Against the Index Fund Religion | Logan Bolinger

Andy Flattery speaks with Logan Bolinger, attorney, writer, and founder of Think Bitcoin LLC, about the problems with Index Fund investing. 

Show Notes: https://simplewealthkc.com/against-the-indexing-religion--logan-bolinger-podcast/

Interlude & Outro: https://www.youtube.com/watch?v=1AxVTvrD3HY

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Andy Flattery is the Owner of Simple Wealth Planning, a Registered Investment Advisor. All opinions expressed by Andy and guests are solely their own opinions and do not reflect the opinions of Simple Wealth Planning. This podcast is for informational and entertainment purposes only and should not be relied upon as investment, tax, or legal advice. Clients of Simple Wealth Planning may maintain positions in bitcoin and the securities discussed in this podcast.

Transcript

Against the Indexing Religion

Logan Bolinger: Honestly, I think it's so unchallenged as to be almost religious. You know, I think that there's folks in the personal finance space and kind of the, I guess you would maybe use the word influencer. As much as that word makes me cringe a little bit. But that' sort of world, , it's extremely Orthodox and it really become.

A sort of part and parcel with, with, uh, people's identities, , personally, I think it's good investing practice to sort of not marry your strategy to your, to your identity. Welcome back to the podcast. This is a very important episode because I'm going to tackle another sacred cow of personal finance. On the show today, this is something that I've addressed. Um, tangential. Essentially on prior episodes of the reformed financial advisor podcast, but never directly. And so today we're going to talk about index fund investing. 

Andy Flattery: And there's some critiques that I personally view as very strong and I find often that most people have never heard them, or if they've ever heard any critique of index funds at all. They always just assume it's coming from a place that's conflicted 

 But not grounded in, um, You know, solid expertise or reason. , and I think it's sort of unexamined to the point where, you know, it's really become a bit of a religion. . Uh, index investing is the. 

Sort of holy grail of investing or, you know, in some cases too, it's almost treated like it's, um, you know, indexing is like Robin hood and wall street is the sheriff of Nottingham or something like that. And. I actually think that that narrative has become. Totally wrong, even if it was potentially true. Um, you know, 

Like decades ago when Jack Bogle. 

Was sort of a Maverick by. Releasing these low cost products. And so to tackle this subject, I have, um, a really. Wonderful guests on this issue. It's a fellow by the name of Logan Bolinger Logan is an attorney. He is a writer. He's the founder of think Bitcoin LLC. Eh, where he publishes a free bi-weekly newsletter called think Bitcoin about the intersection. 

Section of Bitcoin, macro economics, geopolitics and law. And what. Particularly caught my attention about Logan. Is that he did a piece that he calls you shouldn't have to invest in ode to saving money , where he expertly critiques index funds. 

And describes a world where the real sort of Robinhood, the real equalizer. Is in fact Bitcoin and not index funds. And so I think this is really important because sometimes when we, when we talk about. Bitcoin. Um, As being a solution for this problem, that everyone is required to invest. The, the response , but like the personal. Personal finance or the financial planning community is often, well, it's not a problem because now we have index funds. And we're going to try to rebut that argument In this episode so please enjoy my episode With logan i will say um i think it might've been one of my kids But my gain Was turned way up in my mic so my audio did not come in very well on this episode but logan sounds great and he did a nice job but i'll promise to fix that here prior to the next episode here it is my conversation with logan bolinger 

Logan Bolinger: So I think for me, you know, so much of my own, I think development as a, as an investor, as a, as a financial thinker really dates back to. Kind of the, the height of the pandemic, you know, March 20, 20, April, May, 2020, and what was happening then? As I think we all remember, you know, that time was, there were so many unknowns, so many so much uncertainty and we didn't know what was going on with COVID and, you know, everything was shutting down and you know, the lockdowns and people were, you know, not really going out and and buying things demand was just getting destroyed.

And, you know, but all of a sudden, nevertheless in April may, the stock market starts coming back and more than coming back, you know, it starts going almost parabolic. And at the time, you know, I wasn't really a, a, a monetary policy nerd or anything at the time. And this was really suspicious and weird to me.

And and I was very much, you know, just piling in index funds at the time. Because I was very much out of that school of, oh, you know, everything is on sale, quote unquote and gonna just pile in. But I started really digging deeper and cuz it, it just, it just didn't make any sense to me. I know, I obviously understand that the stock market is not the economy stock market is, is forward looking, but you know, forward looking into all the unknowns that we had at that time, it just, it was, it was it was just bizarre to me that the stock market was doing what it was doing.

