What is the LONG TERM value of NBA Top Shot? | INVESTORS BEWARE?

Apr 24, 2021

Are NBA Top Shots Worth It?

This weeks episode of the Clear The Cash podcast with Nate Liss (@AnOutragedJew) and Jesse Bak (@Planet_Fatness) featured professional currency trader and abstract artist Corey Leavenworth who breaks downs the financial make-up of how NBA Top Shot got to where it’s at today, and even where it might be headed tomorrow…

Transcription:

Understanding NBA Top Shot

Nate Liss 0:01
A few months ago, we released an episode about NBA Top Shot that left our audience as confused as us. Yet it wasn’t about how to buy it or how to sell it, or even why it’s so popular. There were questions about money. Is it too late to jump into the market? What’s its long term value? For that matter? How is it valued at all? Because every day we’re previewed delimited sides of the story by accounts online. But this week, our guests Cory Leavenworth, who is a Currency Trader, and an artist himself, paints a different picture. This was our longest show to date. And after you hear it, you’ll understand why. So thanks to Cory. And lastly, thank you to our show sponsor and friends over at underdog fantasy. Now let’s jump right in.

What’s up everybody? Welcome back to clear the cache. I’m your host Nate Liss, you can find me on Twitter @AnOutragedJew. And with me, of course is Mr. Jesse Bach, you can find him on Twitter @planet_fatness. And tonight we have a great guest with us. This is somebody that listened to one of our prior episodes where we were talking about Top Shot, and NFTs, in general. And I put a call out to the world and said, Listen, we need somebody that has a fiscal background, we need somebody that understands economics, there’s a lot more to this than just the hype that we all feel for things that we have an inherent bias towards. And so a guy by the name of Cory Leavenworth, you can find him on twitter at fantasy numbers reached out and said, Hey, I check a lot of the boxes of the guy that you’re looking for. So he’s on with us tonight, Cory, thank you for coming on, man. How’s it going?

Corey Leavenworth on NBA Top Shots

Corey Leavenworth 1:51
It’s going good. Thanks for having me, guys.

Nate Liss 1:53
Yeah, not a problem at all. I know Jesse’s excited, we’ve been talking about this back and forth. We tried to make this happen over the past couple of weeks, really just couldn’t nail it down. So I’m glad that we can make this thing, you know, finally a reality because I know that you’ve got a lot of really unique theories and thoughts. And obviously things that are based on reality out there that rarely get talked about as part of the reason why we’re seeing some of the trends that we’re seeing. So Cory, I mean, let’s, let’s go right off the top here. So just so people can get an idea of kind of who you are, what you’re about what what is your background?

Corey Leavenworth 2:28
Yeah, no problem. So I studied finance and economics in school. I graduated right around the global financial crisis in 2008. I was fortunate enough to get a job at a commodity futures in foreign exchange trading firm. I passed my series three got a job as a broker working on the currency trading side on the speculative retail side for about four years. From there, I transitioned my currency trading to the corporate hedging side, or I was a foreign exchange dealer for a few years, providing foreign exchange solutions to us corporates, by way of FX spot and forward contracts. And then I kind of worked on on the opposite side of the phone, I got a job working for a large us corporate in their Treasury division, managing a portfolio of foreign currency derivatives to hedge against our foreign currency exposure. So yeah, it kind of led me here. I’ve been working in the markets for about 12 years. I heard your original podcast and reached out.

Nate Liss 3:40
Yeah, man. I mean, and a lot of that, admittedly, even for me, who I don’t have a ton of experience in a lot of the areas that you’re you know, addressing at this point. A lot of that goes over my head. Cory, I’m gonna be honest with you. That was that was foreign language to me. I don’t know if it was for Jesse. But it certainly felt like it was for me.

Jesse Bach 3:58
I’m just in the healthcare and card world. Anything else? I’m not really. I’m not too versed with. So yeah, that’s, that’s a little bit. And that’s a little bit above my head, too.

Nate Liss 4:08
So Corey, you also mentioned when you were reaching out that you are an artist, or you do artwork on the side, you do physical art, even though this is an episode that has a lot to do with digital art.

Corey Leavenworth 4:20
Right. So I have been painting on canvas for about, I mean, my entire life about 28 years. So I do abstract acrylic. And so the whole NFT space was was really interesting to me, because I think a big benefit of the blockchain and NF T’s is really connecting kind of buyers and sellers. Because me painting canvases and kind of advertising on Instagram, and you know, local kind of galleries and shops. I have an extremely small kind of audience who I’m selling to. So I think it’s really interesting the whole NFT space. In digital art, really connecting buyers and sellers globally. I mean that the technology behind it is very interesting. But, but the price action is obviously for the reason of discussion today.

Nate Liss 5:14
Right? Oh, absolutely. I mean, but it’s great, because you’ve got this background and the economics, you understand that the art side of things and what these people that are creating this content or these, you know, again, these NF T’s are, what their goal is what they’re looking for. So it’s a good space to come from, because again, some of the backlash on the last episode was that the episode was very biased that we sounded like two guys that were into cardboard, and had nothing and no interest to do with anything digital. And I certainly didn’t want it to come off that way. But admittedly, when we looked at the market and the trends that were taking place, they didn’t correlate whatsoever to what we were seeing in the card market and space where we expect to see a little bit of similarity between two commodities that do share parallels, right. So I’m glad that you came on today. Now, your Twitter handle is at fantasy numbers. So I’m gathering that you do some fantasy football gaming yourself and maybe do a little research and data homework. Is that true?

Corey Leavenworth 6:17
Yeah, it is true. I mean, this podcast is going to be about economics, art, fantasy football. I mean, it’s literally straight up my alley. But yeah, it’s kind of a it really is a small world. So I’ve been playing fantasy football now for a little over 10 years, I started just kind of casual, you know, high school redraft kind of a format. And I discovered you and Matt and and kind of wrote a wonderworld which led me to player profiler calm, which led me to the the statistics and analytics that that that provides. So which led me then to getting a voucher for ffpc, baseball. And now kind of 100 plus leagues later, I’ve really kind of enjoyed that. So I think basketball is very unique in the sense that it’s extremely close in the the rules and regulations to redraft. And I think a lot of people think basketball is kind of redraft plus upside, when in reality, I think it has a lot of upside to do with managing your exposures. in managing risk, I think, if you join a few leagues that are kind of high in value, but you’re in less than 10 of them, you know, some of your player exposure is, you know, 33% 50%. But if you draft a large portion of best balls, it really allows you to have a bowl take or not take on a player in draft, zero exposure, you know, 50% exposure, and then kind of smooths out the variance in the meantime. So that kind of led me to play a profiler. And then kind of the one person in our very small Twitter’s here that I agree with quite a bit and agrees a little bit with me is your boy Josh slack as Josh larkey. Yeah, it’s kind of funny how small the world is. So kind of that small, listening to ruddle underworld brought me to those analytics. And now I’m kind of head over heels into basketball. And I love that format.

Nate Liss 8:23
I just I love that you brought up Josh larkey because as I’m hearing you say the things that you’re saying, from your intro to what you just said, there, I’m like, this guy, I gotta hook him up with Josh larkey. If Josh isn’t already following him, or talking to him, they need to because I feel like you both have a very data driven sort of binary process. And that’s a great way to play. I mean, especially if you’re in it for money. I like to play loose, I put probably way too loose at times. But just like you said, your your exposure, you’re really buying in on a player, it gives you the opportunity to truly sell out on somebody you believe in. I know Josh does a ton of homework. It sounds like you do a ton of homework. So I’m really excited. You know, people check him out on Twitter at fantasy numbers. Again, I was making a joke earlier pre show about at fantasy numbers. Like that’s me. Like, I think everybody that creates a fantasy account is trying to get that name. And I’m sure you must have a crazy amount of views on your account that you don’t even know about. Because people are just like son of a bitch. The name has been taken because it really is a good name. I’m sure that’s what Josh larkey was going for before he inevitably had to settle on his own name.

Corey Leavenworth 9:31
I know you kind of see the available domain names. And once you see one that kind of have the availability you just kind of jump on it. So yeah, I thought it was available. I took it and we’ll go from there.

Nate Liss 9:42
Yeah, I mean, your champion forever because of it. I mean, obviously nobody was after my name. And certainly nobody was after Jesse’s name whatsoever. But I know Jesse really wants to get into this episode. He wants to pick your brain and I do to suggest you take it away.

Jesse Bach 9:59
Yeah, I know. With, with my name, if anything, I’m probably having people that are headhunting for me know. Especially the corporate leaders over at Planet Fitness probably they probably blocked my account already. And they they’re trying to figure out where I live just because just because of my name. But uh, yeah, Cory, honestly, I, you know, I found Nate the same way I was a loyal listener to the sonic truth pod and, and all the all the podcasts on the roto underworld network and breakout finder for years. But before, you know, I reached out to Nate and, and, you know, basically you utilize my resource of player profiler calm and the breakout finder to actually like, help me with what I think, you know, having a pretty significant advantage in the card game. So yeah, that sounds like we kind of we kind of reached out tonight and, you know, almost the same exact way. But just to kind of kick things off, I just wanted to get your thoughts on. What do you think about the overall concept of of top shot and NF and the NFT? market in general?

