BlackRock’s Bitcoin ETF, Elon vs. Zuck Cage Match, & SCOTUS To Consider Wealth Tax

As BlackRock files for a new Bitcoin ETF, the cryptocurrency hits a 12-month high.

Plus: a potential wealth tax heads to the Supreme Court, and Elon Musk and Mark Zuckerberg may be headed to the cage.

Watch On YouTube

Episode Links

About The WealthChannel Podcast

On The WealthChannel Podcast, we unlock the world of wealth, money, and finance. Hosts Jimmy Atkinson and Andy Hagans deliver unfiltered views on the most important news that investors need to know right now.

Listen Now

Show Transcript

Jimmy: Welcome to The WealthChannel Podcast, the show where we explore the world of wealth, money, and finance. He’s Andy Hagans. I’m Jimmy Atkinson.

On today’s episode, BlackRock files for a new Bitcoin ETF, Elon and Zuck may be headed to the cage, and the wealth tax goes to the Supreme Court.

But first, Andy, how’s the mouse situation?

Andy: Well, I have a big update. I mean, it’s been a dramatic week in the Hagen’s household. So I don’t know if you know the whole backstory, Jimmy, with the mouse. So this was almost a week ago, okay? This was like maybe last Wednesday. My wife’s getting into the van. The kids are loading in. They got somewhere to go. They have to like some camp, day camp or something. They’re in a hurry, right? And one of my kids spots a mouse darting around in the van. And so…

Uh, my wife, she freaks out, right? But she’s like, well, we got to go. We got to be at this camp. So she has to drive there with the mouse in the van. And, and the backstory is, look, I don’t let kids have any food in my car. Like they don’t even ask. They just like, no, no food in dad’s car. But my wife, she’s like, Hey, whatever. Like, which I, you know, to be fair, she carts the kids around a lot. So you’re going to need a bag of Cheerios here and there, whatever.

So there, I think there’s lots of food. You know, in the nooks and crannies in the van. And I think the mouse, you know, he knows what’s up. This is a lunch buffet situation. So we’ve been all week, you know, we’ve been putting traps in the van at night. And then in the morning, we got to go out, take them out, you know, before the kids get in the car. There were like three nights in a row, we didn’t catch anything. And finally, two days ago, we got them, right Nick?

Jimmy: Oh, you got him. Nice.

Andy: Of course. Yeah. Well, as, as we told my daughter, you know, we caught them and I drove them out, I drove him out to the country and I released him in a nice field so he can, well, we got one, but it’s like, maybe there were two, you know, so we’re going to keep the whole apparatus going for another couple of days here. She wants, I think she said she wants five mouse free days before she thinks, all right, we’re in the clear. There’s no mouse.

Jimmy: Well, you know what they say about mice where there’s one there’s many I think is the old expression. I was off to share that story with my sister-in-law. She has a she has a van full of french fries most of the time. So I’m sure she’ll appreciate that story.

Well with that, Andy, why don’t we move into the meat of our discussion today? Our three stories we’re going to be covering. Let’s head to story number one here. This one comes to us from Morningstar. This is actually picked up by multiple news organizations. But the headline for Morningstar is what does Black Rocks Bitcoin ETF mean for crypto?

So BlackRock filed for a Bitcoin exchange traded fund on June 15th. And since then, Bitcoin’s been up, up Andy. Bitcoin is now up 20% just in the last 10 or so days since this news was released, it reached $30,000 for the first time in over a year. It’s still off its all time high of $67,000, which was set in November, 2021, but it’s climbed back quite a bit.

The largest Bitcoin offering currently in the United States is the Grayscale Bitcoin Trust, ticker symbol GBTC. It’s Bitcoin without the hassles, kinda. It operates actually more like a closed end fund rather than an ETF. And investors face huge premiums and discounts in its price versus NAV. And when you buy GBTC, when you buy Grayscale, you aren’t holding Bitcoin directly. You’re actually…

You actually own a share in the trust that holds Bitcoin. So there’s some problems with that one. Pro shares is another example of a Bitcoin ETF. It actually is an ETF. It’s BITO is its ticker symbol, and it provides exposure to Bitcoin by investing in front month Bitcoin futures. So it’s a, it’s futures based contracts ETF. So again, you’re not really holding Bitcoin directly here. The main problem with both of these are, well, one, you’re not holding Bitcoin directly. You’re just getting exposure to it through some other mechanism.

And then secondly, the fees are outrageous. Grayscale charges 2%. BITO, that ETF from ProShares, charges 95 basis points, which is better, but still pretty darn high. Now, an iShares SpotBitcoin ETF from BlackRock would be a true SpotBitcoin ETF, and it would make Bitcoin legitimate, according to this article from Morningstar, and it would carry much lower fees than the current offerings. It would just be much less costly for BlackRock to operate, but it still wouldn’t be the same as holding Bitcoin directly, but it would give investors more direct exposure to it than current offerings. It’d be much closer to the real thing.

By the way, the discount on GBTC already has narrowed considerably since BlackRock’s filing from around 44% in the middle of last week to 34% as of Tuesday. That’s actually last Tuesday. This article is a few days old.

But the SEC, Andy, has already rejected spot Bitcoin ETF proposals from Fidelity, among many others. And one differentiator here in BlackRock’s filing, Andy, is the implementation of a surveillance sharing platform in which Nasdaq would be able to get confidential information on buyers, sellers and prices, thus limiting the risk of price manipulation, which is one of the SEC’s biggest concerns.

