FULL TRANSCRIPT
Slava (00:00)
In this episode of Smart Humans, we have a special episode with my colleague, Adam Katz, and we talk about this year in alternative investments. We cover everything in 2024 from real estate to pre-IPO venture, art and collectibles, and of course crypto. And then we give you predictions for 2025 across each of those asset classes. We actually break it down asset class by asset class, how you can allocate your money in 2025 to try to make money.
Slava (00:58)
Hello and welcome to the latest episode of Smart Humans. We have a special episode for you today. Special guest, Adam Katz from the Vincent team. Adam, welcome.
Adam Katz (01:09)
Thanks for having me, Slava.
Slava (01:10)
Yeah, Adam's usually behind the scenes, but today we're doing our year review for 2024 and providing some predictions for the world of alts in 2025. So Adam's one of our experts and creates lots of the content. So we're super excited to have him here. So I guess we should dive in Adam, right? All right. So first let's provide a little bit of context, high level. We're going to discuss 2024 and what we think for 2025, but then we're to dive into alts. We mean, real estate.
Adam Katz (01:27)
Sounds good.
Slava (01:40)
pre IPO venture, art, collectibles, crypto. We're gonna break them down one at a time, kind of what we've seen this past year in our predictions for this upcoming year. Of course, this is not financial advice. This is just Adam and I chatting. This is just to create a dialogue for all you listeners. So let's just dive in. So 2024 was definitely an interesting year. Strong US stock market, way better than global. Actually the second year in a row that we went over 20 plus percent, which is pretty crazy. Last time since the late 90s.
Interest rates started coming down after Jerome Powell in late December of 23 signaled that that was started happening. The interest rates didn't come down as fast as some people predicted. Trump became president. Obviously, that was massive and has a huge implication on predictions for 2025. And there's also some geopolitical issues that obviously we couldn't avoid. And it seems like that just keeps on getting more turbulent as days go on.
Adam Katz (02:36)
And what are you thinking for 2025?
Slava (02:40)
You know, it's hard to predict anything, but I'm not betting that we're going to see another 20 plus percent year for the stock market. I think it's probably going to be a positive year. I'm not thinking it's negative, but not going to be as positive. know, the stock market was led by Nvidia and all those AI pops. I still think there's going be some strength there, but it's hard for me to see that growth continuing. I think there'll be more breadth. So I'll probably dollar average cost in as opposed to being weighted.
by big mega caps, which are like, don't know, 30 % of the entire stock market now. I do think rates will come down, but again, I think they're gonna go slower and slower than people thought. I'm not one of those recession folks, but that is definitely a fear, especially if you start getting some of the geopolitical issues rising up, especially if you get some of the tariff talk coming from Trump and if that has implications on prices and all that. But in general, I'm optimistic, but just not as strong of a year.
as 2024. That said, in the alt world, which we focus on, I do think it'll be net positive. It does seem like it could be more of a risk on year as rates continue to come down. But you never know. And that's why we're having this conversation.
Adam Katz (03:47)
Mm-hmm.
Yeah.
Slava (03:56)
All right, any other thoughts there Adam before we dive in?
Adam Katz (03:59)
No. let's start with real estate
Slava (04:03)
Yeah, let's do it. So let's start with real estate, as you said. So what's your take on what happened in 2024?
Adam Katz (04:10)
Well, the first thing that you mentioned where you talked about the Fed cutting rates, a lot of people thought it was gonna be more rate cuts and that that was going to lead to lower mortgage rates. And even though there were a total of four cuts, so the prime rate came down 1%, mortgage rates actually did not come down at all. We ended the year pretty close to 7%, which is where we basically started the year.
It did dip closer to 6 % in anticipation of the rate cuts, but it ended up not really affecting mortgage rates because mortgage rates are tied largely to the 10 year treasury yield. And that actually rose partially because of Trump's election. There was thoughts that there's going to be more inflation concerns. There's the tariff stuff.
So people are a little antsy about that and so a big driver of the real estate market is how high mortgage rates are especially the residential market but also the commercial market Because the cost of capital is higher it People are locked in to the lower mortgage rates that they have that they got, you know in 2020 and before
So there are all these people sitting around with two and a half, 3 % mortgages. They don't want to sell, buy a new house and then have a 7 % mortgage where the monthly payment is going to be so much higher. So you don't see that many people wanting to move, even if, or they might want to move, but they feel like they're locked in to their current home. And so a lot of what is happening in the real estate market is going to be dependent on mortgage rates.
And so the market was pretty slow. You saw more listings towards the end of the year as people are starting to get used to this higher rate environment. You saw home values continue to grow in 2024. The Case-Shiller index and the FHFA home price index were both around 4 % year over year.
which was down from 2023 where both were close to 6%. So they're going up, they're just going up a little slower. saw just the supply started to come back towards the end of the year. Like I said, people are getting a little bit more used to this idea of higher rates and it also doesn't look like the rates are gonna go down.
