Macro

Episode 72: Investing in Esoteric Alternative Investments with Wyatt Cavalier

Ben Lakoff, CFA
May 30, 2022
51
 MIN
Listen to this episode on your favorite platform!

Today's interview is with Wyatt Cavalier on all things Alternative Assets.

If you’ve listened to this podcast much, you’ve realized that “Alternative” Investments likely deserve a spot in many if not all investors’ portfolios.

Wyatt runs http://alts.co and they’ve recently launched a fund dedicated to sniffing out these alternative investments. I love alternative investments. Collectibles, Crypto, Wine / Whiskey, Art, Sneakers, Music Rights... There’s a lot of capital sloshing around these alternatives and I just love digging into them - and this conversation with Wyatt does just that.

Enjoy this conversation with Wyatt on the current state of the Alternative Asset market (outside of just crypto!).

Listen on your Platform of choice:

Check out https://anchor.fm/investinalts for all the listening options (Spotify, Apple, etc.)

Show Notes

0:00:00 Welcome and context

0:00:17 What is your background?

0:05:00 What are alternative assets?

0:08:45 What portfolio percentage can be pointed to alt assets?

0:10:05 What are the best resources for alt assets?

0:13:51 Investing in collectibles

0:15:30 What would you change to allow greater access to alt assets?

0:17:25 What are your concerns with alt assets?

0:22:00 What is the Alts One Fund?

0:27:45 How do you manage and liquidate action figures?

0:32:10 Investment risks with collectibles

0:35:01 Popularity of collectibles

0:39:30 How do you see NFTs interacting with collectibles?

0:42:10 What alt asset class you are most bullish on?

0:44:41 What is the most overhyped alt asset class?

0:47:51 Your thoughts on US residential real estate

0:50:51 Where can people find out more about you?

Show Links

alts.co

Wyatt on Twitter

Alts on Twitter

Helpful other Alt Asset Articles

Episode Transcript

[00:00:00] Ben: Welcome to the alt asset allocationpodcast, exploring alternative investment opportunities available to theeveryday investor. Here's your host Ben Lakoff!

Hello and welcome to the Alt asset allocation podcast. Today'sinterview is with Wyatt cavalier on all things, alternative assets. If you'velistened to this podcast much, you've really.

Alternative investments likely deserve a spot in nearly allinvestors portfolios, Wyatt runs alt.co, and they've recently launched a funddedicated to sniffing out these alternative investments. I obviously lovealternative investments, collectibles, crypto wine whiskey, art sneakers, musicrights. There's a lot of capital sloshing around these alternatives and I justlove digging into them and this conversation with why it does just that beforeyou listened, please don't forget to like, or subscribe to the podcast or evenbetter leave a review.

If you're watching this on YouTube, give it up. Maybe asubscribe, share it with a friend, all of these things help spread the wordabout the channel. I really, really appreciate it. Enjoy this conversation withWyatt on the current state of the alternative asset market, outside of justcrypto. Enjoy

Wyatt welcome to the all to asset allocation podcast. Excitedto have you on today.

[00:01:26] Wyatt: Happy to be here. Thank you.

[00:01:29] Ben: Yeah. One big fan of your URL, alts.co,very nicely done but also massive fan of alternative assets overall. Veryexcited to get into all things, alternative assets, but to start off, let's goa little bit intro on to you.

And what led you to getting involved with alternativeinvestments?

[00:01:52] Wyatt: Yeah, I think like a lot of folks in thisspace I've come from a pretty. Varied background. And no one has really been inthe space for more than a couple of years as anything more than sort of like ahobby, because it's so new that there are people who've been, you know, coincollecting for 40 years or whatever it is.

But in terms of treating this as an institutional investmentsort of opportunity, it's pretty new. My background is Oh, just the army forawhile. I did intelligence and analysis for awhile, sort of with the governmentand I'd ignore me, officer. I've done banking and finance. I was anentrepreneur for nine or 10 years.

I sold fair trade coffee to offices and cafes most recently.And that of course. Good the way. Well with COVID. So come and gave me theblessing of an opportunity to spend 18 months or so without very much to do youguys, obviously like all the offices were closed and cafes are closed andthat's when I dug into.

What do I think is going to make a difference in the world inthe next 30 or 40 years I've got, I'm still on the planet and how can I be apart of that and closing the wealth and income gaps.

Sort of point out to me as something that's more and moreimportant. And even like wherever you are on in Commonwealth spectrum, it'simportant to close the gap because if, if you're a rich guy, but you wentaround to buy your stuff, then you're going to stop being so. Obviously, ifyou're poor, that sucks.

So I started looking at that and how to sort of affect thatchange in an interesting and meaningful way. And fractional investing becamesort of really clear to me as a great way for folks to accumulate wealth in away that they'll actually do it. And most fractional investing outside ofstocks and bonds and things like that is in kind of the collectible.