Andy, I’ve got a lot of questions for you here. I think we’ve got a lot to unpack with this story. But first question to you, is Bitcoin officially back?

Andy: Well, I don’t even know that it ever really went away, right? Like in the recent crypto bust, obviously its price went down, but Bitcoin, it has this cycle where it hits like a new peak every couple of years. It hits a new peak and then it has a big fall and it usually called it a crypto winter. It usually kind of stays in the basement for a while, but then it ends up having another run up and hitting a new peak. And so, I think Bitcoin investors, Bitcoin speculators, they’re used to Bitcoin going up and down. And you know, the lows, think about how much higher the lows, uh, this year, last year were compared to 10 years ago, six years ago, whatever.

So I don’t think Bitcoin ever really went away. I think what happened is a lot of the other more speculative cryptocurrencies got washed out. Um, but I don’t know that even institutional buyers and holders of Bitcoin, I don’t know that anyone was really that phased by the most recent lows of the last 12 months.

Jimmy: Yeah, well, part of I think the draw of Bitcoin in addition to it being a hedge against inflation or a hedge against the US dollar as the world’s reserve currency or the hedge of just central markets or central banks, I should say, you know, it’s kind of this rogue currency that is decentralized. But if BlackRock enters the arena here and has a spot Bitcoin ETF here.

I don’t know, at some point later this year possibly, would it do away with that purpose of Bitcoin? Would it become too institutional in your mind, Andy?

Andy: No, not any more than a gold ETF makes physical gold institutionalized. If you own physical gold, if you have some gold bullion, if you have an American gold eagle, you’re holding it in your hand. It’s the same gold piece regardless of what novel financial structure has been set up where other people can invest or speculate on gold derivatives or things like that are based on the price of gold, you can still own gold.

I think the same thing is true with Bitcoin. The real serious crypto people, they’re never even going to look at a Bitcoin ETF. They’re going to have some kind of a… I don’t know, Jimmy, you’re more of the nerd with this tech stuff, but aren’t they going to have some kind of a wallet of… Is it a frozen wallet, a cold wallet? I don’t know. But there’s going to… What’s the verbiage, Jimmy? Help me out here. What would a real…

Jimmy: Hahaha! I went down the rabbit hole on this about I think 18 months ago, right when it was hitting its highs, I guess I was I bought I bought high I guess you could say Andy I was not a very savvy investor here. But I got caught up in the in the crypto game. Well, here’s what happened Andy. I figured Hey, you know what, let me just try my hand at this because I just want to see what all the fuss is about. So I actually went and bought a hard wallet or a cold wallet.

And I got a little bit of Bitcoin and Ether on the wall. Not enough to lose sleep over, mind you. A fraction of a fraction of my overall portfolio, just a little bit of play money basically, just to see if I could do it, because I was interested in the technical challenge and just seeing what all the fuss was about. And I thought, hey, maybe there’s a big upside here. It was a speculative kind of fun investment for me.

But that’s the thing that I’m not quite sure about with what the purpose of an ETF would be exactly here, Andy, like with a gold ETF, I get that. Like it, there’s a huge cost in holding physical gold or physical silver or physical copper or whatever type of precious metal or store of value that you’re trying to hold, right? Cause it’s like, well, I only have so much space in my garage or in my closet or up in my attic or, you know, in my bag. And then, well, if the, if the house burns down or I get robbed, you know, like what’s going to happen, but with, with, with Bitcoin, it doesn’t actually take up any physical space. So why not just like get over the learning curve, figure out how to buy and hold it. You can hold as much as you want on a little thumb drive about this big.

And what’s the purpose of the ETF in the first place, Andy? That’s what I don’t really understand.

Andy: Jimmy, I mean, there’s so many reasons that an ETF like this could be hugely successful. So many reasons that it could exist and it should exist. Okay, number one, just the ease of investing. Think about the huge numbers of investors who don’t have an account at Coinbase, who aren’t going to get a cold wallet like you have. People like me who, some of this technology, it’s kind of like, yeah, I could probably figure it out.

I don’t really want to, I don’t care enough, right? But I’m already used to buying and selling ETFs in my brokerage account, right? So those sorts of retail investors. But also think about the counterparty risk. With all of these crypto exchanges and crypto lending things that were in the news, so many of them are in bankruptcy right now, some of them outright just stole people’s money. The idea of not having that counterparty risk or risk of having it at some exchange that gets either frozen or goes bankrupt or steals your money. Uh, I think that appeal is huge. And then also think of like maybe institutional investors. They may not, they may not have rules in place where they’re not allowed to invest in crypto directly, but where they are allowed to invest in ETFs.

So I think just, just the rapper, the very nature of it, I think has huge appeal to many, many people, not, not the individual crypto nerds, right? Not the, not the folks, Jimmy, like you are folks way deeper into it that have the cold water, and I’ll do respect to them. A lot of these people who were early investors in crypto, big believers, they made a lot of money at it by being early, so I’ll do respect to them, but they’re not gonna be the investors or traders of this ETF, but that doesn’t mean that it’s not gonna have appeal or that it wouldn’t be successful.

Now, what I don’t know is the SEC going to approve this when they’ve said no to so many other spot Bitcoin ETFs they weren’t we just talking last week on the show about how the SEC wishes they had absolute power It kind of seems like they do sometimes doesn’t it?