Corey Leavenworth 11:00
Yeah, no, that’s a that’s a fair question. And I think you brought it up. Best last night in the podcast, where we talked about NF T’s. And you said, it’s very much in its infancy stage. And we look at an asset, and especially top shot that you get the kind of I know, it started earlier in 2020, but really kind of picked up the momentum and 21. It’s kind of like an IPO when the fact that as soon as it debuts, you don’t really have a lot of history on what it is. And especially when it kind of breaks into a new sector, you don’t have a lot of comparables in that sense. So you kind of have the blockchain element, you have the the ridiculous kind of economic status that we’re all in. So I mean, it’s it’s a very interesting conversation. And I think anyone that that proclaims that they are an expert in trying to guess what will be valuable in the next 15 years, is maybe a little too hyper bullish in a certain sector. And, and nobody really knows. And as I told Nate, that it kind of really sets up the conversation for kind of an open dialogue and really see what we see in the past. What are the current economic conditions, and really where we’re going. So I think Topshop kind of brings about three points that kind of bring top shot to it is in and also, most importantly, besides that, the technology, the price, I think the price action is what has really driven the headline. So as we look at the first point, we can look at where are we in terms of an academy. So we kind of take a look back to the 2008. And we see that we’ve maintained a massive initiation of quantitative easing. So when we have the real estate scare in 2008, we instituted a massive money supply, pro lending. I mean, it’s a very risk, a pro risk kind of a monetary policy. So we saw that. And the market realized right away that we love low interest rates. We love these growth companies, we love these tech companies that we currently have tech companies that produce negative net income, but we somehow still pay CEOs. In below that, I mean millions and billions of dollars. So they’ve really indirectly through VCs, or directly through the bond market, taking advantage of a flattening yield curve. And what they’ve really done is they’ve given themselves a runway to profitability. So they don’t need to show they’re profitable in 2021, they need to show growth in that they have the potential for future runway kind of in the future. So what that has really done is exasperated inequality in wealth. And it’s really kind of picked up that the froth in the bubble to really take risk and saying, What has my Fiat done for me lately? And what can I do to maintain a big sort of speculative return in the short term. So we saw in February, we saw Treasury yields rise, and we saw crypto fall 20%. We saw these frothy tech companies kind of fall a big trunk and, and the risk really is detect moving forward these companies that really don’t have really any sort of profit on the balance sheets to set forward so that kind of takes us into where we currently are. And then we had kind of the mother of all government led recessions and that came in the form of COVID. So COVID, you know, for the positive or negative was a government led recession, where the government told you not to drive, not spend money on travel. Not to spend money in in the restaurants. And this led to $1.6 trillion of pent up income. We see this with Trump and Biden really pushing a fiscal agenda forward where we’re getting stimulus checks. We’re really, you know, following this free money Academy where we have people in the hospitality in the restaurant industry that have been unable to come back to work, because in all 50 states, we’re now paying people in the lowest income, not to come back to work, and they’re now getting more money from the government. So we have a lot of people kind of sitting at home being told that they can’t go back to work. We have record low interest rates. And we see this recession and we see that certain recessions are systemic disruption is, but COVID, what was global, we saw the unison, sort of collective effort by all central banks to push your interest rates down to zero, and really push the fiscal help that was needed. So yeah, 3% of people absolutely helped were helped via the policies, and we’re kind of held for being on the RAS, but we saw a lot of people also be pushed towards risk taking assets. And that’s really kind of where we were with the GMA, and in that, and the whole, you know, meme stocks era. We saw that with certain crypto. And now we see that in this sector, as well. So that kind of leads us to our conversation today.

Nate Liss 16:35
So I guess what it makes me wonder is, is this just the perfect storm, again, people that you know, stuck at home, pent up, you know, disposable income, and a great product, or, like Jesse asked the question about sort of the top shot general, is the product itself, something that you see the viability? And I mean, is it a good product? Or again, is this just really people not having anything to spend money on?

Corey Leavenworth 17:03
Yeah, sure. Well, I mean, first and foremost, I think people need to be aware that the world is extremely gray, and it’s not black and white. And it’s possible for there to be a lot of board, pent up income, with these risk, perverse assets. And also, I mean, NF T’s and Topshop being maybe long term viable, I think it’s very well in the realm of possibilities for this to have some sort of long term runway. But at the same time, you see a lot of people that at this point in time, when we’re recording April, are kind of stuck at home, and have some time in front of the screen, we’ve seen employers be able to trust employees that they are able to kind of sit at home, in front of their screen and do the same work. So it really is interesting to kind of give a quick preview into the so called metaverse, we’ve seen employers be able to realize that their employees, location really doesn’t matter. And I think that will eventually lead to increased competition in the workforce. And employers be able to find better employees if they remove the whole location aspect. So I think it’s hard. I think you can’t judge the long term view of top shots without seeing the actual long term view. I mean, we really haven’t had any type of economic slowdown in a very long, long time. So we will look at baseball cards, they’ve been around for 150 years, they’ve been around, you know, a lot of different economic cycles that we have seen. You know, you look at people that collect cards like yourself, they aren’t looking at the day to day mark to market of their car, they’re not selling when it goes down 10% You know, they’re, they’re more apt to to pass it down to different generations. So I think Jesse’s had a bass where we’re in the infancy stage. And we really don’t know, until that price action kind of recedes, you know, what happens to your average NBA top shot consumer, when your mortgage interest rate doubles, when your auto loan doubles, when you have to go back to work, when the stimulus packages stop when the presumed inflation comes in q3 q4, this year, now what will really happen to that sector? And then also, what happens to that sector when we have increased supply. So if we see dapper labs branch off to baseball, NFL soccer, if we see celebrities, if we see musicians, you know, what does this money supply do? That sort of expands. And I think a lot of people that we’ve seen on NBA top shots has been falling into two categories. We’ve seen people that are very heavy into crypto, and we see maybe some some NBA fans as well. So what happens when this expands and we see you know, 910 The market share, I really I really don’t know what happens with tighter economic conditions plus exorbitant supply. And Jessie, you kind of mentioned last time, there was a LeBron James card that sold for like a quarter of a million that was of a 50. So I guess, can you talk a bit about the supply and how that compares against the card market? versus, you know, we see a kind of a trapped supply an NBA top shot, and then the long term, we see there could be, you know, much, much, much higher supply. So, yeah,

Jesse Bach 20:38
well, at least for I mean, for right now, and cards, well, in top shot, we only have a couple months worth of data, if like if that because you know, I know this, I know dapper labs, and top shot all all came about in 2020. But really like it hasn’t reached the mainstream until January of 2021. So we don’t have nearly as much data whereas with you know, a LeBron James gold tops, Chrome refractor rookie card has, you know, we’re going on 18 years of data here. So, I mean, I know right now we’re in, we’re in more of a bull market, but just, we just, we just have a lot more sales history of a card, even if it’s that scarce, even if only 50 of them exist in regardless of condition. At least we just have, you know, we just we have the data. And it’s I mean, it’s a physical asset, it’s something that people have been the collectors and people who have been in it for more investment purposes. They’ve been trying to acquire it at some point in time, and especially the brown collectors and people that, you know, I know of people that that do have that card personally. And you know, they don’t, they’re not looking to part with it anytime soon, like the, you know, we have a term called cough coffin cards, where, basically they don’t even there are some people that don’t even want to pass it down to their kids, they just want they want to be buried with it. And it’s, you know, it’s gone forever. So, but then then again, there are other people that, you know, once once they’re kind of, you know, at the end of their, their lives, or if they want to prepare for retirement or something, maybe they’ll pass it down to their, you know, their kids or other future generations, you know, they can have that for as long as they want to, you know, to help start their lives and their children’s lives. So we were definitely dealing with in terms of cards, there’s much more of an astrology factor and there’s a little bit more of a chase and you know, a collector basement than something like the NFT space.

Nate Liss 22:44
Mike, my concern yo concerned with this too Korean, you brought this up, you said what happened when mortgage rates double what happens when auto rates double. And I made a statement on the podcast that we’ve been referring to from a couple weeks back and I basically said, nobody who bought top shots did it because they saw long term viability in the hold, everybody was playing the short term game, everybody saw these no name, a block of 50,000 going for, you know, two grand or three grand and everybody thought that they had a ton of value, because if you’re on top shot, it shows your your value of your assets. So people treated it like that was, you know, some sort of real value? I guess my concern is, when we look at cards, we know that there’s a long term value in cards it’s been going on for decades. We know what’s worth what we know what will have long term value based on its rarity. But you made a statement earlier you said nobody knows. And that’s my concern with top shot overall is that nobody knows the outcome. But yet a lot of people are telling you bye bye bye. It’s going to be great. Look at this LeBron that sold for a quarter million dollars. That’s the future. When in reality I stand by my statement that nobody who bought top shot didn’t list everything that they got right like everything that you got is on the market, there’s nobody that bought something and is just holding everything in the background, if that makes sense. I think that’s my biggest concern with it.

