Digital Currency Is Cryptocurrency The Biggest Thing In The Investment World? With Terry Brock


Investing In Bitcoin

Adam White: So, bitcoin is I think the most well-known example of open or public blockchain, right? It gets a lot of attention and it’s got about a forty billion dollar market cap. What I find really interesting and what we focus on at coin base in GDAX our exchange platform. Is that there are actually dozens if not hundreds of these digital assets out there that each one has kind of a unique value proposition. And our focus is on helping the public, anyone really to be able to access and interact with these block chains.

David Scranton: New ideas and new technology should get us excited. But you know that excitement always needs to be balanced with common sense. And that’s especially true when it comes to the big new thing. The things with the potential for a huge financial gain or a huge financial loss. Now, one of the biggest new things in the investment world of course, as of recent day is digital currency. And of course, the whole blockchain technology behind it, it started with the bitcoin rally and has been big news. And during these last couple of years, the demand for other digital coins that use the blockchain format is surging. But before you get caught up in all the hoopla it’s important to examine the details and to put things into historical perspective. We’re going to do just that today with the help of an expert in technological trends, Terry Brock. It is time to tune out the hype and focus on the facts, facts that matter to you the Income Generation. Let’s get started, get ready to separate reality from myth.

David Scranton: How does it affect the market? How does it affect the economy? Thanks to efficiencies and a new technology and a staff of veteran analysts and portfolio managers. Sound income strategies try to set new standard and bring institutional style investing in your portfolio. Everyone welcome to the income generation, I am the once again white shirt wearing David Scranton. I mean let’s just face it, it’s too hot here in Florida in the middle of summertime to be wearing a blue blazer. You know, I often point out that there are two basic emotions that control people’s investment decisions fear and greed. And that’s not a knock at all against human nature it’s just the fact that we’re all wired this way. When times appear to be good, we want to get as much as we could possibly get. When the table start to turn we want to get out before we can get hurt. This human factor is largely what causes speculative market bubble. It’s also what makes them so incredibly risky, speculative bubbles are especially common in the technology sector. Everyone wants to be in on the next big thing and you know there’s a lot of big speculation right now going on about blockchain, digital coins and all the tech startups that are selling them. We’ll talk about all that today with our special guest, Terry Brock an expert on social media and technology trends. And as always we’ll check in with other financial advisors in the field, in our financial advisor roundtable. But first, let’s talk more about the double edge sword of speculative market bubbles. You know digital currency isn’t all that new in fact, it’s been used for years in online fantasy games. But the creation of digital currency without a central issuer has real market value and that is fairly new. And it’s starting to turn a lot of heads, more and more tech startups are selling digital coins to bypass traditional financing methods such as venture capital, credit cards etc. What’s generating even more excitement and speculation, however, is the blockchain. The blockchain is the technology pioneered by the creators of bitcoin that made digital coins a reality more than four years ago. The blockchain is essentially an online ledger that tracks and records every single bitcoin transaction, preventing the possibility of coins being respent or reused. As our guess will talk about in just a bit. The blockchain is especially exciting to speculative investors because the technology has so many other possible applications. Some are comparing the block chains potential, the potential impact to that of the Internet in the early days. And all of this excitement is certainly evident on

 Terry Brock: David, it’s an honor to be here with you. Let’s make some magic today.

David Scranton: Sounds good to me. So let’s start with why is there so much excitement about this blockchain technology? You know what is it and what causes this excitement?

Terry Brock: I think it’s because it shows so much potential and we’re seeing real-world applications. It gives us the chance to address a lot of serious issues in finance and the kind of things that you do helping people to plan for retirement. And to take care of their financial goals in the right way. The blockchain does it better than we’ve seen before.

David Scranton: And I think the idea if I understand correctly is that it’s to do it cheaper, to take out a lot of the financial middlemen. A lot of the financial intermediaries that get involved in a transaction so that you’re actually going directly to the end user. And able to purchase goods and services with whoever will accept a bitcoin or whichever currency we’re discussing. Is that pretty much it?

 Terry Brock: Yeah, that’s a big factor because we can save a lot of the transaction. Anyone that has dealt with international transfers of money knows hey, there’s huge amounts that the financial institutions will take. And we find that that just is really out of sync with where we are today. Much like e-mail is a way we would send a lot of messages fast, we wouldn’t send a fast message via writing it by hand and putting it in the mail. That’s what we had to do decades ago, today the blockchain offers a lot of possibilities and the number one is money but there’s also other applications as well.