While you were at scene a $5 million baseball cards went up inhalfway in shares or rare books, or even pharma and things like that. That's agreat way to begin to accumulate wealth. And then a lot of platforms out therethat made that. So that's how I kind kinda got into space.

[00:04:20] Ben: Nice. And fractionalization, I feel likeit's this big thing in crypto people act like it hasn't been done in otherasset classes before.

I've been a fan offundraise in some of these other like fractionalization of real estate or art,but good to know that it's being applied in other asset classes as well. I'mcurious when you're thinking about alternative investments for the averageinvestor.

Let's start just by defining alternative assets in your mind.

[00:04:54] Wyatt: So I think it's anything that is out.So alternative is whatever's outside the scope of what most people think of.And most people think of Brooks, first stocks and bonds, and then they're a bitmore adventurous or wealthy or whatever it is.

Yeah, hedge funds or venture capital, maybe even a gold orthey've dipped their toes into crypto and things like that. And so we're whereeverything is kind of beyond that. So whether it's things like sports cards,comic books, video games signed bits of Apollo 11. A collectible toys, actionfigures you know, 70 at star wars stuff, all the way to art, to vacationrentals, music, royalties, wine whiskey, sneakers, there are books and all thatkind of stuff is what falls into sort of our purview.

Most of it is non-cash generating. So unlike a company or avacation home, and most of this stuff, isn't going to throw off cash. It's morebased on. Accumulation and appreciation, although you can try to throw, putsome cash behind some of it so that the music royalties for the space isfalling is.

[00:06:14] Ben: Gotcha. And I mean, how do you, how doyou think about just easy money pumped into the system, kind of a rising tidelifts, all boats, perhaps these things are just Pumped inflated assets becauseof the easy monetary policies that we've had, liquidity premiums. How do you,how do you think through this sort of thing when thinking about these differentasset classes?

[00:06:41] Wyatt: So I think that a bit in the same waythat I think about like solar subsidies. So, you know, solar is the wayforward. It's important. It's only going to. Happen or only has happened incountries where it's been subsidized. And by the time you subsidize it enough,the, you know, the thing gets cheap enough and it's a bit of a flywheel.

So this space has been a bit like that where the COVID stimuluschecks came in in 2020, people were sat around, didn't have a great deal to do.They started buying baseball cards or shares of, you know, the us constitutionor whatever it is. And what that's done is yeah, there's a bit of, lots ofmoney being pumped in that wouldn't otherwise be there, but it also has servedto normalize the space a bit and made it a bit more tangible and less thescary.

So like most folks there, their investment portfolio should beanywhere from like five to 15% alternative assets. And whether you want to callthat. Hedge funds or wine or rare books, like it should be something in thosespaces and, you know, the media and allocation to all it's. So now it's still,you know, basically a zero.

So yeah, it was a bit unnatural, but I think it's been a goodthing. And you know, anything that gets more eyeballs in this space is good andit's, there's still literally trillions of dollars left that can flow into thespace before. Oversaturated from a, an allocation point of view.

[00:08:19] Ben: Yeah. So five to 15% is kind of like agood thumb in the wind estimated allocation to alternatives.

Does that include things like gold or real estate, or you'resaying like collectibles and, and needs more like isoteric co alternative.

[00:08:38] Wyatt: Yeah. I mean, I, I personally, like Ikind of hit gold, but yeah, anything that's not correlated to the broadermarkets, so it could be any of those things. It could be real estate, it couldbe art that could be, you know, buying a, a domain or a website that.

Cash. So, so the point of it is to number one, it boosts youroverall returns because this kind of stuff, at least for now is less efficient.And so the returns are better, but also by building this in your portfolio, youreduced the correlation to equities and the overall market. So. The the morediversification you have, the less correlation you've got between your assetclasses.

The more likely more likely you are to write out, do evenbetter in board.

[00:09:35] Ben: I agree with you. I oscillate betweengold as this barbaric Relic and, you know, the whole monetary system is goingto collapse. I want some of it and kind of everywhere in between, on a neardaily basis. When thinking about alternatives, I mean the average.

Consumer or the average investor, presumably getting startedand getting. Exposure to these asset classes is, is a bit of a challenge inthat. Like, you know, it's the same thing within FTS when people say, Hey, Iknow I want some NFTs, but I go to open sea and I, I get confused and I have noidea what to buy.

That's probably about the same thing. Like, okay, I want adomain. I want a collectible. I want sports, sports cars. Like the breadth ofoptions are pretty broad. How. I know that alts.co you did a lot of reviews atof a bunch of different websites. What are kind of the top websites that theaverage investor should know about to get better, more broad exposure toalternative assets?

