Today's number 50. That's the percentage

of teenagers who say they never read.

Ed, what does a pregnant teenager and

her unborn baby have in common?

>> What's that?

>> They're both saying, "Oh [ __ ] my mom's

going to kill me." Is that the line? Is

that the line, Ed? Totally

inappropriate.

[Music]

What's going on, Ed?

What's going on?

>> Not too much, Scott. I'm going to

Vermont this weekend, which will be fun.

Visiting some friends.

>> No man goes to Vermont of his own

valition unless he's raising

Labradoodles or is in a kind of pretend

marriage and sneaks out late at night to

go visit Javier in the park.

Oh god. Who can't we offend in this show

right now? Who's left?

>> So, you're not you you wouldn't be

excited about that? I'm I'm not

surprised by that. you don't you don't

enjoy the outdoors

>> in 2008. So, I wanted to keep my partner

around. She was much higher character,

much hotter than me. And she's like, I

want to have kids. I'm like, well, I'm

not getting married. And she said, well,

we don't need to be married. She called

my bluff.

And I basically just looked at her and

she got pregnant. And then we had a

second one and she like, you know, did

what she does and or what women do or

what anyways and said, "We need to get

married for the kids." So, okay, fine.

So, the evening of the wedding, by the

way, nicest day of my life. Uh,

so we get married on

>> Why are you so Why are you so

anti-marriage? Is it money? What's

What's the problem?

>> Uh, no. I actually, if we're being

honest, I think marriage is a good

thing. I think it keeps it creates exit

costs

uh, pretty substantial. So, you're more

likely to engage in a long-term

relationship, which I think is a good

thing. Actually, I have come around on

marriage. I actually think it's a a good

thing.

>> I know you're pro. I'm just wondering

what what's why are you anti-marriage at

that point?

>> Cuz it's part of my [ __ ] rap. Just go

with it. Right. Okay. Anyways, so not

that this this was a bad omen, but the

night we got married was when layman

filed for bankruptcy in '08.

>> Oh wow. And I was on the board of a

couple companies and I was trying to get

my career started and I'd made a bunch

of investments and I was working with

all these hedge funds and for some

reason we went to [ __ ] Vermont for

our honeymoon and all I can remember was

was doing board calls as we were trying

to figure out how to save these

companies and then uh my my newlywed or

my bride just being furious at me that I

was spending the entire honeymoon on

board calls and then going to the beach

and being really stressed out and seeing

all these really nice lesbian pebbles

and their dogs walking up and down the

beach and beautiful fall leaves.

God, I'm stressed just thinking about

it.

>> I'm excited about it. I'm excited about

fall in Vermont. I think it's going to

be very nice.

>> Oh, I'm sure it's going to be beautiful.

>> Do you do you have any fun travel plans

coming up? What about you?

>> Oh my gosh, I got a lot coming up. Going

to New York or DC for

uh uh for my book tour and then we start

the Pivot Live tour. We do DC, New York,

Brook, uh, Toronto, Chicago,

San Francisco, LA, and I'm forgetting

one in there. Oh, Boston. Then I'm doing

my book tour, which ends with Bill Maher

on the 14th, and I do Halloween. I'm

going to do Halloween in New York, which

I'm super excited about, although I

don't know what I'm going to do. But

>> what are you doing for your costume? Do

you know?

>> I think I'm going to have to go with

Deadpool again. The Deadpool after the

fire.

>> You're always Deadpool. You got to

switch it Well, my assistant Mary Jane

wants me to go as Larry David, but I

just I I can't.

>> I'm sort of just already looking like

him and I'm I'm insecure. I'd rather

look like trying to look like Ryan

Reynolds. How about you? Do you know

what your costume's going to be?

>> No, I need to figure it out. I was

thinking I mean, cowboy cowgirl. It's

like, you know, it's an easy one. I

could do that. I I' I'd love some

suggestions, though. I always struggle

with Halloween. You look like I'm

telling you, you look like the automated

profile generator from a video game

where you just pick a generic figure.

You're that guy.

>> What is the default character wear?

That's the question.

>> The automated character generator from

any video game. You're the first thing

that comes up. You're pleasant looking

and

>> just neutral.

>> You're not ethnically ambiguous. You're

pretty you're pretty ethnically

ambiguous.

Um but yeah, that's what I would do. I

would go just as like a

>> Yeah. a default video game character.

Again, I need to figure out what what

what a default video game character

actually wears. Um, but that's good. I'm

I'm glad you'll be in New York. Maybe

maybe we'll cross paths. You never know,

Scott. Ed, you know, I don't like to

mingle with the uh the employees of the

company.

>> Crossed paths with you a couple weeks

ago. That was fun. Oh, this is a great

story. We're at one of these douchy

members clubs and all of a sudden this

big handsome guy comes up to me and he's

like, "Scott." And I look up and I'm

like, "I recognize the voice." I was

pretty [ __ ] up at the time. And I'm

like, "Oh, it's Ed." And I said to you,

I said, "Oh, let me come meet your

friends." And you hesitated and you got

very anxious.

>> No, wrong. Not true at all. I apologize

if that's what you think. I was very

excited for you to meet my friends.

>> You were with your girlfriend and

another couple. That's right. Well, that

was a great story. Should we get to the

headlines?

>> Let's do it. Let's talk about the news.

A few weeks ago, we warned that the AI

economy might be headed for a collapse,

propped up by a web of circular deals.

Since then, those deals have not

stopped. Last week, we saw a new

circular deal between AMD and OpenAI.

And just a few days later, we saw

another one between Nvidia and XAI. So,

at this point, the mainstream media is

kind of catching up. The headlines are

everywhere and everyone seems to be

saying in unison at the very least that

we might be in a bubble. Everyone is

recognizing these circular deals.

Everyone is building on this point and

saying, "Okay, we might be getting into

dangerous territory."

>> Analysts have pointed out the fact that

when you froth up a market like this, it

could lead to a bubble. And the original

sin of this bubble could have been like

circular financing.

>> Valuations in AI are at a bubble. You

you cannot

>> public or private?

>> Both. You you cannot value a $50 million

ARR company at $10 billion.

>> Is this a bubble?

>> I mean, it's peak bubble. AI bubble.

Yes.

>> So, everyone seems to agree, Scott,

we're in a bubble. CNN headline,

concerns are mounting about a bubble.

Semfor circular deals spark bubble

fears. We've heard investors talking

about this bubble. We've heard uh even

leaders of the tech community talk about

this bubble and yet we're still looking

at all-time highs in the stock market.

We're still seeing these deals roll on.

Uh AI continues. Your reactions?