Any time soon, maybe they'll come down to 6.5 % by the end of next year. But because of that, more people who have been trying to wait this out and saying like, okay, I'm going to wait to buy, I'm going to wait to sell until rates are lower. They're saying, well, I don't know if I can just wait any longer. And they're just biting the bullet and coming in.
And so you're seeing a little more market activity pending home sales were like a two year high towards the end of the year. You're looking at more, more new listings, but still well below where we were a few years ago. So there are.
Slava (07:22)
And
a lot of what you mentioned is residential. You mentioned commercial a little bit there, but 2024 for commercial was pretty tough. Is that right?
Adam Katz (07:27)
Yeah.
I mean, commercial is interesting because it's so different sector by sector. If you want to count multifamily apartments as commercial, which some people do, rents were pretty steady. They didn't go up very much. Some places had it as pretty flat. Some had it as one, two percent rise. It also depends on the market.
rents in New York went up, I think, six or 7%, rents in Austin, Texas, where there was a lot of supply built in the last three or four years actually went down about 7%. And that actually happened in a number of markets in the Sunbelt in Texas and Florida and places like that. There was actually, I think, a 50-year high in multifamily completions this year.
which is there's a lag because it takes a few years to build these apartment buildings. So like all these buildings started being built during the pandemic when things were hot and then they're getting completed in 2024. And so you have this like big glut of supply come in. But what's interesting and I'm skipping ahead a little bit, but what's interesting is that the actual multifamily completions were at highs, but the starts meaning that the buildings that were started to be built this year.
Decreased significantly so you're gonna be looking at less supply coming online in the next few years. But anyway If you look at different elements of commercial office has been you know, a disaster the last few years of hybrid work people working from home and You know vacancies are crazy high. I think that
Slava (09:12)
The back to the office never really truly
happened, right? I mean, it's still very hybrid.
Adam Katz (09:16)
It's started to
happened. I think that, you know, there was a gradual shift back to in-person work, but people are still even, I don't think we're ever going to go back to the days where everybody's in office five days a week. You know, when, when there's like a gradual return to work, it's people coming in instead of not coming at all. Maybe they're coming in once a week or going from one to three times a week. And so a lot of companies are scaling back the space, a lot of coworking spaces.
especially in urban areas, you know, in New York and San Francisco and LA and places in Chicago, places like that, you're seeing just really high vacancy rates. I think even nationwide, like 20 % of offices are vacant right now. And as a result, you know, office construction is, as I think it's at a 10 year low, like people are not, they don't want to get into the office game, which makes sense. I do think that there was actually a
I don't think there was actually a positive rate of net absorption last year for the first time in two years, which means that more people were renting office spaces than were letting their leases end. So the vacancy rate actually went down a little bit, but it's still, you know, it was not a good year for offices, but we may have hit the bottom. then you go ahead.
Slava (10:37)
So you just,
go ahead. No, I was gonna say you provided a ton of context already. Are you game to move towards 25 in terms of what's in store and potential predictions?
Adam Katz (10:45)
Not
just the last few things, industrial, which is part of commercial, has been one of the bright spots the last few years. This last year, the growth slowed down a little bit, but things like data centers, warehouses, I mean, with the rise of AI, we cannot build these data centers quickly enough. so that has been an interesting part of commercial. And then when you look at retail, retail actually hit the lowest vacancy rate in 20 years.
Slava (10:48)
Hmm.
wow.
Adam Katz (11:15)
Especially like for high end retail, like high end shopping centers, like they actually are pretty in demand and people were starting to go out and shop more. Which was surprising to a lot of people. But so I'd say within the commercial realm, offices are struggling, but mostly everything else is doing pretty well.
Slava (11:37)
So a lot of good information there. We want predictions. What's happening this year? What's gonna happen in 2025? Give us your Nostradamus hat.
Adam Katz (11:47)
I mean, I think that we're going to, it's going to be a slow year again, especially in residential. Um, I just, I just think that so many, mean, there has been progress. Uh, it was something like 85 to 90 % of people had mortgage rates under 5 % going into the year. And now that's down to like 75%. So you're seeing like a gradual shift, but you still see the vast majority of people.
have low mortgage rates and they just don't want to sell. They don't want to move because it's just going to be so much more expensive to do that. So it's going to be slow. There are going to be people who do it. if we're talking three, four, five years down the road, if the mortgage rates are still this high, that's just the new normal. And the market will pick back up. But I still think you're going to see some lag here. I think that home prices are going to
slowly creep up in most markets, but probably at a lower level, two to 3 % rather than 4%, 6%. Rents are probably going to stay pretty flat. Again, it depends on the market. New York is always going to see rent growth because the supply is so constrained here. But when you're talking about Texas or Florida, and you've got so much land, you've got so much construction being built, I think that...