David Scranton: So you know what’s interesting, these people you know when you look at what’s going on today with the whole block change bandwagon. You know there’s a lot of speculation happening today because this could be like Master Card and Visa was years ago. Where somebody came up with this idea that in a while we’d all be spending money with little plastic cards. I’m sure a lot of Americans when the idea first came out thought those people were nuts. And now we hardly carry any cash in our pockets anymore, so it could turn out to be that way. Or it could turn out to be potentially like you know the tulip mania, where tulips were used by the Dutch several hundred years ago as currency and then it quickly went to zero. Is it really just primarily speculative investors today that are using this and what do you think about its future?

 Terry Brock: I think the future looks really good and it’s not based on speculation. Speculation is there and of course, we wouldn’t recommend anyone put money into a blockchain, a bitcoin or any of the other alternative coins, the old coins. Unless you can afford to lose that, but we’re seeing some solid reasons to do it. It’s a much more stable system than in having to trust a third party that maybe is okay, maybe it’s not. We find the blockchain has some serious reasons why it is good, bitcoin is the most notable and widely recognized feature of that. But blockchain is a way to keep an unchangeable record that is monitored by lots of people, literally millions around the world. And we know that it’s going to be safe as we move forward then we’ll know what happens.

 David Scranton: So one benefit is that it could save you some money on a transaction because it eliminates middlemen. Another one is it keeps a permanent unique record, the currency cannot be reused. What other benefits in simple terms exist for individuals that want to use something like Bitcoin as currency?

Terry Brock: I think because it’s based on a fundamental principle that we know will not change and that is mathematics. You know we have people in charge of central banks like here in the United States, Janet Yellen. Who I’m going to assume is a nice person and very smart knows what she’s doing, but she and the other governors are not perfect. They make mistakes, they do things wrong and they’re… even with the best of trying they can’t. With mathematics which the blockchain is based on that is immutable, cannot be changed if you and I engage in a transaction it cannot go back. We cannot go back later and change it because if we try others all around will see something’s wrong here. Something didn’t quite work and all the computers will notice that, so I think we’ve got some extra trust that’s there. And the speed and interactions and a sudu and anonymity it’s a little bit more hidden. It’s not completely anonymous on something like bitcoin but we have a degree of anonymity that is welcome in today’s world.

 David Scranton: Sure, now I know you said it’s not speculative per say and of course, you kind of put a disclaimer on that clause and I appreciate that. But you know in some degree it is speculative, obviously, because you know is this really going to take off? Is this going to continue to be as popular? Is it going to become widely accepted or is it not? To me, that’s where the speculation is but I believe what you’re saying is you think that if various speculative technologies… I think what you’re saying is that you believe that this is probably a pretty wise bet if you were a gambling man.

Terry Brock: Yeah, I think so. And it’s kind of like what you were talking about earlier about the Internet. The Internet looked a little precarious back in the ninety’s, we were wondering is it going to be there or not? Well obviously now we can look back and go hey, it’d be great, Dave (unclear 11:35) come on up here to Orlando with me. Hope in my time machine, let’s go back then and we’ll know where to go but now today we can just see what’s happening. That we’ve got a lot of opportunities with it, it is going somewhere and we’ve got some sound financial principles why? It’s something that we’ve seen go up like for instance, last year on December thirty first a bitcoin was around nine hundred and seventy-something dollars. Today as we’re doing this recording it’s in the twenty-seven hundred.