[00:10:46] Wyatt: Yeah. You know, the best answer isours. Of course. So we, we do that's a lot, so. Sort of like long, long formstuff about different asset classes, whether it's how to invest in formula oneor investing in billboards or private islands or wine, or like any of thisstuff. So that's, that's a good start. And what we've sort of worry about a bitis that you just Google like how to invest in X, the top three results inGoogle are going to be focused, trying to sell you a course in investing orsell you something you don't want.

So.

I think I would always start with, with us, cause like I likeus and we're decent at it, I think. But you know, once you move beyond that andyou find kind of like a niche that you're into, you just gotta be reallycareful that what you're looking at it, check what their motivations are what,what they want from you.

If you're looking for asset discovery, a lot of the fractionalplatforms are a great place to start. Kind of like, I think the biggest one inthis sort of space is rally and they, they focused on all kinds of things. Theystarted out doing classic cars, but now they do, you know, sports cards tobooks, to an FTS to think they would actually bring out a the golden withdrawnthis year, which is, I guess it comes full circle, but then they're are nicheones as well.

So if you're in a sports cards, collectible and dibs, You're inthe art masterworks is great. And you know that the key with all these thingsis find your niche, find out what you're passionate about, and then try to finda way to become dispassionate when you're making the investments. But it's soeasy to say, like for me, for example, I think Cristiano Ronaldo, the soccerplayer is a horrible person, but terrible human being.

But doesn't mean, I don't think it's rookie hard is a badinvestment. You've got to be able to make that distinction. So finding someoneor finding the ability to help you put an analytic framework behind it ishelpful. And that's, that's something we do. And that's how we approach ournewsletters and in the fund we're launching as well.

And

[00:13:07] Ben: let's talk about institutional investmentor allocations to. Alternative assets and then more niche, alternative assetslike collectibles. Do you have much information on that?

[00:13:22] Wyatt: Yeah, there's not very much of that atall. So you've got great scale in the crypto space and they're, they're quitebig.

There's a company called Alex that does a fund and they musthave some institutional capital behind them. There's another alts. Calledheater Nova. And they've got some institutional money behind them. I'm sure.And then there's our fund and we've got a bit of institutional money behind us,but it's very, very early days.

And you know, the, the problem with anything like this, there'sgoing to be, you know, distribution. How do you get this kind of asset class infront of. Wealth managers, investment advisors, you know, the trading desk atGoldman or whatever it is and do it in a way that, you know, someone sees itand doesn't think they'll get fired for it basically.

Right? Like the downside of proposing new stuff is often a lot,lot bigger than the potential upside. So that's where. The stimulus checks andbringing folks into this space in a bigger way, because it can come from thebottom up there, you'll see individuals who work on those desks or work in thatspace and they'll get into it themselves and they'll realize, Hey, this isactually a legit thing.

And I can take this to my clients and, you know, they just needa platform to help deliver that. And you know, that's, that's coming intoevolving. The whole space is evolving now.

[00:14:57] Ben: Talking about access and education, ifyou could snap your fingers and, and change one thing to kind of get peopleover the line in terms of access and education to alternative investments whatwould you do and why?

[00:15:15] Wyatt: I think like any sort of emerging assetclass there's just lots of scams out there. So, you know, there's all kinds ofdisreputable people out there who are kind of preying on that lack ofeducation. And, you know, it's, it's easy, you know, you see in FTS all thetime, but even with there's a bit of a, like a mini scandal last year, aboutvideo games where one of the.

The two biggest grading bodies was alleged to have colludedwith the biggest auction house to pump and dump the entire asset class. And youknow, whether or not it's true, it doesn't look good. Right. So you're kind oflike getting the asset classes beyond. The front tier of market space intomore, well-regulated more not risk averse, which is like risk aware is onlygoing to be good for the market.

And you know, that there's, there are more returns to be madewhen you're in the frontier space. If you know what you're doing, but it's alsoeasier to get stumped. So that's where, when we've tried to help folks by.You're pointing out what we think are scams, but pointing out where we thinkthe good investments are and you were, we're not always right.

But I like to think that we've, we've helped with that. And,you know, hopefully we'll, we'll help them with the.

[00:16:42] Ben: Yeah. When, when deploying capital inalternatives, what is your biggest concern? When, when initiating thatinvestment, is it something like liquidity or is there a greater concern?

[00:16:59] Wyatt: Yeah, it depends a lot on the assetclass.

So for example, if you're deploying a million dollars us into.That's very easy, right? So you can put it in and get out in five or 10minutes. The concerns there are, you know, who's the custodian, what's thesidewall I could, you know, there's a counterparty, you're going to see thatkind of stuff. If you're looking at art, you gotta make sure it's not forgerythe The fees are quite high in a lot of these spaces are arts, a good exampleof that.

