Why the Real Market Rally Starts In The Second Half of 2025

0:00Hello, everyone. We've got a lot to discuss today. I'm going to break down what happened in the first half of this year, and I'm going to tell you where I expect us to go from here. And then Dylan LeClaire, he's going to explain the difference between strategies, three listed preferred stocks. We're live today from the desk of Anthony Pompliano.

0:272025 is one of those years where it feels like a decade has happened in just a few months. Now, if we go all the way back, you can remember Donald Trump had just been elected. People were pretty bullish on this golden age of innovation. And everyone, including myself, thought that stocks were just going to go up and to the right. If you put somebody into the White House who cares about the stock market, that uses the stock market to measure the health of the U.S. economy, you would expect the stock market to continue to go up and to the right. But that's not what happened. Instead, what we saw is that Donald Trump and his administration took office.

0:57And the first thing that they started talking about is that they were going to serve Main Street, over Wall Street. Now, of course, that entire idea, it does fit into some of the things that they were talking on the campaign trail, but I don't think a lot of people, including myself, really understood the level and the severity at which they would pursue that. And so naturally, part of that plan was the tariffs. They talked about a lot of that in 2024 during the campaign. And so as soon as the tariffs got put in place and we saw Treasury Secretary Scott Besant, we saw Commerce Secretary Howard Lutnick and the President of the United States all start talking about Main Street, Wall Street got pretty nervous.

1:32Naturally, the tariffs also created a lot of uncertainty. And the second that Trump actually started to put them into effect, it went from, oh, he's just negotiating. Oh, he's just posturing to now the guy's serious. And we saw Mexico and Canada, two of our largest trading partners, they were real mad. They were big mad when we started putting tariffs on them. But naturally, what did we start to do? If you went and you looked at the data, you realize that Democrats and Republicans for decades have been talking about these trade deficits and the fact that the United States government and the United States people and the United States economy has been being taken advantage of.

2:05And so now here we go. We're going to go try to solve that problem. As soon as we started to try to address the problem, first with Mexico and Canada, eventually China, and then the entire world with all the reciprocal tariffs, the market went down. The market actually went down 20%. We saw Bitcoin go down more than 30 % at one point. And so everyone was freaking out. But I don't have the biggest brain, but I I did say one thing, which was we would go back to all-time highs and we would do it in 2025. The reason is because nothing had really structurally changed in the US economy. And the second that everyone gets fearful together, there's an overreaction.

2:41You saw stocks go down, saw Bitcoin go down, saw everyone trying to sell assets to raise dollars. But if you are putting pro-US policies in place, things that should actually help US businesses, obviously the stocks are going to come back and it's exactly what happened. We were down 20 % in stocks. We're now back almost to all-time highs. The Fed hasn't even cut rates yet. So what do you think is going to happen when they do that? Now, of course, that recovery also came hand in hand with the administration saying, you know what? We came out real strong. We came out real hot with the tariffs. And instead of going and putting the tariffs at 135 % on China or putting many of these other tariffs at 25 % and 50 % on some of these countries, instead, what we're going to do is we're going to roll it back to a more rational level.

3:24We're going to try to get somewhere around 10%. If you're sitting there and you are preparing yourself for 25, 50, 135 % tariffs, and all of a sudden now you only get 10, you have an anchor bias. You thought that the tariffs were gonna be massive, instead they end up being much smaller. What do you do? You start to gain confidence back. As you gain confidence, people start putting capital back into the market. Now, speaking of the market, yes, stocks have recovered. Bitcoin went to a new all-time high already. So one of the two major asset classes that I talk about, that already hit a new all-time high.

3:53But what is actually being traded? What is the people actually investing in? That's what I find most interesting. Retail investors now have a larger allocation to stocks than ever before. They currently hold somewhere around 38, 39 % of the whole U.S. stock market is in the hand of retail or independent self-directed investors. That eventually is going to be over 50 % in my opinion. How long that takes, I don't know. But the individuals, they now get access to information on the internet and they're allocating capital directly on the internet. And that's going to keep going up. On top of that, you see these people.