>> Well, we know we're in a bubble, but

typically what happens is when people

like you and me call the bubble, there's

another 20 or 30% upside to go. What I

have found having been through a few

cycles is that when it's about to pop is

when everyone throws in the towel and

says, "Well, maybe we are in a new

economic reality where the markets are

recalibrating." Cuz what you saw in the

the bubble I experienced, the dot

bubble, is that people said this is a

bubble, but they said it in 97 and it

screamed up another 30 or 40% to 99. And

then you started seeing articles that

maybe the internet is ushering a new

economic age. they started going to this

like new narrative that maybe it's

different this time, right? Some very

smart people though are saying that

we're probably in a bubble based on

their actions. So Sam Alman has said has

actually articulated that he think we

might be in a bubble. Warren Buffett by

virtue of his actions says we're in a

bubble because he is selling like a

madman. I think he sold something like

150 or 200 billion dollars in stocks. In

addition, the news that Tim Cook is

leaving at the age of 64, which is young

given that a lot of people just a lot of

people just refuse to leave. I think

he's decided that this is the top. I

want to leave at the top. And so, and

then the the the chart that scared the

[ __ ] out of me and I posted on threads

that said this is what a bubble looks

like was that amazing chart that

Bloomberg put together showing all the

interesting or the the the incestuous

deal making that's going on. How every

investment is flowing through Nvidia out

to another company and then back to

Nvidia.

That to me is the biggest evidence uh

that we might be near something of a a

reduction or a a draw down. The other

thing that just blew my mind, Kyla

Scanland said something that I thought

was so interesting.

She said that essentially what you have

is America right now is just a giant bet

on AI. And I thought that was such an

interesting way to frame America right

now. And also, if you think about Trump

and you think about what's going on here

and how many people theoretically and

from a constitutional and from kind of a

a kind of a democratic norm standpoint

are just horrified by what Trump is

doing. The cloud cover for Trump to do

these things is the fact that the S&P is

up I don't know what is it up 20 23%

this year. If the S&P were down 20% I

just don't think there'd be troops going

into Portland. I don't think you'd have

the cloud cover to keep doing this sort

of stuff because as long again these are

the most damaging metrics in the world.

As long as the markets are up, there's a

general indication that the person in

the White House whatever they're doing

is okay and it's right and it's correct

because the markets are up and that's

all we're kind of obsessed with. That is

the that is basically the cholesterol

test, the temperature to indicate

whether the corpus is doing well or not

doing well. And the markets right now

are being driven by 10 companies. So

basically what you have is AI is

enabling the president and a small

number of companies are providing cloud

cover for the current administration.

And again I just love this notion that

right now America is just a giant bet on

AI

>> and they're all in bed with each other.

And actually you know we've been talking

about this

>> for a few weeks probably a few months

now but actually we we really brought it

up more than a year ago. The first time

we talked about this, it wasn't about

these uh circular investments, but it

was about these circular relationships.

Specifically, the fact that all of these

companies, the directors of the boards

of these companies sit on each other's

boards, and then they start creating all

these partnerships. We talked about this

in April of 2024.

>> This is everywhere in AI. Right off the

bat, I can name you three illegal board

positions in AI right now. Name them,

you high IQ [ __ ] nominated for best

co-host. Name them. I'm calling your

bluff. Name them.

>> Microsoft. Microsoft's on the board of

OpenAI.

It's, you know, they they say it's a

non- voting board seat, but that's still

a board seat. And Microsoft is also an

investor in Mistral and Inflection,

which are both AI companies that

directly compete with OpenAI.

That's one right there. Another one is

Reed Hoffman. Reed Hoffman's on the

board of Microsoft. He's also a

co-founder of inflection. Brett Taylor,

he's on the he's a chairman of the board

of open AI. He's also on the board of

Salesforce which is an investor in

anthropic and MRO.

>> So that that chart that you referenced

where all of these investments are going

in and out of each other. This has been

happening for a really long time. We've

been trying to sort of point to this for

a while now. Now we're seeing what this

all is culminating into. You also

mentioned this this idea that America is

a giant bet on AI and there was a good

um article in the FT about this uh which

is 100% true at this point or at least

when you look at the stock market this

year. AI companies have accounted for

80% of the gains in US stocks so far

this year. You look at how much money is

in the stock market at this point. Stock

market wealth as a share of GDP uh is

50% higher today than it was in 2000.

You look at the companies that are

driving these gains, it's the the big AI

companies at the top. So Nvidia,

Microsoft, and Apple, they now account

for over 20% of the entire S&P 500. That

is a record high. In addition, the top

10 stocks in the US now account for 25%

of the global equity market. So a

quarter of all stocks in the world uh or

all market value, 10 US companies are

contributing to that. Nvidia's market

cap is now larger than the entire UK

stock market. It's larger than the

entire Indian stock market. It's larger

than the entire Japanese stock market.

It is actually larger than all of

healthcare put together. So the point

being AI is driving everything at this

point. Uh it is driving the stock market

and it is driving a lot of the GDP

growth too. By the way, technology and

software investment. AI it's responsible

for 92% of GDP growth in the first half

of the year. So without AI basically the

stock market would be flat and so would

productivity so would GDP. So this all

spells overinvestment

and as we've discussed it's kind of

artificial demand because these

companies are stoking the demand by

investing in these companies so that the

companies turn around and spend the

money on the chips and the compute which

is all very dangerous stuff all says

bubble and as I mentioned earlier most

people agree on this. So then the

question becomes okay

what do you do about that? I mean, if

you believe that we are in a bubble or a

bubble is building, uh, what are

investors supposed to do? If you think

we're going to see a correction, what

are you supposed to do? I think this is

the big question that now needs to be

answered because the question of whether

or not we are in one,

most people agree we're in one.

>> I think this is where, and it's our

favorite word, really kicks in, and

that's diversification. And that is if

you've been lucky enough to be an

investor in video or one of these

companies, you want to look at what

percentage of your portfolio it consists

of right now and perhaps think about um

selling down. And if you think, well,

I'm diversified because I'm in an S&P

fund. I would argue now just being an

SPY, you're not diversified because 40%

of it is in 10 companies. So that's not

real diversification. And we've talked

about international diversification. I

am now for the first time contemplating.

A friend of mine who's a a well-known

podcaster called me and said, "I'm

thinking of going short the S&P." And I

said, "Okay, but keep in mind there's

two S&Ps. There's the S&P 10 and the S&P

490." And I think what you're talking

about or what he was saying is the

reason why he's worried is you're

worried about the S&P 10 and that is the

Magnificent 10. And I started looking at

there are ETFs and and special funds

that basically go double and triple

leverage on the Magnificent 10 or the

NASDAQ 100. And I'm contemplating buying

some of those shares just as a hedging

strategy. Now, don't do that unless

you're willing to lose it all.

>> You're you're considering buying buying

those magnificent seven ETFs or those

magnificent 10 ETFs or you're

considering shorting those ETFs. There

are now inverse shortleveraged ETFs.

>> Okay.

>> So, for example, ProShares Ultrashort

QQQ. It's it's 3x triple inverse the

daily return of the NASDAQ 100. Now,

there's different ways to short a

company. You can write covered calls or

you can write calls, excuse me, they're

not covered. You can write calls, but

the problem with that is your downside

is unlimited. If if you write a call

against

um Palunteer,

that strikes me as the kind of stock

that could go from 600 to 900 and you

can you can get hurt really badly.

Riding calls is sort of like collecting

dimes in front of a bulldozer and that

it feels like it feels like easy money

until it's [ __ ] disastrous,

right? And so I wouldn't recommend that

to anybody. What I am looking at is what

these companies do is they create a

synthetic where they go out and they

they write calls against a basket of

companies and then turn it into a stock

and they close it out every day and then

they sell it as a fund. What I'm looking

to do is the following. If the market if

these guys get cut in half and it

triggers a global sell-off and

everything's down 30%, which I don't

think would be unusual at this point,

you end up being down 10 or 15, not 30.