Jesse Bach 24:06
I think genuinely with from like a collector’s perspective too out of out of any NFT maybe not NFT more probably more top shot out of their entire user base or the history of their user base, I can see. Point 01 2.05% of that whole user base actually seeing this as a viable collectible. And make n whether or not they they have intentions to you know invest it and sell it outs and sell it decades down the road or just have it just to have and you know, maybe over time it just naturally appreciates. Like if if we can maybe talk shot something like like the like the I think it was a 2016 NBA Finals LeBron series saving dunk basically in game I think it was in game seven. Like that. That might be something that is If If NF T’s can be viable in the future, that might be something that that can actually, you know, become iconic and actually be worth something down the road. And I just wanted to kind of take it, take it back to your, your artistic side, and you said, you said you’ve been painting for a little bit. Do you think that your appreciation? Like how is your appreciate appreciation of art impacted? How you see or if you even see NF T’s as an art form in general?

Corey Leavenworth 25:35
Yeah, I think First things first, as an abstract artist, I can’t subject anybody to any negative emotions, if it you know, if it calls to you, you know, I, I’m an abstract artist. So if somebody says they like something, and it calls them and they like it, I’m the last person to call them, you know, incorrect in that sense. You know, art has always been an eye of the beholder. But I think with this NFT space, sort of two things, I think, one, you know, what, how close are we to the quote, unquote, metaverse? You know, did that start kind of with the the Pokemon Go and people are walking around and kind of in their physical world collecting that, you know, versus people collecting art in in showing them to their internet friends on their computer? I think we have to keep in mind that, you know, less than 4% of the population is on Twitter, and of that population, you know, how much has the exposed income to invest in something that they look at the piece look at their PC about? I think we also see that we’re in a cusp of massive opening in the country. You know, we’re right around 25% inoculation, our goal is 70% to really open the economy back up as the FOMC has said. So kind of when we see that massive explosion in leisure, and in hotel and kind of retail, our people going to want to show their internet friends, their their gifts that they paid, you know, whatever theory and for. So I think it’s very hard. I think you see the quote unquote, future as moving towards the metaverse. I think erosion of that physical landscape. I think there’s a lot of bullish sides. I think that the favorite thing that Wall Street has is a new sector. So I think of luxury goods and architecture, kind of move towards the metaverse and they see that as kind of a new wallet share, that absolutely opens up a new kind of precipice for how we classify GDP versus the physical world versus the metaverse. So as the population explodes, and as location kind of erodes, it’s very interesting, kind of kind of how that, you know, moves forward. But I think you see a lot of people that invest in crypto, that a few years ago who I talked to had zero interest in digital art, but all of a sudden, because you kind of put a border around the scarcity. And there’s a ledger of who made it and who bought it all the sudden, it’s 1000s of times that, you know, the value of would have been so kind of a contrary and take, I do wonder if the quantitative easing in the appreciation of assets, including crypto being a risk asset has appreciated towards that, you see people that are paying, you know, 50 aetherium, for an arc RPS, and it kind of hits the magazines, as you know, look at how big this purchase has been, when in reality, this person may have just been, you know, kind of a tech savant in a purchase aetherium for a few $1,000. And now, it’s worth this kind of this price tag amount that’s kind of hit the headlines, when in reality, they weren’t really a big art collector, and they may have just been appreciative because of this massive black swan event within COVID. So it’s a you know, it’s a very interesting topic, and nobody has the answers. But let’s say this, let’s say I have an abstract piece of art. And I say, hey, netlist, I’ll sell this to you for $5,000. And you say, you know, no, thank you watch this. And you can simply copy that or recreate that you would never pay me $5,000 for a one of one piece that you can simply recreate downtime to the absolute pixel, you wouldn’t do that. And then if Jesse was looking for a piece of abstract art, and he saw your piece for $100 in my piece for $5,000, but I said, Hey, Jesse, my piece has a fraction bit of metadata that says, I am the original, you don’t care, you know, that’s something that that’s placed in your home. So it’s very difficult to kind of you know, differentiate the digital from the physical When there’s not a person on the planet that can recreate my sort of art, I can’t recreate my art once, once I paint it versus, if you have a digital painting, if you do a digital piece of artwork, you can sell it as a one for one. And then a week later, you know, you can edit that piece in theoretically change the color, or, or something else, and all of a sudden, you can then adjust the scarcity of it. Whereas, you know, if I do artwork, it is literally one of one, I couldn’t reproduce that abstract art, if I tried 100 times over. So somehow somebody that does digital art, but places some sort of boardy border of scarcity around it is worth 101,000 times more than then my artwork. But then again, it is on the eye of the beholder. I was in, in our competition a few years ago. And somebody beat me by quite a bit of votes, who just I think they had the word war written in like blood, or like grass seed, it was like, wave or worth more than mine. And it’s like, yeah, I really don’t understand that.

Nate Liss 31:15
I, it brings me back to you know, artists, very subjective, right? Whether it’s price that who loves it, who doesn’t love it, I kind of want to ask you this question. As somebody that clearly spent a lifetime doing art, you kind of made a statement there where you mentioned that if somebody can create a one on one digital piece of artwork, and then they can alter it simply by changing the color or some variants to a very simple does that I mean, does that bother you from the standpoint that I would imagine what you do takes a lot of effort. And then you see something like this, it’s very simple. And even the statement you just made where this one person decided to do something brazen, and they created this very, you know, something that was supposed to be you know, self meaning or important moment, and then they they there’s worth more than yours is when in reality, what you’ve done is probably incredible in its own right. But then you look at these NF T’s that are going for hundreds of 1000s not if millions of dollars, and they can take literally no time to put together and it’s some may take more time. But is that something that kind of irks you a little bit?

Corey Leavenworth 32:17
No, no, not at all. I mean, as I told friends and family, as they asked me, How do they get into the trading of the meme stocks, you know, get yours and get out. And I’m extremely happy for you, you know, good for the people that kind of saw this coming. And it took the effort to list their art and really take advantage of the technology. And so, no, I hold zero kind of grudges against people that have sold art for more than me. You know, it’s kind of funny, I sincerely love making a piece. And when I put a price tag on it, that’s above cost, it makes me laugh every single time, whether it’s, you know, two times above cost or 10 times above cost. I’m like, I would have made this anyway. And you know, it’s a little secret that I have that, you know, I would sell this to you for at cost if you can really beggar for it. No, it really doesn’t hurt me too much. You know, it’s not paying my mortgage, so to speak. Or it’s been kind of a hobby, all my life since I’ve worked in finance. So I mean, if anything, the blockchain is really enabled people to connect buyers and sellers. And I think, above the authentication of who made it, or you know, the ledger or where it is, or if it’s authentic, I think connecting with the buyers and sellers is the massive point that will be proven over the next few decades. You know, my audience, despite people who may have seen my Instagram, like I said, is people out of coffee shops, I have artwork at random kind of, you know, barbers and flower shops in my local Midwest city. But digital art kind of gives you the landscape that it really efficiently kind of shorts, the supply and demand. And eventually, I think, you know, despite this kind of being first in line, I think that the the top the cream of the crop will kind of rise in the NFT space. And the best are eventually I think it will create a really nice landscape for artists. And you know, what, if somebody wasn’t into art a few years ago, that because of this, they got into art, then you know, I champion them and I think you’ve heard we’re kind of entering the segment. So it’s a very interesting topic. And I know a lot of people kind of bring up you know, copying the Mona Lisa. It kind of looks the same. You know, you look at a Monet and if somebody can take them on a and you know, if you’ve ever seen him on a in person, you know, some of them are 20 feet long. If somebody can replicate a Monet with a paintbrush, and you can’t tell the difference, then that painting is probably worth it. Lots of money, right? So I think we say this digital copy thing very, you know, in in our 280 characters or less. But in reality, if somebody can paint the Mona Lisa with a paintbrush, and you can’t tell the difference, you know that that’s an incredible artist in kind of as that broaches the topic of kind of, you know, frauds and kind of, you know, copies. I think that that’s very popular in movies and in media. But in reality, you know, copying art in Fiat, that’s an extremely low percentage of the population isn’t a big deal on the large scale. Yes, it is. But in reality, if you had a very nice oil painting you paid like five grand for, trust me, it’s never going to be an issue that that was a replica of somebody else that made a painting was worth $5,000.

Nate Liss 35:57
Right? No, I totally agree. And it’s just interesting, because, you know, we talked about making copies of things. And I think there’s people out there that might not understand that, despite the fact that these are document, you know, they’re on the ledger, they’re on the blockchain, we know that Corey Leavenworth was the creator, this is the first of this kind. But now we’ve made a copy of it, you know, and it’s, it’s become its own thing as well, you’re the originator of it. There’s people out there that like you said earlier, they may not care that the original version is worth more if they can just have a copy of I mean, it’s the same thing. When people buy prints, I would assume versus you know, an original, I know lots of people that have bought prints and some prints go for a lot of money. There are some artists out there that sell and they’ve made 1000s of the same print and they still go for a lot of money. I don’t know that that’s a thing yet that the fraud is a thing yet. I’m sure it’s something to be worried about in the future, especially kind of the questions for me with artwork. And maybe you’ve done some thinking about this as somebody that’s clearly you know, deep in the art world. How does How is digital art to be displayed in the future? Right, are we do we picture some sort of, you know, like a digital frame that holds things? I mean, kind of where do you see digital art going?