Rents there probably are not gonna grow and in some cases they're gonna decline. I do think that down the road Because some because the supply has come online in the last year or two and it's gonna be much less going forward one of the interesting things about high mortgage rates is that while it's going to make it tough to The cost of capital is high and so it's tough to acquire properties
If you have multifamily properties already, because it's hard for people to buy, there's so many more renters. So there's more rental demand. And so you're gonna see as this continues on with multifamily starts declining and completions are gonna decline going forward. So there's gonna be less supply, there's gonna be more demand. It may not start in 2025, but over the next year,
two, three years, like multifamily is in a really good spot because there's gonna be more people wanting to rent, less supply coming in. I think there's gonna be a lot of opportunities. I think that people who get in now and even people who got in last year are gonna find that the multifamily opportunities are gonna be very attractive in 2025.
Slava (14:28)
Mortgage rates. What do you think is the mortgage rate a year from now?
Adam Katz (14:35)
probably going to be relatively similar to what it is now. I think you'll see maybe a little fluctuation throughout the year down towards six and a half, maybe even as low as six, but and just to be clear, this is like the 30 year fixed mortgage rate. No, I mean, I'd love that, but I don't I don't see that happening. I mean, they're projecting what two cuts. So let's say it's even four cuts. That's another percent. I just don't think that it's going to drop that far.
Slava (14:48)
Right, but you don't think we'll see something with a five handle.
Adam Katz (15:05)
from where we are. We're at seven, like maybe we'll get down to low sixes, but I wouldn't count on it.
Slava (15:12)
And you mentioned all kinds of areas. There's residential, commercial, industrial, retail, hospitality, et cetera. If you had to pick your one winner out of all those verticals, what would be the one that you think will do the best in 2025? And what would be the one that you think will do the worst? And obviously you have no idea, but just for the sake of prioritizing.
Adam Katz (15:35)
I mean, I think that industrial is going to be have another solid year. just think that this demand for data centers is going to be higher and higher. For retail investors, you know, I mean, they're like industrial REITs and things like that, but most people aren't going out and buying a data center or buying a warehouse. I think that two things that I would look at personally, I think real estate debt is going to be very strong because interest rates are high. You know, you can, there are a lot of
platforms, there's a lot of opportunities to get in at double digit percent returns, pretty stable. You know, you're you're lending to people who are rehabbing properties, whether it's residential or commercial or whatever, I think that that could be really strong. And then I think multifamily, which is apartment buildings, I think that that's think now it's a good time to get into that. I think that rents are going to probably be more or less flat this year, but I think over the next
three to five years, you're gonna see increases there and because supply is going down, it's gonna be harder to get in. So you might have to swallow a couple years of high debt payments and relatively stagnant rent growth, but I think long-term, people who get into multifamily this year who got in last year are gonna be in really good position down the road.
Slava (16:56)
Yeah, I mean, you got ahead of me there on that final question, which is I was going to ask you how to allocate cash in 2025 into this asset class. And you basically just answered that right. So you were saying you try to get into some real estate debt and you try to get into some multifamily, whether it's through a platform or direct, depending on how much risk and exposure you want to get.
Adam Katz (17:05)
Yeah.
Yeah, I mean, it depends on your financial situation. If you can buy a building, that's great. If you can get a slice of a building, that's great. I think that debt and multifamily, and then if you can get into industrial or retail, which is, think, a little harder for everyday investors to access other than like REITs, I think that those are probably going to be pretty solid bets going forward.
Slava (17:39)
Awesome. Well, I think that covers most of our real estate conversation. Is there anything else you want to cover?
Adam Katz (17:40)
Thank
No, I think we can move on to venture and let you talk for a little bit.
Slava (17:49)
All right, so in the pre-IPO world, 2024 was an interesting year. Definitely lack of liquidity was one of the main terms. AI, a lot of hype around AI. You had some massive rounds coming from big VCs, practically sounding like PE rounds, a billion dollar rounds. You had open AI, you had...
SpaceX and others take off. But we also had is an opening up of the IPO window. So not a ton of IPOs, but definitely several well known IPOs, whether it's Reddit, Astera Labs, Service Titan. And the key here is they actually held up. They had a pop on day one and then they actually have been doing well, which is huge for the market. The early stage venture has been doing well in getting funding.
But it's been harder than ever to be able to really do the venture game in the earlier stages. The middle, the B, Cs, Ds is really kind of a no man's land. It's really hard to navigate that. You need to have some strong unit economics and try to get to those kind of huge pre-IPO company rounds. So we did see discounts for a lot of companies evaporate because the post-Zerp zero interest rate environment days where we had inflated prices.
we saw some massive drawdowns on expectations on prices. So the bid ask really widened and there was expectations of massive discounts. In 2024, I would very generically simplify that discounts were eroded by about 20 % across the board. Now, obviously that's company by company, stock by stock specific. Some of them are still 95 % discounted and some of them are in the positive versus their last rounds.
it's interesting to see overall the erosion of those discounts. think that momentum is going to continue into 2025. And I would say the companies that showed the greatest strength was SpaceX and OpenAI. Now you can use OpenAI as an abstraction for Anthropic, Perplexity and others, but really SpaceX is the dominant space play and OpenAI is quite
dominant as the AI play. Both are extremely difficult to get into on their cap tables or even to invest. it's really challenging as it relates to navigating fees and discounts, sorry, fees and access. But that's really kind of what happened in 2024.