I'm not looking this at this as a means

of creating alpha but as a means of just

buying some

insurance because a lot of my

investments right now are

diversification and what I'll call the

avoidance of mental anguish and that is

it was losing basically losing my shirt

in 2000 and 2008 were damaging

financially but I've always made decent

money. I knew I was going to be fine. I

never had trouble paying my rent or my

mortgage. I wasn't blessed that way. the

it was the emotional and the mental hit.

And so a lot of my investing strategy

right now is trading off potential

upside, trying to protect myself just

emotionally and mentally from someone

who sees their total self-worth wrapped

up in how much money I have, which I

realize is pathetic, but it's true. I

will be less emotionally and mentally

hit if I go short something and I lose

my money there and it doesn't work out.

then if the market just throws up

because I'm gonna look back and think,

well, Jesus Christ, I knew it was going

to and I didn't. But this feels just

this feels crazy. Now, at your age, I

think it's a little bit different. I

think at your age, you might want to do

have a little bit of fun with a fund

like this, but for the most part, you

can ride out cycles because you're young

enough just to stay invested. It's also

very hard to time the markets here. and

over the medium and long term which you

have a lot you have a lot more long-term

in you than I do you can absorb more

risk your your earnings are increasing

as my earnings are decreasing that's why

I need you to start a third and a fourth

pod but anyway it's another story as my

earnings are increasing I'm not looking

to get rich I'm looking to not get poor

so a lot of it is situational but I'm

thinking of going trying to find an

instrument where I can go short

effectively these 10 with some leverage

recognizing I might lose is 50 80 90% of

my investment almost as like idiot

insurance because if these things pop

Ed, we're all going to feel like [ __ ]

idiots for not investing against it. In

addition, if the market does go down,

say 10 15%. It could be a bit of a

downward spiral because you won't have

panic selling. But when the top 10% who

base a lot of their consumer or

discretionary spending on the market,

the thing that is great about rich

people when they get rich is they can

spend a lot more money because they have

it. The awful thing about them is that

if a chill comes over the wealthy or

they feel less wealthy, they can take

their consumer spending down 30 or 50%.

Middle class people can't do that

because they got to eat and they got to

pay their mortgage. rich people can take

their spending down 30 to 50% if they

really need to for 3 6 12 months and now

that that accounts for 50% of the

consumer economy I mean I there's really

two things right now you could argue

America is a bet on AI and it's a bet on

rich people continuing to spend I just

want to push back a little bit to the

the short big tech strategy and I

appreciate that you make that point

which is you know you you're doing it as

a hedge because you basically just don't

want to feel that emotional pain of

coming down 15, 20, 30%. So, you're

trying to hedge a little bit. Uh just a

few things I would say. First off, this

question of, you know, when does the

bubble pop? I would point out that

valuations

among big tech specifically these big a

these big tech AI companies, the

valuations are very high, but they're

not crazy crazy high. I mean, if you

look at like the Mag 7, you look at the

average forward PE ratio, the 24-month

forward PE, it's it's an average of of

27 times forward earnings. And in the

MAG 7 right now, compare that to the

year 2000, the height of the tech

bubble. The average uh in 2000 was 52

times forward earnings. You compare it

to the Japanese bubble of 1989, average

was 67 times forward earnings. So we are

we are defin definitely experiencing

these rich valuations but they're not

crazy crazy rich and you look at

something like a Google or or a meta

these valuations are not totally out of

control. So what I would say is yes this

bubble is forming but I don't think

we're at a point where we can say it's

about to pop. We're about to see this

massive correction. I just don't think

we're there yet. Which brings me to the

other point which is you know I think

there's this tendency this feeling that

we have a responsibility to sort of

predict when the recession will hit and

try to time it and what I can tell you

is one impossible

and two even if you get it right the

impact on your portfolio is actually not

as meaningful as you might think and it

all goes back to what you said which is

the long-term time frame If you look at

a 5-year time frame, if you were to only

invest at the highs during a time frame

of 5 years, your returns would actually

be equivalent to if you had invested at

all of the other dates. You get equal

returns over 5 years. It's not true over

a one-year period. When you're looking

at like one-year returns, when you're

looking at shorter time frames, yes, you

would rather not invest at the highs.

The reality is most of us, and that's

why I appreciate your point about

especially young people, if you're

investing over 5 years, 10 years, 15

years, the crucial point is this.

Investing at the highs is almost no

different. And the reason is because the

long-term trajectory of the stock market

is just up and to the right. And we're

constantly hitting new highs every

single year. So, that's the thing to

remember here. You might be thinking,

"Oh, recession's coming. What do I do

about it?" Honestly, I mean, you you

could try to get some alpha, you could

try to hedge yourself against that

downturn, but over the long term, you're

not going to get that much of a benefit

from it. The other side to it is the

following, and that is you have actually

a lot more time than you think when when

you're trying to predict when a

recession happens. in in recessions

historically, the average amount of time

between the point at which the stock

market peaks and the point at which the

recession is officially called and

everyone agrees we're in a recession.

The average amount of time is 9 months,

which basically means you don't need to

call the recession before everyone else

does. You might want to because you'll

feel smart and you'll feel good about

yourself, but generally the money you

make in the bull market, which everyone

has made so far, the money you make will

buy you enough time to wait until you

know for sure that there is a recession.

At which point then you can make your

decision. But I think in these in these

times, especially when we're talking

about it and we get a lot of there's a

lot of, you know, angst uh and energy

being put into when is this recession

going to hit, we can get caught up in

the excitement of calling it. Everyone

wants to be the Michael Bur. But the

reality is there actually isn't that

much alpha in doing that. You are barely

rewarded and if you really want to make

money, you want to be a bull and you

want to keep on investing over the long

term. So I just think that's important

for people to keep in mind. If we're in

a recession, that doesn't mean, "Oh my

gosh, I I I'm going to sell." By the

way, we said this during Liberation Day,

too. We said, "Don't sell America, hold

America, but go buy other places, too.

Diversify your portfolio." The same

applies here.

>> Yeah. So your point is a solid one in

that is if you look at 99 even if you

look at the percentage of capex as a

percentage of the economy it's less than

the investments that were being made as

a percentage of GDP and capex around

infrastructure on the internet and less

than investments that were made you know

100 years earlier around investments

around electricity. So this might be

this might feel like crazy town, but

it's but we've been to crazy town before

and the earnings growth has not been

commensurate with the expansion in the

stock prices. The pees have gone up, but

they haven't gone up as much as you

referenced in 99. But let's assume if I

had to predict, I think this is a

bubble. I don't think the pop is going

to be a sonic boom. I just think it's

going to be a pop. It was a sonic boom

in 2000. Keep in mind, Amazon from 99 to

2001 lost 90% of its value. So, say this

isn't nearly as overvalued, but there's

still a draw down, so it goes down 30 or

50%.

What do you do? You do mostly nothing.