So if you're buying through an auction house, the fees are 20to 50% and that's, that's a huge factor. And so the how you source it becomesreally important. If you're looking to put that kind of money into, to rarebooks like liquidity as a huge problem, how many people out there. Can spend orwant to spend half a million dollars or a million dollars on a rare pork, themarket that doesn't really sustain that in a very liquid way.

I'm like usually sports cards where, you know, you're going totake a haircut if you'd take your Mickey mantle rookie card to, to an auction.But you know, it will be gone within a month guaranteed. So like every assetclass has different concerns and. Yeah, that's part of what we do is we look atthat. We understand that and it's you've gotta be mega aware of it.

And if you don't know what you're doing with it, then it mightbe better to sort of give you money to someone else to manage and not have toworry about it.

[00:18:30] Ben: Yeah, something within crypto we alwayshear is like about the greater fool theory is that the biggest criticism ofinvesting in some of these things is just, you know, they're not cashflowproducing. I had my CFA, I did the whole like discounted cash flows, looking atthis thing.

So it took me some time to get over the fact that. These arenot cash flow producing assets and it's a different type, but is that, is thatone of the biggest concerns for, for like new people entering into the world ofalternatives?

[00:19:03] Wyatt: Yeah. In the, I think the challengethere is discerning what's garbage and what's quality, right?

Because it's, if it's not cash flowing, then you've got tofigure out what the intrinsic value is. And. A lot of stuff. I think it'sgarbage. Right. And it won't be around in three or four or five years, andyou've got to be able to pick out what, what matters, what has relevance, whatwill care about. And, you know, find those bits because the greater fool theoryis super relevant, super correct.

In a lot of cases. And you see bubbles all over the placeagain, NBA, top shot, if that was going way up into the right, until itstopped. Right. And people realize like, oh, actually you don't care about thisvery much. Or, you know, empty projects. Yeah. How do you pick out the boardapes? The 3000 other PFP projects launching any given week, you know, same thingwith the sports card sort of hype last gen fab, March.

And you saw things that had no real rights to be worked right?Much like coverage, bell kids cards started being more thing, started to besorry to be worth, you know, mid five figures for like a nasty garbage girlcard and like, It was never worth that. But it's sort of like route along thetailwinds and discerning what is just greater full from what's legit, it's hardand it's important, you know, I want to see your whole strategy is just to likeride square for theory, to, from one thing to the next, which is I guess, alegit thing to do as well.

Yeah.

[00:20:50] Ben: Potentially it's a bit of the, when themusic's playing, you need to dance, so make sure you can grab a chair, Isuppose.

[00:20:58] Wyatt: Let's see, let's talk about it. Doeshighlight sort of like a problem though. Sorry, just before we move on an issuethat I didn't, I didn't mention before, and I don't want to go into namingnames and stuff, but you do see a lot.

In the space, whether it's crypto or NFTs or collectibles orthings like that, where an influencer gets an audience and, you know, the pumpand dump becomes real and you know, it can be horrible, right. You know, youknow, step one, build up massive audience, step two, buy loads of X product.Step three, say how awesome it is.

Step four, sell it to your own. You know, step five, take allyour money and run. Any of you see that, and it's, it's not limited to cryptoor Ft as you see it in other asset classes as well. So it, it's hard todiscern, like what, what has organic enthusiasm sometimes from what is justlike a few dudes who abandoned together to pump and dump something.

And I, I guess that that's part of what I was go back to aminute ago. When you said, like, if I can wave a magic wand, All theinstruments are doing the pumping and nothing. It's awesome. Money ruinednegative for an entire industry.

[00:22:13] Ben: Oh yeah. And there's some, there's somevery well-known people that are doing that with NFTs and collectibles that cometo mind instantly.

So I definitely know what you're talking about there, but I,you know, the thing is I put myself in their shoes and that would be really,really. Really hard to ignore, right? That you buy something for a few thousanddollars, speak about it, you know, on your show. And then suddenly that fewthousand dollars is has a couple extra zeros on it.

It, it takes a strong will to not be lured by that. I wouldimagine let's you guys recently announced a fund, so the alts one fund and Ican link a lot of these things in the show notes, but let's talk a little bitabout the investment thesis and kind of the allocations that you're looking atfor this fund.

[00:23:09] Wyatt: Yeah, for sure. As we kind of saidbefore, there's not a huge amount of institutional sort of investmentopportunities in this space. So that's kind of, one thing that we're looking todo is give institutions or people who want to invest on institutional scale,the ability to get in this space. And we're also trying to solve the discoveryproblem as well.

So, you know, there are 30 or 40 asset classes that. Relativelylike top tier with any tornadoes. There's thousands of different assets insidethere and figuring out what to invest in is tough. So we'll, can you solve thatproblem as well? But generally speaking, like what we're, what we're looking todo is give people the opportunity to invest in a very broad basket of all it's.