Corey Leavenworth 37:10
Yeah, that’s a very interesting topic of conversation is, is really when does that quote unquote? metaverse kind of take hold? And I think what people are understanding is that the the equation of when is new art in a metaverse digital world going to take place when you’re kind of wearing these VR goggles. And you’re kind of emerging with your your your internet, friends, and you have your your house and you know all of your paintings. I don’t know when that’s going to be but what I can tell you is that we will have a new bearish economic cycle before that is mainstream. So I think that that’s a big thing to recognize is a lot of people look at the micro and investments. But when in reality, the macro always holds true. And we saw that with COVID. I mean, we saw some of the most profitable companies of all time tank during the COVID collapse in last last q1 mixing with q2. So I really don’t know where that kind of lands. I know that you know, eventually. I really do think the metaverse will take hold in that location, specific will will erode. But as far as what happens, you know from now, until then, I don’t know, I think we have a good case study in the stock of tilray. So tilray is a marijuana producer that I paid about $30. Shortly after IPO, it was up to 300, I think in $60. Now, if you were to go back in time, and you told those tillering desperate investors at 300, that you know what, a few years down the line, marijuana is going to continue to legalize, it is going to move off the black market onto the official market, we’re going to see a massive state by state kind of deregulation of marijuana, you know, that person would have probably bought more, but tillery went from 350 to about $5. So I think investments in trading is always a representation of how far in the future Can I pull those future cash flows present? And I think a lot of people in the NFT and NBA top shot space have said, Listen, we’re moving towards this digital world. I know that’s where it’s going, it’s going to be worth more in the future. So you got to pay me 20x what it’s worth now because I know this is going to be there in the future. But again, we don’t see people you know, bottling freshwater in land and selling it for 100 times what it’s currently worth now. So as we see kind of investments, it’s kind of this this is We say, buy the rumor, sell the fact. And we saw that with Coinbase. As soon as it debuted it tanked. You know, how do you represent future costs representation versus what is happening now? And I think a lot of people see this world moving digital correctly. I am in a big bowl of the metaverse. But where that lies in the current price. I mean, it’s really anyone’s guess.

Nate Liss 40:28
That I mean, that honestly brings me to the question that I want to ask you, is the valuation of these moments and top shots specifically, right? So we saw LeBron James cosmic dunk moment sold for I think $208,000. Now, again, as somebody that’s heavily into the car thing, it makes me roll my eyes a bit. But when I take a step back, and I think about the world of art, it’s not so crazy to me that, as you mentioned before, in the eyes of the beholder, to someone, this is worth $208,000. Right? And is that where we’re at? Or is there actually some sort of baseline that we can use as an indicator to truly value these things?

Corey Leavenworth 41:08
Yeah, I mean, we really don’t have that. And we really, we really don’t have history, we don’t have price action. We don’t see, you know, what, what occurs during a bear market? You know, I’m very curious, if we had this froth of NBA top shots during the COVID crisis, when we saw everybody in every firm sell every single risk asset in by US dollars, you know, what would that mean to NDA top shot. And I think that kind of brings me back to we look at the the Dutch tulip bubble, we saw the the viceroy tulip, that was five times the size of your average house. And I think you have your average investor that has these NBA top shots, that is we’ll just say, kind of a, you know, a middle income type individual, a middle risk, kind of averse kind of person. And, you know, they put $1,000 into a risk asset. And all of a sudden, it’s up 1,000x. And they say, you know, I have a car payment, I have a mortgage, I have all of these bills. And at the end of the day, you know, are they going to hold for that purple Lamborghini? Or are they going to hold, you know, for, you know, the utility that they have kind of sitting in front of them. And when I was a broker, this is what I told people all the time is trader psychology is the number one killer of profit, before you enter into any sort of risk asset, you have to understand what is the risk capital that I have put forward? And then what is the loss I’m willing to take, and then as is accumulates, what sort of profit and they are willing to sort of give up? Because if if 1000 people, you know, hold out for that lime, green, purple, Lamborghini, you know, I’ll tell you, just as Matt tells us, 999 will end up, you know, blowing their account up, and that one person may be rich. So think at the very tip of the quote, unquote, end cycle that we’re in, you have to imagine that COVID came right at the absolute frothy tip of the bull market. We saw, you know, a little bit of protectionism with Trump and the trade war, we saw a little bit of jostle lations in the market there. But you know, we really were kind of at the end of that market in starting to raise interest rates. And then we had kind of this black swan event. So I mean, the answer the question that I really don’t know, you know, it’d be really interesting if we did this exact podcast, in you know, eight years, and we kind of did a case study, looking back, after we see kind of Treasury yields rise, mortgages rise, commodity prices rise, your everyday goods rise, people going back to work, people spending money on gas in their cars driving to work. And we kind of see a return to normalization. I don’t know where we are. I don’t know if honestly, as I said, I don’t know if we’d be having this conversation. If it wasn’t for COVID.

Jesse Bach 44:12
I was just thinking, you know, especially now with the, you know, with with the lack of sales data, and, you know, what’s crazy is that this market only came about, you know, almost a year into COVID. So it really makes me wonder, like, let’s say if we kind of try to, I don’t want to I don’t you know, I keep trying to I keep comparing cards to NF T’s or NF T’s to the card market, but the card market was actually it was booming in 2019 going into 2020, it had a pretty good year run it was it was a more healthy run. Then Then something like the NFT craze in 2021. But while the country was shut down in in March of 2020 The collectibles in general, and the card market took took quite a bit of a hit like 25 to 30% of basically the overall card market went down. And then all of a sudden people that were that were in it since 2019, they just saw this as a buy opportunity. And then prices just started going up like crazy, especially with, with people’s free time at home. You know, here we, I honestly, I don’t know if if, if NF T’s would have had the same bull run in in March of 2020, as cards did, I could be totally wrong, but we’re just not seeing as much of as as much data there. And we’re not seeing like, you know, like a more healthy appreciation, and increase in value.

Nate Liss 45:45
I think the thing that concern me the most just about this in general. And the reason that I’m so glad you came on here is that I see a lot of influencers, and many of them are people that I follow and friends of mine, and they’re really pushing the positive side of this, that it makes it feel like there’s no bad can happen. And I guess with what you do for a living and all the research that you do, I guess my question would be are we at the bottom of this yet? I mean, is this is this as bad as things are gonna be? Or is there something in the future a wave coming that people should keep considering when they decide to dive into things? Whether it is cards, whether it is NF T’s?

Corey Leavenworth 46:22
Yeah, no, that’s fair. And especially with something that that’s extremely early on. When you talk about kind of support and resistance and kind of buying the dip, we have an extremely small set of sample, we have to understand that NBA top shot was kind of the first on the scene and kind of give them credit. So I would really like to see, you know, how this crypto risk assets kind of flow during during a bear market, we really haven’t seen it. And we see really a new generation of speculators that have never seen a bear market before they’re really asking the question, you know, what has my USD dollars kind of kind of done for me, when in the background, they don’t know that, you know, the US dollar has been the lubrication for global trade. It’s the reason why you have the deflationary pressure. It’s the reason why you have cheap labor that gives you that the cheap costs that you have, I think a lot of media is kind of pushed the the money supply aspect of this, but they haven’t really looked at the osney as well. So quantitative easing is not so much about money printing, but it’s also about encouraging the spending. And we really, really haven’t seen that too much. So as we kind of look at what’s in the future. There’s the deflationary crowd, and there’s the inflationary crowd. So, on the deflationary crowd, we kind of say that, listen, technology has been a huge aspect in driving prices down, Apple somehow produces in China in has a camera on their phone that, you know, eight years ago was worth $5,000. So we have that kind of cheap labor, we see corporate tax rates falling quite a bit. So there’s that kind of aspect of deflation. And we see when there’s, you know, fear in the streets, people kind of hoard money. And then on the inflationary aspect we have. Listen, we today we printed retail sales, we’ve seen cpis, we’ve seen purchasing manufacturing, we’ve seen the highest purchasing manufacturing since 1992, mixed with the lowest inventories possible. So we’re seeing this accumulation in a rise of cottage commodity costs with, you know, sort of this pressure of constrained supply chains. We have CPG companies that had a run on their products and dry goods a year ago today, you know, how do they plan for their inventories, when they rely on something that grows from the ground? It’s extremely hard. So we have that. And also we have a government led recession. So we have people that haven’t spend money on leisure, travel, gas eating out that have really had this $1.6 trillion kind of sitting on the sidelines. And so for instance, somebody that drives to work that hasn’t done it in a year, how do you replicate what you’ve spent gas, when you have to go back to the office, you can’t spend that twice, you can’t kind of make that hole in spend what you would have in 2020 in gas in 2021. So I do wonder if people will spend that on leisure as the inoculation rate continues. And I really think that that points is to the topic of discussion of NBA top shots of what does that mean for the Federal Reserve. So the Fed has a few mandates as far as inflation, we look at maximum employment before they raise interest rates. And the Fed has told you, you know, over and over again, we are not in a hurry to raise interest rates, inflation. Men are how skewed how we measure it. We’re not going to raise rates until 2023. We saw in New Zealand in 1989. Really take a look at how we measure inflation in funny enough since then, how we measure inflation has gone down. So there’s, there’s no, there’s no secret that, you know, members of Congress are able to hold on individual names, and that we greatly benefit from low interest rates. From a frothy risk acid point of view. We saw Trump over Twitter, tell Jerome Powell, don’t you dare raise interest rates or you’re pretty much fired. So that this kind of frothy appetite is really set us up where we are. But we’re really see, I mean, we’re due to see the biggest rise in economic activity in 40 years. So nothing right now really matters. What matters is when we get to q3, and we kind of see how we spend that money. So as we kind of see inoculation rates hit 70%, we kind of see this crowd immunity come forth, we see businesses sort of open up, you know what happens to inflation, when we have too little goods with the supply chain supply constraints, and we have too many of the dollars, and we really see inflation pick up, we then will see interest rates rise, cost of living go up, people have to return back to the office. What happens then, especially if you increase the supply of these moments, and you have other sports, celebrities, musicians, so I really don’t know where the price action goes. It really should be interesting to see what happens when we see a pullback in risk assets to something like these NF T’s