Adam Katz (20:28)
And you kind of touched on this, but like, what about the secondary markets for these, these companies like SpaceX, open AI, private companies.
Slava (20:38)
Yeah, I mean, again, it's all based on the companies. You definitely saw a lot more demand than 2022 or 2023. Demand was huge in 2021. Everybody and their mother was piling in totally eroded massive whiplash effect in 2022 and 2023. So versus 2022 and 2023, we're seeing a lot more demand. That demand shows up in, as I mentioned, the prices going higher, but still many of these companies are at discounted prices.
versus their last raise because a lot of these last raises happened at the peak of ZIRP Some of them did not, sorry.
Adam Katz (21:15)
I just said that makes sense.
Slava (21:17)
Yeah. uh, but the ones that are super hot, the, the space X's and the open AI's, mean, they're trading up significantly. There's talk now that SpaceX is doing a $350 billion tender, which is practically a double versus what it was a year ago, which is crazy for a company that's already worth that much. Uh, just to put it in perspective, like SpaceX trades in the private markets, uh, more than some small caps traded in the public markets. So
while it's definitely a private stock, definitely has some trading volume to find some price transparency.
Adam Katz (21:54)
And what are you seeing in these trends for 2025?
Slava (22:00)
You know, I think it's more of the same. And I think the momentum is building as the interest rates are coming down. I do think that the Trump election is very strong. think the clarity of the election as well as potentially some of the Republican agenda, as well as the momentum in the IPOs from H2 2024 has more momentum for what's going to happen in 2025. I think it's going to be a good IPO window.
Is it going to be gangbusters? I don't think so, but I do think there's an opportunity for, you know, several, if not a dozen or two, IPO's meaningful IPO's. you just, whether it was, Databricks was just raised. Who knows if they come out, SNYK might come out, Stripe might come out. there's a bunch of companies that might come out. There's always talk of whether or not it would be SpaceX or open AI, but chances are those are going to stay private for a while.
I do think there's gonna be more M &A and more of these smaller companies getting acquired, more big companies merging, especially in the shift in the White House. So all of this is gonna create liquidity. And liquidity has been the number one issue and the lack of liquidity has been the number one issue in the venture markets and in the PE markets, in the pre IPO markets. So I do think that's gonna become the fuel to potentially accelerate things to the positive.
I do think it's a good vintage for 2025 to still be investing into the earlier stages. I'd be focused either the earliest of stages or the latest of stages. So either kind of the inception, pre-seed, seed investing where any lottery ticket can turn out to be 100X or the pre-IPO where chances are these are great companies, strong unit economics, and it's just a matter of trying to get in before the IPO and you still have a lot of upside.
That in between can get a little scary because sometimes it's still expensive, but still a lot of risk. So a tough trade off there. I do think AI is still going to be the darling. Probably agents will be the trendy word for 2025, but we'll see how AI becomes more mainstream and how it becomes more part of people's kind of everyday and how that turns into profit, you know, in economics and how people start paying for AI.
Adam Katz (24:22)
Are there any other sectors besides AI that you think are going to have a strong 2025? I mean, I know that AI was like the dominant story of 2024 and it kind of sucked all the oxygen out of the room. Is there any other sector, even other companies? I mean, you mentioned a few that are not AI companies that could come and IPO and know, and like Reddit, obviously not an AI company and had a strong IPO last year. Just curious.
Slava (24:49)
Yeah,
some of the trends that I think that will continue, they're not new trends, but there's going to continue momentum. I cybersecurity is massive. I think it's a huge secular trend where there's just more and more threats that are going to get more and more complicated, whether it's from a nation state or from just a bad actor. Anybody listening is going to have to worry about that even more and more than they already do. And I think that investing into strong cybersecurity companies could be interesting.
There's one called SNYK that I'm a fan of that there's a decent chance that it'll IPO in 2025, if not soon. So, you know, that's a play that I think is interesting. I think defense tech is interesting. So defense tech is really the shifting of let's go from like Top Gun 1 to Top Gun 2. You know, these are generations newer planes were much more innovative and you're seeing it go from a huge
Adam Katz (25:39)
Mm-hmm.