Jimmy: Yeah, I think that was a couple of weeks back we were talking about that. I don’t know what they’re gonna do here. Andy, I guess another reason for a Bitcoin ETF is it would make such a the wrapper would make it much easier to hold Bitcoin in a retirement account or a 401k or an IRA, something like that, right? I don’t know how else you would say that your hard wallet or your Coinbase account could be in an IRA. I don’t know. If I’m wrong, maybe one of our viewers can write in, but I think it would make it much more easy for that to happen.

Andy, what do you think investors should do with this information? I guess a two part question for you. One is Bitcoin a worthwhile investment in a high net worth investors portfolio? Or is it, is it merely speculative or is it a good store of value? Is it a good hedge against, uh, against the U S dollar or against inflation? How does it differ from gold? And then, um, second question for you, I forgot. So why don’t you just answer that first question first? I’ll get back to my second part.

Andy: Well, yeah, it’s an interesting question. I would say I’m going to quote, I’m going to sort of make up a quote to the best of my memory. Meb Faber, right? You know, I’m a big fan of Meb Faber.

Jimmy: Oh yeah.

Andy: The way he categorized crypto or justified owning crypto, he was like, I’m not even really that excited about crypto. I don’t really care that much about crypto. But I own a little bit. And I forget the exact amount. It may have been like half a percent or 1% or something.

He was like, I own that much because I don’t want to have any regrets. And what if Bitcoin like 10 X’s or 50 X’s from here, I’m going to be annoyed at myself if I didn’t own any. So I think just the fact that it’s novel, um, you know, I think you don’t want to be having, you know, 50% or whatever, some crazy high percentage of your portfolio in crypto, but I think even if you’re not excited about it, it’s totally reasonable for a high net worth investor to have.

half a percent or 1%, maybe even 2% of their net worth in crypto. And again, I just love the way Meb Faber put it. It’s like own enough of it where if it 10Xs, and by the way, Bitcoin is 10Xed many, many times in its history, right? Own enough where if it 10Xs, you’ll say, Oh, I’m glad I own a little bit, but also where if it goes to zero, you just kind of shrug and you go, yeah, whatever. That’s why I only had, you know, half a percent or whatever. That’s my attitude.

Jimmy: Yeah, the I guess that’s the optimal amount to hedge for FOMO risk. Am I right? And then, yeah…

Andy: That’s exactly right. FOMO is a huge driver in Bitcoin, isn’t it? I mean, it has to be the biggest driver.

Jimmy: It is. It is. I think that was the driver in me, or at least one of the drivers was FOMO. And then plus, I’m a nerd. And I just like geeking out on the technical challenge of setting up.

I remember my second part of my question, which was, how can investors play this current situation with BlackRock entering the arena potentially that if BlackRock gets approved with this ETF, I think it’s going to make Bitcoin much more legitimate. Should investors get in now if they’re not already in Bitcoin? What are your thoughts there? And then we’ll move on to story number two.

Andy: Yeah, I mean, here’s the thing. Who knows if this is going to get approved. I think it still might be a long shot. And I mean, BlackRock such a huge asset manager, so many offerings, and only this is going to, you know, whether it’s approved or not, I don’t think that’s going to move BlackRock, uh, you know, their fortunes much in either direction. But I do think for Bitcoin, it could be a pretty big, you know, driver of, you know, future appreciation, because it’s just a lot more.

just easier, easier ways to invest, maybe more institutional investors. You could see a lot more money flow into it. Sort of like how gold ETFs have, you know, a lot of people own gold through owning a gold ETF, have that underlying exposure that otherwise wouldn’t right. Cause they’re not gonna, they’re not gonna drive to the precious metals dealer or, or go to app and order some bulk gold bullion, but they will buy a gold ETF. I think the same exact thing is true here.

Now, is it the perfect time to invest in Bitcoin right now? Ah, that’s hard to say. I mean, if you were going to buy in, you might want a dollar cost average. And again, that’s kind of my, uh, that’s, that’s kind of my stock answer to avoid the FOMO and, you know, to avoid regret. That’s how I like to invest.

Jimmy: If you’re not in yet, now’s a good time to at least take a look at I think. I think that’s great, Andy. And by the way, I don’t know, if you’re only a gold ETF guy, maybe take a look at getting a double gold eagle. It’s kind of fun to hold one of those in your hand. So anyways, with that, let’s move on to story number two.

By the way, as a reminder, you’re listening to the Wealth Channel podcast. This is the show where we explore the world of wealth, money and finance.

Andy, you said you wanted to take the lead for this segment number two. It’s kind of a surprise to me. I know we’re going to be talking about Elon and Zuck as part of it.

Take it away Andy, you’re in charge here for segment number two.

Andy: Yeah, Jimmy, I have something special planned. And really, I heard from one of our viewers, they wanna hear more from you. They want more Jimmy opinions. So I planned this whole segment. I’m gonna put you on the spot, put you on the hot seat. So this next segment, we’re gonna play something I call the Statement Game. And full disclosure, I got the idea for this from Flippin’ Bats with Ben Verlander.

If you’re a baseball fan, it’s a great show. I highly recommend it. But Jimmy, here’s how this works. I have five statements and I’m going to give you a bold statement. And then for each of these statements, you tell me if you agree or if you disagree and why and no waffling, no, you know, I don’t know, or I’m not sure. You’ve got to call it either a hard agree, hard disagree and take that bold stance.