Nate Liss 51:58
Matt Kelly, on the last podcast, he asked me a question about top shot in general and what I thought we were it was it at today, because obviously you’re aware took a pretty significant hit recently, a lot of people saw massive dips, which happens in all markets, so not to crap on anything. But there was a pretty massive dip recently and one of the points that he made. And I think it’s something that you’re reiterating, in a way right now, he basically said that we’re going to go from the, you know, a commodity of things to a commodity of experiences. And that may be where you’re talking about how people are putting a lot of money into these things right now. Right? Whether it’s NF T’s, whether it’s cards, whatever it is that they can’t go do, they’re spending money on that remotely. And when things open up, when you know more people are immune, we have herd immunity. If we ever get to that point, I’m sure someday we will. But when this all takes place, or we open up events where people that have been vaccinated can attend those events, that then creates the opportunity for the commodity of experience. And people go back out and start enjoying dinners and Travel and Leisure and all these things. It What does that do to you know, even cards to that point, or these things? Things that are things essentially, is what I’m saying what happens to those? And that’s kind of concerning as well. But yeah, I think best case scenarios, things obviously open back up, and almost in a free market sense. Whatever’s best will survive the future change.

Corey Leavenworth 53:26
Yeah, absolutely. And we see during recessions, you know, luxury goods, you know, think that things kind of recede, as we saw during the global financial crisis. I mean, people love the McDonald’s dollar menu. And as we see kind of that, that shrinks, you know, at the same time, people who are like we said, your middle, you know, average class citizens that have made 1,000% on top shot, and they’re sitting potentially on auto debt. And they have other other needs, you know, what, what really happens then, and it’s very easy, like we said, in 280 characters to kind of give you your bullish thesis, but when we have Corona, and for an entire month, not a single person was touching any sort of risk asset going along, then it kind of opens up the eyes. You know, at this point in time, it’s very rosy. And it’s very easy, you know, when you see people doubling their money overnight, to partake in that. But as we kind of see the long term cycle, we see people kind of guessing where these assets will be in 15 years and such and that’s extremely hard against the macro draft, you know, the macro drop. These tech companies really haven’t made any money. We saw it in February, Treasury yields rose, Bitcoin fell 20%. We see these frothy tech companies that don’t make any money, they fell considerably. So even if we see a bump in Treasury yields, or a Fed governor even talk about raising rates It pulls risk asset assets back. So what happens when we actually enter into a recession of some time? What happens to those risk assets? Are we going to see these long lines and queues of people lining up to disband expendable income when they actually don’t have it? So yeah, I don’t know, you don’t know. But I think it’s only fair once we kind of see the price action kind of recede in an actual economy, then we can actually make a truthful assumption.

Jesse Bach 55:32
Cory, I know, you said it’s impossible to see 10 to 15 years from now. But do you think beyond the craze that we’re seeing right now, or that we saw earlier this year, and now we’re seeing more of a bear market? And I know, you said people that have been in this space for the short amount of time that they have been, they haven’t quite seen a bear market yet. So it’s interesting to see how people are reacting right now. Do you think that there is a place for NF T’s within the collectible market beyond 2021? I don’t know. I don’t know what a good time frame is, I don’t know if if two years or five years from now, honestly, I’m not it, you know, it just at some point within the foreseeable future. If if there’s a place for them within within the collectible class, if they’ll even be worth if there’ll be seen as legitimate both legitimate collectibles, and as a viable asset? And if not, what improvements Do you think need to be made either from dapper labs or from from other NFT? companies or corporations to retain a legitimate collector base?

Corey Leavenworth 56:37
Yeah, I mean, I really don’t know. I mean, what we’re still so early, kind of in the cycle, I don’t know, if people who are investing in them now are holding them, you know, for 1020 years, it’s very easy on Twitter to say you are versus when you know, the markets kind of collapsing, and you kind of you know, pull out. So to be honest, I really don’t know, we really haven’t seen too much of examples of anything blockchain based with a recession. So I really don’t know, we had a nice litmus test during COVID. In COVID, I mean, we saw risk assets, we saw crypto collapse. So I really don’t know, if we were actually tested. It’s a very hard question versus, you know, the short term versus the long term, because people say, Hey, we’re moving into this digital space. So I’m going to invest in this digital space. I mean, maybe in 15 years, that the biggest top shots are worth, you know, potentially more than they are now. I think that’s actually very well in the realm of possibilities. But some of the some of the cheaper, you know, NF T’s, I don’t know, if we look at top shots, if you you guys are more in the NBA than me. But if you kind of see a mediocre plus player that has an above average dunk, you know, where is he in 15 years, I mean, if you think back 15 years to the NFL, you know, if it was an above average player that made a random kind of NFL catch, you know, we see growing talent in the sports leagues grow. So I think at some point in time, it kind of becomes a factor of supply. We’ve seen the demand, and we’ve seen that the kind of random social media influence. But as that supply grows, I don’t know if that can withhold at current times a recession. So if we kind of said that the NFT supply grows by 10, and the new wealth money, kind of, you know, just bumps up a little bit. I really don’t know. And, and to be honest, I think dapper labs really don’t want this very quick turnover. And to make the quick 5% on these, these huge moments, I think dapper labs would absolutely want a longer term business model, where they have people that aren’t getting turned off by not being able to get a pack and not being able to get their money out. So I think it’s kind of a strange dichotomy. We look at kind of the present and the price expansion. And then we look at where’s this going to be in five to eight years when the supply is exuberant? And the economic conditions have maybe tightened up a little bit. It’s anybody’s guess what happened to that point in time?

Nate Liss 59:28
I just I definitely don’t want to end up the guy who pushed back so hard that it totally flamed him in the future. I mean, I certainly was not a believer in cryptocurrency in its infancy, right. I think I think there was a lot of people I mean, and I’m sure you maybe from an investment standpoint, were one of those people that were like, Look, we don’t know anything about this. large sums of money being dumped into it doesn’t make a lot of sense. It’s a good way to lose large sums of money. And then on the other hand, we have you know, 23 year olds driving purple lambos right because of it. So, you know, here we are today and I look at DNF Tea space as a whole. And I realized that there’s certainly something here, right, as you said that we’re going into this media digital media world where all of this stuff is going to continue to grow and foster and companies are going to recognize the success of this moment in time. And whether we become a commodity of experiences, again, people are still going to chase what was successful right now. So I think for those reasons, we’re gonna see this trend continue. And sort of, in a minor way, the success of a lot of things because something has to fail, right? Not everything can be successful, all at once. And just like the players that you mentioned, Jesse and I were talking about this, when we’re trying to get the Skype stuff set up, you’ve got these random players with random plays, and people are listing them for whatever they can, because again, I think it’s a cash grab. But at some point, something has to be worth nothing like, we will get to the point where you open packs, and there’s it’s not worth shit. But that’s the risk of opening a pack of cards is that you could spend $50 on an old pack, or $8 on this pack, or whatever and open it and nothing in it has any value whatsoever. I just what throws me off about top shot is we don’t have that, like what’s the cheapest top shot, you can find that have to go look, is it $15? I mean, I could open a pack of cards right now there’ll be a card in it not worth a penny, it was probably worth what it was cost to produce. Right. That’s it. So I think that’s one of the things that I continue to worry about. And like you’ve mentioned, if I had a top shot, if I had a moment that had $100,000 value, I’m selling that instantaneously today, if I can get it, I’m not even holding for the future. Because I don’t know if this is going to be here. And when is the next chance that I’m going to it’s like a lottery ticket, when’s the next time I’m going to spend $8 on a pack and hit on something that’s worth $100,000 you would cash out why would you wait, right?

Corey Leavenworth 1:01:52
Yeah, absolutely. I mean, I think if you can rip a pack and instantaneously, you know, without a doubt kind of retain, you know, increase that value, it kind of becomes a speculation grab. So, I mean, when I was a broker, I talked to a ton of speculative investors in tons of different instruments. And if something is kind of too good to be true, and you’re kind of promised this exorbitant return, you know, typically, it’s not going to work out. You know, I talked to investors and traders and they say, I want the little risk possible, but the maximum reward, and I tell them that that really does not exist, and we’ve kind of looked at asset classes, you have to risk to reward. So I think history has proven to us, you know, if you walk in with that attitude, the rug kind of gets pulled out at the last second as though those big buyers kind of subside. So it can be really interesting, especially looking at who holds, you know, a big part of the market and a big part of those, you know, top top moments and really, you know, no one expected COVID. You know, like, like I said, we saw companies like Apple who have more cash on hand than the yearly GDP of a country like Portugal, you know, absolutely crater to those sort of pressures. So I think the moment you think that you are invincible, and you think for sure, you know, what’s going to happen next is sometimes when that random overnight gap kind of catches you by surprise.