So I really started digging in So, you know, what people were kind of viewing as safe havens at the time and sort of where this retail crowd was, was putting their money and, and how smart that was. And I kind of found I, I, I found Mike Green who at the time was it's I think it's, he's at simplify

Andy Flattery: Yeah, not logic maybe was

Logan Bolinger: Yeah. Yeah. That's where I was. It was logical at the time. Yeah. And you know, I, I, he started talking about passive investing in a way that I had never heard it spoken about before, and it really kind. It resonated me with a little bit or resonated with me more than a little bit. And at the same time, I was kind of finding Bitcoin.

 I had gotten into Bitcoin originally in 2017 at kind of the, the height of that mania and that cycle. But it didn't really stick with me. And I, I kind of came back to Bitcoin in the same time, you know, March, April, 2020, when everything was, was getting really weird. And you know, it just, I started to just think from a totally first principles you know, perspective, you know, why it is that we all.

You know, feel the need to be kind of full-time investors. In addition to our full-time day jobs that we do, you know, what is the economic environment that necessitates that is it a net positive for society that we all kind of need to price insensitively, shovel our money into, into something to outpace the inflation.

That's kind of baked into our system. And I, and I started to, you know, Bitcoiners are, are really big on, you know, saving money and low time preference and zone money and, and that sort of thing. And the idea that you should be able to just save money and you know, not necessarily get rich per se, but your money should at least hold its value.

And, you know, would society be better off if regular wage earners, you know, folks who wake up. You know, go to the factory or wake up and sort of, you know, go work, you know, pretty normal, you know, middle income jobs. And what would a world look like where they, where their money held its value. And would that sort of address some of the, the chronic and you know, just epic wealth in equality that we have.

And so I started to think a lot about that and, you know, I, I. Do a lot of content and I'm kind of have one foot in the personal finance circle. So I kind of see where that sort of collective thinking is. And, and you're right. This is a totally, this is a, a take that is Completely non-existent in, in those circles for various reasons I think, but so I, wasn't seeing a lot about it in, in those spaces.

And so I just kind of wanted to start highlighting it and, and talking about some of the downstream risks, not just financially, but also I think societal. Of that type of passive investing if it's done on a large enough scale and and so that's, I started writing some pieces on it and the most, the most recent piece that that I wrote on it was on the last issue of my, my newsletter which is what you're

Andy Flattery: Yeah. And I'm gonna put that in, in the show notes too. I think that was your, your think Bitcoin issue number 34. And I, I loved it cause I told you I had written a SIM a similar sort of article for Bitcoin magazine, but I think, I think yours was better. And it was very plain spoken and I. I don't see you as trying to be a contrarian for Contrarian's sake and like trying to make this like a clickbait sort of thing.

I think you're just being very plain spoken about it. So I, I think that's terrific. But let's, let's just sort of kind of set the, the scene here because you know, in the personal finance space or now in the world that I live, like the fee only RIA. Channel it, it really is sort of, or orthodoxy to encourage investing, just investing and sort of leave it at that.

And it's like really celebrated now that we have this democratization of investing, where everyone has the tools to quote unquote invest, or at least . The way that you can invest a place like Vanguard or iShares. But as you point out, maybe that hasn't always been the case.

 Our, maybe our grandparents or our great, great grandparents would've found that odd. I know my, my grandmother would have founded odd. there's probably nobody that can remember. Just, you know, just saving for savings sake. That's a lie today. So we just sort of think it's a good thing that we've had this democratization of investment.

 Could you maybe give a sense on how sort of popular and unchallenged that amount of I just orthodoxy is within the personal financial planning space and personal finance base, I should say.

Logan Bolinger: Yeah, sure. Yeah. I, I think it's. Honestly, I think it's so unchallenged as to be almost religious. You know, I think that there's folks in the personal finance space and kind of the, I guess you would maybe use the word influencer. As much as that word makes me cringe a little bit. But that's sort of that' sort of world, it's very it's, it's extremely Orthodox and it really become.

A sort of part and parcel with, with people's identities which, you know, is not, I mean, I think, I mean, personally, I think it's good investing practice to sort of not marry your strategy to your, to your identity. I think that you know, only leads to, to problems down the road, but but you know, I, I understand why I think it's, it's treated that way in the personal finance community.

I mean, I think. We, we do live in a world where, you know, it's, you do kind of have to invest in order to outpace the the degradation of your purchasing power, if you're just holding cash. And you know, I think the,

Andy Flattery: Right.

Logan Bolinger: that, if that's the environment, you know, the it's almost like the best bad option is to kind of do so passively in the, you know, most democratized and sort of generally, you know, As of now like successful way that you can.

And so I think people like you know, there's, there's a meme where, you know, there's, there's a, these, this large crowd, you know, moving towards a sort of booth that says, you know easy answers, but untrue. And then there's like one person going to the other booth. That's like hard truths, you know, like people like to grasp onto these easy things that are difficult to challenge and.

Don't really examine them particularly deeply, but, you know, it's, it's my contention that, you know, I, I don't think we. I question why we live in a world where we require people who are already taking certain risks with their capital, with their human capital and personal capital by like having a day job why we're requiring them to, to feel like they need to go take more risk by investing because their, their currency is, is losing value and they can't save money.