Jimmy: Okay, I haven’t prepped for any of these, by the way. I think you’re gonna hit me with Elon and Zuck at some point, but I’m curious to see where this goes. Go ahead, Andy. Fire away.

Andy: All right. All right. So first statement, the bull market this year that many investors barely even acknowledge is just getting started. We’re going to see another five to 10 percent gain in the S&P in the next 12 months. Agree or disagree, Jimmy?

Jimmy: I agree. I read an article in the Wall Street Journal this morning that said that futures trading for the S&P 500 is… actually, the call options volume is at the highest it’s been in a few years, just this past week. So that leads me to believe that investors, institutional traders are very bullish on the S&P 500.

I think people were kind of reluctant to address the reality that the S&P 500 was on a bull run. It’s up I think 13% this year. It’s up about close to 20% since its lows from last year. I think the bull market is here to stay for a little while. It would not surprise me at all if it went up another five to 10% before the end of the year. That said, by the way, Andy, you and I have a wager in place. I think we set forth in our very first episode of this podcast, the Wealth

And I took the bear side. So I’ll kind of hedge by saying, I think by year end, the S&P 500 might start to head down a little bit. If I’m looking into my crystal ball, I think it’s got a little more of a run. And then I think it’s gonna, I think the specter of increased interest rates and are gonna have a negative impact on the S&P 500 as we head into the fall and the later months of the year. That’s my crystal ball prediction.

Full disclosure, my crystal ball is usually pretty cloudy and doesn’t always turn out the way I think it will, but that’s what I see happening here for the rest of the year, Andy.

Andy: Alright, I like it. So we’re gonna get another five to 10% more out of this bull run, but then we’re gonna see a correction. I’ll take that to the bank. Okay, you ready for the second statement?

Jimmy: That’s what my cloudy crystal ball says. Let’s do it, let’s do it.

Andy: Alrigh, so second statement, AI artificial intelligence is in the 1999 quote unquote dot com phase where VCs thought leaders, everyone and their cousin is overhyping this big bubble. That’s going to just burst in the next couple of years. Agree or disagree.

Jimmy: I agree with that. I agree. I agree. I think that’s absolutely spot on. I think AI is going to play a huge role in our future, in the future of tech and in the future of humanity. But I think maybe we’ve put the cart before the horse a little bit too much here recently. I think AI is not all it’s hyped up to be currently, but it’s overpriced at the moment.

I mean, look at what Nvidia stock has done over the past few months and some of these other big tech companies that are leaning into AI. So I think we are at about the 1999 equivalent of AI where the internet may have been in 1999. That is, you know, you kind of recall companies like that had huge valuations and then fell by the wayside.

Andy: Webvan.

Jimmy: Now that said, by the way, look what has happened with internet technology. In the ensuing 23, 24 years, right? Like Internet stocks have gone up, up. I mean, look what’s happened with Google and Netflix and Apple and Facebook. I mean, it’s incredible to run, but we did have a pretty big correction before that run up. So I think we’re probably gonna experience something similar here with AI very shortly where this bubble builds up and up and up and then pops and crashes before we have a big sustained run up in the midterm.

So by the way, that kind of plays into the answer to my first question as well, I think, Andy, where I think this market has a little bit more legs to run before it collapses here toward the end of the year.

Andy: Well Jimmy, you’re very agreeable so far. We’re two for two on the hard agree. Let’s see if we can make it three for three. So here’s the third statement. As disinflation continues, the CPI, consumer price index, will get closer to normal in the second half of this year and will print as low as 3.5% in Q4 of this year.

Jimmy: Oh man, that’s a tough one. Uh, I’m going to agree. I think it’ll get, I think it’ll get down that low before the end of this year. It’s, it’s close right now, right? It’s in the fours right now. It doesn’t have that much farther to go. The Fed has indicated that they’re going to be rather hawkish on this going forward that we can expect more rate increases. I think that will help bring inflation down. I think the disinflationary trends will continue. By the way, I do think it’s kind of silly and arbitrary. The target inflation rate of 2%.

I don’t know how long it’s going to take to hit that necessarily, but I think, you know, we’re getting close enough to what did you say? Three, three and a half percent was where we had to hit?

Andy: 3.5, yeah.

Jimmy: I think we’re going to 3.5. I do think that we will hit 3.5 before the end of the year. Absolutely. Yeah, Andy, I think I think that’s the trend these days is that the Fed has increased rates so quickly and in such high in such high hikes that that they have done a pretty good job of bringing inflation back down. And I think it will hit 3.5% before the end of the year.

Andy: Yeah, so in it and again I define 3.5. I’m not calling that normal exactly normal ish, right? It’s not hitting that 2% target, but it’s I think it’s a number where…

Jimmy: That might be the new normal at some point. 2% is kind of an arbitrary number. I mean, why not 0 or 1 or 3 or 4, right? There’s nothing magical about 2%.

Andy: Well, I think we know why not zero, right? And inflation is too good for Uncle Sam.

Jimmy: Yeah, that’s true. Yeah, yeah. It is. It is.

Andy: Alright, are you ready for the fourth one?

Jimmy: Alright. We’re three for three so far. Andy, you got to give me one I don’t I don’t like here.