Nate Liss 1:03:27
And I don’t know, if you’re referencing I had put a link in our show sheet. And it mentioned, Darren heitner, I think is his name. And he put this tweet out with a graph that basically said that the top 1000 MBA top shot accounts are worth more than the remaining 350,000 accounts. And over half, roughly 800,000 users have never purchased a moment. So it’s it’s really, it’s really imbalanced when you look at ownership in it sort of value in the market. But I guess it would lead me to asking you so the people that are in the people that invested heavily not because they were the first people to buy in and see a an artificial inflation and sell and make money. But the people that were too late and overpaid, and are now in the market and they’re invested 1000s of dollars, let’s say what do you say to those people? What should those people do? Is it like the world of stocks? Do you just hold and wait for a rebound? Or do you cut your losses? I mean, I know you can’t predict the future. But if you’re in that far, and you were late to the dinner, what do you do?

Unknown Speaker 1:04:34
Now? That’s actually a good question. I think it relates all back to trigger psychology and doesn’t matter if it’s top shot or physical cards or derivatives or equities. Before you get into a trade. You have to know two prices. You have to know when you want to get out on the top side. And you have to know when you want to get out on the bottom side. I think a lot of people have misinterpreted this quote unquote diamond Hands and all this, this paper hands and all these stupid means, when in reality, you know what that actually means is if an asset goes against you, and you say, for example, I will take a 30% haircut on this, that means, what it hits 30%, you get out. And I think a lot of people have actually reversed that and they say, I am down 75% on this investment, I am diamond hands, I’m not going to get out, because I’m just so cool. And it doesn’t affect my emotions. But you’ve completely, you know, gotten that that entire take wrong. And, and you wouldn’t probably last, the first round of interviews in any place on Wall Street. It’s all about managing risk. And you have to know those levels. And for those people, when you take on a risk asset, if you have, let’s say, just say 1000 bucks, and you say I want to risk, we’ll say 400, you probably shouldn’t get into one asset, and then risk that that downside, you should probably get into four or five, and then risk, you know, about a percentage there. And then kind of double what your potential losses and say, you know, if I invest $1,000, if I want to risk 400, that means maybe I want to gain 100. And then over time, I only have to be right, you know, half, half half the amount of times, and I’ll be profitable. So my advice to those people is be prepared for the next surge, you know, do your research, do your education. Now, get your brokerage account set up now. So you can take advantage of the next rocket that takes off and you are in a position. So you aren’t the person that’s texting me when Jimmy as an all time high, or asking me how do I set up my brokerage account? How do I turn it off? You know, what you should do is do your homework now, and then be ready for when that next asset but will happen? So I mean, with that we really don’t know. I mean, NBA top shot is at Wait, like we said at its infancy stage. As we look when we’re recording this podcast, we had Johnson and Johnson just had a vaccine, that that caused blood clots in six females, you know that six out of 7 million, you could go to your Walgreens and buy any over the counter drug and have something give you blood clots much more than six people of 6 million. But how many people out of that are now not going to get a vaccine? And how long is that going to push forward? The below 75% inoculation rate, I think six people six very small class of females who had a blood clot, you know them pushing people for not getting the vaccine may have then in the future, push the Fed for not raising interest rates out another month or quarter in that have raised, you know, billions of dollars to market capital to kind of tech companies. So it’s really interesting. It’s kind of you look at the the bad news versus good news, where we’re kind of in a cycle now where we’re bad news might actually help the deflationary cause and help push back the Fed to raising interest rates, the Fed is giving you every excuse possible, why they want, you know, asset prices to rise, and they’re not going to raise interest rates, we need maximum employment. Even though people who to work these low paying jobs are getting paid to not work and they will come back to their jobs. We see a lot of deflationary pressure, kind of across the board in that sense. And, and so if that continues, and if the Fed pushes out their interest rate rises that will help these risk assets. Whereas if the vaccine rollout is perfect, and everyone is inoculated by, you know, late q3 and reopened back up, we had inflation, we raise interest rates that’ll hurt the sort of risk assets. So it’s kind of counterintuitive, but if you are long these frothy, you know double your income overnight, like things like Dogecoin you actually want kind of bad news to happen. And you want the Fed to kind of have every excuse possible to keep this circus going. I

Jesse Bach 1:09:05
think just one thing you you said in that explanation is that I think that it applies anywhere, but like, you know, NF T’s cards, alternative investments, you know, more traditional investments is that if something doesn’t go your way and if you’ve put your money into something, it’s always wise to even before you put $1 into something always have a price in mind are a price point in mind. Whether or not whether it appreciates or depreciates over time of when you feel like you should get out even before you you look at the asset all together in the first place. And and before before you put in any money into it and I thought that was a great point that you made. And it applies everywhere.

Unknown Speaker 1:09:51
As we say kind of in the street, I mean, green on the screen, your entire point of getting into this is profit green The screen, it’s making a profit, if you’re into this for making a profit, and you take profit at, you know, 400%, you know, the risk of you kicking yourself versus a little more return, versus that kind of subsiding to know, your breakeven, you know, we’ve seen that the kind of the odds of that happening and, and then trigger psychology happens. So if you put 1000 bucks into a risky asset, and it goes up to 4000, and then it goes back to, you know, 1500, you’re not going to get out, you’re going to wait until that goes back up. And that kind of goes below your cost basis, and you’re going to wait, so you want there your reason to get out, not dependent on the market, you want to set your risk parameters before you get in the market, or else you’re going to tell yourself every story possible. You know, especially right now, in the frothy assets, you know, there if you bought an NBA top shot, and it went down 20% you know, why is that if you can’t explain that down to the absolute detail, you know, then you have to be expected that that that could double in price that could you know, chop in half. And that’s why we have those risk parameters is because you just don’t know you can’t will the market the way you want. And we kind of see that in fantasy football with an unproven prospects, you know, people kind of fantasy want and once they kind of fantasy wants, they never they never, you know, relinquish that that sort of take.

Nate Liss 1:11:27
I you know, I feel the same way about chase Edmunds. I feel like that’s been going on for far too long people fantasy want and it’s just not going to happen. I just I don’t see it this year, either. Let me ask you a question. When inevitably, when the economy opens back up, when we hit herd immunity, when numerous other sports NF T’s come out whether you know, even you brought this up baseball, but you know, of football, hockey, all these other things are going on? Speaking about top shot, specifically, what do you predict if you had to make a prediction? What’s the long term prediction for top shot as a whole? Does it? Does it maintain this this strength and this popularity? Or is the economy of experiences and more competition and a different market? Does that really squeeze the life out of it? And is it just another? Is it just another thing out there in the universe?

Unknown Speaker 1:12:27
Yeah, I mean, if we kind of roll back to the q1, and we see the the retail stock trading explosion, you know that that seems extremely present. But when in reality, retail stock trading is back to pre COVID levels. So it kind of seemed like everybody and their mom, all of a sudden became a day trader, you know that that’s very far in the past now. So I don’t know really what’s going to happen as the economy opens up. And as people don’t have the time to sit in line, they’re not, you know, getting these stimulus checks. You know, maybe they don’t have the the easiest monetary lifestyle in the history of human humanity. You know, I think all these things have come to a point that have reached, you know, the feverish aspect of MBA top shots, but it’s a hard question, because there’s the short term price coming back. And then there’s a long term appreciation. So I think it’s kind of two questions as far as what happens to the price of the non 1% kind of moments in the next 18 months. And then kind of what happens in the next seven to eight years. I really don’t know if the technology for the metaverse will be here in a few years. What like I said, it makes a lot of sense in 280 characters. Well, we’ll see if people are kind of on their back and their VR goggles, as you say, kind of seeing the Swiss Alps and kind of showing their friends. You know, I really don’t know, if I had to make a strong take, I would say that 99% of those top shot moments are probably going to decline in value. And I think maybe some of the absolute rarest LeBron James will probably appreciate in the long run. It really all depends. I mean, all eyes will be on the market in q3, as we see just how intense this inflation is. And you know, we had a hot print today, we had a hot print and pmis earlier. You know, this very well could lead to something we haven’t seen before. We saw the Great Depression came on the heels of the roaring 20s. And as you know, kind of fever speculation to place where, you know, they said your average janitor or your everyday person was putting their savings in the stock market before it crashed. So we really, at this point in time, don’t know. And if anybody is telling you that this is the collectible to have in 15 years, they’re probably wrong. And if somebody thinks that, you know, this is a Ponzi scheme, and it’s all gonna go to zero, I think that is probably Little bit wrong as well. I think you have some wealthy buyers that have entered the space that may have the luxury not to close, when the academy kind of reasons. So yeah, I think we’ll all kind of see. But I am very interested in the supply aspect. And kind of top shots being the first to market when there is an even in themselves kind of if they get the licensing for all different sports, I can think within themselves, what is the competition? So I kind of throw the question back to you, I heard dapper talking about, you know, the rarity of a car that is, you know, the the pop count of their birthday, or, you know, kind of one of whatever. Does that hold true in the physical card market? Or do you kind of see all of that as kind of, you know, the greater pop count kind of as a whole,

Nate Liss 1:15:55
Jesse and I were literally talking about this pre show, because what I found out with with the top shot moments, I had made a point on a show where I said, How are they going to discern a difference in value from one moment to another, let’s say they print, or let’s say that there’s a digital asset version of a LeBron James dunk. And there’s 100 of them out there, right. And it’s, it’s numbered one through 100. And they’re all exactly the same, because unlike cars, there is no difference with the quality of them. Right? They are literally a one for one, all 100 of them. So you find out I said, Well, how are they going to do it, they’re gonna have to make the first of the 100 the most valuable, right? Because there’s no other way to necessarily peg a value to it. And suddenly, that’s what we found out they did. And Jesse and I were talking about it, and it does happen in the car market. I’m sure Jesse can speak to this a lot more. It’s just such a curious thing. In cards, I think it’s less of a powerful use, because there is quality differences.