I mean, I kind of looking at it from, you know, an actually like a 50,000 foot view you know, Just asking the, the very basic question of just, why do we do we live in this world, but yeah. You know, just kind of put a pin on that. Yeah, I mean, it's, it's totally, it's it's, it's absolute doctrine like religious doctrine in the personal finance

Andy Flattery: Right. And just to handle home, like what that doctrine is. There's been, you know, so much content created books written around just the simple idea that you can win by not losing. Essentially what you do is you fire your asset manager, that charges an expensive. Asset management fee by just buying an index fund, you know, like what the, the Vanguard total stock market fund.

I can't recall the, the symbol, the ticker symbol off top of my head. And.

Logan Bolinger: VTI. I

Andy Flattery: And of course, and of course there's a lot of wisdom in that. And I think there's a lot we can learn from, from Jack Bogle. He had a lot of interesting insights, but there's never really any other cons, any other considerations beyond the fact that you're that wall street charges too much.

They're trying to screw people over and. The and paying fees is essentially takes away any alpha that could ever be generated by, by active stock picking. And there's just really no consideration beyond that. And so I think people sort of turn off their brain, even though those are important things.

 There's, there's some other considerations that we can take, take to mind here too.

Logan Bolinger: Yeah. That's those are great points. And I, I do think I, I totally agree. There are some, you know, folks in the personal finance community, I think. Like they don't they certainly don't take into account the fact that you know, if you're somebody on wall street or you're, you're somebody who's a professional money manager, you might have different mandates other than just make the number on my computer screen.

Like go up as you know, on the, over a long time horizon as much as possible. I mean, for ex I mean, you might have, you know, to, to limit, draw downs to a certain amount, you know? And so you have to. You know differently if you're, if one of your primary goals is like, well, listen, I don't want to, I don't wanna have a draw down of bigger than, you know, five, 10% or something like that.

 Cause I'm gonna like lose my clients. If that, if that happens. But so I think, you know, that's certainly not considered. And I think folks just think, well, you know, I'll, I'll take any, any downturn. You know, because in 40 years it's automatically gonna be a bajillion dollars and So, I mean, it's just kind of a very monolithic way of looking at what investment managers actually do.

Andy Flattery: Yeah. It certainly gets away from the idea that like investing in and of itself is a skill. It's the, it's the commoditization of investing. It's turning, you know, like the real skill into, you know, something like an algorithm. And I think that's way too simplistic, but I guess, let me, let me ask you Logan.

So what, why do you, why are you picking on index funds? And I know you're not really picking on them, but why, why did you feel like it was worthwhile to pick at some of these problems and, and what in your mind are the two or three biggest issues with this style of investing?

Logan Bolinger: So I think for me you know, I just was seeing so many folks, I, I guess I almost have like an allergy to I'm sure I'm gonna get some criticism for saying on this. As somebody who's, who's a Bitcoin, but I, I, I kind of. Have a little bit of an allergy to sort of like when I see kind of blind faith like when I, when I see that it just sort of bugs me a little bit, cuz I just don't think it ever really ends well.

 And, but what I was mostly seeing is I was seeing a lot of people online selling courses and things like that, you know, products. That they were selling. And the product would consist literally of basically just, you know, some slides pointing you to a Vanguard index fund. And then, you know, some statement about how, if you just invest X amount of dollars for a month for, you know, Y amount of years you'll be a millionaire and.

Roughly, you know, the substance, you know, there's some fluff thrown in to sort of make the deck longer, but that's roughly kind of the substance of, of some of these products that were being sold. And of course, you know, the, the whole thing is zero is, you know, you don't need a to pay fees to anybody, to any professional money manager.

You just need to buy the index funds, but oh, by the way, like, you know, pay me to, to show you how to log into Vanguard and. To just show you a, you know, a historical chart of the S and P over a hundred years and some of the prices, I think what really tipped me into the edge of, of, I need to start talking a little bit about this is, you know, some of the prices, the price points of these products that were being sold in the personal finance space, by some of these F influencers were so egregiously high and, you know, Andy I'm.

I'm a lawyer. I used to be, you know, a quote unquote, big law lawyer. So, you know, I used to bill by the hour at, you know, big fancy firms in Chicago and, and these, some of these people for their one-on-one coaching are charging, you know, like white shoe law firm level. Hourly rates above, you know, like a partner level rate that would be charged to like, you know, a public company, like a fortune 500 company.

They're charging that to some, you know, random Joe on the, the street who just to show that person how to log onto a Vanguard account. And and without sort of explaining any of the risks that, that might, you know, be be there with that strategy, because I don't think the person Hawking that strategy necessarily has considered those risks themselves.

