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Warren Buffett criticized modern markets, saying that it's hard to find value when everyone is gambling . My next guest says that value investing still has a place in today's investing world because the key to uncovering value is patience. Let's invite Tyrone Ross Jr., CEO of 401 Financial. Always good to see you, Tyrone.
Hmm, you know, when Warren Buffett talks, we tend to listen, and you know, he was right, I mean , he did an interview this week where he reiterated those comments, but he's talked a lot in recent years about what he calls the " casino atmosphere" that he thinks has come to the stock markets. I mean, you deal with a lot of, you know, younger clients.
How do they feel about value investing? Do they consider it something outdated? Yes. I think value investing is something that needs more education. I think there are a lot of younger investors who have a lot more options than older investors and unfortunately are chasing the next shiny object. Um, and if every firm has a brokerage now , they're launching some kind of prediction market or some kind of, you know, perpetual futures trading decks, and it's crazy.
So, yes, I think value investing still has a place, but I think it's the fiduciary's responsibility to teach the new generation what it means to find value, to have patience, and to hold on for the long term. I mean, and Buffett also said, you know, he has a hard time finding value in the market. I mean, of course, we've seen that because, um, Berkshire Hathaway hasn't been investing that much capital in recent years.
So, how do you search for it? How do you advise clients to look for it? In fact, we have started educating clients again about what value investing is. I think 12% over the last 5 years or so, so we definitely won't be making Grandma happy on Thanksgiving . But I think we've also started to look at overseas markets, um, introducing clients to VT, which is a combination of all the companies here and around the world, to show them investing outside of our shores and trying to find value outside of the U.S.
markets, which we think are pretty valuable right now, if you will. But it really is. It's more of a learning experience, it's a conversation, not something that will increase by 100% next time in the next 6 months. Right. Hmm, and on the other hand, you have the casino atmosphere in the stocks, and then you have the real casino when you talk about the prediction markets, right?
And I was thinking about this this morning, Tyrone, it was so interesting when cryptocurrency reached a sufficient level of adoption that you had people like yourself coming to you from the advisory side and saying you want to allocate X% of your portfolio to this. Are we at the point where you would do this for prediction markets?
Your clients come because you want to limit risk, right? So, are you even having this conversation? That's not the conversation we're having, and I don't think financial advisors should be having it right now. It is clear that what clients want to do outside of the consultant, they should inform their consultant.
But I think it's also appropriate for financial advisors to say what's the right thing to do within the client's long-term goals and what's just pure excitement. And I don't think any consultant, any fiduciary, for that matter, wants anything to do with gambling. Hmm, yes, I think it's complicated here.
We don't discuss it. We didn't have the opportunity, and if we had, I would have expressed the sentiments I just shared with you. Of course. No allocation of funds for gambling. Hmm, that makes sense. Hmm, with that in mind , you know, he, I think, was also talking about cryptocurrency as gambling, right?
Hmm, and as someone who is deeply immersed in the world of cryptocurrencies, what do you think about this? Well, this is where the audience says, " Hypocrite!" Now he's about to tear everything apart." Hmm, very similar in that regard . If you are a short-term trader and you trade cryptocurrency, for me yes, it is a gamble.
Hmm, long-term investing in any asset class has a plan for me. There is a process of getting in and out, and cryptocurrency as a new and unusual asset class falls into this category. Now people will still argue, “Well, this is new and unusual. Not much experience. There is a game of chance . Yes, but I could say the same about stocks.
So, I think long-term investing, you know, is very constructive in terms of your views on why you're investing, when you're going to exit, making sure your financial plan is in place, I think cryptocurrency has its place as a long-term investment. But anything you are going to trade with the hope of getting rich quick will and should be considered gambling.
And finally, I want to ask you about your current Bitcoin prices, because we've seen them jump up a bit. What do you hear from customers? Are they, um, true believers, or at least patient enough to stick through this? Yes, again, our customers, like us, tend to be crypto-hippies. They are true believers.
They are not going to leave. I personally believe that we are falling lower and lower. I do n't know when, and I don't know what will be that catalyst. It could be that the Clarity Act will not be passed. I don't know, but I think we're not out of the woods yet, and I think that's good for the long term.
I think as long as Bitcoin stays above $60,000, it's not good for the long term. I would like to see us hit the bottom at 35, 40,000, wash away all the excess and unnecessary garbage, and then I think we can start moving higher as you start seeing all the big announcements and things that are happening now.
These kinds of ads usually happen , right? In, you know, a bull market, if you will, it's really crazy; but seeing some of these announcements in a bear market, you can see that this will be an inflow that will turn the hand as we go up. But yes, we are going to, we can and should go lower, and I think that will be creative for the space.
Are you and your clients adding to this , or are you waiting for a further drop? Well, we tell people to consider dollar cost averaging, right? So they'll , you know, take into account the average cost on the way down, but yeah, I think, I mean, personally, again , I think it should go lower. I'm backing up .
I might sell this sofa, but we have clients who are actively and constructively discussing their other goals; but yes, given that prices are down about 50% from the highs, it's good to accumulate a position here and continue to dollar cost average. Tyrone, good to see you. Thank you very much. Thank you for inviting me.
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