David Scranton: I know, it’s triple. It’s crazy, Terry stick with us for just a moment we have to take a commercial break. Stay with us also our Income Generation members, when we come back we’ll talk more about Bitcoin but also different types of financial elements much like that. So stay with us, we’ll be right back. If you’re not using someone who is well trained in fixed income and you’re born before nineteen sixty-six. It may just be time for you to break up with that advisor and move on. I would suggest someone who will care for you through these important years of your life. If you need help finding someone call or write us, I’d also like to remind you of the special report entitled, The Income Generation. This is available free to you our loyal viewers online. If you haven’t downloaded your report, pick it up after the show. If you’re near or in retirement head over to the Income Generation dot com and download your special report written specifically for the needs of the income generation. Again those born before nineteen sixty-six. I’m David Scranton and you’ve been watching the income generation. Welcome back to the Income Generation, I’m your host David Scranton. Now, although we’re looking at a very specific area of the market on this week’s show. It is always important to consider things within the broader framework, if you’re a regular viewer you know we’ve talked a lot about the stock market in general. Being wildly overvalued in relation to real corporate earnings today, but bear in mind also that anyone lives G.D.P. growth for the first quarter. Annualized G.D.P. growth was only point seven percent, which is a significant decrease from the two-point-one percent rate of growth in the fourth quarter of two thousand and sixteen. Now compare those numbers to the fact that the Dow is up seven point four percent since the beginning of the year and the S&P Five hundred is up eight point six percent since the beginning the year. And the NASDAQ’s up fifteen percent. The point is that investors and digital currency and blockchain technologies aren’t the only ones speculating these days. As I’ve discussed before you could argue that big investors in every sector of the market have been speculating since November about Donald Trump’s success pushing through his economic agenda. As of now, however, that speculation still appears to be based mostly on optimism despite an almost nonstop turmoil on setbacks from the White House. Optimistic that their overvalued stock prices will eventually be justified by a G.D.P. growth rate of much closer to four percent. As of course President Trump has promised. As I put it before Trump’s value has been factored into the market prior to his having any actual economic impact. Speculatively in other words, but as I’ve also mention all this optimism might not be as great as it seems when you consider one more detail. And that is that the ten year U.S. government bond, the ten year Treasure rate has actually fallen since the beginning of the year from two-point four-four percent to two-point one-five percent as of this time in June. And of course, that means that money has flowed into the bond market and bond prices have come up. So not everyone is putting all their faith in stocks, there’s really money going into all sectors of the market. Stocks, as well as bonds and that, ‘s the kind of detail that some financial advisers might overlook if their business model revolves mostly around stocks and stock mutual funds. But it is an important one to consider if you are part of the Income Generation. If you’re over the age of fifty or if you’re within ten years of retirement and haven’t yet taken the steps to lower your market risk. But right now let’s bring back our special today Terry Brock. Terry, thanks again for sticking around.

Terry Brock: Nice to be with you.

David Scranton: You know when you were talking about Janet Yellen. I thought for a moment you were going to go into the fact that you know bitcoin and these digital currencies seem to say that there’s a finite number that’s issue. And it can’t change, whereas the central banks around the world with all the FIA currencies, just have the printing presses and they’re cranking out all the money. And I thought that’s where you were going with that. So tell me how important is this finite element if you will around?

Terry Brock: I think it’s critical. Yeah, I think it’s critical because we’ve got a way we set up with bitcoin particularly. You got twenty-one million bitcoins that can ever be produced and they’re not all produced right now, they’re being produced as people create them. They’re called miners after the idea of mining gold, but they’re actually calculating a lot of very complex equations. Whereas you flip it over to the central banks and they are trying really hard but in a way, David reminds me of kind of the old Soviet Union. You know they would get really, really smart people who are really, really care and they try to figure out how many pencils do we need for the month of February in Moscow. And eventually, they would either produce too many or too few and the marketplace was stifled, it was really the black market was the free market. Today we look at what they’re doing and we’ve got you know over twenty trillion dollars as we’re recording this now in U.S. debt, let alone Laurence Kotlikoff one of your guess you had before. Telling us it’s really over two hundred and I think people are looking and thinking, we need something that’s a little more reliable. And so they’re looking at mathematics, mathematics that cannot be changed.

David Scranton: Though there are twenty-one million coins in bitcoin for example and there are worth twenty-seven hundred apiece. The rain man in me says that that equates to somewhere just shy of sixty billion dollars of total market worth right now for Bitcoin. So I guess my question is you know that certainly is it nearly enough to replace the currencies around the world, the amount of money outstanding today is much, much greater than that? So is this…you see these things just being one of the currencies that people use to exchange for goods and services. Or do you see it eventually growing to a point where it can actually take over and be the primary currency? Because given these numbers it doesn’t seem like you can do that.

Terry Brock: Yeah you raise a very good case there because we don’t even have all twenty-one million right now. They’re scheduled to come later but what will happen is the price can go up. I think we’re going to see a diversity and so that people, some people will want euros, some U.S. dollars, (unclear 18:30) or whatever. As well as bitcoin and other digital coins, there a competition there so that if bitcoin doesn’t do as well or has some problems or has some… it doesn’t have features that other coins like say Dash or Bit shares or some others won’t have. People will be able to do it in a free market way which is much more reliable and dependable than some government control. And I think that’s what we’ll see happen in the long term.

 David Scranton: So that brings me to my next topic then. From my understanding the second player there in terms of popularity is ethereum. That’s come out and could you speak to our Income Generation members and frankly to myself. In your own words about the differences between Bitcoin and ethereum and why has ethereum’s popularity really taken off.