Because at your age in terms of

emotional well-being, the thing that

really [ __ ] me up was I would have

rather have lost money by being in the

market and having it go down than miss

opportunity. The biggest angst I felt

when I was a younger person was missing

out on upside.

>> Yeah. I got less emotional pain having a

stock go from 10 to 7 than thinking I

should buy this stock and I didn't and

then watching it double. That drove me

crazy. But all roads lead to the same

place. Diversification. Always be in the

market and low cost, low fees. We should

also mention the other big trend that is

happening in the markets right now is

gold hitting $4,000 for the first time

ever. It hit 4,000 last week. It's up

121% since the end of 2022. It's up more

than 50% so far this year. Uh it is the

best performing asset class of the year

by far. It's doing better than Bitcoin.

Uh global gold ETFs hit $472 billion in

AUM in September. That is up 23% quarter

over quarterarter. So huge growth

all-time high. Um I think this is the

other part of of of the markets that we

need to kind of think about. Why is this

happening? And it really has to do with

this issue of loose monetary policy and

this idea of debasement. The idea that

uh we're we are getting looser and

looser with our monetary policy around

the world. We're seeing inflation that

is higher and longer uh around the

world. And when you talk to people about

okay why are you buying gold? It really

goes back to central bank policy. And

that is according to surveys 95% of

central banks around the world are

planning to expand their gold reserves

uh over the coming year. So I think this

is the other thing you know a lot of

people if

if you're not super excited about AI a

lot of people are super excited about

gold. Uh and it's been one of the best

performing assets of the year. Going

back to your point about FOMO, a lot of

people seem to there is a belief that

gold is this hard asset. It's this sort

of safe asset. Um, and in a lot of ways

I I I think it gets this sort of

narrative protection against the the

concept of FOMO which you just brought

up. I just want to point you to a quote

that that uh one of our guests, Robert

Hayworth, said on the podcast when we

talked about gold. This is what he said

about why gold is ripping up so much

right now. We don't see evidence that

central banks are buying yet. We're

seeing some evidence that speculators

are actually pushing this up. ETF

holdings are moving higher. Uh if we

look at the commitments of traders data

from uh the CFTC, right, we're seeing

more futures demand coming into the

market. So, it's really speculatively

driven at this point. We don't and it

takes a long lag to see what central

banks are buying to know if that's

really kicking it off. So, I find this

really interesting because gold has been

positioned as this hedge against

exuberance in a way. Um, you know, if

you're worried about the stock market,

if you're worried about too much uh

concentration in AI, maybe you go for

gold instead. If you're worried about

governments printing money, maybe you go

for gold instead. It is sort of the safe

haven asset. But what Robert is

basically telling us is actually the

same forces that are driving up AI are

also driving up gold. And that is

momentum and speculation. It's not that

central banks are actually buying the

gold. Yes, they're buying they're buying

more gold. But what's driving up the

extreme rally, the reason it's at 4,000

all-time high is because people are

anticipating what the central banks are

going to do. It's not the actual gold

itself. It's the gold ETFs. it's the

gold futures. So, this is actually a a

momentum trade that is happening right

now, which to me is very similar to what

we see with Bitcoin and it's very

similar to what we see with AI. In other

words, the the speculative assets are

the ones that are driving up prices

right now. Um, and you know, a lot of

people would disagree, say gold isn't

that speculative. I I think we just

heard it from Robert Hworth. Actually,

it is speculative and that's why the

price is at $4,000. So, I just want to

get your reactions to that.

>> I would have thought that it was one

kind of a debasement trade that the

weakening of the dollar obviously sends

it up. I think gold being in the news

every day largely also creates it as a

more sort of viable asset class and

people think, oh, I should probably buy

a little bit of gold. So, I think that's

part of the momentum narrative. But

also, I think of it as

when you kind of want a flight to

safety, the ultimate go-to was

treasuries,

US treasuries. And I think that there's

uh more risk around treasuries right now

or less confidence than there's been.

And you'd think that'd be reflected in

the yields going up, but I also think

it's reflected in people thinking, well,

maybe I should diversify my more, you

know, conservative investments and gold

is seen as one of those. So, it's I

think I think it's benefiting from the

fact that people no longer think of

treasuries as the ultimate safe haven

and so they're looking for other stores

of value. Uh but the momentum the

momentum point was interesting because

just us talking about gold and the fact

that it can it's not it's not your

father's gold anymore. It's not a sleep

asset that it can go up this much brings

in a new level of speculative investor

that thinks I want some of that that

that juju or whatever that mojo cuz

traditionally growing up gold was sort

of this thing that you held on to it but

it was like holding on to cash almost.

It just didn't just didn't do a hell of

a lot. But I see it as, and again I tend

to look at the current administration

through, you know, clouded glasses. I

see it as less faith in the full faith

in credit or the government's ability to

pay back interest on treasury bills that

they're looking for other safe havens.

Yes, that is certainly what's driving it

at the first level and that's that's why

you see part of the increase. But I

think what's really interesting is that

that has formed the base for which a

larger momentum trade has emerged. And

when I think about like

defining 2025 in terms of the stock

stock markets, financial markets, and

investing, to me, it's sort of like this

is the year of the risk asset. I mean, I

think what we're seeing is that risk

assets across the board are exploding.

The counterargument to that would be,

well, no, look at gold. Gold is the safe

haven asset. Gold is the anti-risk

asset. But I think what I would point

out is that actually this is kind of a

matter of perspective and in my view you

look at gold right now actually gold is

a risk asset. It's it's got no cash

flows. It's got questionable underlying

value and you know if people aren't

buying for the value of gold itself if

people are buying because they think

other people i.e. central banks want

gold. If they think that uh there's some

distant hyperinflationary future, again,

that is speculation. This is this is a

risky asset. This is a risky investment.

So, I think actually that the rise in

gold, the rise in Bitcoin, the rise in

AI, to me, those are all pointing to the

same direction, which is people are

making more speculative bets in 2025.

They're actually, it's not this safe

haven that you think it is. That was the

beginning of the story, but the story

has sort of transmutated over time and

it's now really a momentum trade.

We'll be right back after the break. If

you're enjoying the show so far, hit

follow and leave us a review on Profy

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We're back with Profy Markets. Tesla's

year is not exactly going according to

plan. At the start of 2025, Elon Musk

pledged Tesla would build 10,000 Optimus

robots for internal use. But last week,

the information reported that the

company has abandoned that plan and the

head of the Optimus project has just

left for Meta. That setback is just one

example of the broader challenges Tesla

is facing. The company's US market share

just dropped to its lowest point since

2017. Sales in Europe dropped 43%

year-over-year in August. Meanwhile,

last week's launch of cheaper versions

of the Model Y and Model 3 failed to

impress investors. The stock fell 4% on

the news. And as former president of

Tesla, John McNeel, put it when I

interviewed him on our Daily Show. He

said Tesla is a car company in

transition. So, Scott, not looking good

for Tesla right now. We can get more

into the details of why. Your reactions

to what's happening with Tesla at the

moment. Well, in transition, I mean,

essentially, you have a company, what is

it, worth, $1.4 trillion, trying to

figure out a way to grow into a company

that might be worth $1.4 trillion

because they'll do anything to try and

fool people into believing this is not a

car company. Because if it was a car

company, it'd be worth 10% of its worth

now. So, let's say it's a robot company.