 Let alone, you know, conveyed them to to their, their clients. And that just really bothered me a lot. And so. I kind of started poking the bear a little bit and posting a little bit on different social media accounts that I had just kind of questioning this approach and you know, it was, I certainly got a fair amount of pushback, but I did have some folks kind of say, oh, I never thought about it that way.

But, but yeah, that's the reason that I started doing it is I was just really bothered by the amounts of money that people were charging. For products that I didn't think were particularly well thought out. And of course, you know, there's no, there are very few disclaimers. There's a lot of you know, kind of guaranteed future results based on past results.

Just stuff that like, you know, you would, would never do, obviously, because you're a professional and everybody, you know, knows that you can't just go around guaranteeing future results from past results, but except for these people. And so, yeah, that

Andy Flattery: Yeah, that's interesting. I, I just, just to add to that, cuz you, you have a lot more knowledge of the influencer space. It sounds like than I do, but I mean the, the same thing is happening in the wealth management world where, you know, a lot of people think it's you know, like the whole Vanguard thing is like really sticking it to the man and you're, you're gonna drain wall street by You know, by putting your assets there.

But, the reality is from what I've seen in my world is . The ship is moving in that direction, even in the wealth management space. So since about 2016, I've seen a, a real push to just move wealth management to indexing. Where now if you go to. You know, Mr. RA down the street, that they just have a Vanguard or dimensional or an iShares portfolio to sell you.

And what they do is they're gonna attack their management fee on the top. And so the conversation is around things like your portfolio is a commodities, so we're gonna help you with the behavioral investment counseling or bullshit like financial therapy or if, if they, if they, if they really know what they're doing, they're gonna do some, some financial planning.

But, but there's a disconnect there in that. If you're, if you're doing financial planning, why don't you just charge for that? As opposed to just saying you're, you're, you're gonna bill for the investment advisory and then you're sort of like giving away the financial planning for free. 

 And so I, I think the regular sort of, you know, Vanguard BOGO head on the street probably doesn't realize that really it it's sort of the establishment here in, in wealth management world now, too.

Logan Bolinger: Yeah, that's interesting. And I think the, what you said about how, you know, lots of folks think that this style of investing is, is quote, unquote, sticking it to the man. I think is, is just so funny. It's Because I just don't. I think it's kind of the opposite of that. You're, you're almost like bolstering demand.

Like you're kind of increasing centralization in some ways and you're, you know, kind of end up investing in everything that's already big, basically, because it's already big. And it's, which is just kind of the, the total, you know, sticking it to the man would be kind of actively investing and going out and finding some wildly mispriced asset that, you know, nobody is, is looking at.

And, and that's sort of a contrarian take and you kind of, you know, the consensus opinion on that asset is that it's, you know, not going anywhere and, and you kind of make a, a gutsy call on it. That to me is kind of sticking it to the man, but that's sort of. A totally different heuristic of, of

Andy Flattery: Yeah, I gotta read this Alan Farrington quote. There's a great article that he wrote on ESG called I finance the current thing. And one of the things that he attributes the, the rise of ESG to is comes alongside the, the rise of passive indexing. And the quote from this article goes quit. If a manager goes out on limb and does something crazy, like, I don't know, invests in something they think is mispriced and is going to go a lot of with capital.

There are two possible outcomes. They are right and goes up a lot and they get paid a tiny bit more. Or they are, are wrong. It goes down a lot. They look like an idiot. They get fired and they get paid nothing. This is how we end up with the travesty of passive investing, which for the layman basically means investing in absolutely everything that's already big.

Passive investing is an absolute farce. If the goal is as it really should be the effective, efficient, creative, and differentiated allocation of capital, I do not exaggerate. Exaggerate in the slightest. When I say that it is very merely communist on the dubious premise that we ought to cut through the noise and the race of silly old competition capital is allocated entirely centrally in a sense it is even cleaner than communism because there isn't one allocator or a committee or whatever.

There is zero. The allocation is algorithmic companies get capital in proportion to how big they are provided. They are already big enough to begin. They're already. They're they're already big to begin with. That's end a great article by the way.

Logan Bolinger: Yeah, that's a fantastic piece by a, that's a fantastic quote from it that you just pulled. And, and I think obviously pretty spot on to what we're talking about. And I would certainly agree with everything that Alan said there.

Andy Flattery: Okay. So maybe we should break this down though, because O on the surface, you know, a lot of people might think, well, if I'm, if I'm passive indexing, I'm literally just buying the market. And so there are already active participants that have sort have decided this sort of appropriate allocation. And so when I.

When I buy the index, I am tracking their, their picks essentially. So what's the problem with that.

Logan Bolinger: and the problem with that is that is just absolutely not how index funds work when you put money into them. What you're there is no, you know, sort of third party intermediary kind of, you know, checking on the allocation or sort of making an assessment of the appropriateness of the allocation.

