The Bitcoiners Won (EP.386)

Episode Summary

Executive Summary: The episode centered on post-election hindsight bias, arguing that voter anger over inflation, incumbency, and perceived disingenuous economic narratives explained the result more than any single campaign tactic. The hosts then shifted to market implications: a strong risk-on rally, tight credit spreads, Bitcoin’s explosive adoption, and potential regime changes in stocks, bonds, and small caps. They also covered ETF innovation, housing, private credit, and some lighter culture/media recommendations.

Main Topics: Election hindsight bias and the real reasons voters rejected incumbents (Priority: 5/5): The hosts argued that post-election narratives are being rewritten after the fact, when the more important takeaway is that voters had been unhappy for years about inflation, cost of living, and messaging that felt incomplete or misleading. Global anti-incumbent vote and inflation backlash (Priority: 5/5): They discussed a chart showing governing parties across developed countries losing voter share, framing the election as part of a global pattern where incumbents got blamed for inflation and economic pain. Economic messaging failures by Democrats (Priority: 5/5): They criticized the Biden/Harris team and some economists for failing to clearly claim achievements like labor strength, wage gains, and a soft landing, while also overemphasizing unpopular policies and avoiding victory laps. Risk-on market rally and valuation concerns (Priority: 4/5): The conversation moved to the powerful rally in equities, especially small caps, value, and ETF inflows, while noting that valuations and credit spreads are stretched and that future returns may be more muted. Bitcoin’s adoption and changing investor attitudes (Priority: 4/5): They treated Bitcoin’s rise as validation of the long-term adoption thesis, discussed Saylor’s aggressive buying, and noted that institutions and even policymakers now treat crypto seriously. ETF and financial product innovation (Priority: 3/5): The hosts highlighted new tools for investors, especially a mechanism for seeding ETFs with appreciated securities to diversify without immediately triggering a tax bill. Housing, private credit, and consumer behavior (Priority: 3/5): They briefly covered a low-cost home community, a private credit index, Zillow’s rental focus, and a DoorDash pricing issue as examples of evolving consumer and investment markets.

Key Arguments: Voters did not suddenly become unhappy; dissatisfaction with the economy had been visible for years, and the election outcome simply reflected that reality. The biggest error was not economic performance but economic framing: many people felt they were being told inflation was transitory, harmless, or outweighed by wage gains. Incumbent blame for inflation was global, not just U.S.-specific, which helps explain why multiple governing parties lost voter share in developed countries. The Democratic campaign and Treasury leadership failed to publicly claim real achievements such as labor force participation, manufacturing reshoring, and a soft landing. The market has entered a powerful risk-on phase, but high valuations and very tight spreads mean some asset classes may have limited room left without a new growth catalyst. Bitcoin’s thesis was never about near-term utility claims; it was about adoption, scarcity, and market belief, and that thesis has now been validated by institutions and price action. The next macro regime may differ from the post-COVID period because policymakers and voters may be less willing to accept recessionary stimulus after the inflation experience. ETF and tax-optimization innovation is creating practical solutions for concentrated stockholders who want diversification without an immediate tax hit.

Data Points: Median age of podcast listeners: 35 years old - Referenced from Scott Galloway’s chart comparing podcast audiences with older legacy media audiences. Voter enthusiasm for the U.S. economy: 7% enthusiastic - CNN exit polling cited by the hosts. Voter dissatisfaction with the economy: 43% dissatisfied - CNN exit polling cited by the hosts. Voter anger about the economy: 29% angry - CNN exit polling cited by the hosts. Voters rating the economy as not so good/poor: 67% - Jeff Stein’s tweet highlighting persistent economic pessimism despite strong macro data. S&P 500 year-to-date gain: over 27% - Market performance through Friday in the week of the episode. Frequency of 30%+ annual S&P 500 returns: 18 of the past 96 years - Historical context for the strength of the current rally. S&P 500 all-time highs this year: 7th most in a calendar year - Cited from Sam Ro / market chart discussion. Top 10 S&P 500 average P/E: almost 50 - Torsten Slok chart showing concentration and high valuations among mega-cap leaders. Top 4 S&P 500 average P/E: 40 - Same valuation discussion. S&P 500 average P/E: 26 - Same valuation discussion. Cash flowing into ETFs: about $12 billion/day - Referenced via Dave Nadig/Ben Johnson-style ETF flow commentary from the prior week. Normal ETF daily flows: $3 to $4 billion/day - Used as comparison against current risk-on flows. Bitcoin price: $82,000 - Discussion of crypto’s surge during the post-election rally. MicroStrategy/Strategy Bitcoin purchases: 27,000 BTC for $2 billion - Michael Saylor’s reported purchases between Oct. 31 and Nov. 10. Average Bitcoin purchase price: $74,000 - Same Saylor purchase update. Strategy Bitcoin holdings value: $12 billion - Approximate current value mentioned in the discussion. IBIT vs. gold ETF AUM: Bitcoin ETF surpassed gold ETF in 10 months - Nicolás or related ETF commentary comparing IBIT to IAU. IAU launch date: January 2005 - Used to emphasize how fast Bitcoin ETF assets accumulated relative to gold ETF history. Housing community home price: $163,000 - A Lennar community north of Houston. Home size: about 1,000 square feet - Same Houston housing example. Rental turnover rate: 35% to 40% - Zillow discussion on online rental listings and turnover rates. Private credit index assets: $315 billion - Cliffwater Direct Lending Index size. Private credit loan holdings: 15,000 - Cliffwater Direct Lending Index coverage. S&P 500 low in March 2020: 1,200 - Used to illustrate the magnitude of the post-pandemic market rally.

Pivotal Quotes: "The best story wins." — Michael/Ben discussion of Morgan Housel’s idea: Used to explain why the election narrative may have favored the opposition and why economic messaging mattered. "People knew these narratives were incomplete at best and wrong at worst." — Colin Roche: Critique of inflation, spending, and student-loan-forgiveness messaging that many voters rejected. "They won." — Ben Carlson: Referring to Bitcoin’s long-term adoption and the fact that crypto believers ultimately succeeded in making it a serious asset class.

Implications: Investors should separate narrative from data: political outcomes, market leadership, and asset-class trends are being driven by sentiment, not just fundamentals. The post-election regime may favor risk assets, but stretched valuations and policy uncertainty argue for discipline and diversification.