And my understanding is the person who

was running the optimist group left to

go to Meta and took a cut in pay because

he wanted out of there so badly. Um I

mean it's just it feels like the David

Copperfeld of the modern economy is Elon

Musk who's saying look over here while I

try and stuff you know a car company

this rabbit back into the hat here and

fool people that this is an AISSAS

company. He's trying to I mean the

transition is the following. He's trying

to transition to be kind of this AI

company with uh uh mobility with

satellites with broadband and with an

LLM with Grock. And the robots were

nothing but an attempt to say I mean

keep in mind at the beginning of the

year he said that they were going to he

put a projection on it and said that

ultimately 80% of their IBITA or 80% of

their enterprise value would come from

robots and they basically just now said

they're kind of putting the Robot thing

on pause. So, I just wonder at some

point when everyone yells at the

magician, you know, you're a fake

because they're doing everything they

can to try and keep people keep people's

gaze diverted from what this this is.

And that is a company, an EV company

that is declining

uh dramatically. Um they've they've

delayed production of these bots, right?

So, that's not working. The bot thing

isn't working. Uh they said it was going

to be 80% of Tesla's enterprise. That's

clearly not that's clearly not true. And

the core the core business is

struggling. Tesla's had a 7.4% sales

increase year-over-year. But that mass

real weakness because this was this was

the last quarter where that $7,500

tax credit was available. So you should

have seen a massive sugar high as you

did at Ford where EV sales were up 20%

and GM they were up 107%.

He's got a limited amount of time just

as the Kingdom of Saudi Arabia has a

certain amount of time in a fuse burning

around transitioning away from a fossil

fuels economy. Otherwise, it's just

Russia and it's not it's a very

vulnerable economy. Tesla's the same

thing. They have to transition out of an

automobile company and he keeps again

using these weapons of mass distraction.

He just raised a ton of money for Grock.

Uh, I don't know if at some point he's

going to fold in SpaceX, but the

autonomous thing isn't working. I mean,

autonomous isn't working or he's

definitely a distant number three player

right now. The Optimus, the latest

weapon of mass distraction is clearly

just that, a mass distraction, the

Optimus robots. And the automobile the

core business which is now worth more

than every other automobile company

combined is is not collapsing but it's

getting you know the the the business is

maturing and other people are catching

up. So the the amazing thing is that the

stock is still up 14% this year and

trades at 17 times sales. Ford and GM

trade at less than.5

time sales. BYD trades at 1.1 time

sales. So Ford and GM, legacy companies,

not as profitable, not the same margins.

They trade at Tesla trades at 34 times

what the those companies trade at. And

BYD, which is eating Tesla's lunch in

the sense that it is producing way more,

has a better car, a lower price. Tesla's

trading at 16 times what BYD trades at.

And again, this isn't financial advice,

but this, with the exception of

Palunteer,

I would argue, uh, is the most

overvalued company in the world, but

it's become, I believe, a meme stock, an

investment in an investment in Musk, an

investment in AI, but he's lost one of

his weapons of mass distraction because

it's clear that the Optimus was all jazz

hands.

>> 100% agree to overvalued, most

overvalued company in the world. I mean,

every time the data comes out, I cannot

understand for the life of me how on

earth you can justify this ridiculous

batshit valuation. I mean, just to

re-emphasize some of the data there,

you mentioned those September sales that

everyone was like, "Oh, great. Tesla

sales were up. They were up 7%." Again,

you might think that's good until you

realize that was pull forward demand

because the EV tax credit was expiring.

So, everyone was trying to buy their

their electric vehicle before the tax

credit expires and the prices of these

EVs goes up. So, you think, "Oh, it's

good." And then you realize, "Oh, wait.

The Ford EVs, those sales are up 20%.

The GM EVs, those sales are up 107%."

And you compare it to Tesla sales up 7%.

So, that's not good. Then you look at

these cheap models that they unveiled

last week, and this was supposed to be

like a big deal. Oh, we've got these

great new cheap Teslas. Those cheap

models cost $37,000 and $40,000. They

are actually more expensive than what a

premium Tesla cost before the EV tax

credit expired. So

this is what the EV tax credit has done

to the price of Teslas. Teslas are up

and now their cheap cars are actually

more expensive than their premium cars

used to be. And then, as you mentioned,

BYD, compare it to the to the to the

Seagull, their cheapest option in China,

which costs $8,000. So, what's going to

be really interesting now that their

cheap model is $40,000? That's a cheap

Tesla. What's going to happen when we

see sales after this EV tax credit

expiration, which just happened? What's

going to happen to sales next month and

the month after that? These are the real

questions. So, what we have here is a

car business that is in decline. It's

just not a debate. That is what is

happening to Tesla. And so you think,

okay, how do you value how do you

justify the $ 1.4 trillion valuation?

Well, it's got to be the robots and and

the and the robo taxes. We just learned

that the robot, the Optimus robot, the

production is being delayed. We just

learned that the guy who was running

that segment, running that business, he

just left to go to Meta. And then you

might think, oh, Zuckerberg must have

offered him like some billion dollar uh

pay package like he's been doing to all

these AI researchers. He left and he

took a pay cut to go to Meta. He

willingly decided to leave the what is

supposed to be the business that's going

to drive 80% of Tesla's market value. He

took a pay cut to go somewhere else to

go to Meta. I I can't think of a more

bearish signal for the Optimus robot

than that. which leaves you with, okay,

the only thing that could justify this.

The only thing is the robo taxi that

that's the only thing that makes sense

here. And again, clearly the market is

in over its head in some way because

Whimo is the leader. So if if if Tesla's

worth $1.4 trillion, you should be

adding a trillion dollars in market cap

to Google. Whimo is far and away the

leader. You have all of these other

competitors. you have Uber getting into

the autonomous game. Like nothing should

indicate to you that Tesla is set to

take over autonomous taxis or at least

you need to be a lot more discerning if

that is your belief. I think essentially

this company Well, let's ask ourselves

and Josh said this, what could go right?

Like what could what could happen that

would justify Tesla's valuation or maybe

put the stock up? one, I think the the

closest path to shareholder value uh uh

to justify this valuation would be if

they made real progress, if they

accelerated and made a ton of progress

around autonomous. And they do have a

built-in advantage. One, they have more

data. Now, I don't know if that data is

useful, but they have they have

digitally tracked, you know, hundreds of

millions, if not billions of miles with

their pre-existing built-in fleet of

cars, too.

they can go more vertical their

technology they can produce technically

an autonomous car for I believe 30 or

$40,000 whereas Whimo cars are somewhere

between 200 and $250,000

and that will probably come down as they

get more scale but the there is a

built-in advantage or cost advantage

because Tesla is vertical so to speak

and it's chosen the less expensive

technology so it strikes me that if

someone were to say okay what is it

about and then

If someone were to say in a year the

stock is up, I would say okay, they've

shown real progress around autonomous or

they've been able to link in terms of

usage synergy, whatever you would want

to call it, a booming gro, right? did uh

basically Tesla shareholders are now um

if they were if they were any way like

to wrap it into Grock and X and create

some sort of like AI company that's

vertical around autonomous I think he's

trying to figure out a way to wrap all

of these things under sort of an AI

umbrella but it would be one autonomous

or two some sort of ability to create an

AI halo from Grock

uh over over Tesla because just standing

alone, it's just becoming increasingly

clear that Tesla is what it is and that

is a company that wraps steel around an

axle and a battery. It's a car company.

