What's going on guys. Today we got a great episode with John Pompiano. In this conversation we talk about Bitcoin, the price crashing, whether the bare market is here, and what you can do in your portfolio.And I get a little personal. I explain how I invest, how I think about buying and selling assets, and also how I think about portfolio construction and why there's a difference between the gambling table and the long-term lounge. You know where you'll find me.All that and much more in this conversation wi ...

Core Insights - The article emphasizes the importance of identifying high-potential investment opportunities before they gain mainstream attention, focusing on asymmetric risk-reward scenarios [1] - The investment strategy is centered around a 4-5 year horizon, allowing for the absorption of market volatility while aiming for significant long-term returns through disciplined capital allocation [1] Investment Methodology - **Leadership & Management Analysis**: Focus on companies with proven track records in scaling, smart capital allocation, and insider ownership, alongside consistent revenue growth and credible guidance [1] - **Market Disruption & Competitive Positioning**: Target firms with strong technology moats, first-mover advantages, and network effects that facilitate exponential growth in high-growth industries [1] - **Financial Health & Risk Management**: Prioritize sustainable revenue growth, efficient cash flow, and strong balance sheets to ensure long-term survival while avoiding excessive dilution [1] - **Valuation & Asymmetric Risk/Reward**: Utilize revenue multiples compared to peers and DCF modeling to assess value, ensuring downside protection while maximizing upside potential [1] - **Portfolio Construction & Risk Control**: Maintain a diversified portfolio with core positions (50-70%), growth bets (20-40%), and speculative investments (5-10%) to balance risk and reward [1]

Core Insights - The article emphasizes the importance of identifying high-potential investment opportunities before they gain significant market traction, focusing on asymmetric risk-reward scenarios [1] Investment Methodology - The investment strategy involves identifying high-conviction opportunities through leadership and management analysis, market disruption and competitive positioning, financial health and risk management, valuation, and portfolio construction [1] - Leadership analysis includes evaluating proven track records in scaling businesses, smart capital allocation, insider ownership, consistent revenue growth, and credible guidance [1] - Market disruption focuses on companies with strong technology moats, first-mover advantages, and network effects that drive exponential growth [1] - Financial health is assessed through sustainable revenue growth, efficient cash flow, strong balance sheets, and avoiding excessive dilution [1] - Valuation is based on revenue multiples compared to peers, DCF modeling, and ensuring downside protection with significant upside potential [1] - Portfolio construction includes core positions (50-70%), growth bets (20-40%), and speculative investments (5-10%) [1]

Core Insights - Tax harvesting is expected to become the most in-demand customization feature in portfolio construction as solutions become more available [1][2] - Advisors rated tax harvesting a 3.7 out of 5 in terms of demand among portfolio construction features [2] - Other customization features include vehicle integration of ETFs (3.3), customized withdrawal plans (3.2), and managing concentrated positions (3.1) [2] Portfolio Construction Drivers - The primary drivers for portfolio construction decisions among advisors are maximizing risk-adjusted returns (44%), maximizing diversification and asset class coverage (41%), and creating long-term wealth growth (39%) [3] - For Registered Investment Advisors (RIAs), changes in clients' goals/risk profiles (89%) and liquidity needs/life events (86%) are the most important drivers for portfolio allocation changes [4] Advisor Relationships with Asset Managers - A significant majority of advisors (85%) collaborate with multiple fund managers for portfolio construction advice, with RIAs at 76%, wirehouse advisors at 88%, and independent broker/dealers at 91% [5] - Advisors prioritize risk analysis (55%) and portfolio optimization (53%) when seeking portfolio construction services from asset managers [6] - Over 60% of advisors rated the importance of meeting with an investment specialist as 3.7 out of 5 [6]

Group 1 - Inflation reached highs not seen since the early 1980s three years ago, prompting the Federal Reserve to increase the funds rate to 3.25% as part of a rapid tightening cycle [1] - The tightening cycle by the Fed is noted as one of the fastest in decades, indicating significant shifts in monetary policy [1] Group 2 - The article does not provide specific insights or analysis related to companies or industries, focusing instead on general economic conditions and monetary policy [2][3]