Terry Brock: Ethereum is doing very well, it was created by a gentleman. A Russian immigrant to Canada and he put this together so that it cannot only take care of money. But it also has a real strong component with contracts, so that we can then start writing contracts and be able to know what we’re going to do. What you say you’ll do, what I say will do and it’s stored in something that cannot be changed. Ethereum is a good competitor to Bitcoin, it was up as of this recording, today we saw a significant drop in it. But I think if we live by how is the stock doing today you know this better than I do David if you’re living on oh no, my stock lost three points today. Tomorrow it’ll be up a couple, we’re going to be in trouble. Long-term ethereum has some real stickability and I see ethereum addressing a lot of the issues that Bitcoin does. But also I think it will have some additional features, particularly in the contracts area.

David Scranton: Yeah, it seems like most of the major financial institutions and Wall Street firms seem to be backing ethereum. Almost to a point where it makes me wonder if they were somehow behind the initiation of it, were they behind the creation of it at all? Or is it just that because it’s contractual feature they feel like it’s a better alternative than Bitcoin for example.

 Terry Brock: I don’t know all the pretty things that went into it… behind those that created ethereum and those Wall Street firms. But I do think that they’re looking at it and they want something that’s going to be reliable. And when we can find something that is trustworthy based on again mathematics, then we know that it’s something that we ought to look into and be aware of.

 David Scranton: Now is there room for more than one? I mean let’s say that obviously if this whole blockchain technology really doesn’t take off when it comes to virtual currency at all. You know then all these companies are basically going to eventually disappear but assuming that your crystal ball is right and it comes through. Is it that one’s going to flow to the top or do you see that there’s room for four or five of these just like we have Master Card, we have visa, we have discover, we have American Express. What are your thoughts?

Terry Brock: Well, I wish my crystal ball was working a little better. I think the batteries are out on it today, but I can tell you what I think could happen (unclear 21:20) possible. I think we’re going to see competing currencies, Bitcoin is the dominant force right now as we’re recording this. Ethereum closing in a little bit but I also see advantages and disadvantages in a free market way with others, so there might be the Terry coin. There might be the David coin and we could all have our own coins that do certain features and certain activities. Right now we’ve got probably over a thousand and they’ll probably be even more coins that are out there. Each of which addresses different areas of the market and I’m a big believer in the free market. Let it run rather than trying to trust really, really smart people who really, really, really care like the Soviet five-year plan. And let the free market with its trillions of decisions that are made every day decide what’s going to happen. Give us the vehicles and tools like the old coins as well as Bitcoin.

 David Scranton: Of course. Of course, in the last fifteen or twenty seconds or so we’re not going to hold you to it. But I’d like you to go beyond just as blockchain technology, I know it’s one of the things you think is maybe the big next thing but what else? What outside this technology right now would you recommend that people look into if they’ve got a little bit of money with which they’re willing to speculate?

 Terry Brock: Can I see your twenty seconds and raise it to twenty years. I got a lot, but I look at things like drones, they are doing incredible things particularly outside the U.S. The F.A.A. is curtailing a lot that’s going on in the U.S., I see 3D printing, I mean we’ve got 3D printers up on the space station. It’s a much better way to manufacture in many cases. I also see a lot of other technologies that are emerging right now that are enormous, so I’m optimistic on technology and where we’re going.

David Scranton: The drones are really interesting to see. So you not only look like Jeff Bezos a little bit to me, but you sound like Jeff Bezos with the drones. Terry, thanks so much for joining us today.

 Terry Brock: Thank you, Dave very much

David Scranton: Coming up in just a bit we’re going to be talking more about today’s topic with some of my fellow financial advisers. At our financial advisor roundtable but before that Miranda is going to break down some of today’s most important financial headlines. So stay tuned, you’re watching the Income Generation.

Miranda Khan: Welcome back to the Income Generation, I’m Miranda Khan. Now let’s take a look at some of the big stories that move the markets this week. The U.S. ranks as eighteenth in the world for wellbeing. This according to a recent survey it looked at fifty different metrics including health, environmental protection and fighting discrimination. Denmark ranked number one if you’re looking for a new job you may want to consider Clorox, Bang, Facebook, and Space Exploration Technologies. According to a new glass door, survey employees rank the C.E.O.’s of those companies as the highest. Meanwhile, the C.E.O. of Uber took a hit in his popularity rating, the company didn’t even make the top one hundred. Travis Kalanick has now stepped down as Uber’s C.E.O. under pressure from investors amid controversy. That includes multiple sexual harassment allegations in the company’s offices. Kalanick, however, will remain on the board. President Trump’s net worth slims to just under three billion according to Bloomberg’s Billionaires Index. Some of his properties have shown a decline in profits since his inauguration in January. Home resales rose unexpectedly last month to more than one percent according to the National Association of Realtors, Sales are now at the third highest monthly level in a decade. And for much more on these stories please visit Newsmax dot com slash finance. Now back to David Scranton and the Income Generation.