It's an EV car company which should

trade at a higher multiple because it's

a bigger potential market and they're

better at making EVs, I would argue,

than the, you know, Ford and General

Motors and Stalantis. So, they should be

trading at one-time sales, not, you

know, not 17 or whatever it is. Uh, I

feel like the the biggest distractions

in history are Trump's attempt to keep

Epstein out of the news and must to try

and say anything about Tesla and trying

to get people to believe that no, this

is not a car company. This is AI or

autonomous or something else.

>> I reemphasize what you said about what

he said. said he said Optimus robot

these humanoid robots he said it's going

to make up 80% of Tesla's market value

and the guy who runs that business just

left to go to Meta

>> I'm just so freaked out about all of

this these synthetic relationships would

you want a robot in your house

>> if it did the laundry maybe

>> maybe cooked or something

>> but that's not going to happen for 20

years 30 years I mean he he keeps on

telling it's going to happen next year

they haven't even started production

>> actually this really is a better

question for your girlfriend.

She could answer this.

What's it like having a robot in your

ass?

We'll be right back after the break. For

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and use the code markets.

We're back with Profy Markets. The

Economist just published an article that

investigated what is holding Europe

back. Europe doesn't have a single

company in the global top 25 companies

while the US has 20. They also have a

startup ecosystem that is really lagging

behind the US. And their conclusion in

this article is that it's too expensive

to fire people. And because it's too

expensive to fire people, it creates a

risk averse culture where companies

hesitate to bet big. Which got us

thinking, maybe one of the reasons why

the US is so dominant, so innovative.

Maybe it's because we can fire people.

The freedom to fail and take chances,

that might be what gives America its

edge. Scott, you've been on both sides.

You've done hiring, you've done firing.

Um, what do you make of this idea? this

idea that actually because you can fire,

because we have weaker severance laws,

weaker severance protections in America,

that might be the secret to America's

innovation.

>> I think it's a big part of our

innovation. I I mean, there's so much

when people ask me what is the

difference in the UK between the UK and

the US. I mean, if you just look

in 1995, equal productivity, $45 per

hour Europe in the US, it's gone to like

$75 in the US per hour and it stayed

flat. Europe literally, for the most

part, hasn't grown in 20 or 30 years.

And I think a lot of that comes down to

risk aggressiveness. People are willing

to take much more um bigger swings.

There's $5 million, a lot of its

capital, $5 million in venture capital

available for every startup in the US

versus 1 million in in Europe. And part

of that is that if things don't work,

you can pivot. So,

I'll use an example. I started a company

seven years ago called um I think we

called it section 4, then we changed the

name to section. It was meant to be

Don't laugh. Jesus Christ said, "Don't

laugh. You're laughing at my startups."

I'm laughing that you don't remember the

name of the company you don't remember.

My job was just to sell just to sell it

and raise money or just to to Anyways,

>> this is a crazy Sorry, this is the

craziest statement of all time. I

founded this company a few years ago. I

think it was called uh

>> what was it called?

>> Was it It was either called Google or

Joey's Edibles. I can't remember.

Anyways,

>> it was called section 4.

>> Section four. That's right. Thank you.

Uh Mia Mia Sio, our lead data analyst

worked there. So now it's just called

section and now we've changed the name

to section AI. Initially, initially it

was um meant to be 80% of graduate

degree classes or graduate business

classes for 10% of the price and then we

started using AI and then essentially we

found that people were coming to us and

saying you seem to understand AI can you

help us upskill our employees and the

pivot has been to what I'll call the

adoption layer and that is per some of

these studies you've had a lot of

companies spend a lot of money on site

licenses with anthropic or open AI only

to find out 6 months later their

employee their workforce has not adopted

it and is not using it. So in come

section to you know to help L'Oreal or

whoever figure out all right how do you

train employees how do you get them

upscaled around their specific tasks

make them more efficient such so they're

not threatened

that company we were we went to 20 to

120 people all right now when things

weren't working and we got to like 10

million down of cash if I had if this

had been a company in France we probably

would have had to have closed down the

company because that $10 million would

have been needed for severance

And in addition, we never would have

gotten to 120 people because when you

can't fire people, the reality is you're

much more reticent to hire them.

So if you want a flexible workforce, if

you want more innovation, if you want

more risk-taking, you can't punish

people for taking risks. And along the

same lines, one of the other incredible

features about the United States is our

bankruptcy laws. And that is we're

fairly forgiving. If a company has a has

too much debt, it can go BK and

basically gets to start over, crush down

the debt or take out all the equity. The

equity holders get crushed, go to zero,

re reformat the debt and keep the assets

inside of the company because it might

be a good it might be a good company

that's just overlevered. Also, personal

bankruptcy. You're out of college, you

think you're making good money, you're

you're spending a lot, you don't you

don't really understand how much money

you're making. You get in out over your

skis, credit card bills keep mounting,

you're paying stupid interest rates

because no one ever people taught you

calculus but not how to calculate the

interest rate on your credit card. You

can declare bankruptcy and while it's

terrible for your credit, you basically

get to start over. And that is a

wonderful thing. What does that do? It

encourages risky behavior on the part of

people and of companies. And you're not

afraid or as afraid in the United States

to hire people uh because you know you

can fire them. And uh I remember my

first few companies, we never even hired

people initially. We'd always hire them

as contractors initially and then moved

them to full-time employees. So I think

this is really a a key component of the

US economy is our ability to ups you

know to hire and fire. And also

something I didn't realize or you know

young people especially your generation

that have been in an economy that's kind

of been up and to the right

I find that and because of concierge

parenting and social media that kids

when they I do see them when they do get

laid off

it it was never easy but it seems like

kids of your generation take it

especially hard and what I would say is

that the worst thing that can happen to

a young person is that they stay at a

company and the company doesn't really

think they're great. The company,

they're just good enough. And I've had

conversations with people with people I

really liked and I I'm speaking once

example, a great kid, and I sat him down

and said, "I don't know why, but the CEO

just doesn't think that much of you. I

think you should look for another job

cuz I think you're really good." And for

some reason, the person who's gonna make

all kind of have a tremendous amount of

domain over your future here is just not

impressed with you and I want I like you

enough and I want you to do well enough.

And he ended up going to work for

another company I was on the board of

and he's done really well. But you're

not you're not doing yourself any

favors.