Slava (25:47)
massive multi-billion dollar plan to now drones, right? Which are, and can you turn into a swarm of drones, be as effective as a huge fighter jet? I don't know the answer, but that's where these things are headed. There's a private company called Anduril, A-N-D-U-R-I-L, that's kind leading the Charger around $15 billion. I do think they're a proxy for a movement that's happening. This will probably take a decade at least to see the evolution.
you know, is it going to be the bow wings and all these companies that are still the only ones that are relevant in defense tech, or are going to see the space X movement in defense tech? Right. So no one could ever think of NASA getting replaced and here we are with space X. Right. So is there really going to be a replacement with a private company for some of his defense tech? I think it's possible. and I do think that's interesting. another company, sorry, another trend is just a continuation.
of the GLP ones and all this weight loss. I know it's just probably a category that people just don't want to talk about anymore. Exactly, exactly. So like OZEMPIC and all those, I just think that there's such demand for these drugs and the supporting therapies that that's just going to continue to grow and grow and grow and how will people deliver it? How will people get it? What will be the
Adam Katz (26:46)
That's like, that's like Ozempic
Slava (27:08)
support systems around how will you track it? You what are the pros and cons reactions? I just think there's gonna be a lot of market there. I don't have the perfect private company to tell you as the pre IPO opportunity, but I do think that's a trend to look out for in the public and private markets. So those would be some of the other markets that I think are definitely interesting. and the other one that I'm personally not.
an expert at, but I do think is just always interesting, but it's even more interesting than ever now is life sciences. So I just think AI is going to catalyze significant acceleration in more therapeutics, more drugs, more kind of things that are being discovered. The breaking down of DNA and sequencing and personalized medicine and all of that. think there's going to be significant advancements and opportunities to meet, you know,
profit there in 2025.
Adam Katz (28:08)
That's a lot of really interesting info on the trends. And so I'm going to ask you, what you asked me about real estate, is for 2025, for investors, what would you be looking at? Where would you allocate your money? What companies would you target? What would be your outlook for this coming year?
Slava (28:21)
Mm-mm.
You know, I think pre IPO is a tricky market to enter into because it often lacks liquidity. So you sometimes are tied up for a year or two, if not many years, if you get early into a fund. So investors should think about that appropriately. But I do think I would barbell if I could into the super early stage into some pre some pre seed inception seed type funding, if I can get exposure to that. Usually that has to be through a fund. So if I can get exposure to that, that's fine.
then also some pre IPO potential investments. The few darlings that are out there that I think the best day to get into is yesterday is probably the space X's, the open AI and the stripes. I think it's hard to see those companies being worth less by the end of the year than being worth more. the challenge with those three companies is being able to navigate fees and expenses and getting access.
Now outside of those, I do think there's a lot of interesting companies out there. You just should navigate the platforms. If you can go direct to get on somebody's cap table, because you know the actual companies, that's amazing. But often there's quite a few platforms that you could try to navigate to get onto these cap tables or into SPV, special purpose vehicles, or to get into the investment. So that could be an Anduril that could be a SNYK and many others.
I do think it'll be an interesting year, net positive for 2025 for pre-IPO
Adam Katz (29:57)
Great, great.
Slava (29:59)
Awesome. So shall we move on to art and collectibles? All right. So Adam, going back to you, what did you think of art and collectibles for 2024?
Adam Katz (30:11)
okay. Well, I'll start with art. in both actually, you know, there, there were a lot of big notable sales, for both art and collectibles in the art world. had this $120 million Magritte painting that got sold. I think the one that got the most press was, called the comedian, which was the banana duct tape to a wall that sold for $6 million. And then the guy bought it, ate the banana, which, you know,
pretty predictable, there were other, there were a lot of, there were always a lot of records being set. You know, I think there was an Ed Ruscha a Leonora Carrington. On the whole though, there weren't as many high end sales. The art market has kind of paused a little bit compared to, and you can say the same for the collectibles market, compared to pandemic level kind of frothiness. But there were signs that
Slava (30:41)
You
Adam Katz (31:08)
we've hit kind of the bottom and things are starting to rev back up. We're starting to get, like you said, for all these assets from a risk off environment back to a risk on environment. You started to see signs of that, think, especially in like the middle rung, the lower rung of the art world. We're starting to see, so even though Sotheby's and Christie's saw their auction sales go down and Sotheby's laid off a bunch of people and they're kind of some of these issues with the higher
more prominent auction houses, the lower and kind of regional auction houses actually did better. You have a lot of people who made money in the stock market or made money in crypto who are looking to start their collections, build their collections. And so they're looking not at these, know, multimillion dollar artworks, but sort of the five figure artworks to start. And so you're seeing more demand at the lower levels at art fairs, at gallery levels, rather than these like
super prominent auction houses. And I think that, you know, in both art and collectibles and probably across many markets, there was, because it was more of a risk off environment, there was more of a flight to quality. So more established things in art that's, you know, Monet and Picasso and things like that. You saw a dip in the ultra contemporary market, which is sort of the more risky, more speculative market.