Andy: Yeah, I’m hoping you’re going to disagree with this one because, you know, I don’t want everybody to think that you and I are always agreeing on everything. That’d be kind of awkward. Here’s the fourth statement. As student loan repayments start up again and possible additional rate hikes by the Fed drain even more liquidity out of the economy, we’ll see a more significant repricing of real estate assets in Q4 of this year and into Q1 of next year. So finally, we’ll see a real correction in real estate prices. Agree or disagree?

Jimmy: I agree with that.

Andy: Gahhh!

Jimmy: I think the real estate market is due for a correction soon. I’m actually surprised we haven’t seen it yet. The prices have been up, while borrowing rates have gone up, and up as well. And what we see is we don’t see much transaction volume. I think buyers and sellers are having a hard time being able to meet in the middle because buyers are facing this new reality where mortgage rates or interest rates are higher than I mean, much higher than they were a year, year and a half ago, and sellers haven’t quite priced that in yet. So I do think something has to give here sooner rather than later.

And I think we will see that price correction before the end of the year. By the way, that said, I’ve actually been surprised that it hasn’t come soon enough. I think maybe we all underestimated the amount of liquidity that was available in the market. Despite these rate hikes, I think there was just so much extra liquidity in the market over the past couple of years here that it’s been tough to tamp down.

But I think, yeah, end of the year, still, what, five, five and a half months away. I think that’s enough time for a correction, Andy, I do. And now if you had said, maybe before the end of the summer, I might have disagreed with you there, because I think it might still take a few more months before we see that. But I think it’ll all come together here toward the end of the year, we’ll have the S&P 500 drawing down, we’ll have the AI tech bubble popped and we’ll see a price correction in real estate prices, Andy. Give me something I disagree with, come on.

Andy: That’s an interesting point. Well, no, it’s just interesting because I was kind of thinking in my head, I don’t know that we’re going to see much of a, maybe a little correction, but in the statement, I said a significant correction because there’s all these real estate owners, whether we’re talking about commercial real estate assets or just homeowners who are sitting on these really, really low fixed rate interest rates. And it’s like, what is my incentive to sell?

When I’m paying, you know, 4% interest on this asset that I own, I’ll just hold it like indefinitely. So, but you make a good point if there’s a big correction in other asset classes, especially the stock market, that’s going to tend to reverberate into these other asset classes, including real estate. So you may be right about that, Jimmy. Okay, this one, this is the fun one. Had to put in a fun one. The fifth statement. In a cage match between Mark Zuckerberg and Elon Musk.

Zuckerberg’s training in Brazilian jiu-jitsu would allow him to dominate Elon Musk and Zuckerberg would win via submission. Probably like an armbar or rear naked choke. Agree or disagree that Zuck would dominate?

Jimmy: This is an easy one. He’s definitely going to agree. I mean, first of all, he’s what 10, 11, 12 years younger than, uh, than Elon Musk. I mean that right there gives him a huge advantage. Second of all, this guy, by the way, I didn’t know this until recently, but, uh, Mark Zuckerberg apparently is training in Brazilian jujitsu. And he recently completed, uh, completed a challenge called what, what what’s the challenge called? Andy’s at the Murph or something like that, where he has to hike a certain amount of miles with a, uh, a 50 pound weight and then do a certain number of pull ups.

Oh, well, that’s like that’s like that’s CrossFit isn’t it? That’s that’s not jujitsu. That’s CrossFit, but you’re just saying he’s in good shape. Yeah.

Jimmy: No, no, I understood that. Understood that all I’m trying to say is not only is he training in Brazilian Jiu Jitsu, but he’s also apparently in very good shape too. I don’t know what Elon Musk is a genius and he’s leading all these incredibly innovative companies. But I wouldn’t think of him as someone who’s in really great shape or would know how to find his way around an octagon ring.

Andy, I think I would say Zuck would win by submission and he would probably win within the first minute of the match. I’ll go as far as saying that.

Andy: You know, I think you are overconfident on this. I mean, you know me, I’m a jujitsu guy. So he’s training in jujitsu. He’s only a white belt though. Right. So it’s not like he’s, and the thing is, you know, that saying if you’re a black belt and then you get punched in the face, now you’re a brown belt as soon as you get punched in the face and, you know, I think, uh, Elon Musk, he’s a big guy. Right. I mean, to some extent. Zuckerberg.

Jimmy: He is much bigger. Yeah, that’s true. He’s taller and heavier than Zuckerberg’s. That could give him a slim advantage.

Andy: Yeah, and that’s the thing. Like, like, like Zuckerberg, if this if this were weight classes, like I could see Mark Zuckerberg, you know, cutting weight getting really lean, like, you know, getting to that lean middleweight size and having really low body fat or whatever. But if there’s no weight classes, then it feels to me a little bit like this could be like a Butterbean versus a middleweight type. Do you remember Butterbean?

Jimmy: I do remember Butterbean, yeah, that guy was huge. Did he ever win anything though?

Andy: I gotta get him on my screen, Jimmy.

Jimmy: Yeah, yeah, go for it.

Andy: I gotta get the, because I feel like this, you can see Butterbean Jimmy.

Jimmy: No, it’s black, man. No, there he comes. I see him now, yeah. Yeah, that’s hilarious.