Jesse Bach 1:16:57
Exactly. Yeah. And cards grading essentially builds in a type of scarcity. So whether it’s, you know, like a bass card, or, or something like if it’s a bass card, it’s more artificial scarcity, just because companies like Panini and tops, they don’t tell us the true print run of a certain card. Unless if it’s serial numbers. So there there may be, there may be a PSA 10 pop count of just over 100, but who you never know, there could be 20,000 of these things printed just, you know, not not, we might see numbers that aren’t dissimilar top shot, you know, moment, like whatever the moment is out of the moment count. So grading definitely. It Trump’s, I guess a serial number. But I mean, if you have, if you have you know, something that’s a rookie card that’s numbered one out of 100 100 out of 100, or maybe the player’s jersey number, and assuming all three of those serial numbers are in the same grade, same condition, they’re all PSA 10, then those, those three cards that I just mentioned, those three serial numbers will have a premium over, you know, something that’s number 15 out of 100, or 70, out of 100. Just Just because that’s just, it’s it’s just how it is people like seeing the or taking ownership of the first car that was produced in, you know, like the assembly line, or the last one or the one that just represents the jersey number. I’ve even seen cards that are number 23. Just because of the significance of Jordan and LeBron, like, it’s just it’s so it’s so obscure, but even something like that I’ve seen have a premium over any other serial number, assuming they’re all in the same condition. But yeah, for sure. grading and, and the condition of the card Trump’s it’ll, it’ll Trump the serial number. First and foremost.

Nate Liss 1:19:00
If you’re a person, though, that that appreciates, let’s say you literally like art appreciated a moment, not say there was 150 people that appreciate it a moment. And they didn’t really care about the long term value of it, they would look at numbers 50 to 100, verses one to 49, right? Because what does it matter to them, that the value of it is higher if they’re buying it because they want to appreciate what it is, you know, as a commodity. I think that’s kind of where I keep going back to that I struggle with the idea that we don’t know how they’re valued, and then they’re only valued solely on which one is the lowest number. And it’s just such a strange thing when you sort of reflect on it, but again, much like artwork in the eyes of the beholder. That’s how this takes place.

Unknown Speaker 1:19:46
I don’t know how people represent that number, like you said the number 23. You know, if we’re looking at artwork, it has nothing to do with the number it really has. It draws back to the quality In really what what the artists kind of made. So it seems like it’s, and you guys can tell me more than me, the art the the, it’s kind of random, I mean, you kind of get in line and you kind of get something and it’s got a number that has some sort of significance. But whereas the art world, I mean, you’ve you’ve, you’ve acquired something that’s that nobody else can replicate. And I think that is kind of the big draw for art is that, you know, I can show you the art piece in the wall, and you can’t replicate it. Whereas, you know, an NBA top shot or an NF T, I can show you something that that’s literally 100% the same thing on my computer. So yeah, I have no idea where the the value of that goes, I have no idea. You know, in 20 years, if we’re walking around in this augmented reality, if someone kind of points to a painting and says, You know, I bought this in 2021, look at this metadata, it’s the original, versus if you go to your friend’s house, and they have the same thing. In a paid, you know, you know, point 000 1% of the same thing. I don’t really understand that, quote, unquote, flex. I don’t know if that has to do with the appreciation of crypto as a risk asset? I really don’t know, I really don’t know. And I think we have to come back to this conversation, once we’ve seen an economic downturn, and it really can kind of pointing fingers. But I don’t think anyone who is super bullish in the space, or super bearish really has an appropriate take until we see an actual market, you know, come to light.

Nate Liss 1:21:46
I think that makes it the most the most likely would be as you brought up the augmented reality like that, that is the universe where I picture this being the most successful where Yeah, you are walking around with VR headset, or you can have these things displayed in such a way that they’re readily available. Because the right now how do I show some of my my NF T’s or my digital artwork, I pull it up from a phone, which everybody has on them all the time, which is a likely answer. But I don’t have a piece of artwork that’s six inches by three inches, right? Every piece of artwork that I’ve ever owned, is significantly bigger. I mean, so it seems it seems like you have to sort of bend your mind into a world to see the fully digital that you’re immersed in, well, we find a way different to display it. And these moments, I think, because they’re novel, because they’re the first it’s created a unique situation. And that’s what’s really helped it survive. And that kind of takes me back to that question before when the markets flooded with competition with other sports with competitive sports. Even with football, we are your basketball, we have different companies making different cards, when you have similarity. What does that then do two things. I mean, it’s it’s not an impossibility for top shot eventually to maybe not be the most viable NBA creator, and maybe they don’t hold the licenses, right? Maybe it shifts. So how do we then value? The the old producer of the cards when top shot had the license for MBA from 2020 to 2026? And then suddenly, from 26 to 2035? It was some other company? Do we then still value those the same way? Are they more valuable? I think there’s a lot of questions that you can ask on the subject. And Jesse, I don’t know what your thoughts are on that, because we know that his Panini deserve football contract runs out at the end of is it this year? Is it 2022? Is that when Panini loses their NFL?

Jesse Bach 1:23:38
I’m not sure actually I’d have to look that up. But they’ve I think they’ve been they’ve had the exclusive rights to produce football cards since 20. I want to say 1616 2016. Yeah, yeah. So yeah, I mean, it could be it could be running out in 20 2022 or 2023. I’d have to look it up. But yeah, I’ve I’ve heard rumblings myself that that their their time is coming up soon. Unless if they, you know, extend the deal.

Nate Liss 1:24:09
Yeah, so it’s so I think there’s a wide variance of outcomes out there. I’m just glad, Cory, that you you did exactly what you said you were going to do. You came from a point of neutrality and really kind of played both sides of the fence. And I think it put a perspective on it that I haven’t heard from anybody else. I’ve listened to a lot of other takes on top shot NF T’s in general. And it’s always more from sort of the digital point of view, what will the future be? You know, what’s the interest right now and nobody really talks about how did we get here and where are we going? And I think that this is probably going to open a lot of eyes for people because I mean, this is a subject that clearly you’re you have a wealth of knowledge in and it translated to NF T and top shot is really important because we’ve got a lot of people that I think every I think most people are attempting to sell but there are people out there that believe it’s the long term hearing what you’re saying should concern people that aren’t holding things of vast rarity. And I don’t know if that’s that’s sort of your belief that is short of holding something that, you know, is rare. Maybe you shouldn’t necessarily be holding anything at all.

Unknown Speaker 1:25:16
Yeah, I guess what is rare? And are you kind of debeers, who are hoarding diamonds in the basement and kind of controlling supply. I mean, if you took advantage of the blockchain, and you invested in, let’s say, a dinosaur fossil, you know, that’s nothing I can pull out of my ass, you know, that’s something I can replicate and create a digital copy of, I couldn’t make a plastic version, that’d be worth nothing compared to the real thing. So I think kind of as the money supply in the US explodes, I think people have gravitated towards the word scarcity as they should. But I think they have to be very careful when you can literally buy a click of a button at a comma orders zero onto a supply, kind of put a border around it and say, hey, it’s kind of limited, versus, you know, if this hysteria happened versus, you know, collecting a player’s shoes after a game, you know, that that is one for one, there could be a ledger for that, that is truly very unique. But for some reason, because we say something is one of 2000 that somehow adds additional value. So you know, I’m not too sure we have 150 years of cards, we have more of that kind of in stamps. So as collectors, I kind of bring the question back to you, you know, you’ve seen cards and stamps and things like this, that are more recent, have a high value, versus something that’s a century

Unknown Speaker 1:26:45
old,

Unknown Speaker 1:26:46
that is worthless. I mean, I personally, I have stamps from the 1800s that are worth $0. So I think a lot of people think they’re their first to a segment and the end first equals, you know, the highest future representation of that cash flow. So I guess, can you guys speak of, you know, pop count versus, you know, time in kind of the relation to that and price?