David Scranton: Thanks, Miranda. Now that you’re all up to date, let’s hear from some other advisors in the field and get their insights on today’s topic. Yes, it’s time for another financial adviser’s roundtable. Today joining us are David Stearns and Al Caicedo. David is president and founder of Sterns retirement group in Watkinsville, Georgia and is specialize in working with retirees and near-retirees for over twenty years. David, welcome back to the show.

David Stearns: Thank you.

David Scranton: Al Caicedo is the owner and president of CKS Summit Group in Clinton Township Michigan. He also focuses on the specific needs of retiree’s and people nearing retirement and he’s been in the business now for twenty-one years. Al, thanks for joining us again.

 Al Caicedo: Thanks for having me.

David Scranton: Most important thing Al is I was just in your town you know last week. And this little Detroit municipal airport they call Coleman field, you know I got to tell you it’s the first runway I’ve ever landed on where there’s like weeds and grass like sticking up out of the middle of the runway. So can you give me a favor? This Saturday can you get your lawn mower, can you go over there and just kind of mow that for me. So that next time I come I don’t have to deal with that.

 Al Caicedo: You know while here in Detroit we’re just…we dare to be different man, I think we’re just going to let the grass grow.

David Scranton: You dare to be different, okay. Let it grow, okay sounds good. (Unclear 26:15) blades attached to the landing gear so.

Al Caicedo: Absolutely.

David Scranton: So, Al seriously you know have you had people approach you about this bitcoin type stuff? The digital currency in general and if so what do you tell them?

Al Caicedo: Actually, yes have. I’ve had questions about it you know we know that it’s been around since two thousand and nine. And you know in periods of low-interest environments and volatility in markets and things like that. People are always looking for the next best thing and so when that’s been brought up to me. It’s like I always approach anything as if they were asking me about gold or any of the other speculative assets that are out there. Is that it’s always proceed with caution and I only allocate assets that we definitely know we have no intention of maybe ever using. Because any monies that go in there are monies that you’re okay saying you know what if… I’m okay if I don’t have a chair left.

David Scranton: Got you. Okay, that’s good. Good feedback. Can I give you some feedback too Al, would you mind for a moment?

 Al Caicedo: Sure.

 David Scranton:

David Stearns: Well, probably similarly to Al because at the Stearns Retirement group we are working with retirees exclusively and I don’t have really any clients that have a lot of extra money they could speculate with. So I’m not a big fan of that type of investing in retirement, I’ve never had anyone specifically taught me about Bitcoins. But my answer would be similar to that of gold. Especially the fear mongering and fear-based approach that I see out there. I’m not a big fan of it, I try to bring more clarity and certainty to retirement and remove the fear.

 David Scranton: Okay. So you know it’s funny you talk about precious metals and I don’t know if you guys ever thought about this but you probably have. But you know even people who talk about gold you know what do we… You know is gold a safe haven and you know the funny thing is gold is less of a safe haven than some the other precious metals. Because there’s other precious metals are used for real purposes like copper as in wire, there’s an underlying demand for that. Whereas really the underlying demand for… the primary underlying demand for gold is really a luxury you know it’s jewelry. So you know Al, besides you know besides you know buying gold for your lovely wife you know what other benefits I mean do you see? Do you see the same problem I have, I see with this are there other metals that you’ve thought in your experience that might actually be… have less downside because they’re actually being used to have a real purpose other than just speculation?

Al Caicedo: If you look at Copper, I mean copper we use for wiring. So copper has a use. If you look at silver, silver has always had a use whether it be for money or anything else like that. So I always find that if you’re going to go into any type of precious metal that I’d like to see a secondary use for it or a primary use for it. And not just on the speculative side hoping that it just raises on just a value in the four years of what’s happening with the investors.

