Titans of Finance – Raoul Pal on Bitcoin & Macro Investing

October 28, 2020

There’s a lot of scuttlebutt about Bitcoin these days. Perhaps its most prominent proponent is former Goldman Sachs executive and RealVision founder, Raoul Pal.

I’ve been eager to have Raoul on the podcast to discuss his vision for Bitcoin because he’s not a tech or diehard Bitcoin person – instead, he comes from the world of finance and has a more objective and surgical thesis on Bitcoin, which he believes is the best asset to come along in generations.

We also discuss RealVision’s macro lens on the world and markets and how it’s democratizing the very best financial information. We dissect the show Billions, assess a contrarian view he holds (spoiler alert: inflation is never coming back), why he left London and got out of the rat race (a.k.a. “lifestyle arbitrage")...and a whole lot more.

As a fun fact: Raoul now lives directly on the beach in Little Cayman and runs his businesses from there.

You can learn more about RealVision at this link. They have a 30-day trial of RealVision Essential for just one buck. I'm a RealVision Pro member and love it.

Raoul's Bio: Former hedge fund manager who retired at 36, Raoul Pal is a co-founder of Real Vision, a financial media company offering in-depth video interviews and research publications from the world’s best investors. He has run a successful global macro hedge fund, co-managed Goldman Sachs’ hedge fund sales business in Equities and Equity Derivatives in Europe, and helped design the BBC TV program Million Dollar Traders, training participants in investment and risk management strategy. Raoul retired from managing client money and now lives in the Cayman Islands, from where he manages Real Vision and writes for The Global Macro Investor, a highly regarded original research service for hedge funds, family offices, sovereign wealth funds, and other elite investors.

1:00
Raoul left Goldman Sachs as co-head of global hedge fund business because volatility profile of hedge funds was changing from performance-based to asset gathering; wasn’t appealing to him; Moved to GLG and ran their hedge fund business. Then moved to the coast of Spain to get out of the rat race

2:45
Launched his first business, Global Macro Investor; mainly for institutional investors and family office; all of. the insiders knew that the 2008 crisis was coming but the little guy didn’t; this was the reason for creating his second business, RealVision. RV democratizes the very best financial information

5:10
Video on demand made a ton of sense to him for RealVision as the medium for people to learn and exchange views; the 'hive' mind is more powerful than an individual;

7:35
How Raoul thinks about distilling down information for people who are at different parts of the learning cycle; firstly, must find the right communicators / guests, topic and thematic that matters…RV is creating tools for people to find their feet. We’re all on a knowledge journey; everybody needs macro thinking in their life because we live in a macro world (i.e.cost of food and so on is driven by macro thinking)

10:45
How Raoul's non-traditional lifestyle has informed his world view and vice versa; he's comfortable living in both worlds; as a macro guy Raoul lives in the future. He's not a financial guru, but certain things he knows and has learned over time; he moved to Cayman Islands because he realized the Euro was going to fall; currency trends last ten years so he was ‘in his lifestyle trade’ by moving. there; building a business in cayman is great and he realized other would do it, too

15:06
Why Raoul is bullish on Bitcoin; In 2012 he knew that even more debt and the inflation/deflation mess would be an outcome of the next recession (this one); to be outside of the banking system is a good option; he got out of BTC in 2017 and it was off his radar screen; was focused on other areas; his friend Dan Tapiero told him in 2017 to look at Bitcoin again; sea change with central banks and tokenization…Bitcoin is the queen of the empire as the pristine reserve asset

20:02
He views bitcoin far and away as the dominant player; been tested and tested as a reserve asset; Ethereum and perhaps several others will create the ecosystem; Ethereum is a call option on a whole different aspect of crypto - its not a store of value.

21:50
What institutions are getting wrong about Bitcoin is coming up with a vernacular; many of the individual bankers are trading it already in their personal accounts; custody and defining the asset will take time for institutions; false narratives around it being only for criminals and so on; we’re so used to centralization but this is de-centralized with everyone on the public chain.

"The wall of money is coming"

24:55
There will be a bitcoin ETF; custody is solved and prime brokerage too; with individuals depends on your income and risk profile in terms of sizing your profile

27:30
Charlie Munger and Raoul’s thoughts on the pursuit of wealth and wisdom; money is "lifestyle tokens" for him - he puts lifestyle above all else; doest want to work more to earn more so you can have a pile of money at 70 yrs old; the lifestyle you can have is the asset – it comes with intelligent choices you don't need a ton of money; this is lifestyle arbitrage; also includes the people you spend time with.

30:08
Who are Raoul's go-to wise men/women? He tends to figure stuff out himself rather than look to other people for resources; Dan Tapiero is one individual who he talks with to kick around ideas

31:38 his view on the show Billions; some of it is accurate but not ruthless pursuit of success and arrogance; many of the wealthiest folks are humble; operation set up of hedge fund with big swinging dick boss is real.

33:15 What’s on Raoul’s browser? Twitter, LinkedIn, RealVision, FT; Also loves Sonos, Netflix, AppleTV, Evernote, TripIt is his favorite app. Likes to snorkel, walk his dogs in nature

35:00
What's a contrition view that Raoul holds which he is 100% convinced is true? He doesn’t think inflation is ever coming back; every time somebody tries to raise wages, technology solves it; the big inflation in the 70s is non-repeatable; we'll see shrinking population; technology is the overwhelming dominant force; wages have been deflating more than prices have deflated; world has gone for hundreds of years without inflation.