In collectibles, that's, you know, Michael Jordan, Babe Ruth, things like that, rather than, you know, rookies and prospects and things like that. So I think, I think on the whole less risk, more flight to quality, you saw in collectibles, a lot of like really high end, scarce, rare things sell for incredible amounts. I mean, you have the, Babe Ruth jersey.
from his called shot game sold for $24 million, which was an all time record for sports memorabilia. You had these. Wizard of Oz, Ruby slippers, know, Dorothy's Ruby slippers sold for $32 million. Like by far the biggest sale of something for a movie memorabilia ever. saw a lot of entertainment memorabilia do well music memorabilia. So a lot of these like one of, one of ones like rare, desirable, scarce items that are like the blue chip best of the best.
Ohtani's 50th home run ball sold for 4.4 million, which is the most ever for a home run ball. You had the highest comic book sale ever. Action Comics number one, is Superman's debut was sold, one of those sold for 6 million. I mean, so you have these things at the top of the market that did really, really well. I mean, there was a...
dinosaur fossil, the Stegosaurus fossil apex that sold for 44 million dollars, which I think the estimate was four million. So you're seeing these things that are, I mean that's the only thing out there in the world of that. So you're looking at these blue chip scarce one-of-one items that did really well in collectibles. On the flip side, some of the luxury classes as a whole, so not necessarily the top of market, but sort of like
like wine, think the Livex index was down almost 12 % for the year. Watches were down like 6 % on the watch chart index. Cards, like the high end sports cards, card ladder 50 was up 5%. So maybe that's hit the bottom. That kind of collapsed more than those luxury items. Luxury items held up a little bit longer, but last year was a little bit of a struggle for them. But I would say stable high end rare assets did really well.
Um, and the things that surprised me were sort of the emergence of music memorabilia, entertainment memorabilia, these fossils, these dinosaur fossils, which I always like reading about and writing about. And then the one thing I haven't touched on that kind of can segue into 2025, but something that we saw more of was women's sports cards. People like Caitlin Clark, Serena Williams, um, that stuff saw a pretty big pop in 2024 compared to previous years.
Slava (35:31)
All right, so dinosaur fossils and Dorothy slippers. Those were the big hits. I love it. The rare said the rare. So what are you predicting for 2025?
Adam Katz (35:42)
I think that it's going to be, I mean, I think as always in art and collectibles, rarity and desirability kind of drives prices and drives demand. And so, you know, the best of the best in these classes are going to still see growth. I think that the people who have made money off of equities, off of crypto, off of real estate, other things, it kind of trickles into these asset classes.
So there is a delay. I think you're going to see a slow recovery. I think we've hit the bottom on a lot of these things. A lot of them, you know, fell significantly in price from 2020, 2021 to 2024. And I think that we're starting to see things come back up. I think that as we enter into more of a risk on economy, there will be a rebound in these luxury items. think that
you know, things like watches, wine, handbags, things like this, I think are going to do better in 2025 than they did in 2024. I think you're going to see that both art and collectibles correlate a lot with other asset classes. And I think that's going to continue. I think in the collectibles world, one of the things I'd look for in 2025 is more of an emphasis on these.
rare items and the provenance of them and the kind of the photo matching, which is an authentication tool to know that it's this actual jersey from 1930 or whatever. And I think that that has become a big part of the industry because it's sort of like art, art, it's been provenance and those things have been extremely important over the years. And I think you're going to see that more with collectibles. I think that we're going to continue to see in art more people
starting to build collections. think if you look at artists that do well during art fairs and things like that, that's gonna show you what will eventually do well at auction, sort of like the prospects of the world. And I think that looking at artists who have big museum exhibitions coming up in 2025 is also a good way to see what will eventually become more popular and more in demand.
Slava (38:03)
Awesome. So how would you allocate money into this asset class art and collectibles over this coming year?
Adam Katz (38:12)
I mean, it's a tough one because it's so dependent on your personal kind of financial thing. I think that some people are into the speculative stuff. I think if I was to speculate in the art world, it would be a lot of this ultra contemporary stuff, which went down so much in 2024. And I think it's poised to rebound in 2025. think especially because there's going to be these growing interests from new collectors if
the equities market and the crypto market continue to do well.
ultra contemporary is sort of people who are, you know, young now in their 20s, 30s, 40s, and create artwork right now, you know, in the 2020s. And that market struggled in 2024. But I do think it is poised to rebound in 2025. I think for collectibles, you know, that would be Caitlin Clark or
Victor Wembanyama people like that who are young and have this potential to be, you know, among the all time greats. think, I think if you are more of a speculator, that's where you would go. I think that if you are looking for more stability, I would look, you know, into the Jordans of the world. And, you know, I think that if you are able to, even within whatever niche
you're interested in. And I think it's always important to focus on what you are personally interested in rather than to speculate if across, you know, there's so many asset classes within collectibles. If you were not a sports person, I wouldn't go towards sports stuff. If you're not an entertainment person, I wouldn't go towards entertainment stuff. I think you got to be focused on what you're interested in. But I think within those, there are all these little niches where if you can get something that is rare, that is one of one that is going to be desirable, that's always going to be your best bet.