David Scranton: So David, you know it’s funny when you heard the Terry Brock interview. We talked about you know is this safe as the speculative and you know first he kind of said well, it’s safe. And what he really meant was that he really felt like of all the technologies that are out there a bit. You know two of the best technologies have both the best potential for actually coming to fruition down the road. Is this Bitcoin type technology with a digital currency and of course the other one was drones that he mentioned, he thinks it’s a real-life use for those types of things in the future. You know what are your thoughts on that if you were to speculate and say hey you know this virtual currency has some play? I mean do you think this is probably a good bet if someone want to take a small part of their money and do something that was more speculative?

 David Stearns: Yeah, you know Dave I really do there’s probably a couple reasons why. You know if the government doesn’t decide to regulate somehow force their way into Bitcoin. And allows it to organically grow, it looks like it may eventually become more user-friendly than gold would be, there’s already been numerous instances of people spending Bitcoin on things. And we can spend our dollars on, so that to me already feels like it has a leg up, I do have some concerns about it though you know I see conflicting reports out there. You know they have the mega network, the computing power is more powerful than anything we’ve ever seen, yet some of the larger and more complex transactions can take up to four hours to mine. And so you know that makes the dollar bill look a lot better and I think if those things can get worked out. With eighty billion dollars out there right now in cryptocurrencies all together, I think this one might be here to stay, Dave.

David Scranton: Okay. Alright so let me ask you this then in the thirty seconds or so we have left guys. If I’m a part of the Income Generation and I am and I’ve got a million dollars. What’s the most amount of money you’d ever recommend that I put into something like this? Like a Bitcoin type technology? David, what’s your number? What’s the most of a million dollars for an Income Generation member?

 David Stearns: The most that you can afford to lose. We know that one hundred dollars in Bitcoin in twenty-two would be worth seventy-two million dollars today. We would both miss that one, I say whatever you can comfortably afford to lose.

David Scranton: Do you have a number in mind Al yourself or is your answer similar to Dave’s? Is it specific on the individual?

Al Caicedo: Pretty similar, (unclear 33:04) five percent mark there but the price wouldn’t go any higher than that.

 David Scranton: Five percent? Okay, that’s even more than I was thinking. Gentlemen, if you can stick around for a minute that would be great. And same thing for our Income Generation viewers will be back to talk more about digital currency.

Announcer: Read David J. Scranton’s groundbreaking new book, Return on principle, seven core values to help protect your money in good times and bad. Discover practical solutions to the financial challenges facing today’s generation of retirees and near-retirees. Learn the truth about Wall Street, the financial media and the secrets they try to hide from everyday investors. This isn’t just another book about investing. Working Americans who have lived through two major stock market crashes and the worst financial crisis since the Great Depression, in the past sixteen years don’t need another book about investing. David Scranton’s approach to financial planning is a holistic system designed for maximum protection, strategic growth, and reliable income regardless of market conditions. Stop planning for retirement with your fingers crossed. Read Return on Principle, seven core values to help protect your money in good times and bad, available now.

David Scranton: Welcome back to the Income Generation. I’m David Scranton and rejoining us now to continue our roundtable discussion are David Stearn’s from Watkinsville Georgia and Al Caicedo from Clinton Township Michigan. Where they have the furry runway should I say? Gentlemen, thanks for sticking around.

Al Caicedo: Thank you.

 David Scranton: Now Al, you surprise me a little bit so when you gave that five percent number. So you think it’s possible that even with a million dollars let’s say at my age fifty-one, pushing age fifty-two in just a couple months that, that maybe even as much as five percent. As much as fifty thousand dollars could be appropriate to put in something speculative like this.

Al Caicedo: I think so, I think if you have a solid plan and a solid income plan and you want to allocate a small portion of that portfolio into something speculative. I don’t think it would hurt any, it would hurt the overall plan. I think you have to have a concise plan, you have to have a good sound income plan. And really be backed up with pensions and social security and everything else like that. As far as bitcoin is concerned I still think there is a lot of played upside to it, Japan actually legalize it as a legal currency. It’s, I think it has a long, it’s now become… it’s been around since two thousand and nine so now we know that it has some type of longevity. I do get concerned on the other side with competing cryptocurrencies you know we… We spoke about ethereum being a possibility and some people say that might overtake that also. So I think understanding the ethereum is out there right now. And that’s only… you know that’s only in the three hundred range right now and they’re projecting that in the next couple years it might get up to seven hundred range. So you do have some play there and some upside and knowing the history of a bitcoin. I think there’s possibilities there, now it’s again it’s always proceed with caution because they just started creating more cryptocurrencies as we go along.