 What's happening is the end. I mean, I think this is like a key point. I mean, what what's happening when you put money into an index fund is the only signals that the index fund basically receives, like, especially a market weighted index fund, which is what we're talking about here. Like something like Vanguards, like VTI or, or voo is the only signals they receive are are there inflows coming in?

If, so that means by. Are there outflows going out which means sell there's no kind of assessment of any kind by like a human being doing research or diligence it's if an incremental dollar comes in you make the fund will make the purchase you know, proportionate of, of all the sort of companies in index proportionate to their weight in the index.

So the biggest companies get the biggest slice of that incremental dollar. It's not, I mean, I think it's pretty telling that, you know, in VTI, which is Vanguard's total index fund, I mean, this would be a good example of this phenomenon is you know, Tesla is, you know, a top 10 holding, like by weight in the, the fund.

I mean, do we think that. I mean, I think if you were to pose on Twitter you know, if we thought Tesla, you know, based on kind of, you know, profits, revenues, that sort of thing, you know, the, the type of just basic kind of like value analysis that, that you know, investors do on companies, would we put them as like the fifth, sixth best company in America?

 I mean, you would definitely get some people who would say, yeah, of course, you know, I mean, Tesla is gonna change the world, maybe they will. But I think you would get a lot of people who would. Tesla is a, is a really interesting and compelling, you know, growth story down the road. But you know, currently as it, as it stands you know, is, is probably not a top five company by, you know, the normal metrics that, you know, investors would use is, you know, it's just.

But because it's it's, it's market cap is so big, cuz got such a retail following it kind of gets into the index and then, you know, it starts getting a huge slice of every incremental dollar that comes in. But yeah, which is all to say, it's just there is no people think that there's some person making these allocation decisions and there's just not the, I mean apple could, I mean.

Apple could literally be burning down to the ground. But as long as the flows keep coming in, I mean, every company in America could be burning down to the ground, but if the flows keep going into the index fund, they only receive that signal to buy and they will just keep buying. It's totally price and sensitive.

Andy Flattery: Yeah, the, what you want is you want, you want a market that is dynamic where you have many different actors making, you know, doing their own human action and making their own choices based on where they think is the appropriate place to allocate capital. And, and the grand result of that should be a market where, you know, the, the price is you know, pretty accurate.

But, but the problem is that, I mean, that word flows that you're using is so good. I, I, I started following that with Mike Green, too, where he makes the point where, when they're, when they're sort of naively allocating or what, what I call it is really nihilistic investing where nothing matters. It's that next dollar of allocation.

That's just. It's just dumb money it's being allocated. Not in any sort of intelligent way in the, in the way that markets are intelligent, but it's just sort of putting money naively into these things, not based on any sort of entrepreneurial bet. And so the example that I always like to, to use is the example of the checkout line at, at the grocery store.

So if you go, if you go into the grocery store at like five o'clock in the afternoon after a Workday and there's a lot of people there you'll notice that it's sort of like an efficient allocation of everyone in the lines. If you've got four or five lines open, they're usually like fairly equal. And the reason for that is everyone is making their own decision on what they think the shortest line is.

And they're gonna, they're gonna go that line. And then, so as a result, you have sort of orderly. Result of, you know, the market is sort of efficient here. And if, instead, if people thought to themselves, well, the market is efficient. I'm just going to sort of naively step in the very first line. What would happen is that the lines would end up not being equal because nobody was actually making an intelligent entrepreneurial bet on the line.

And so that's, that's the example I always like to use.

Logan Bolinger: Yeah, that's a great example. I like that a lot. 

Andy Flattery: Oh, okay. So let's talk about some of the other things that you mentioned in your article. Tell me more about what you are, are getting at when you talk about the sort of top heavy allocation to the index where you have, you know, only a few amount of companies in like the, the, the top 25th percentile.

Logan Bolinger: Yeah, I think, you know, it just, it just, that's just when the top, you know, I think VTI right now, it's like the top 10 holdings are like 25%. Of the fund. I think what it, one of the sort of nefarious things that happens is it gives the illusion of diversification. And I think you'll see a lot of, of retail investors and folks in the personal finance space.

 Talk about how, oh, you know, you only need like a one or a two fund portfolio if you just have like VTI and like something else, because you know, it automatically diversifies you and, and that's kind of a phrase that gets used a lot. That's just kind of automatic diversification. But I think the, the way that the waiting works and the top heaviness of it, and the way that sort of the, the bigness of companies is, is rewarded repeatedly and constantly really just, it creates this illusion of, of diversification, which I think is dangerous because then you have a bunch of investors kind of walking around thinking that they're super diversified.

And of course they're finding out now when you, when you kind of have. Large draw downs or, you know you kind of have just major macroeconomic headwinds and liquidity being kind of sucked outta the market correlation kind of runs to, to one. And, but, you know, there are a lot of people right now who think, oh, I'm diversified because I own an S and P 500 index fund.