And that's not always financially feasible, but I think that, you know, not everybody can buy Dorothy slippers, obviously, but I think that, you know, there's always within these memorabilia classes, you know, there's Pokemon cards or there's whatever that have these rare things that are more accessible that will likely grow in value long term.
Slava (40:30)
Sweet, awesome summary. Anything else you wanna add there on our collectibles?
Adam Katz (40:37)
No I think that's it. We can move on to our final asset class, is crypto, which is always one of the more exciting asset classes, gets a lot of headlines and 2024 was pretty wild.
Slava (40:55)
Pretty wild indeed. So, huge gains for crypto. We had the halving for BTC, where the blocks that get created were made a half smaller, which means we're getting closer and closer to the end of all BTC that will be ever available, which just shows how limited it is. We actually hit 100K.
100K is crazy for Bitcoin because a lot of people said if we ever hit 100K, that's like, you you know, to the moon from there. And most people never thought that would happen. And it actually happened just before the end of the year, which is pretty remarkable, even for a guy who's somewhat bullish as I am on crypto and BTC specifically. A lot of that had to do with the ETFs and the institutionalization that happened in the earlier part of the year. So that had a whole year of momentum there.
as well as I do think the Trump election was helpful. Just the clarity of the election and then all the pro crypto talk that's been happening. Other trends that we saw in 2024 are stable coins becoming much more normalized. We'll talk about that again in 2025. And probably one of the stories, if not the story behind 100K is meme coins. Oh my gosh. Meme coins in 2024 were absolutely ridiculous. What we thought was just Dogecoin
a few years ago as quote unquote, the only meme coin that mattered and it was just ridiculous doge. Now, every other coin that was interesting for 2024 was some obnoxious, ridiculous meme coin that has no value whatsoever, yet became the speculative asset that people made either a ton of money or lost a ton of money on. But it's a really interesting say on the investing market. Just as like a commercial break here, it's kind of like the whole market has gone meme.
And what I mean by that, whether it's trading public equities, is Nvidia meme now? know, or is it really worth that much money? I guess, you we don't have to debate it here, but it's just interesting how meme coins became almost like an investable asset, which I must say old me was never really expecting to see that, but it kind of did happen in 2024. And I wonder if that's going to continue for 2025.
Adam Katz (43:12)
think that there's just more gambling in our society, whether it's sports betting or whatever. And I think that that has carried over to the markets in some way. I think that, and you see that with meme coins.
Slava (43:25)
Yes, this combination of gambling though with momentum, right? Momentum trading, gambling, and doing what your friends are doing.
Adam Katz (43:35)
Yeah, social media.
Slava (43:36)
Exactly, right, the speed of social and the communication happening so fast. Combine all of that with algorithmic trading. It's almost as if whether it's the public markets, the private markets, these meme coins, et cetera, it all now has a layer of meme to it. Meaning, is it 100 % meme, i.e. doge, or is it 20 % meme or 40 % meme? I'm just making this up as a theory, but it's very interesting how that's all been happening. And I include this for the public markets as well because
As much as I think Elon Musk is an incredible entrepreneur, is Tesla really worth as much as Tesla's worth? You know, on fundamentals, it's absolutely bananas, right? So that's basically a meme coin, no? I mean, but it's not really a meme coin because it has an actual company that has fundamentals or profit and loss and all this stuff, but is it really connected to its price? I would argue not.
Adam Katz (44:27)
I I just think there's a lot of speculation, right?
Slava (44:30)
Right,
right. So it's interesting. So those are my thoughts for 24. I do think it sets up for a very dynamic 25. I think that while 24 was a little bit of a step-by-step process up, I think 25 will be full of volatility. I wouldn't be surprised if we hit 150 Bitcoin, 150k Bitcoin.
And I also wouldn't be surprised if we hit 60k Bitcoin. So for those of you doing the math, that's 150 and 60k in the same year. So potentially like, you know, 50 to 75 % drawdown in one year. And I do think that potentially could happen in 25. So, you know, go in with
Adam Katz (44:59)
Mm-hmm.
Slava (45:26)
the risk and willing to hold on if you wanna hold or be scared of the volatility if you wanna be scared of it. But I do think Bitcoin has a lot of momentum. I do think it's still on a path toward million dollar Bitcoin. Probably like, yeah, yeah, yeah, I'm still thinking, not this year, for sure not, but probably 15 years out, plus minus. Solana stepped up as a big competitor.
in the layer ones for 2024, think salon is going to continue getting momentum. Ethereum is still very strong, but I think you're seeing the competition there in the layer one world where there's more than just Ethereum. And I think that's good for business, meaning I think that's good for competition and good for the markets. Really, this has to do with like the speed of the transactions, which Ethereum is quite slow and can get congested. I think they'll improve that. But I think it's great that there are strong competitors out there.