 David Scranton: So

 Al Caicedo: Then one doesn’t…again when does the music end?

David Scranton: So David, you know he says when does the music end you know it’s like a game of musical chairs, tulip mania back in the… You know about four-five hundred years ago now the popular Dutch folklore which where people speculated on tulips. Actually, the price went skyrocket of tulips you know the flowers and of course, you use those currency and then all of a sudden people woke up one day and said why are these flowers valued so much? They’re just silly flowers and the price plummeted and anybody who was stuck holding the currency of a tulip basically was like the person. The child playing musical chairs and the music stopped, they didn’t have a chair. So you know obviously, that’s probably would… Probably what you said when you said you know make sure it’s money you can afford to lose, because if the music stops with all this then I could be the guy stuck without a chair right?

David Stearns: Yeah, you know that’s exactly right and you know the currency is an interesting thing because it really is more of a perceived value than anything else. I mean we’ve got a green piece of paper that says one hundred dollars on it, as long as we agree that it’s all worth one hundred dollars. And we can use it, it’s worth one hundred dollars and that’s what it’s worth and it really is just a piece of paper and so currency is hard to know what its intrinsic value is. And so, you know that’s what really a bubble is, a bubble is when a large asset loses touch with its intrinsic value and I think it’s really hard for the world to know what bitcoin is worth. I mean today it’s worth… one bitcoin is worth twenty-seven hundred dollars. But you know the start of this year it was worth eight hundred dollars so yeah, I think the music had end here quickly and so I agree with Al. I would say five percent at the most.

David Scranton: Okay. So let’s say my number was five percent it sounds like both you gentlemen are in agreement then. That if my number were five percent, I would take that fifty thousand dollars and I’d split it between bitcoin, ethereum, maybe some of the others. So that I didn’t have all my eggs in one basket right?

 Al Caicedo: Yes.

 David Stearns: That’s right.

David Scranton: So Al you know David’s talking about you know speculative bubbles and you know you’re a pretty intuitive guy. You know why do speculative bubbles exist? Why do they occur? And why do we learn our lessons? You know I get nervous about this and I guess that what makes me so conservative, I’m afraid to gamble on these digital currencies and to invest in them. But people made a lot of money, I’ve been sitting on the sidelines. So, let’s talk about speculative bubbles for a minute, Al. What are your thoughts about this? Why it happens and what people need to be careful of?

Al Caicedo: Well, there’s a couple of (unclear 39:08) factors I believe. One of them of course, being greed. You know when we see something that we believe that it has incredible upside. And other things are not going well, we start looking at things and say hey, what is the possibilities of this? I think greed has…is a huge driver of bubbles. I also think that current conditions increase the possibility of bubbles. Right now, for example, with the economic decisions of a lot of different countries and the mistrust that’s going on in so many different countries, I think that… And they’re all currencies, I think people are now looking for alternatives so when people are looking for alternatives to what they believe is no longer working. I think it also creates the (unclear 39:56) of wanting to be part of something that you know all of us by nature are… Have some kind of explorer wish inside of us.

David Scranton: You’re right. And right now it’s almost like it’s part of the populist movement in a way, it seems this whole bitcoin thing.

Al Caicedo: It is, absolutely.

 David Scranton: So Al, we need to leave it there for this segment. We’ll be back in a minute, stick around Gentlemen. We’ve got to go to a commercial and for our Income Generation members you stay with us also, we’ll talk more about digital currencies when we come back. Welcome back to the Income Generation, I’m David Scranton. And joining us now to continue our roundtable discussion, we have David Stearns president and founder of Stern’s retirement group. And Al Caicedo, the owner, and president of CKS summit group. Gentlemen, thanks again for sticking around here. You know I guess Al, I need to pay you a compliment because I did cut you off, we had to go to commercial break I apologize. But I know you did a really nice job in the last segment you know looking at the camera but I just want to let you know don’t worry no stress you’re as handsome as you were six minutes before that.

Al Caicedo: Thank you, thank you.

David Scranton: You’re welcome.

Al Caicedo: I’m working on it.

David Scranton: So David you know it is greed that starts these speculative bubbles you know I think we’re wired differently. People hear what they want to hear sometimes and when you’re experts people like Terry Brock coming on and saying you know this is real. There is a demand for it, we think this thing’s going to stick, people want to hear that I guess I’m so conservative and I know you are too. That my mind automatically goes to all the things in the past that people talk about with certainty and they never came true. And maybe the bubble, you know the price went up and the next thing you know boom it came down to zero you know people are wired different ways. So I know you’re wired more like me, I mean so how do you get your clients to think look at both sides of it and not just hear what they want to hear?

