’re going to see things from places, corridors we’re going to know where they’re really come… We’re not going to know who or what to trust.

Do you think that is going to happen? And do you think if that does happen, do you think that’s going to be disruptive for the markets or is that going to be an opportunity?

Robert Ross: I think it will be disruptive. As anyone’s seen the AI videos that are coming out now, the deep fakes, open AI’s new video software where you can just type in something and it’ll create a very realistic video. I think it’s important to remember that AI isn’t perfect yet, but this is the worst that AI’s ever going to be. It’s only going to continually to get better.

Shah Gilani: You’re right on that one.

Robert Ross: Yeah, it’s going to keep improving. And from the market implications though, the companies that are able to take advantage of these AI software and platforms and to make their companies more efficient and more productive, I think that’s going to be great for the earnings of those companies. It’s been tough out there if you’re working in tech for the last few years, but I think that’s going to continue.

As Mark Zuckerberg said last year, it was supposed to be Meta platform’s year of efficiency. And we’ve already have seen that in their earnings as well. I think that’s going to be a trend we see all through the market. So might be a little tough for tech workers, which is about 9% of the workforce. It’s not insignificant, but I think it’s going to be a very good thing for the shares of those companies.

Shah Gilani: I agree. I think it’s going to be disruptive. We’re already seeing tech layoffs, we’re seeing layoffs across the economy unfortunately. And I think we’re probably going to see more of that because as AI is increasingly adopted, it creates great productivity shortcuts. And for a lot of companies it will create great top line and bottom line changes and the cost sometimes of employment. And that’s on one hand of course, unfortunate, on the other hand brilliant for companies that can take advantage of AI and increase both top line, bottom line margins. And I think we’re going to see a lot of that. There’s going to be a lot of disruptive changes with AI, a lot of small caps are going to do well. I think from your perspective and mine, I believe finding those small caps they’re going to be… It’s nice to have the Microsoft of the world and the NVIDIAs, but those small caps they’re going to be gems in there.

Robert Ross: Yeah. And I think it’s the same thing with crypto too. You can’t just buy any small cap or any crypto if you want to take advantage of these trends, you have to know what to look for. You have to understand the downside risk with a lot of these small caps because they are high risk, high reward investments.

You have to know how to manage that risk effectively, which you’ve done throughout your entire career. Are there any small caps on your radar right now that you’re looking at?

Shah Gilani: Yeah, we’ve got a few of them in my Launch Investor service, got some really great little companies there. And we find a lot of them, they’re there. But I elected time correctly, I think certain times you’re looking at the market. We’re seeing certain things move. And because the small caps haven’t participated the same way, sometimes when the market sells off, they sell off and that’s when we get in because they can be volatile. But when we’re in, we’re happy. We’ve already had some pretty really great plays already.

One of our positions this morning was up 78% literally today. So yeah, there’s tremendous value in a lot of those small companies. And AI related small cap companies I think are going to be for 2024 and beyond, the secret sauce for outstanding returns.

Robert Ross: I 100% agree. And AI especially, it’s a trend that’s not going away anytime soon. I know a lot of people are comparing this AI boom to the dotcom bubble we saw in the 2000s. Do you see any parallels there or is that a little bit overblown, would you say?

Shah Gilani: The only parallels I see is the hype that a lot of companies have put into their earnings, put into their messaging by using AI that aren’t really using AI. I think in that sense, there’s a bit of a bubble there. But the rest of it, it’s real. It’s the future. It’s here, it’s now and we’re going to make a lot of money playing the game.

Robert Ross: I sure hope so.

Shah Gilani: I know we will. Great being with you. And thank you, and I look forward to following you and all your speculative plays.

Robert Ross: Likewise. Thank you so much, Shah. Great talking to you.

Shah Gilani: Thank you, Robert.