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Bitcoin and ether 'are like cockroaches — they're not going to die,' Ross Gerber says

Gerber Kawasaki Wealth & Investment Management CEO Ross Gerber joins Yahoo Finance Live to discuss bitcoin, ethereum, Tesla, and cannabis stocks.

Video Transcript

ZACK GUZMAN: This in, too, on what all this means for crypto. Of course, that's been top of mind for investors, as we saw those crypto executives testify in front of the House Financial Services Committee earlier this week. If you back up and look at the last month for Bitcoin, things have gotten pretty ugly now, off by about 30% over the last month. As people continue to debate whether or not it is, indeed, an inflation hedge, as we look at the latest inflation print and Bitcoin down, maybe not the case at all.

And for more on that, I want to bring on Ross Gerber, Gerber Kawasaki, Wealth and Investment Management CEO joins us once again on the show. And Ross, always good to have you on, man. I mean, we'll start with crypto. We can broaden out to the market. But, you know, there's a lot of Bitcoin bugs who have been talking about inflation and how it's all due to the fact that the US keeps printing cash, but, you know, they might be overlooking the supply crunch that's happening here, too. So what do you make of where Bitcoin is at, given kind of the 30% pullback we've seen?

ROSS GERBER: Well, I don't see any correlation between Bitcoin and inflation in the United States, but the pullback in Bitcoin is really a byproduct of its very high price and the fact that it's had such a great year. You know, most people in the stock market now think long-term is, you know, two weeks.

And so with crypto being a 24/7 asset, it kind of compresses this, like, short-termism mentality that really gets in the way from making smart investments. We buy Bitcoin on every dip. We buy Ethereum on every dip. This is a long-term, high risk investment for investors. If you want to be a part of the digital currency of the future, you buy and hold these assets. If you trade them, you're playing a very difficult game. But I cannot be more bullish about the crypto ecosystem in the next decade.

ZACK GUZMAN: Yeah, just to follow on that, too, I mean, are you looking to maybe start to broaden out beyond Bitcoin and Ether? Obviously, there's a lot of questions as you get further and further down the line in some of these assets. But now it's been interesting to watch correlations start to break from some of those, too. I'm thinking about Terra-- we've had that founder on a few times-- and some of the other, I guess, products in the crypto space. But there's still security questions, and the SEC hasn't really given any guidance there.

ROSS GERBER: Right, so you've got two big questions in there. One is what are these other coins worth? And most of them are worthless. We did this with the ICOs in the last cycle in '18. You know, in 2018, we started a crypto index. And it was coins over 10 billion. And our index started 1,000 at the top, 1,118. And it went down to about 200 when the market declined. And basically, all those other coins died pretty much, except for maybe Bitcoin Cash. And Bitcoin and Ethereum are like cockroaches. They're just not going to die.

And so, you know, they've come back. And now that index sits around 3,500 for us. So Bitcoin and Ethereum has been the best way to play these assets over the long-term versus many of the other coins that are sort of "get rich quick" coins. Some of the coins we like, maybe like the Binance coin, that have utility.

But if you can't ascribe direct utility to the coin and you just start telling me it's proof of stake or proof of this or proof of that, I don't want anything to do with it because I'm a long-term investor, and it's got to be here when the next crypto winter comes, which will come. So beware, crypto and FT lovers. Crypto winter will come, and they're brutal. And they're brutal. So we're in the core assets. And that's where I think investors should be long-term.

AKIKO FUJITA: Ross, I think that's the first time I've heard a comparison to cockroaches. Did you just say that Bitcoin and Ethereum are like cockroaches?

ROSS GERBER: Yeah, Bitcoin is more of a cockroach. Ethereum has gotten beaten up a little bit more. Bitcoin, you can't kill it. You know, I started in Bitcoin in 2014, and at the time, I thought it was a scam. And I thought it was going to die and all the things that a lot of people today still think. And fortunately, I was converted by my very smart friends, who convinced my traditional financial mind to think bigger. And in the seven years, I've watched them almost get killed several times. And they continue to survive, just like cockroaches have for thousands, if not millions, of years.

AKIKO FUJITA: Ross, I have to ask you about some of your other conviction plays. I don't know if you heard our previous guest talking about some of the growth names that could be hit hard with the rates going up. I know you've been bullish on Tesla, but now you've got the likes of Cathie Wood, who are saying that she's having-- she's going through some soul searching because of where the market's headed and the fact that some of her holdings are down as well. Are you still bullish on that? And are you worried about the ability not just of Tesla, but some of these other higher growth names to be able to ride out a higher rate environment?