You know, relatively easy and, you know, risk minimized sort ofway. So if you don't really know what you're doing, but you think the ultracool. And you think that, you know, I've seen 40% annual returns for the last10 years. I want to, I want a piece of that. Then we're creating a way forfolks to do that.

And unfortunately we're limited to accredited investors. At themoment we'll be launching a fund for non-accredited investors in the sort ofreasonably near future for anyone who doesn't know, I'm accredited basicallymeans you're rich and non-accredited means you're not. So yeah, we're, we'rehoping to get access to it.

And we're super excited. We've already seen. Picking up assets.Our first one was a 1978 Kenner's star wars, Darth Vader action figure a greatexample of your things that you wished you kept from your childhood. So, you know,there's a. We paid 25,000 for, we value it at 30,000 plus thing. That's gonnahave a potential of five or 10 X the next few years, super bullish on the assetclass in general.

And the fund is all about stuff like that. Yeah, we we've gotour allocation. What up, we're looking at collectables crypto and at T iscultural stuff like. Historic items, fossils, meteorites are real estate music,wine and spirits, sneakers and books. Within each of those spaces. We've got anindividual thesis for each one and we're looking for the best opportunities topick up assets that fit all that.

Ideally you get a discount and that the fund is small enoughthat we, we can do that, right? Like if you're a, a billion dollar fund, you'vegot. To a million to, you know, asset class X, you're going to be overpayingand you're going to struggle. But if we're only, you know, five or $10 million,we can pretty easily allocate, you know, 300 K into rare books, for example,without having to make too many compromises.

[00:26:01] Ben: That's a large hurdle for aninstitutional capital. It's like, how do you, how do you deploy a hundredmillion dollars into a rare action figures? Good, good luck. Well, it's goodfor you guys because it kind of pumps a little entire industry, I would imagine,but. A few things like let's just double click on that action figure.

For instance, one, I like inherited all of these star warsaction figures from my uncle who got them as original. So I probably destroyedmany of those, like rare, super expensive collectibles as a child. Damn, and Ienjoyed the heck out of them. That's for sure. But so yeah, it does. It'stotally worth it. You get this action figure. The first thing that comes tomind or the first two things that come to mind is custodian ship. Like where doyou custody? Something like this and how do you do it? I would imagine it needsto be like temperature controlled and in some safety deposit box, but which isnot very scalable.

And then secondly, Exit strategy with something like this. Sowhat, what sort of, sort of period of time are you looking to hold it for? Doyou have a target price? Or how do you think through that?

[00:27:21] Wyatt: Yeah, so the, the custody stuff,there's one of those foreign, but really important factors you've got toconsider and it's different for every asset class.

So, yeah, that's one of the main reasons we're not touching,you know, for example, classic. Even though they're a really popular Mozart inthe asset class and people love them. Like, I don't want to deal with storinglike a 65 Mustang or whatever. Right. Like I just don't have the mental,emotional, or, you know, physical bandwidth to deal with that kind of stuff.

So we, we definitely factor in how we're going to store stuffand ensure it. And the. One of the benefits of the sort of Cambridge andexplosion in this space has been that the picks and shovels industries havedeveloped alongside it. So there are 3, 4, 5, 6 different vaulting services,basically, where you can send your 52 mantle rookie card or 78 Kenner DarthVader, and they'll store it in.

Give you access to it when you want it. And they'll chargemaybe a couple hundred dollars a year or like a 1% fee or things like that. Andthey're strategically located and sales tax free states. So you have to paysales tax when you get it shipped there. So there's a whole little cottageindustry around it, which is, which is handy.

Yeah, the, the exit is, it's a great question. And again, itdepends a lot on the asset class. So, for example, if we're looking to investin cask whiskey, which is, you know, distillery, distillers, bunch of whiskey,you put it in the giant barrels, which are called casks. What they want to ageit for 30 years.

Then a lot of times they'll sell those casks straight awaybecause they needed the money because they can't wait 30 years for the cash. Soan investor like us comes and buys them. They appreciate, you know, 10 or 15% ayear, and then say eight years down the line, we sell it to someone else whopicks it from your, you know, the last 22 years or whatever it is.

And that's pretty straightforward. Things like the actionfigure we bought. So we're super bullish on the space. We don't think we'll beselling for the next couple of years, at least. I. Action figures have got fiveextra 10 necks to run. So yeah, we, I'm not saying we wouldn't sell for price,but we were gonna be waiting quite a long time when it does come time to sellthe best option is always going to be find a private.