Andy: Okay. Yeah. I mean, this, this to me, this is more of an Elon Musk physique. All right. Now check out this tab. You remember this photo? They’re shaking around in social media. Uh, Elon even replied to it, the photo of him at the beach. I think he’s got the Butterbean thing going on. Um, and so I’d give him a puncher’s chance, you know, like the heavyweight puncher’s chance, it only takes one solid hit.

Jimmy: Yeah.

Yeah, yeah, yeah.

Andy: So I might have to take Elon. I mean, I get that he’d be an underdog, but I think I’d take Elon in the cage match.

Jimmy: I don’t see it happening. But yeah, I’ll bet if you put some money on Elon, you can get some pretty good odds on it, maybe four to one or five to one, something like that. So we’ll have to check out the sports book.

Andy: Well, Jimmy, I- I had fun with the statement game, but I’m a little disappointed. We agreed all five to five. So next time we play the game, I’m gonna work harder to give you some statements to get a little more cranky disagreement out of you, okay?

Jimmy: You got to say something a little bit more outlandish, I think, Andy, next time.

Andy: Okay. Fair, fair.

Jimmy: Well, let’s move on to story number three here to wrap up today’s episode.

Andy, I’m excited about this one because this was my Bull Of The Week last week. I teased it hoping that we’d be able to cover it in a future episode of The WealthChannel Podcast. And well, here we are. So this is a story from the Wall Street Journal with the headline, “Supreme Court to hear case that could block Democrats plans to tax the rich.”

This of course refers to US Supreme Court docket number 22-800, Moore v United States. According to the Wall Street Journal article, the Supreme Court said Monday that it will hear arguments in a tax law case that could block the Democrats’ wealth tax proposal. The case stems from a one-time tax on accumulated foreign profits that Congress created as part of the Tax Cuts and Jobs Act in 2017, signed into law by then President Donald Trump.

That tax applied to 30 years of profits that US-based companies held overseas and hadn’t repatriated. And it also applied to individuals who owned at least 10% of foreign companies. So there’s this couple in Washington state, Charles and Kathleen Moore, that were subject to this tax and they owed a tax bill pertaining to this particular section of the new tax code.

in the amount of $14,729. They are challenging the tax in court and they’re requesting a refund. They’ve argued that they haven’t realized any income on their investment in this particular case in an India-based company, and thus they couldn’t be taxed because the income hadn’t actually been realized. Now, Andy, as you know, the 16th Amendment of the United States Constitution was ratified in 1913, and it states that Congress can issue an income tax.

But the court has rarely attempted to set rules for what counts as income, quote unquote income. And Congress has enacted several tax laws that don’t rely on a strict definition of realization. So what is income? Does income need to be realized? Does it need to be cash in the door, cash to your bank account? Or could it just be unrealized income on paper? That’s basically at the heart of this court case. Now the Moores are backed by conservative organizations and business groups. There’s a ton of co-signers on this case, if you check out the docket at the U.S. Supreme Court website.

They lost their case in lower courts. And the Justice Department is kind of on the other end here arguing against the Moores. They urged the Supreme Court not to hear this case. Now there’s a lot of ramifications with this case. If the court sided with the Moores, it could mean that companies have been paying the one time, that have been paying the one time tax, may be able to seek.

refunds totaling hundreds of billions of dollars. So it could kind of hurt the coffers of the US government here. Secondly, it could affect existing pieces of the tax code that impose taxes without the realization of income. That includes, by the way, taxes on individual shareholders in foreign companies with passive income, investors who buy certain discounted bonds and wealthy people who renounce their citizenship. Thirdly, and this is…

The most, this is the most interesting part and the sexiest part I think of the story and kind of the lead here that we’re gonna go with on our headline is this realization requirement if the court favors the Moores would block some of the Democrats most ambitious tax proposals such as President Biden’s calls for an annual minimum tax on wealthy Americans, which would be based in part on unrealized capital gains. Other Democrats, Andy, such as Senator Elizabeth Warren have proposed an annual tax on the net worth of the richest households.

Now, Andy, I fully believe that taxing unrealized income is unconstitutional. I think it’s totally bogus. How can the US government point at a pot of money that I might have on paper and say, hey, you are that wealthy on paper. We’re gonna need to extract a certain amount of your paper net worth. I think that’s totally bogus and should never be able to be allowed. I cannot believe that the district courts, the lower courts ruled against the Moores on this one.

Andy, what about you? Do you support Senator Warren’s plan to tax net worth on an annual basis or do you not?

Andy: Well, I, yeah, I think that’s a little bit of a leading question. No, I do not support Senator Warren’s plan to tax unrealized capital gains as part of some sort of wealth tax. I mean, here’s the thing, Jimmy, it’s not even about liberal versus conservative. It’s just, it’s literally impossible to do a sort of wealth tax that includes unrealized capital gains. I mean, even let’s just take billionaires, right? Who have art collections, right?

and some of these Monet paintings or Cezanne or all these artists, beautiful impressionist paintings, Modern art, contemporary art, some of these paintings are worth $50 million, $80 million. Now, when the art market goes up, Sotheby’s Auctions, they have these big record setting auctions. In theory, all those individual masterpieces that these billionaires tend to own, their value has gone up because the comps at auction have gone up, but they don’t necessarily have them reappraised.

So you’re telling me every single year, if I’m a billionaire…

Jimmy: Yeah, you just got to get your art collection. You got to you got to itemize each one and mark to market every single asset you own, right? Is that what you’re getting at? Yeah.