And I own all these companies. So, you know, I guess I can just weather any storm because you know, some companies are up and some go down, but I just don't think. They realize how truly concentrated some of these funds are, which I think is which I think is unfortunate obviously. And I think it's just dangerous.

I mean, a lot of, a lot of my. Issues with, with this kind of passive approach is or what I think it's doing to the market is I think it's just hiding a lot of risks. And it's kind of addressing a lot of them up and I have no problem with people taking risk. I think people should take whatever amount of risk they feel comfortable taking, but I do firmly believe that people should have a, a sense and an idea of the risks that they're taking.

And I think a lot of the. Kind of the infrastructure of this kind of passive world is almost designed to to kind of hide those risks a little bit, or to just not be as, as forthcoming about them as it could be. Which, and so I think it's just important to point out that, you know, these hyper concentrated market weighted funds are, are not gonna provide your portfolio with the diversification that that you're probably looking for.

 Particularly in downturns, like we're having right now, Where you would want to hopefully hold something that is, that is not correlated. Although admittedly that's becoming increasingly difficult.

Andy Flattery: Yeah. I mean, if, if you're honest with yourself and, and you're buying something like the S and P 500 index fund, you're saying, well, I'm making. I'm making a bet on maybe us large cap stocks. I mean, maybe that's as far as you, as you can say, the sort of active investment allocation is going and, and maybe that is something, you know, as opposed to like international stocks or so, or bonds, , that you can say that it is sort of, , close to real, real investing.

But I don't, I don't, I imagine that most people don't even. That far, , I mean, the other problem is you allude to, is that it also sort of leads to this, the, the big, getting bigger phenomenon that we've been seeing for a while now. I mean, at least since the 2008 financial crisis where it seems like there's this, you know, greater disparity between these sort of massive firms and the smaller firms, you know, you hear about even like the disparity between wall street and main street and this, this sort of exacerbates.

 A little bit more, I mean, there's a whole, there's a lot going on here. A lot of these larger firms, your apples, your Teslas, they're sort of closer to the, the spigot of money printing that comes with the Cantel effect anyway. But I think this this index investing phenomenon, we're all being nudged to, it is sort of another piece of that puzzle.

Logan Bolinger: Yeah, definitely. You know, I think that's, I think that's exactly right. You know, I think, and it's also just, it's kinda a function of scale now, too. It's just. I, I think the, kind of the germ of the idea that that Jack boggle had is, is like a, is a, is a good one. It's like an innovative and thoughtful one that sort of the passive investors ride the, the coattails of the act investors.

And basically they kind of just free ride on it. But the problem is, you know, when the passive investing reaches such a, you know, a certain percentage of the market, it starts to kind of like warp the surface of the market itself. Kind of create more misinformation and, and sort of leads to less efficiency in the markets, which just makes markets more precarious for for everybody who's involved with.

Andy Flattery: Yeah. I mean, he's got the famous quote. I don't know if it's famous, but maybe it's just famous from people that I listened to. Whereas like towards the end of his life, he, he gave an interview where he said, if everyone index, the only word you could use is chaos. Catastrophe. The markets would fail. guess my next question to you cause is cuz I, I don't know.

I, I can't find those white green papers when, when I try to pull them up from a few years back, but it seemed like he was sort of predicting imminent doom with the passive investing bubble as he was calling it. There's a few great interviews that he did, like on that Dimitri CS podcast.

Logan Bolinger: Yeah,

Andy Flattery: I guess in your, in your mind, do you see this as like, sort of like imminent doom in passive investing or is it more like, you know, a thoughtful person could just begin to look beyond the sort of passive orthodoxy, but I don't necessarily know if you know, imminent doom is gonna result from this.

Logan Bolinger: Yeah. So I'm, I'm definitely not somebody who sees, I don't think that this spells, you know, imminent doom, you know in the next few years or anything, I, I also don't think. That the, the doom that that would come is necessarily going to be con confined to just kind of a stock market crash or something like that, or like a massive outflows, I mean, I think.

One of the risks would be, you know, a passive continues to gain market share because it only responds to inflows or, or outflows if you were to have a major outflow event. And some of that might be like demographic, if you were to have I think millennials and. And gen Z folks more so than boomers are, are usually have more index funds and kind of our, that sort of passive investing zeitgeist.

And so, you know, if you, if everybody, they all retire at once, you know, and they start pulling money out, does that create an outflow event? But I think. For me, what concerns me is less kind of like the market crashing dramatically and precipitously because of, you know, some outflow event, which, you know, I do think those are possible, but it's more just, I think the damage that gets WRT upon the, the economy and markets by increasingly inefficient markets.