Who kind of just happens to find you or through your network.Second best is some sort of a, like a broker and then increasing along theexponential fees curve. The last option is auctions. You know, broker charged10% auction houses charged 20 to 40%. So you always want to try to find aprivate, private buyer if you can, but you know, auction houses exist forever.

They find the buyers for you, man.

[00:30:24] Ben: I had no idea those fees were that high.Yeah, private buyers, that stuff that's going to be extremely attractive. Whatwith collectibles, I mean, this is, this is an asset class that I've kind ofseen come and with COVID and. Made me wish I kept all of my baseball cards andthings like that.

But what are, what are some existential risks to that assetclass overall?

[00:30:55] Wyatt: The, I think the biggest risk is, youknow, think about, you can think about quotable as the same way you think ofFiat currency to some degree, right? It's, it's worth something. As long aseveryone believes it's worth something. The the biggest risk with all thesethings is going to be people doing pumps and dumps influencers, trying to makea quick dollar different folks, colluding to scam people some way or another,and all of these in aggregate conspire to road conference and the industry.

And if that does create opportunities sometimes. So forexample, with video games, I was mentioning a little while before. Kind of 60%,70% haircut in the months that followed those allegations coming out. And evenif you think the prices weren't flooded with all the pumping and dumpingallegedly was going on, you know, taking a haircut of two thirds is probably apretty good buying opportunity, but the risk is it never comes back.

Right. You know, that people would say, oh yeah, video games,scams don't want wanna I don't see that happening. On an industry-wide scaleunless just like literally everything has its own some scams or something likethat. It it's unlikely that what happened with, with video games will affectcoin collecting, for example So I can't actually ask this question a lot.

When we have phone calls with investors, for the fondant peopleasking you what's the bare case would cause these things to go to zero. And Iguess the answer is people turn into robots and stop caring about nostalgia andstop caring about, you know, going to sports games and things like that. But Idon't see that ever really happening.

I can't think of a good, everything goes to zero barricades forthis.

[00:32:45] Ben: Well, I can, but it's more of a. Youknow, pitchforks and torches go to zero with a lot of other asset classes aswell. Not many would do you much good in those situations? Are there anyexamples throughout like, like looking back at history, you know, mark Twainhistory doesn't repeat, but it rhymes, but thinking about.

Asset classes that, and you know, you don't have to talk abouttulips. I think that one's been beat to death, but thinking about asset classesthat were once a Berry like the, the, the Juul of the time that are no longer,you know, we look back now and it was like, oh, that was such a silly thing forpeople to invest in.

And is there anything throughout history that. Bumps into yourmind that we could perhaps learn about and apply towards some of theseinvestment trends that are happening today.

[00:33:40] Wyatt: Yeah. I think there's a great exampleof that. And it goes back to what you were saying a minute ago about likewishing you kept all your baseball cards and stuff.

So in the late nineties or late eighties, early nineties wasthe junk lax era for sports. Which is baseball cards got really popular ToppsDonruss where all of them saw that popularity and then printed 300 times morecarbs than they probably should have. And because of that, everything, eventoday, everything from that era is basically worthless.

There was just so much of it. Like not worth the paper. It was,it was written on. And I see parallels to modern cards today. Not necessarilyso much with so much being printed, but more with how much stuff is gettingwhat's called slabbed and slapped me to send it off to the grading authority tosay, this is a 1, 2, 3, 4, 5 up to 10 card.

And they put a bit of plastic covering and people are callingthat the, are we in the junk slabbing era, which is people. Started likingsports cards again and injuring COVID a little bit, but before the mostvaluable versions, those are things that have been graded and authenticated,and now everyone's sending everything off to be great and authentic.

And we've seen a bit of it already, but then you see, you know,rookie cards for, you know, prominent basketball players or baseball players orwhoever it is. And there's like 15 or 20,000 of these that been sent off to.PSA or BGS and have got perfect scores. And you know, it's, it's not worthanything anymore.

It's not the same thing. As, you know, a 52 mantle or a 1980scoring leaders, Irving and burden and Johnson conduct the scarcity nowadays isartificial. Like everyone's got the perfect version of it. So I think we'regoing to see a similar glut in the future. With sports cards, you know, today'ssports cards to what we had in the nineties.

And you do see that asset class it's kind of rhyme over time.You, you can pick up on what makes asset class a work and then apply it toasset class B. And you can see the, you can see the trends and you can see thepatterns and, you know, it's part of why running a fund. Of 30 odd assetclasses. Isn't quite as overwhelming as it sounds at first sort of blushbecause there are so many similarities between them and you can spot thesentiment.

You can spot when something is running out of steam or when,when it's picking up steam or whatever it is. And usually the. The main factorof anything going into a bear market or whatever it is it's somehow associatedwith greed. Whether it's pumping and dumping or collusion or, you know, sportscars, companies making too much of whatever they've got.