Andy: And who’s going to do that? Well, like what about your, that, you know, not everybody owns artwork. And, you know, there might be viewers and listeners saying, like, I can’t really relate to owning a Monet painting worth $50 million, but also a lot of millionaires and billionaires own private businesses, and I got news for you, like those are very hard to value. Right. Uh, they, there’s no, there’s no real way to value a private business aside from selling it, right? I mean, you can have it appraised.

Sure, but one appraiser can say a business is worth 10 million. Another appraiser can say it’s worth 50 million. And that’s surprising. That kind of disparity is very, very common, right? That’s not like some outlier. So it would just be impractical and impossible to do any sort of wealth tax on unrealized capital gains. And this is part of what drives me crazy is when if you wanna raise more tax revenue,

You know, that’s sort of a separate conversation than creating a new and very inefficient and impractical tax scheme, right? So you could be in favor of much higher taxes on the wealthy, but still acknowledge we would wanna do that, we need to do that in a practical way that’s actually possible. And things like market to market, you know, this wealth tax on unrealized capital gains.

All of the gray area ambiguity, complexity and enacting stuff like that. All that stuff favors the ultra wealthy anyway, because they just have an army of the world’s best accountants who can figure it all out and manipulate it. So at the end of the day, I don’t even know if it raises anywhere near the revenue that they pretend that it would raise.

Jimmy: Yeah, that’s interesting. And I love having these conversations with you, because I always focus on the philosophical or constitutional argument of, well, is this even possible? Should this even be allowed? And you like to focus on the practical, like, well, if it were allowed, how would we even do it? It’s totally impractical to try to impose such a thing. And it kind of makes me think, well, how much is The WealthChannel Podcast worth? Is it worth zero to us? Or is it priceless? Or somewhere in between?

You know, how do we, how would you and I pay a wealth tax on the value of this podcast and our associated businesses. Well, what about the Supreme Court ruling here, Andy? And it looks like they’re probably going to hear arguments on this during the October 2023 term year. They’re winding down this current October 2022 term year is the current term year they’re in. So we’re some time away here from this bubbling to the surface. But how do you think the Supreme Court might rule on this case?

Andy: Jimmy, I honestly have no idea. I mean, historically, they have given Congress very wide latitude when it comes to taxation, right? But one wonders, this is a more conservative Supreme Court, if the impracticalities of taxing unrealized capital gains, I could see that coming up in the oral arguments before the court, and I’m far from an expert on the Supreme Court.

There’s a cynical side of me that says, you know, in nine times out of 10, with these kind of, you know, really core cases that are more judgment calls, the justices, they already know how they’re going to vote and they just kind of work backwards to justify how they want to vote with some sort of legal reasoning.

I think this may be one of those situations where they can’t, they can’t really do anything that causes these big waves that or they may feel like they can’t do anything that causes these big waves that destroys or drops a bomb on huge portions of our tax code or the way taxes are already collected. I think they would be very hesitant to do that, the Supreme Court, that is, just on a purely practical level. But at the same time, I can’t imagine that the five conservative Supreme Court justices would feel any differently than you do, Jimmy, about the constitutionality of wealth tax or tax on unrealized capital gains. It’s so silly.

Jimmy: Yeah, it really is. Well, Andy, I think that one thing to consider here is that if the Supreme Court, I mean, no matter what the Supreme Court does, I think they’re going to be dropping a bomb on the tax code, right? Because they’re either going to be dropping a bomb on what’s currently in the tax code, or they’re going to be dropping a bomb in the sense that it does, it would open up the possibility of a wealth tax going forward.

So either way, I think the Supreme Court, damned if they do, damned if they don’t. They’re definitely going to piss off some people here or there, right?

Andy: Yeah, and I think honestly, if I’m Elizabeth Warren, if I’m the Democrats in a way, I’m hoping this ruling does go against me in the sense that I think if they were able to pass some sort of tax on unrealized capital gains, it would turn into a nightmare for them politically, logistically, practically speaking.

I think it’s one of those things that they may be, you know, kind of crossing their fingers and hope, Oh, I hope that these conservative Supreme Court justices get to play the bogeyman in this case, because that, you know, that, that wealth tax, I think it’s one of those things that’s good to campaign on. But when it comes time to actually legislate it, I think they’d, they’d probably rather

Jimmy: Yeah, that’s interesting to think, because the Supreme Court could gift wrap them potentially the ability to impose a wealth tax. Maybe they don’t want that is the point you’re trying to make. They’d rather have the bad guy there, the bogeyman.

Well, Andy, should we move on to this week’s edition of the Bull Of The Week? And if so, Andy, what’s your Bull Of The Week this week to close today’s episode?

Andy: Yeah. So I, I have an actual stock pick. I know sometimes I do, uh, you know, non-financial things in my bowl of the week today, I have an actual stock pick for you, Jimmy, which is Hasbro Inc that ticker on Nasdaq HAS. So Hasbro, I mean, you probably, uh, familiar with Hasbro, the toy company. They own transformers, uh, Parker brothers. They have a monopoly twister or my little pony.

They also own Wizards of the Coast, Jimmy. Do you know what Wizards of the Coast is?

Jimmy: I do not.