Investment Strategy - The company focuses on spotting high-potential winners before they break out, emphasizing asymmetric opportunities with an upside potential of 2-3 times outweighing the downside risk [1] - The investment methodology includes identifying high-conviction opportunities through leadership and management analysis, market disruption and competitive positioning, financial health and risk management, valuation, and portfolio construction [1] Leadership & Management Analysis - Proven track record in scaling businesses is essential, along with smart capital allocation and insider ownership [1] - Consistent revenue growth and credible guidance are critical factors for evaluation [1] Market Disruption & Competitive Positioning - A strong technology moat and first-mover advantage are key competitive advantages [1] - Network effects that drive exponential growth and market penetration in high-growth industries are prioritized [1] Financial Health & Risk Management - Sustainable revenue growth with efficient cash flow is a focus area [1] - Maintaining a strong balance sheet and long-term survival runway is crucial, along with avoiding excessive dilution and financial weakness [1] Valuation & Asymmetric Risk/Reward - Revenue multiples compared to peers and DCF modeling are used for valuation [1] - Institutional backing and market sentiment analysis are considered to ensure downside protection with significant upside potential [1] Portfolio Construction & Risk Control - Core positions (50-70%) are allocated to high-confidence, stable plays [1] - Growth bets (20-40%) are high-risk, high-reward opportunities, while speculative investments (5-10%) are aimed at moonshot disruptors with massive potential [1]

Investment Strategy - Generating consistent returns requires a DEI (Diversity, Equity, and Inclusion) approach to portfolio construction [1] Portfolio Allocation Examples - Hype investments may involve companies with Chinese founders [1] - Launch investments may involve companies with Jewish founders [1] - IP investments may involve companies with Korean founders [1] - BTC investments may involve companies with Indian founders [1]

Investment Strategy - Portfolio allocation: 50% stocks and 50% crypto assets [1] - Asset limit: Maximum of 10 assets in the portfolio [1] - Investment horizon: 10 years with no selling allowed until year 5 [1] - Goal: Outperform the average S&P returns by 10%+ each year [1] Asset Selection Considerations - The strategy requires careful selection of stocks and crypto assets to achieve the target outperformance [1] - The long-term investment horizon necessitates assets with strong growth potential [1] - The inability to sell assets for the first 5 years demands a focus on assets with long-term viability [1]

Portfolio Allocation Strategy - The portfolio should consist of 50% stocks and 50% crypto assets [1] - The portfolio is limited to a maximum of 10 assets [1] Investment Goal - The primary goal is to outperform the average S&P returns by 10%+ annually over the next 10 years [1] Asset Selection - The report requires the selection of specific assets (stocks and crypto) [1] - Justification for the asset selection is needed [1]

Financial Data and Key Metrics Changes - The company has a long-term view on inflation and interest rates, expecting them to remain higher for longer, which aligns with historical trends [4][5][9] - The company has $116 billion of dry powder available for investment, indicating strong capital reserves for future opportunities [7] Business Line Data and Key Metrics Changes - The private equity portfolio is marked at over 60% at more than 1.5 times the cost, while public names are marked at an average of four times the cost, reflecting strong performance [18][19] - The company has been actively exiting investments, including sales in Japan and infrastructure, contributing to a mature portfolio [19] Market Data and Key Metrics Changes - More than 70% of the company's deployment in infrastructure over the last five years has been outside the United States, showcasing a global investment strategy [34] - The company has seen a shift in investor sentiment, with a more balanced approach to global allocations, particularly towards Europe and Asia [36] Company Strategy and Development Direction - The company is focusing on building portfolios that can navigate different economic cycles, emphasizing long-term investments [15][16] - Strategic holdings have been introduced to capture lower-risk, attractive reward investments, diversifying the company's offerings [23][25] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the realization outlook, citing a strong pipeline of realizations and a disciplined investment approach [15][21] - The company does not foresee significant stress in its portfolios despite macroeconomic concerns, indicating confidence in its investment strategy [12][14] Other Important Information - The company is expanding its product offerings for high-net-worth individuals through partnerships, aiming to capture a larger share of the market [45][49] - The insurance segment is expected to see growth in earnings as the business model transitions and third-party capital is raised [92][93] Q&A Session Summary Question: What is the company's view on inflation and economic growth? - The company expects inflation and interest rates to remain higher for longer, which is consistent with historical trends [4][5] Question: How is the company managing its portfolio amidst macroeconomic concerns? - The company has not seen significant stress in its portfolios and feels confident due to its portfolio construction and historical experience with economic cycles [12][14] Question: What is the outlook for the company's strategic holdings? - The strategic holdings segment is designed to capture lower-risk investments with attractive returns, and the company is optimistic about its growth potential [23][25] Question: How is the company addressing client demand for alternative products? - The company is seeing significant adoption of its alternative products and is expanding its offerings to cater to high-net-worth individuals [38][45] Question: What is the company's strategy regarding direct lending and asset-based finance? - The company is actively involved in both direct lending and asset-based finance, with a focus on scaling third-party business alongside its own insurance growth [76][80]