It's when, when someone spots opportunity to make money, ifthey exploits it and that kind of ruins it for everyone.

[00:36:57] Ben: I'm just thinking, listening this. Whatdo you think about NFTs? Just eating into the collectibles market. I mean, Istarted thinking like Bitcoin, which is, you know, air quote, digital goldeating into the gold market, or even me personally, I lived out of a suitcaseout of a carry on suitcase for four years.

Loved collectibles and culture, but like digital works betterfor me. It's the same way. The reason why I travel with my Kindle, I have ahundred bucks as opposed to lugging around a bunch of physical books. So doyou, how do you see NFTs interacting with the collectibles market overall andthis, this idea of digital provably scarce, digital collectibles versus

[00:37:42] Wyatt: Yeah, I think so part of it is we're ina rising tide lifts, all boats sort of scenario now where the more stuff likethis that we have out there, the more legitimate it gets, the more money, 4%.So either the pie keeps getting bigger. So it doesn't matter as much like howbig each individual slice is. I think it's also a slightly generational thing.

So. People who live their lives on the line. People who thinkthere'll be a metaverse that comprises a significant amount of our day to dayroutines in the near future. They're more likely to be on the FTE side ofthings. Whereas people move it a bit. You know, the, the Woodstock era, thatkind of stuff, they're going to be more in the physical.

So I think there definitely is a

But the opportunity for them to sort of be a zero sum to somedegree, but I don't think it's huge. And you do see a bit of crossover as well.So, you know, dips is a mostly sports card fractional marketplace. And whatthey've done is create a F T is for all the assets, Brooklyn up in the shards,and then people could buy the Tia that gives them a share of a physical asset.

So you do see blending happening a bit like that. And are thereother sort of more creative ways as well? Or I don't know, maybe less creative,but yeah, I was mentioning the bolts before about where people store theirsports cards and Darth Vader's and all the rest of it. And you can buy. A cardnow on eBay.

And to have it sent directly to their vault where you don'thave to ever have to deal with shipping or receiving or taking ownership oranything of the actual item. So if you don't care about having the physicalthing in your hand, you don't need to deal with it. And, you know, for, youknow, for investing, for example, that makes it a lot easier.

You don't need to deal with all that stuff. You can. Yeah,move, move bits across from your camp, someone else's account and then movethem back when you want to sell it. So I don't necessarily think it's an eitheror, but there's a lot of opportunities in the, in the both space as well.

[00:39:53] Ben: Yeah, that makes sense.

And a lot of these asset classes will continue to converge andkind of evolve into something closer to each other. What is your, so you havethis rare. Eagle eye view of all of these different alternative investments. Solet's start off with the most bullish, alternative asset segment for the nextfive years in your eyes.

[00:40:23] Wyatt: Well, it's, it's in the things thatpeople haven't discovered yet. And that's what we're obviously focusing onwith, with our fund. The next, the next, next, right. And again, that's wherehaving the, the 20,000 foot view and seeing what happens in one asset class andapplying it to the next one. So I'm super bullish, for example, on the musicindustry, not necessarily like royalties and GS and stuff, but in vintagevinyl, vintage concert posters, that kind of.

Yes. It pulls on all the same strings, that sports cards oranything like that pulls on, but it's just not been looked at so much yet. AndI think there's actually a strong case that people have, you know, theWoodstock sort of generation will care a heck of a lot more about that. And asthey get older, reliving, the youth have been, oh, I can get this poster from,you know, 66 grateful dead at the Avalon ballroom.

And I was there. I remember it that's worth a lot to me. LikeI'm a rich guy now, so we're super bullish on those spaces. I mentioned beforeloving the quotable toys, like actually bigger space as well. Really bullishthere. Whiskey has a lot to offer still. But even maybe more is like, what'sthe next whiskey?

So we're looking at. In that space. So, you know, a lot of itis taking what what's popular now and was popular the last two or three yearsand being able to figure out what's next. And that's where like all of our dataanalysis comes in and all the sort of on the ground, scraping of auctioncatalogs and, and all the rest of it.

It's going to help.

[00:42:06] Ben: Yeah. Good answer. And then what aboutthe most over-hyped alternative asset segment right now?

[00:42:18] Wyatt: Over-hyped I'm Fitz how ulcerative youwant to get, like I'm a mega worried for us residential market. For example,it's not very ulcerative, but you know, a lot of leading indicators that thereis going to be a bit of a, a bubble popping that are potentially but on the, onthe more. Oh, so things ticket stubs have become a big thing in the last fouror five, six months.

And it's, it's one of those things that hasn't grown, theenthusiasm hasn't grown organically. It's grown because it feels like a few peoplehave decided they're a big thing. So they're making a big thing and. It's beingpushed as like the best of both worlds between sports cards and memorabilia.You know, it's looks like a sports car, but it's got all the game authenticityof, you know, assigned Jersey or something like that.