ROSS GERBER: Well, Cathie's having a real bad time right now. You know, she's been doing horribly for her shareholders over the last six months, and I feel bad for her. I'm one of them, so, you know, I feel for me. Not a big one, fortunately, but, you know, I believe in innovation. And innovation in the way they invest is 100% off the future and 0% off valuations.

And so I can certainly see her readjusting her viewpoint of certain positions, Tesla being the one I'm least concerned of, of any stock I have ever owned. I have never seen a company dominate, be in such a-- even Apple with Steve Jobs in the cusp of the iPhone days wasn't as dominant as Tesla is today in the markets that they're in. The one thing that I don't spend any time worrying about at all is Tesla, OK?

Now when you talk about high growth names that don't have rapidly rising earnings and wonderful products and services that are changing the world, and I'm paying a huge multiple for that innovation, I would be concerned in a higher rate environment.

ZACK GUZMAN: I just realized you upgraded your mic, too, so we've got to comment on that. But when you look at maybe the other things out there, Ross, and year end plays and what investors should know about kind of rebalancing, I saw you kind of tweeting about selling and buying versus other strategies here at the end of the year when it comes to taxes. I guess, what's the main takeaway that maybe retail investors who jumped in maybe this year should know about maybe what their plans should be when it comes to taxes?

ROSS GERBER: Well, tax loss harvesting is super effective for every reason. You go through your portfolios. This is what I do, what I'll do in a few minutes, and what I've been doing every day. And I have losers, you know. Some of the stocks that we buy go down. We bought some Square. It's gone down. You know, so I can tax lost harvest that, move it into something like Ark F, which is the same exact exposure. And so I don't change my exposure, but I'm able to take that tax loss. Not every investment we make goes up right away, but there's ways to benefit from that.

One great trade is moving your losers and selling them and moving them into my fund, GK, which gives you lots of diversified exposure. And that's the way I'm running my fund right now. And I think people should pay attention to the diversification in their portfolios. We have a very large real estate component. We're heavily weighted in real estate, in positions like Home Depot and Lennar and Blackstone, IIPR. It's done very well for us.

So I think when you look at innovation, you look at all these exciting areas of technology, but then you don't look at many other areas of the market that present opportunities like real estate, investors have more volatility and lower returns over time. But I'm not convinced that we're going to see very high rates for quite some time. So I'm still quite bullish, despite all the interest rate talk.

ZACK GUZMAN: Yeah, and lastly, Ross, I don't know how big of a piece of your portfolio it is, but, you know, I have obviously talked quite a bit about cannabis names out there. And those still have not recovered. There was a lot of optimism we might get Safe Banking this year. It doesn't look like it's going to happen. So I imagine those might be some of the losers you could be selling here. I mean, what's the strategy around those names if it is to sell them now year end, and then kind of get back in? Because Democrats haven't been able to get the job done there on changing the law.

ROSS GERBER: Yeah, it's the most disappointing part of my portfolio. So half of our cannabis exposure is, like, MSOS positions, which are multistate operators in the US. And then the other half is really this IIPR. So the IIPR has done phenomenal, phenomenal. The real estate portion of cannabis has done great. But the actual MSOs, which, fundamentally, their businesses are doing really well, the valuations have been crushed because the Democrats can't seem to move on to legalization.

But I think this is going to happen next year. And I don't really care that it didn't happen this year because now I'm looking at some of the best opportunities I've ever seen in the growth cannabis names. And I haven't pulled the trigger yet to go all in on these names. But some of them, I will at some point soon-- and obviously, I'm not going to tell you until after I do it.

But I think some of the valuations are absurdly cheap now, but I still see several challenges in getting institutional ownership of these securities. And it's all around Safe Banking and the ability to list on the US exchanges so institutional investors can own them. So then those stocks triple. So I just think it's a 2022 story now. That's where we're at. It's a great opportunity. I haven't taken it yet.

AKIKO FUJITA: OK, well, we'll have to have you back on in 2022 to see where your portfolio is headed. Ross, always good to talk to you. Ross Gerber, Gerber Kawasaki Wealth and Investment Management CEO.