And with the inefficiency kind of being, it just sort of continuously pumped in through this kind of price, insensitive investing. And I think they're just, you know, kind of. Unsexy, but like not great things that sort of can just continue to happen more and more because of, of that, you know, just more and more mal investment, you know, more and more concentration of the big asset managers themselves who are then making all of the you know, sort of shareholder voting decisions you know, by proxy for like every company in America and, you know, I mean, black.

Is is they're so involved in like the government at this point that, I mean, I think that's concerning, but the reason they are is because they manage like, you know, some Gargantua amount of money because they receive all these flows. And so I think it's more of like a slow burn, I guess. Oh yeah. You know, sorry.

I was just, you know, just, it's just kind of a, what I see is kind of just a, a kind of an erosion of, of. Healthy market behaviors which I think create an environment that'll be increasingly volatile increasingly kind of nonsensical at times and just prone to, to moments of extreme fragility. And I don't think it's a great, I don't think it'll create a a great business environment.

 So, so yeah, that's where I.

Andy Flattery: Yeah. I mean, you, you started by talking about March of 2020, and I think it was shortly after then that we saw that even the us government step or the federal reserve stepping in by black rocks corporate. Bond ETFs, which is sort of like another way to socialize the economy. I mean, literally some of the bailout bailouts that happened two years ago now was literally the us treasury taking on.

Bond index funds and, you know, buying the debt of corporations. And so it's sort of a way to drift even closer to like a nationalized or a socialized economy which when you put that way, it sounds really, but at the time of again,

Logan Bolinger: Yeah, no, exactly. That's spot on.

Andy Flattery: Okay. So how, how does Bitcoin relate to all this? Is, is the idea of, of hoarding Bitcoins or stacking? Is that different and kind than buying index funds, for example, or how do you think about the relationship between the two.

Logan Bolinger: So I view Bitcoin as basically a way to opt out of and disempower the or to, or to siphon out power from the the financial environment that necessitates that kind of everyone needs to be an investor. Situation that we have now, which then of course, is that that environment is met by that need is met by you know, index funds and the, the Vanguards and the BlackRocks of the world that kind of step up to meet the demand that is created by this.

Everybody must be an investor because everybody must be an investor because you're, we, we have an inflationary you know, currency and monetary policies that degrade the purchasing power of your money. So you can't save it. You have to invest it. And, you know, normal people need. Easy avenue is to do so.

So, you know, you get the Vanguards and the black rocks, et cetera. You know, I, I think that that's unsustainable in the long, long term and, you know, like, like we just spoke about, you know, I think we'll see some, some negative downstream effects of that. And what I think Bitcoin does is it's basically like a, like a monetary vote for a different system.

 You're kind of voting for a different system. You're choosing to take some power out of the existing system. And, you know, the idea with Bitcoin is obviously it's, it's not an inflationary currency, it doesn't have a manipulable monetary policy. So you know, the, the idea is that, and, you know, if it, if Bitcoin does, what, what Bitcoiners think it'll do you know is that you will be able to preserve your purchasing power?

 Eventually, I mean, obviously now Bitcoin is super volatile. Although it's, you know, The highest performing asset of the last 10 years, if you go by like three year periods cause it obviously has its, you know, savagely, cyclical kind of habiting cycles. So it. You know, easy to, easy to kind of pinprick.

The idea of Bitcoin is a store value now. Cause it's so volatile, but you know, I would encourage people to just remember how young it is as an asset. I mean, it's kind of in the process of demonetizing other assets that have accrued to monetary premium to them just because of you know, the money itself, Fiat money, not being able to.

Hold its monetary premium. So that premium goes elsewhere. But yeah, so I think, I think Bitcoin is just a way of saying this current Fiat system that we have that creates these, these problems where everybody's gotta go out and invest. It's, it's not gonna, it, it seems like it's fraying and you know, we kind of finally have an option.

Where people can kind of move if they, if they so choose. And I think Bitcoin is kind of, I guess the analogy would be almost like a, like a life raft that you, that

Andy Flattery: Yeah, it's the only money that you choose and, and to compare it to index funds, of course, I mean, there's a rabid fan of BOGO heads that choose index investing as well. But there's also 401k plans that will just put you in these things, like the day that you sign out on with the company, you know, like they'll automatically enroll you in the target date fund or something like that.

And so, so yeah, Bitcoin is the, is really the only money that's a choice. And I guess. We should mention too, that we're, some people might not understand this sort of compare this sort of savings. Talk that we're talking about here. Like when we're talking about sort of naively buying index funds at every paycheck and just naively putting money into the market.

 I, I sort of think of that Logan as like savings behavior. So I think, I think that person is saving and not investing. Is that sort of how you would describe it as well, too?

Logan Bolinger: Yeah, I think that is I certainly think that's how it is commonly and popularly viewed. Yeah. As I think it's viewed as having a similar risk, I actually think, you know, in some ways I think it's viewed as being less risky than, than just saving money and talking money under. Yeah. So, so I would, I would agree with you there.