Jesse Bach 1:27:17
I mean, it really just depends on the asset. First and foremost, it depends on on the player, you’ll you’ll have something that’s serial numbered. I mean, you can have a, I don’t know a one of one, Trey young or I’m even trying to think of somebody more obscure maybe like somebody like a Karl Anthony towns or, or even a one of one Justin Jefferson. I mean, something like that isn’t going to go for nearly as much as Michael Jordan’s main rookie card, which there are over 300 of so it really it? I think in terms of cards, it depends. It mostly depends on the actual athlete and the card itself first, before even looking at scarcity. I mean, with I mean, I guess you can say that to an extent. I mean, I know there, there are certain rookie cards that are, you know, were at one time seen as valuable. But then all of a sudden, like, like one that I’m thinking, right off top, my head is a 1986 tops, Barry Bonds, rookie. And that sounds like a really big car that sounds like you know, one of the best baseball players of all time the homerun leader, no matter how controversial he was, but there’s over 50,000 of them graded. And it’s it’s just a it’s, it’s it’s wild when, when something that had so much potential and was, was so overproduced in the time when that was like that really kind of kick started the junk wax here and in the mid in the mid to late 80s. So, I mean, it’s it’s kind of it’s kind of a balancing act where you look at the player first and then and then the pop count next, but if the pop count just severely like if, if there were over 100,000 of those Michael Jordan FLIR rookie PSA 10s they’re not going to be worth $750,000 ever not ever I don’t care if they’re 5 million people that want that car there’s 100,000 of them it’s not going to be that hard to get you’re going to see them on pop up on eBay and other online buy and sell platforms over and over. They’re not going to be that rare so yeah, with with cards it’s it’s it’s certainly it’s certainly a balancing act.

Nate Liss 1:29:35
My dad massive stamp collector, massive presidential autograph collector the stamps though have lost a ton of value. But I think what gets forgotten or has a lot of built in nuances adoption, right like the the people that that continue to buy into something or keep it alive, right you’ve you’ve got a ton of people that have adopted what’s taking place. With no top shot, and obviously we have a long standing level of adoption with sports cards, and that’s what’s kept it afloat. That’s, that’s kind of my concern long term is when you price people out, like if only people can really only afford to buy packs, right? I don’t know what the upper level of the people that have the most monetary disposable income are. But most people can only afford to buy packs. And many of those people aren’t buying the $230 most expensive packs, because a lot for a lot of people that really priced them out. So I don’t know what happens in the long term when people can’t get packs, and the only ones that are available, or maybe too expensive. And then when they’re getting packs that are getting hits. It’s like that’s where you lose your adoption to me. And then you necessarily need people to bridge that gap. That is, there’s no real way to display these, right? They’re not physical like cards, not like artwork, you then necessarily need to get those people to continue to commit to stay in that adoption period where they’re not really getting great stuff, they can’t sell their stuff, they can’t buy the stuff because it’s too expensive. And there’s no way to display it, because it’s so new wave that it’s not you know, how do you show it off? Right, you need a collective community. That’s what we have, the car world hasn’t clearly, you know, top shot has, there’s discord groups, websites, forums, all that you really need a community to make it survive, I think and to go through this, this period. And if there is a deep recession, you know, worse than what we’ve already

Unknown Speaker 1:31:29
dealt with coming

Nate Liss 1:31:30
or whatever the future is. And again, Cory, you know, way better than I would on this subject? Are those people get a band together and stick with it? Because those are your buyers? That’s your that is your basis for your platform? And if those people decide to go, what happens?

Unknown Speaker 1:31:46
Yeah, no, absolutely. And we don’t know what really happens, until we’re kind of faced with that. And I think that kind of holds a testament to cards. And, you know, maybe stamps to a little bit is, you know, we’ve had periods where if you have a box of rare stamps, and let’s say they’re worth 10 grand, and we go through a recession, and they continue to sit in your basement, and then you know, by the time we kind of get lifted back up, you know, you haven’t sold those, whereas I think with MBA top shot, we have people literally staring at at the price from from minute to minute. So I think when that happens, I think people are in this feverish moment of speculation. I think quantitative easing has left them with with not many outcomes, you can’t put your money in a savings account. So it’s people really chasing yield. And I think that the points I made earlier, to you know, the monetary and fiscal stimulus in people being at home and having the excessive money has really kind of pointed us in this kind of this, this redirection, so what, like I said, I don’t know where we’re going in the future. I don’t know if it really has any sort of utility. But yeah, we will see, you know, once we have an actual dip when we have an actual sort of recession, you know, we’ve had some tremors. But you know, I’m very curious if this were to happen, you know, kind of pre COVID what the top shot market would look like, if we had, you know, everybody running for the hills, buying US dollars, parking their money and safe haven assets, and leaving, you know, even parabolic assets, like, like apple and other tech stocks, you know, if you’re selling apple in some very, very sexy tech stocks, during COVID, you know, what do you need to do with a, you know, kind of a random, you know, layup by somebody that you may have made, you know, 50% on, I really don’t know, and that’s kind of what it comes back to, to, you know, kind of psychology in what people think, at the time. And if the social media kind of influence continues, I mean, you can’t go on Twitter, or, you know, Saturday Night Live Without people, you know, talking about NF T’s and NBA top shot. It’s kind of nauseum. So, you know, as we know, cool things always kind of subside. And when that happens in an asset class, you typically have a run. So again, I don’t know where this is going to go. But you know, the only thing I’m saying is kind of all signs point to being kind of the perfect scenario for the price accumulation of NBA top shot. And that certainly, you know, not a discount to dapper, you know, they’ve made an incredible product with incredible profit margins at the right time. So, you know, kudos to them. You know, I’m just kind of bringing a point of view of, you know, how have we gotten to this point, and what are some possible scenarios of where this could potentially go?

Nate Liss 1:34:49
Well, Cory, let me let me hit you with one final question before we get out of here. And I’m gonna make this easy on you if I gave you $10,000 I said you can spend it on only one item and it’s of your choice. Any player you get to choose and you could choose between a top shot moment, or any card that was $10,000 in the universe. What are you selecting? Oh, God?

Unknown Speaker 1:35:15
Well, I know absolutely nothing about NBA. I only know about really soccer and NFL. But I mean, honestly, if if Jerome Powell and the other fed governors are saying, Listen, we’re not going to raise interest rates for a while. Even if we have inflation. We are the government and even if CPI has been skewed to show that CPI, inflation really isn’t impacting the economy, when it is we’re we’re trying to hint hint, wink wink tell you that risk assets will continue, I would probably buy an option on a tech ETF that’s like 3% out of the money in try to have, you know, 10x my money, you know, I would probably be extremely risk risky with it. You know, I’m a very kind of risk pro person. So I really don’t know. A terrible answer your question, because I don’t know anything about NBA. The last NBA game I watched was the Detroit Pistons versus the Los Angeles Lakers when the pistons won the title with Chauncey

Unknown Speaker 1:36:21
Oh, five.

Nate Liss 1:36:26
That’s good. That’s, that’s a while back? Well, man, I’m so glad that you reached out on Twitter, because in all honesty, man, you’re you’re, again a wealth of knowledge. I’ve yet to listen to anybody that was as eloquent and intelligent, and, you know, thought provoking with the same as they were making as you are. So this is, this is a great interview. And I’m glad that we’ll be able to share this with people. Is there anywhere that I mean, people can find you your artwork? I mean, is there a place that you’ve got listed that people could check that out? Sure.

Unknown Speaker 1:36:55
Well, I guess before I dive into the digital artwork, and can sell my, you know, product to 7 billion people, you can find my artwork at CL paintings, on Instagram, in CL paintings at gmail, if you have an inquiry, I do ship all throughout the US. And then my Twitter, my Twitter is fantasy numbers. And I try to kind of blend what I’ve learned, working in risk management in the markets, and learning about game theory and sort of things like that to basketball. So I kind of tried to compare my experience trading to basketball in NFL, with the occasional kind of asshat comment about the market. So that’s where you can find me for now. Yeah, and I really appreciate you having me and kind of given a contrarian opinion to the space.

Nate Liss 1:37:44
I love it, man. Well, I really appreciate having you on. I know Jesse does as well, we’ve been going back and forth. We’re working on this, this, you know, show information and we’re like, God, we’re like, what do we ask him? And, you know, how do we make this work and try to put it together? And I mean, you really made this very easy, because it’s just clearly something that you’ve spent a lot of time you know, doing your research on. So thanks, man, everybody, check out Cory at fantasy numbers, check out his artwork, that would be a huge bonus as well. I’m gonna check it out. I still don’t know what it is that you do, necessarily, other than the fact that it’s abstract. Is that one behind you? Yeah,

Unknown Speaker 1:38:22
he really can’t see Yeah,

Unknown Speaker 1:38:23
I use a I use I mean, I’ve been painting my whole life but I use poor painting. So I use gravity, not a brush and then a use a torch. And I try to bring out some of the more dense colors within what I paint in kind of under it. And then I kind of just tilt the canvas and I kind of go from there. So it creates a very unique piece and it doesn’t take me 30 hours like it used to with the brush. It takes me only a few hours. So it’s a fun way to paint and I really enjoy it. Awesome,

Nate Liss 1:38:53
man. Well, thank you very much for coming on guys. Again, follow Jessie on twitter at planet underscore fatness and on Instagram at flippety flip cards. Another great one. And we will be back next week on clear the cache.

 

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Community Roundup #11
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