And it's, it's one of those things where if you do this longenough, you can feel when something feels a bit off. And that just feels a bitoff to me.

[00:43:25] Ben: Man ticket stubs. No idea. I I workedfrom my parents' house, a lab last year, sometime. And. The, the office,whereas set up, it had my dad's all of his ticket stubs from his childhood.

And along with like vinyl records up on the wall and, you know,there was a certain age category of people that would see that background andjust go bananas. And so I think he's got a goldmine behind that office downthere. That's for sure.

[00:43:56] Wyatt: So that's the thing was tickets they'relike so much of the value of a ticket stub is your memory of being at thatevent.

Right. It's much more about it. It reminds you of being therein a way that is unique to that asset class. And I don't think translates wellto selling to somebody else. It's like, if you know, babe Ruth. Maybe not beagreed. Let's say Mike trout signed a baseball to you to, to Ben. You'reawesome. Love Mike trout.

Like that's worth so much more to you than it would be to me. Ithink ticket stubs are kind of the same way.

[00:44:43] Ben: Yeah, I agree. I mean, it makes me thinkin the crypto space of collapse, right? It's a bit of a solution looking for aproblem maybe, but it's essentially a proof of attendance. A ticket stub, butprovable on the blockchain that you were there at that point. Yeah. Pretty coolthat that could be like in 10 years, the next like massive bubble let's let'stalk briefly on us residential real estate.

I've seen you write about this before, but I'm out inCalifornia right now. And you know, people are buying things at $2,000 a squarefoot, and I've been unsuccessfully buying real estate in Portugal for some timenow. A hundred to $300 a square foot. A 10th of the price talk about some ofthe leading indicators or kind of reasons why that us residential real estatemarket scares you.

[00:45:40] Wyatt: Yeah. And this is so I, I lived throughoh eight know I had the misfortune of going to business school from 2007, 2009.So I graduated like the worst. In history of graduating from business.

[00:45:53] Ben: So graduated with finance too, but fromundergrad. Yeah, not good.

[00:46:01] Wyatt: So like what, like my biases out thereyou know, out on the table there, but yeah, you see things like, so interestrates are coming up.

They have to come up to combat. You're seeing it alreadyhappened with 30 year mortgages. You're looking at the, you know, mortgagedivided by rent ratios and in a lot of markets. And they're just, you know, theway they're as high as they've been since 2007 sort of thing, you're, you'rereading and hearing all the same kind of things that I was reading and hearingwhen I was trying to buy a house or in Washington, DC in 2006, 2007, which is,you know, We have an open house, 20 people signed up.

So by the end of the day, with 15 competing offers, like it'sall the same stuff. And in the same way that I can recognize, I, I feel liketicket stubs are a, a bad idea. Hey, you just, you hear enough, you experiencedenough and in your spidey sense tells you something isn't quite right. This,this can't sustain itself.

People just literally can't afford it. You know, inflation'sgoing up. Wages are not going up to keep pace. Mortgages are going uprelatively because of interest rates, but they're also going up. Absolutelybecause the housing prices are so much higher relative to what rent is and, youknow, something has got to give, like, I don't think there's a mortgage back,like derivative situation.

In in the background somewhere, it's just much more structuraland fundamental a bit like this. Something's got to give and you know, peoplecan't afford this stuff.

[00:47:42] Ben: Yeah, I agree. It is it is crazy. Well, Yit was great having you on today being aware of time here. So where can peoplefind out more about you or alts or where would you like to send them?

[00:47:58] Wyatt: Yeah, go to all step copes, sign up forthe newsletters, have a look at the fun perspective. It's there to download.

If you're, if you think that, you know, by sounds smart and youlike it, we're like what we're doing. I'm on Twitter a little bit as well. It'smostly just shitposting but you know, feel free to give me follow hash it'squiet. I'm around. I love hearing from folks and always looking for new ideas.

Okay.

[00:48:25] Ben: Really appreciate it. Quiet. There yougo. First off. Thank you very much for listening all the way through. I hopeyou got a lot of value out of that conversation as always. You can find shownotes, links, and [email protected] Please share this with anyoneyou think might be interested in derive any value from this conversation.

And as always, you can reach out to me for any feedback orquestions. Please give the video a like, or even better subscribe on YouTube oryour podcast player of choice. This really helps others find the podcast or thevideo as well. Thanks a lot. Hope everybody has a fantastic day and stay safeout there and invest wisely.

Ben Lakoff is an entrepreneur and finance professional. He has developed strong global finance experience through 10 years of international assignments in the US, Brazil, Afghanistan, Southeast Asia, Czech Republic and through the award of his Chartered Financial Analyst (CFA) certification.