I think you're going to continue seeing the momentum in stable coins. think stable coins might even get even more visibility mainstream usage just because it takes so much expenses out of the process, whether you're sending money from one country to another or you're trying to figure out how to lower the cost of transactions. Stable coins are very valuable and I think you're just going to see more usage there. I do think the meme coin momentum is going to continue. I don't know if it's going to be
as much of hype as it was in 2024. I wouldn't be surprised if the actual trading volume is higher, but the attention in the market might be a little bit lower, but we'll see. It's hard for me to predict there. I do think we're gonna see a lot more institutionalization just because the first year of institutionalization was really this past year, 2024. So I think these slow moving institutions, these behemoths are only now today starting to talk about for the first time, how are we gonna redeploy our assets?
And should we be shifting towards crypto? And I think we're going to be seeing that happening in 2025 even more. you know, I think it'll be exciting to see us more and more, you know, funds, mutual funds, sovereigns, whoever slowly starts shifting more and more money into crypto. So I do think it's going to be a very dynamic year for crypto, not for the weak of heart. I do think you can make money.
in 25. I definitely think you could lose money in 25. But you have to be paying attention. Or you just, you know, go into Bitcoin and hodl, hold on for dear life and close your eyes, take a nap for a decade.
Adam Katz (47:59)
So you've kind of touched upon this, but what would you recommend investors do in 2025 with their crypto portfolio or with their portfolio overall?
Slava (48:08)
So
I think everybody should have a little bit of everything and that includes crypto. So I do think you should take 2 % of your net worth, maximum 5%, but let's call it 2%. So if you lost all $2 out of 100, you still have $98. And if that $2, that 2 % did really well, maybe you just had massive returns or who knows, maybe at 100X somehow, then you were just like super excited. So.
With 100 % of your allocation in just crypto, I would suggest something like a lot of BTC, just because it's the most stable, it's institutionalized, it's already got, let's call it the best religion behind it, that people believe in it and it's starting to grow. So I would probably say about 60 % Bitcoin, 30 % a basket of L1s, and 10 % YOLO into some crazy stuff, just to explain what I just said. The 30 % L1s, those are layer ones like Ethereum, Solana.
Hedera hash graph, which I was involved with and others, you know, whether it's Algorand, whether it's ripple, I think all these layer ones can be very interesting to, to work with. and I wouldn't try to pick exactly which one is the winner. If you pick Solana a couple of years out, you would do great. If you pick the Ethereum seven years back, you would do great. But instead of always trying to pick the one, I would just, you know, get a basket of them knowing that they're all going to grow in general.
or which one's gonna grow more, it doesn't matter. And then I would go 10 % of your 2%, right? Which is only 0.2%, so that's pretty tiny. Into some YOLO crazy stuff, you only live once. Whether it's going to Doge, but into the new Doge, whatever you think that is. You know, there's this coin called Bonk, which one of our peers actually recommended when it was like, just coming out of the gate, we could have made like 100,000 X if we listened to him, but we didn't.
But that's a perfect example of a meme coin on the Solana chain that happened to do incredibly well and is now worth like so much money for no good reason whatsoever. So those are the YOLO bets. You should know that you probably will lose all of it or you might buy X and 100X. And should you do that with a lot of your money? Absolutely not. Should that be your 100 % crypto play? Absolutely not. Not if you're actually a prudent trying to make investment and returns. But
Again, you should diversify it. I would say 60 % Bitcoin, 30 % later on basket and 10 % crazy stuff. One of the things that just got into the markets is hype, hyperliquid, which is a new exchange that has great usability. They just went public, like I said, on the markets. They're doing really well. Something to check out, HYPE.
Adam Katz (50:52)
Okay, cool, great.
Slava (50:54)
All right, well, is anything else you want to add, Adam? We've been talking here for just under an hour, lots of interesting stuff across many different asset classes. We started out with covering the entire markets. We then jumped into real estate, talked about pre IPO venture, art and collectibles, and then crypto. So definitely covered a lot of topics. Anything you want to add, Adam?
Adam Katz (51:15)
No just excited to see what 2025 is going to bring in all these alternative asset classes.
Slava (51:22)
Yeah, I mean, our one suggestion to you if you're listening is get some exposure into alts. Obviously, you could have your 60-40 mix of stocks, bonds. Obviously, you could have your mutual funds being ready for retirement. But there's a lot of opportunities in alts. know, the rich are often into alts and there's a lot of opportunity to make good money there. So thank you for listening and we look forward to having you on the next episode. Bye.
Adam Katz (51:46)
Bye.