 David Stearns: Well most of the people that come to see me Dave at this point come by referrals. And so they have relationships with my clients, they are actually coming to hear the other side of it in my office that’s for sure. I won’t keep them from speculative investments but I’ll get them really solid advice about keeping an eye on what they can lose. Things like that, I’m also concerned about the U.S. stock market Dave, I mean… Talking about bubbles and you know we’re not worried about the fact that the simply adjusted price to earnings ratio right now in the stock market is almost at thirty. And we’re sitting here wondering can this continue on and so I’m even having these conversations with my clients as it relates to their portfolios even today.

 David Scranton: You know we had a guest on several weeks ago who actually said and I was trying to prod him a bit about the bubble in China. And he said bubble in China? He says the Central Bank right in the United States, all the western central banks that’s a big bubble you know printing money. And it seems like these digital currencies are hopefully some attempted solution toward that by making it more finite. So Al, in thirty seconds or so tell me what do you tell clients if I come to you as a new potential client and say I want to be really, really aggressive. What do you tell me? Do you take me on if I want to be aggressive? Do you tell me I’m sorry that’s not what I do? How do you handle it?

Al Caicedo: Well, it’s basically refocusing and really understanding whether it’s what our money for purpose versus performance. And understanding that you have to have finite goals for growth and finite goals for income. And at the end of the day, most people would want to retire based on income, they’re going to be using money from all the money they put away. And it’s just really…it’s just redirecting their thoughts and educating them on what it means to be income driven when it’s the time for distribution. And for the time to de-cumulate assets.

 David Scranton: And buying these digital currencies definitely isn’t generate any interest or dividends. So we have to take one more commercial break. Stay with us gentlemen, we’ll be right back. Welcome back to income generation, I’m David Scranton and continuing to joining us now are Alfredo Caicedo and David Stearn’s. Al, now I didn’t think you were aspired to be mayor of Detroit, but you kind of answered that last question a little bit like a politician. So I’m going to try again thirty seconds or less tell me. You know I come to you as a client and I want to be super aggressive with the majority of my money, you take me as a client? Do you not? What do you tell me?

 Al Caicedo: We are not a good fit.

David Scranton: David, how do you answer that question? Same thing, you take me? You try to help me and convert me.

 David Stearns: Yeah, there’s going to be no conversion. I think what clients love is they love honesty and sincerity and what they want to know is who I am, what I do, what I don’t do and I just tell them right away. I’m not the right fit for them.

David Scranton: Well good for you. Gentlemen, I think that’s the right answer, you can’t be all things to all people and the most important thing is you know and for our Income Generation members. The most important thing when you’re trying to find a financial adviser, you find someone who’s philosophically aligned with you. So if you’re conservative and you live in the Detroit area or you live near Atlanta these two gentlemen might be a very great fit. If you’re aggressive you need to go somewhere else. Gentlemen, thank you.

David Stearns: Thank you, Dave.

Al Caicedo: Thanks for having us.

David Scranton: And I’d like to take a minute to thank all my guests again for joining us for another episode of the Income Generation. I also would like to thank you our new and returning viewers, you know new technology can be a wonderful thing. It can improve our lives, it can create new jobs, it can pave the way for even more advanced technology the list goes on. As baby boomers, I believe most of us are more inclined to embrace new technology than to fear it or to reject it and I think that’s a great thing. But there’s always a potential danger to embracing the next big thing too quickly or with too much enthusiasm in your portfolio. Technology changes quickly and it takes time for new trends to evolve and gain stability and when that happens some companies incorporations will emerge successful and others will fail. That can seem fun and exciting from an investing standpoint at times because it is, but only the same way that a casino floor seems fun and exciting sure there’s a chance you could win by placing the right bet on the right game. But an even bigger chance that you lose, just keep that and a historical perspective in mind whenever it comes to investment hype or hoopla about the next big thing. Thanks for watching and if you’re close to retirement and you really want to know how to help to protect and maximize your money. It’s absolutely essential that you stay informed and up to date and right here is where you can do it on the Income Generation. I’m David Scranton and thanks again we’ll see you next week. If you’re near or in retirement head over to the Income Generation dot com and download your special report written specifically for the needs of the Income Generation. Again those born before nineteen sixty-six. I’m David Scranton and you’ve been watching the Income Generation, we’ll see you all next Sunday.