Often times it's it's a blow in the

short term. And look, people got to pay

their mortgage and all that, but if

you're somewhere where your human

capital isn't being put to good use and

isn't appreciated, that's not the place

for you. You want to get out. You want

to find a place where you excel, the

company's growing, they can afford you,

they can they like you. And what you

have in Europe, I think a lot of times

are these kind of zombie companies and

zombie employees where they think, okay,

they're just good enough to hold on and

they're more expensive to hire to fire

than they are just to keep around and

let them go sideways. So also just for

morale, and people don't like to say

this out loud, everyone talks about look

the key is great hiring, but

occasionally on a regular basis as a

CEO, I believe it is good for morale to

have what I call a strategic firing. And

that if someone is clearly not pulling

their weight and you get rid of them

because what that says to everybody else

in a weird way is we appreciate you. Not

everyone just gets to be here. You are

working harder and you are better than

the people we let go and we recognize

that. Otherwise there's a tendency to

regress to the median and everybody says

why am I working so damn hard when Bob

over here is just not that good. So

again, the faster you can fire, the

quicker you can hire.

>> Just to go over the data that really

backs this point up. So the cost of

firing an employee in America costs the

company roughly 7 months of that

employees wages. When you look at it in

Germany, cost of firing an employee is

31 months of their wages. And in France,

it is 38 months of their wages. So

essentially what you have here is it's a

lot cheaper to fire people in America,

which makes companies more willing to

fire. And I think I agree with you. It

makes companies more willing probably to

hire because you know the there's you're

calculating less opportunity cost. It's

not going to be a huge issue if you need

to let them go. So you're down to be

nimble and pick them up and maybe that's

good for uh innovation. That's I'm sure

that that could be true. Along these

lines though, a lot of this got me

thinking about our conversation with

Katherine Anne Edwards, the the labor

economist, who, you know, her her point

that really resonated with me at least

is

one thing that we need to emphasize more

in America is just stronger labor

protection laws. And we weren't talking

about severance. said, "I I I think I'm

actually with you on on on severance

laws in America, but you know, she was

talking about, for example, universal

paid sick leave, universal paid

maternity leave." She was pointing out

that these are issues, especially for

women, uh that that actually lowers

labor force participation, makes it more

difficult uh to join companies because

they don't get the kind of benefits that

you get in Europe, specifically when it

comes to sick leave, specifically when

it comes to family leave. Um And I I

thought that was the right point. But

then there's the other side to this,

which is okay, well maybe if you take

the Europe model, maybe if you lean into

benefits for for workers, for employees,

if you make it more expensive

uh to to keep them essentially,

um then that could be again a suppressor

on innovation. So, but I'm not the I'm

not the founder and I'm not the CEO

here. So, I want to get your reactions

to that. It's complicated because the

species needs to continue and we need

young people to have kids. So to to say

to constantly preach about the

importance of young people meeting and

having the opportunity and the economic

wherewithal to have kids and then to say

no all employees should be out of will.

I just think that's hypocritical. And I

remember how hard it was for my partner

working at Goldman with two kids under

the age of five. The market is solving

for a lot of us, not not not for not not

all of it because the best companies

recognize that 60% of our college

graduates are women and most women at

least want the option to have kids. And

so that the criteria for selecting a

company is how they treat women and

specifically, you know, how are they

around maternity and leave benefits. So

the competitive pressures have naturally

I mean I'm not exaggerating.

Women used to get two weeks off to have

a kid back when I was a kid. I mean,

there was no Google and 6 months

maternity leave. That just wasn't that

didn't exist. There there was absolutely

no recognition that women have ovaries

and and actually need to give birth and

should be at home with a baby. You know,

this this is a this is a tough one.

Where do you land? The species needs to

continue. The market is figuring a lot

of this out because women are the most

qualified and most educated. So they

want to make familyfriendly offices for

them. I do think that the government has

a role here. We're the only one of the

G7 nations that doesn't have universal

child care. And if we want to bring more

women into the workforce and increase

workforce participation, there's a myth

that America loves to work. Americans

work hard, but we actually not that many

people work. Up to 350 million people,

only 165 million work. So, if we want

greater workforce participation, I think

universal child care is an absolute is

an absolute must. But I just want to go

back to hiring and firing because I've

thought about this a lot. I think I've

probably hired 12 or 1500 people. I've

probably fired three or 400 people. If

you're put on a PIP, a performance

improvement plan, start looking for

another job. the moment fairly or

unfairly you've put on put on a

quoteunquote performance improvement

plan, it means somebody no longer has

confidence in you and you should just

try and find another job. Two, as a

manager or a CEO of a company, uh, I

don't think I've ever fired anyone on

the day I was supposed to. I always put

it off. I hate it. You're rocking

someone's world. It's a awful It is

hands down the worst part of the job.

It's just awful. And what but my advice

to any manager is I would say 90% of the

time I have fired someone too late. I've

never I don't think I've ever fired

someone too early. You have a gut. It's

not working out. In a small and a

mediumsized company, you don't have the

resources, the wherewithal, the

bandwidth to try and figure out the kind

of the progressive woke view is, oh,

it's all about the company and if they

only had the right role and if they if

we switch bosses and they have a better

No. No. When you're a small or

mediumsized business, it's handto hand

combat. If someone can't figure out a

way to to figure out how to add value

almost from the get-go, you should

probably move them out. And my view is

around firing is the following. Higher

slow, fire fast. And what you can do

when you fire fast is then you

immediately become exceptionally

generous. You can give them more

severance. And essentially, my approach

to firing has always been the same

thing. We're letting you go. uh here are

some reasons. We can talk about it, but

it's not going to change the outcome.

What I want to move to is a conversation

around what we're going to do for you.

You should be you can be angry, you can

be upset, you shouldn't be scared. We're

going to keep you on for as you know as

long as you need and we're going to try

and help you find another position such

that this is a win for you. Um, but I

find that your ability to be generous

like that oftentimes is based on your

ability to fire quickly instead of

keeping someone way too long and then it

becomes totally obvious and then quite

frankly you can't be as generous. So my

attitude is you're rapacious about the

decision, but then you're very maternal,

paternal, whatever the term is around

the terms of them leaving and such that

they're not scared. you know, they go

home and they have a terrible

conversation with their spouse, but

they're not afraid. It's like, okay,

you're going to have health insurance.

We're going to pay you for as long as

you need and we're going to help you

find another job. What do you think of

this thesis, this idea that this is part

of the reason why Europe is behind and

this is why they're lagging in

innovation? I mean, I I kind of like it

as a theory, but I'm also hesitant to

just be like, this is why. I mean, I

feel like there's got to be a lot of

reasons. Uh but what do you what do you

think of that as as one of the

explanations?

>> It's absolutely multi-dimensional.

There's a lot of reasons, but this is a

big part of it because the West's

attitude towards business is ready for

our aim. Let them we we air on the side

of a lack of regulation, right? Let Uber

go into Argentina, not even get business

licenses. Let Airbnb start renting out

people's apartments without getting any

licenses whatsoever. or let AI molest

traditional IP. Now, in every one of

those instances, you can make an

argument for why it's wrong, but

generally speaking, a lack

underregulating has worked out really

well for the US versus overregulating

because as they're sitting there trying

to figure out how to save the whales and

how to be carbon neutral and what's

right for for, you know, special

interest groups, we're just blowing

right [ __ ] by them with companies

that are moving a lot faster. So there

is a certain if you were to just look at

economically where where I part company

with what I'll call the techn

libertarians or the people who claim to

be capitalists is you want fullbody

contact corporations you want to let

them you want to let your winners run

but quite frankly you want to tax them

at higher rates such that you can make

you can afford to have retraining

greater unemployment benefits universal

child care but in terms of the actual

combat on the field give them the

weapons they need and then stay the [ __ ]

out of the way and then tax them.