Andy Flattery: Yeah. So essentially what we're talking about Bitcoin versus index funds as a savings vehicle, cuz there's this essentially there's this monetary premium on, on index funds that probably wouldn't exist if we weren't sort of nudged into these products by Fiat inflation and various things. So I think that's terrific.

So okay. So the last thing I wanted to say here, Logan is we need to point everyone to your subst stack. So maybe tell us a little bit more about what you're doing with think, think of Bitcoin, and you could direct the listeners to handoff to how, how they can find your subst stack.

Logan Bolinger: Sure. Yeah. So think Bitcoin is a free biweekly newsletter that I, that I write and publish on subs stack. And what I'm trying to do with it is, is kind of cover the intersection. Bitcoin macroeconomics, geopolitics some law, you know, I'm, I'm a lawyer. So I try to mix that in from time to time when it's relevant.

 And also sort of how Bitcoin should be viewed by The personal finance space as well. I'm kind of trying to bridge that space a little bit into Bitcoin. You know, I also, in each issue, I, I share a lot of content some of the best content that I've seen on a particular week. With everybody.

 Just to sort of, one thing I find is that it's tough sometimes in the Bitcoin space to differentiate between what's quality information and what's just kind of not credible information. So I try to make sure each issue I'm, I'm also pointing folks to, to other people who are, who are writing interesting thoroughly research things about Bitcoin or on podcasts that are worth listening to et cetera.

 But yeah, it comes out every two weeks. It's totally free. So would encourage everybody to, to check it out and give it a look. It's at think Bitcoin dot sub stack.com.

Andy Flattery: Yeah, and you, you're doing the thing. That's really valuable to me where, you know, I'm on Twitter and I know there's great stuff on Twitter, but I never know if I'm seeing it or not. You know, it's like, like how do I know if I'm seeing like the absolute best of what's. Out there on Twitter right now. And like to find someone that could curate that for me.

 Cause a lot of the best stuff is on Twitter is, is it's sort of worth its weight and gold. So I wanna commend you for that piece. Let me ask you, cause I just, I just found you with this issue from a few issues back on your owed to saving money, what what's like the one or two best issues you've put out that I should go back and revisit.

If I wanna check out the back catalog here of think Bitcoin.

Logan Bolinger: Oh man. That's a good question. Recently so the most recent issue for anybody who's, you know, feeling feeling down and frustrated or hopeless about this, the kind of bear market that we're entering. The most recent issue I did is kind of all about that. How to look at the bear market, approach it and.

Kind of how to survive and thrive in a Bitcoin bear market. So that one's worth checking out. I mean, recently I did a two part series that's on Bitcoin magazine as well about kind of my intellectual journey from kind of being politically leading to be like a Bernie person, a Bernie Sanders supporter to kind of finding Bitcoin and sort of what that was like.

 And I think a lot of folks found that. Interesting. Also recently written about why governments cannot end Bitcoin. And, and I guess the only other one, the other one I would point you to, well, if people are interested in the geopolitical stuff, I do have an issue. I forget which number it is it's called.

I think the great geopolitical game that kind of gets into Russia and Ukraine and, you know, the fraying of the dollar system which for folks who are into kind of macro and, and geopolitics, that's a good one. Yeah. So yeah, those are kind of the recent kind of the last, you know, batch of couple months or so.

 Yeah, definitely starting to write some

Andy Flattery: that's that sounds terrific. You, it sounds like for, for just getting into the space here in the last two years, Logan, you've ramped up pretty quickly. That's awesome. Yeah.

Logan Bolinger: Yeah, it's kind of funny how, I mean, Andy, I'm sure you kind of feel similarly, you know, once, once Bitcoin kind of gets into your, into your brain, it's sort of it's such an interdisciplinary subject and, you know, there's just so much to constantly be learning and, and thinking about and different perspectives and ways to look at it that are worth exploring that.

You kind of can't stop and you sort of almost without even thinking about it, you kind of end up ramping up what you're doing and you know, just, and just trying to do more in the space,

Andy Flattery: Yeah. And you're doing the thing too, which sort of makes you Bulletproof where you're working a day job. right. Where it's like, it's not all on you, you know, having to like make a living off of your content right away, which I

Logan Bolinger: right. Makes you bullet Bulletproof and very, very tired

Andy Flattery: Yeah. Yeah. But I think maybe, maybe those days are gone now that we're in a bear market.

 We we've seen the end of everyone staying at home to tour all day.

Logan Bolinger: Right, right. Yeah. Yeah. It's gonna be a different, gonna be a different vibe out there. I

Andy Flattery: time to,

Logan Bolinger: of year.

Andy Flattery: this has been great. I'm looking to made the, yeah. Thanks for, to

Logan Bolinger: Yeah. Likewise, Annie, thanks so much for having me. That was a lot of fun.

Andy Flattery: it's a pleasure.