4:25Some of them are super sophisticated. They're going to go and they're going to allocate capital based on all kinds of timeless investing principles. But many of them, what are they doing? They're buying penny stocks. They're gambling. They're all speculating. And I always find it funny. You know, Wall Street, they sit there and they kind of thumb their nose and they say, no, we don't gamble. We're not speculators. We're really serious people. You know, we got our suits and ties on. We wear our cologne. Some people wear Rolexes, the whole nine yards. But when they do that, they're gambling too.

4:52I've never met bigger gamblers than the people on Wall Street. That's okay. That's their job. Their job is to find risk mitigated ways to drive returns. That's okay. And that's what individuals are doing too. But individuals, they take it kind of a step further. 47 % of all trading volume right now is in penny stocks, stocks worth less than a dollar. Crazy to see that. But I think it's all part of this big demographic shift, this big cultural shift. The second that you put a cell phone in the hands of young people and they sit there, they constantly want the dopamine and they constantly are looking for how do I get fast results?

5:23Those people are going to push further and further on the risk curve. And that's what you're continuing to see across the market. So who are the big winners in that world? Well, if you have money printing going on with global M2 supply going up, if you have the Fed who's getting closer and closer to a rate cut, if you have more risk taking coming into the market and you have retail pushing their capital in, guess what happens? Assets like Bitcoin are going to do very well. And then obviously stocks will as well. So that's exactly what I think is happening here. Through the end of this year, I expect Bitcoin and stocks to do incredibly well.

5:55I think stocks will go back to all-time highs. I do not expect a recession, a depression, a Black Friday or whatever else, all those doomsdayers we're predicting. And instead, I think that we are going to actually get investor amnesia. All of the investors by the end of this year, they're going to be like, it wasn't even that bad in April. I don't even remember what was going on then. Just literally, going to completely forget about it because what ends up happening is that people want to understand what is going to happen over the long run. And the only thing that matters, the intelligence test for our entire generation, are we going to keep printing money?

6:28Are we going to continue debasing the currency or can we balance the budget and stop? And now what we've figured out, this was the single greatest chance that we ever had to balance the budget in my lifetime. And we failed. We didn't get there. We're not going to get there. Instead, what are we going to do? We're going to print more money. We're going to spend more money and the dollar is going to be debased in asset prices. They're going to keep flying. So as Lynn Alden always says, there's no stopping this train. I completely agree with Lynn. And I think that that is really going to end up being the only thing that matters.

6:56Are you invested or are you trying to save? And the funny thing is the institutions, they're not as allocated right now to the market as the retail investor. The retail investor actually was able to front run the institution and get access to the recovery in the stock market and in the Bitcoin market. So for all those people who think that the retail folks are stupid. Again, there's plenty of gamblers, but there's plenty of gamblers on Wall Street too. But I do think that you are starting to see a greater degree of sophistication in self-directed investors. Those people are going directly to the market and they're allocating without financial advisors or stockbrokers.

7:26And my expectation is that the percentage of capital that is owned by those individuals in the market is going to continue growing. And eventually we will see more than 50 % of stocks. They're going to be actually owned by retail and self-directed investors, not by the institutions. And on top of that, I still expect stock market all-time high, Bitcoin all-time high. By the end of this year, we've got six months, six and a half months left. Let's see what happens. One of the top questions I keep getting right now is what's going on with strategy, formerly known as micro strategy, with all of their stride, strife, stripe, bing, bang, boom, bomb, all these different preferred stocks that they're putting out there.

8:01I don't know. So guess what? I just go and I listen to people who've studied it way more than I have. And that person today is Dylan LeClaire. Dylan recently sat down with Natalie Brunel, And they had a conversation specifically about what the difference between these three different preferred stocks are. Take a listen to how Dylan explained this. Dylan, you're so good at articulating things simply. Can you describe the differences between stride, strike, and strife for investors? Yeah. So I think it's, you know, what Saylor is doing is he's building a yield curve, a credit curve on Bitcoin. And so, you know, strife, you can think of it as like investment grade, safe, low volatility debt instrument.