Corporations have their lowest tax rate

since 1939, but don't ra but try and do

away with as much regulation as possible

that gives them the opportunity to move

faster than their European or their

Chinese counterparts. And then with that

full body contact violence, they

hopefully become the best in the world,

generate a lot of profits, and then tax

them at a real rate. And when people get

laid off because they're in that full

body thunderdome, we can give them more

unemployment. When women go on, women

can enter the workforce because they

have universal child care. Right? Basic,

we can reinvest in worker retraining

when someone loses a job because they're

in an industry that's in decline. So I'm

of low regulation but high taxation.

Um, so I guess it's a mix of the two,

but I think it's a big component of why

I'm on the board or was on the board of

a French company. We were very careful

about hiring people because it's like if

it doesn't work. I mean, basically, you

almost can't it you almost can't fire

them. You can't afford to fire them

three years. You'd rather keep them

around, even if they're bad, than have

to pay them what amounts to threeear

severance to just do nothing. Yeah. Just

find something for them. Anything,

right? And so this is I I absolutely

also to a certain extent, Ed, I mean, I

hate to say this, but that anxiety and a

little bit of that fear is very

motivating.

You know, there America at the end, my

my dad, who was a Scottish immigrant,

said something that always stuck with

me. He said, "America is a terrible

place to be stupid. I would argue

America is a worse place to be unlucky.

But America is comfortable with the

following. We are comfortable with a

zeitgeist that is winners and losers. We

want really talented, hardworking, and

lucky people to garner more assets than

any individuals in the world. At the

same time, we're also comfortable with

quite frankly having a safety net that

is much more porous and lower to the

ground. We have made a conscious

decision that if you don't work in this

country or you're not lucky, your life

is going to be worse here. But if you're

really good at what you do and you keep

trying and keep taking risks, your

life's going to be better than anywhere

else in the world. America has basically

decided that they are comfortable with

that complexion of a society. I think

the only part where we run into trouble

is yes, it's good to have a system where

it's full body contact, more innovation,

more wealth creation, uh more valuable

companies. It's all well and good, but

again to your point of the taxation,

it's like, well, why do we live in this

incredibly prosperous society, this

incredible economy, and yet many

Americans are unable to afford their

groceries? How could it be that someone

in America is living with that

situation, living in the most prosperous

nation in the world, and then meanwhile,

you've got Bezos who's deconstructing

100-year-old bridges and and flying his

400 ft yachts through those bridges.

Point being, I agree with you in terms

of you want to loosen regulation, let

companies do their thing, and I also

agree with you when it comes to

taxation. But you can't have it both

ways. You need you need some way of

redistributing that wealth,

redistributing that value creation such

that people live decent lives. And it

shouldn't be that we have this

incredibly innovative and prosperous and

wealthy society and yet we can't get our

act together on something like universal

child care. I mean that exists in all of

the European nations that we ascribe as

as sluggish and and and low growth.

You'd think they don't have the money to

pay for anything. Somehow they figure it

out.

>> There's a difference between just the

kind of libertarian view of the free

markets and capitalism. And that is

we're moving towards just basic free

markets and kind of a libertarian low

touch low government involvement. That

ends up with a small number of people

who garner most if not all of the

resources, most of the romantic

opportunities, most of the political

power. And then they don't think of

themselves as bad people, but they give

money to the right people and figure out

a way to soak all the oxygen and all the

resources into a smaller and smaller

group of people. And then at some point,

the bottom 99% realize the fastest way

to triple their income is to kill the 1%

or to overthrow them in some form of

revolution. That is the basis

>> as has happened throughout history over

and over again.

>> The greatest innovation in history is

the middle class in America. It it's a

it's an accident. Republicans would have

you believe that it's a self-occurring

organism that if you just let the market

go, the middle class will thrive. No,

the middle class is an accident. It's

not supposed to exist. People who are

very talented and well-connected garner

a disproportionate amount of resources,

use that economic power to weaponize and

overrun government, create regulatory

capture, and just [ __ ] run away with

it. And that's kind of the story of the

S&P over the last 20 years. You have to

redistribute money back. Let me use the

R word, redistribution. You have to tax

our our periods of greatest economic

growth are when our corporations have

been paying 50, 60, 80% tax rates. And I

go back to Daniel Conorman. The

difference between making 10 or $15

million a year makes you no more

happier. So why on earth would you not

have incremental tax rates above a

certain amount of 60 70% on individuals

and have an alternative minimum tax of

at least 30% on corporations such you

can have universal child care such that

you can have training such that you can

have PEL grants such that you can have

tax incentives to create more housing to

bring down the cost of housing. You also

need I'm going off base here or off

script here. You need a massively

aggressive FDC and DOJ to make sure no

one set of companies like 10 control 40%

of the S&P. But all of these are common

sense solutions that other governments

have implemented and we implemented

basically from 1945 to about 2010. But

we have become weaponized by old people

and by rich people who are basically

following the same tact as every third

world nation. And that is they've said,

you know what, enough is just not

[ __ ] enough for me, right? I want

policies that take me from 1 billion to

8 billion, then to 80 billion, and then

to 280 billion. I'm not saying we don't

need billionaires, but do we really need

someone worth $400 billion while we're

cutting while we're about to double the

tax credits for Obamacare to children. I

mean, like like William Gibson said

about the future, it's here, just not

evenly distributed. Well, prosperity,

unprecedented historic prosperity is

here in America. It's just not evenly

distributed. Capitalism does not work.

It collapses on itself unless you

consistently redistribute capital from

the most fortunate, most blessed, and

best performing companies and

individuals back into the middle class.

And if you don't do that, there's no

basis to build an economy. The whole

point of an economy is to build a middle

class. Full stop. Anyways, thank you for

my TED talk.

>> Let's take a look at the week ahead.

Earning season will kick off. We've got

JP Morgan, Goldman, City, Bank of

America, Morgan Stanley, and Wells Fargo

all reporting. We'll also see earnings

from ASML and Johnson and Johnson.

Scott, do you have any predictions?

>> I don't know, Ed. Let's let's just say

that either either Palunteer

or Tesla are off 40% or more by end of

Q1 2026.

Let's put that down. Palunteer or Tesla

off 40 plus percent by end of Q1 2026.

What do you think?

>> I always want to say yes.

>> And we're always wrong.

>> Yeah. I would I wouldn't be surprised if

you made the same prediction last year.

It should be. I mean, it it makes

absolutely no sense. I'm just

I really struggle with this company. It

it it it never it never seems to

fall down, but it has to at some point.

I just I just don't know about the

timing. I know it will. I know it will

come down by 40% at some point. I just

don't know about Q1. It's hard. It's

hard to say.

>> Either that or you're going to decide

you've had it with my [ __ ] Move to

Vermont and raise Labradoodles. Raise

hypoallergenic Labradoodles with that

lovely girlfriend of yours.

>> Or maybe you're going to fire me. You

love You apparently love to fire people.

>> Yeah, it hasn't happened yet. Hasn't

happened yet. You know, you know, 18

bucks an hour, you're a decent deal.

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