Andy: So Wizards of the Coast is the parent company of Magic the Gathering, which is a collectible card game, kind of like Pokemon started around the same time in the early to mid 1990s. And quietly, Magic the Gathering and Wizards of the Coast has grown into this huge, very profitable division within Hasbro, and I believe now it’s their, their, basically their biggest moneymaker. You know, and they own a lot of different brands.

And Magic the Gathering is their biggest moneymaker. Well, anyway, magic, you know, the, the sales that the sales were up, but they’d kind of stalled out a little bit, uh, here lately and Hasbro stock, if you look at it in the past five years, just in general has not performed very well, but the latest release by magic, the gathering was a Lord of the ring set and magic they wizards, they did something different. They put in like this ultra chase card.

I don’t know if you’re familiar from like the sports card world, Jimmy, that companies will put in like these ultra chase cards, not like one out of every 10 packs or one every 100 packs, like one in the world signed Jersey or you know, something like that. Well Wizards put in it’s Lord of the Rings theme set. They put in the “One Ring,” they printed a one of one copy of the “One Ring” from the Lord of the Rings.

And it hasn’t been opened. It’s somewhere in one of these booster boxes. And so there are now stores and collectors putting a bounty on it. And there’s one store, I believe it was in Spain. It’s basically said, we’ll pay you $2 million. If you, we have like an open bid. If you open the “One Ring” card, we’ll pay you $2 million for it. And so wizards, number one, they’ve gotten all of this free publicity out of this new strategy.

And of course they’ve had chase cards before but nothing like this, right? Nothing like six figures or seven figures before. But also, now I think they’ve just realized, oh, we can do the same kind of strategy that like Tops and all of these sports cards manufacturers do, where they release these like super chase cards. And so I think now Hasbro, this is their money-making division. I don’t think that’s in the stock price.

I don’t think investors are like fully aware of what’s happened, where this long-term brand that’s very profitable as is for over 30 years, they just kind of figured out, I don’t want to say by accident because I think this was a test, a deliberate test, but I think it succeeded beyond their wildest dreams. And it’s going to set up the next phase of growth for Wizards and for Hasbro. I don’t think that’s reflected at all in the stock price yet. I think Magic the Gathering collectors, I think maybe are beginning to be aware that the game has changed.

Um, so that’s my Bull Pick Of The Week. Hasbro.

Jimmy: That’s a good one, Andy. It’s actually a financial based, a little bit of an investment based stock tip there. That’s pretty cool. I mean, we should do a pack opening on this show. Maybe you could get a couple packs to open at one point down the road here. Or maybe we can make it a short at least and you can see if you pull one of those cards.

Andy: The “One Ring,” yeah, I mean, if we pull the “One Ring,” then it’s a $2 million pull. Yeah, that’d be fun. Maybe next week.

Jimmy: That’s not bad. Okay, let’s move on to my Bull Of The Week. It’s not as serious as Andy’s. My Bull Of The Week, Andy, is Otter Pops. Do you remember Otter Pops, Andy, from your childhood, the frozen summer treat?

And I know that we promised we would never talk about weather on the show, but shoot, Andy, I was in Hermosa beach in San Diego last week and beautiful weather there, really cool. And now we get back to Dallas Fort Worth. That’s 105 here and I just got the hankering for some Otter Pop. So I’m swinging by the grocery store later tonight, see if I can stock up our freezer. It’s hard to beat that red flavor, if I recall correctly, but you know, it’s been about 25 years since I’ve had one of those things.

Andy, what’s your favorite Otter Pop flavor? Do you remember those?

Andy: Well, I’m thinking through I’m thinking like to the ice cream truck. Okay. I’m thinking you got bomb, Bomb Pops, which are the red, white and blue. Uh, those are awesome. You got Fla-Vor-Ice, you know, and it tends to be better quality from the ice cream truck and then you have like the push pop with like the, the Sherbert or whatever. Uh, you lost me with Otter Pop. That’s like a, it’s another type of…

Jimmy: I think Fla-Vor-Ice may have been what they called Otter Pops in the Midwest. You’re from the Midwest. So they’re the little, uh, they’re like the kind of in the plastic wrapper. And it’s basically just a solid block of frozen sugar juice, basically that you, different, different colors, different flavors that you squeeze up. And I’ll show them to you on the next episode. Maybe Andy, if I can find some.

Andy: Oh, yeah, yeah. No, Jimmy, that, yeah, I’m familiar with the Fla-Vor-Ice, but I gotta say, I’m more of a Bomb Pop guy. You know, the white flavor in the middle. I don’t even know what flavor that is, but I think I’d stick with a bomb pop personally. But I like your, and you know what? I’m gonna allow you to talk about the weather. You’re down in Texas, from what I understand, there’s a heck of a heat wave this week. So I hope you’re staying hydrated over there.

Jimmy: I’m doing my best, And. And with that we’re out of time for today, but hey, do you want to do this again next week?

Andy: Absolutely.

Jimmy: Alright. Well, Andy, thanks for joining me today. And thanks to you, our listener, for listening to today’s episode of The WealthChannel Podcast, the show where we explore the world of wealth, money, and finance. As a reminder, you can find us online at

The WealthChannel Podcast is available on YouTube, Apple, Spotify, and all other podcasts listening platforms. Just hit that subscribe button. See you get our new episodes every Tuesday morning and we’ll see you next week.

Andy Hagans
Andy Hagans

Andy is co-founder and co-CEO at WealthChannel.