8:43So, you know, this is like the highest grade. It's severely over collateralized. If in the case of a missed debt payment, your interest rate ratchets, it goes from 10 to 11 % and then 11 to 12 % and it's cumulative. So any interest they miss, they have to pay later. So there's all these protections in place. Meanwhile, stride is basically similar to strife, but with all of the protections stripped out. So it's non-cumulative, they don't have to pay the dividend, right? And so that stride is junk debt and someone, you might say, why would you ever buy junk debt rather than investment grade debt?

9:17Well, junk debt pays you more. So while stride, I think they're both 10 % at par value at 100, But what's, you know, Strife will probably pay you, you know, if I had to guess a year out, you know, 7%, 8%. Stride will pay you 10%, right? And who knows what those rates will. But I think the simplest way to think of it is Stride is junk grade debt. Strife is investment grade debt. Strike is in the middle of those two. Strike is, you know, they call it a Bitcoin with a fellowship, right? You get Bitcoin exposure because there's a conversion. There's a call option, right? It's like you have a bond and then you have a call option on MicroStrategy for 100 years and they're combined, right?

10:03So the interesting thing with Strike is, you know, if you go on Robinhood or your TD, you know, Ameritrade app or whatnot, and you click on the options for MicroStrategy, a thousand dollar call option for next year is like actually pretty pricey. You know, it's like, it's expensive, right? Because one year out, it's a volatile stock, anything can happen. Strike takes, you know, it's a thousand dollar call option that never expires. It's perpetual. So it takes, you know, a fixed income instrument that pays you 8 % combined with a call option. So there's really, there's something for everybody. Do you want higher risk, higher yield?

10:37Stride. It's at the bottom. It's the most risky relatively. Do you want a yield with performance that's linked to Bitcoin and micro strategy? Strike is really attractive. Do you want safe, boring, low volatility, high margin of safety? That'll be strife. So I think that it's pretty genius the way that they're structuring this capital structure. And then at the bottom is MSTR. So it's benefiting from the leverage of everything above it, of all the preferreds. And those preferreds are being issued to buy BTC. So all that Bitcoin that they're raising is benefiting MicroStrategy Common. It's also interesting that whenever you issue stride, the lowest preferred strike, strife, and the convertible bonds all become safer and more attractive.

11:29So it's a really reflexive dynamic on the capital structure. And I think, to be honest, I think Sailor is going to continue to innovate and they probably issue more into the future. And they're all over collateralized. Severely. Do you think the market is really missing what's happening here? Yeah. Well, the interesting thing is that most, I think we touched on it earlier, most preferreds or really most debt instruments are based on the expectation of future cash flow, not asset backed. And strategy has said they're trying to really kind of almost create a new theory of credit, right? It's we're going to create asset backed credit instead of cash flow backed credit instruments, future discounted cash flow backed instruments.

12:14instruments. So that's the game that's being played. That's the mission. And stuff like getting a credit rating agency to give a credit rating to these instruments is the next battle. So it's an exciting one. I think 10 years from now, 20 years from now, financial historians will look back and say, okay, wow, that was an inflection point in Bitcoin. And the rise of something that we all agree now was inevitable. But right now it flies in the face of conventional, traditional wisdom, which is why it's so polarizing. Really does. And there are many trillions to go after in the fixed income market.

12:53Many trillions, hundreds. Now I got to give Dylan and Natalie a lot of credit. You watch that, it's way clear. And so Natalie did a great job in terms of really setting Dylan up to explain this in excruciating detail, but to do it simply. I appreciate both of them. They're both amazing contributors to the Bitcoin community. I think they do a great job. Dylan's obviously done a fantastic job over there at MetaPlanet and really helped to kind of catalyze what's happening in Japan. And then Natalie, she recently joined the Seminar Scientific Board and she's been doing a great job as well. So thank you both for helping to explain that.

13:23That's it for today's show. Hope you guys are enjoying it. I'm having a blast putting this together every single morning. Please make sure you follow us on X and make sure you're subscribed on YouTube and I'll see you guys live from the desk of Anthony Pompiliano on Monday.