Today's number 12. That's how many

points the average credit score

decreases after a state legalizes online

sports gambling. Ed. True story. My

credit score is like my sex life. I

didn't used to have one and now it's

just bad. [snorts]

What do you think, Ed? Pretty good.

>> It's okay. It's okay.

>> Actually, you know what? Uh my credit

score, it's it's a lot like um my sex

life and or my dating life in New York.

And that is every time I pull out my

credit card, uh, she and it go down on

me. [laughter]

That's so wrong on so many levels.

What do you think of that number? 12

points. Your your credit score goes down

by 12 points on average if your state

legalizes sports betting. I thought that

was a fascinating number.

>> Yeah. Um, [laughter]

>> all right. There we go. [laughter]

>> Have you ever had a credit card rejected

on a date? I have. That's a good move.

By the way, I didn't get laid that

night. Just I know that's a shocker, but

I was especially

I was especially like usually I wouldn't

have sex, but after having my credit

card declined, she immediately went and

had sex with someone else. [laughter]

I just thought of that.

>> Actually, I think I have had that. I had

it with with drinks at a club with a

bunch of guys. I was like, I got it. I

got it. I put it put the card down.

Credit card is declined. My friend has

to come in and step in for me.

[laughter] It's brutal.

>> That used to happen to me so much that I

still can't use credit cards without

getting nervous. Every time I swipe my

card, I expect it to come back not

approved or rejected or something. I

still I like to carry cash. Makes me

feel like a mobster. I like cash.

[laughter]

>> Well, we got a lot to get into here. Um,

so may I move us along?

>> I want to know a little bit more about

the real Ed going into the holidays.

[laughter]

What's going on, Ed? How are you?

>> I'm doing well. I'm doing well. I've got

uh Christmas parties this weekend.

Um,

>> yeah, you're such a complex, interesting

person. I'm glad I asked. [laughter]

[ __ ] this. Claire, what's going on with

you?

>> Not much, Scott. I was really hoping we

could get away with moving on.

[laughter]

>> Well, you guys aren't even being nice to

me anymore. This is This is Let me just

give everyone a 411 what happened. Ed

has not had his review in bonus

conversation yet. So, he's laughing and

being nice to me. Claire's like, "Fuck

you, old man. Let's get on." She had a

review yesterday, so she's done. The

money has already been wired. She's out.

She's probably already accepted a job

running like Salesforce Podcast America

or something.

>> I've collected the bag. It's time to go.

[laughter] Move it on.

All right, you guys win. Let's move

Let's move into the episode.

>> Okay, let's do it. Over the last few

months, we've had an incredible lineup

of guests from professors and

journalists to investment strategists

and analysts and economists, all with

their own take on what 2026 might look

like. And we're going to just play a

quick collage of some of our favorite

moments. If I came to you and I offered

you a robot

that could do your job for you,

does that make you better off? Yeah,

it's not hard, right? Well, that robot

more or less exists and it's called AI.

Now, let's take the same scenario. I

invent a robot,

but I sell the robot to your boss.

You're out of a job, brother. Penniles,

nothing to do by the side of the road.

The point here

is these two scenarios have the same

technology,

a robot that can do your job.

One of them is a land of plenty and

beauty where we're called to our higher

callings. And the other is one of misery

for many of us. What we have here is not

a robot problem or an AI problem, but an

ownership problem. So I'm more convinced

that there'll be a destruction of value

in the markets, but probably more akin

to something like 1999

than 1929. What I think I don't know

about today is I think it's harder to

fully understand where all the leverage

is today than we used to know. You know,

after 2008, so much of the the the loan

market in this country moved to private

credit. We don't really know all the

disclosures about that. Some of that's

connected into the insurance industry

now. So there's a lot of sort of

questions that I have and I also think

this AI boom which is sort of the

euphoria I mean it's how much of that

whole boom is being powered by leverage.

So not to say that you look at you know

Meta and Google and all the big tech

companies are obviously throwing a lot

of their own cash at this problem but

also they're taking on uh some debt but

they're also now partnering with all

sorts of private credit funds and doing

all sorts of other things. There's all

sorts of other component parts of this

ecosystem that are being powered by

leverage.

>> To the extent that there's going to be a

correction, there's no place to hide in

stocks. I I can't see a way because if

the mag 10 go down by 40%. It's not like

the investors are going to hold their

value while this happens. The panic that

that's going to create is going to

ripple through stocks. You're an

investor primarily invest in stocks and

bonds. My advice is even though

historically you might never have

invested in non-financial asset

categories, this might be a time where

you think about, you know, kind of at

least moving a portion of your

portfolio. know bigger chunk than ever

into cash or something close to cash or

maybe even collectibles things that I

I've never owned collectibles but you

know for the first time in my investing

history I'm saying maybe I should hold

something that is not going to be

effective inflation goes to 10% there's

a market in economic crisis that is cat

potentially catastrophic

>> it would be kind of shocking if you

didn't have some kind of profit- taking

correction

in 2026 at some point on the order of 10

to 15%. It would be I'd be I'd be really

surprised not to see that.

>> I actually think Michael and I are

pretty aligned in the sense that I think

there is going to be a draw down next

year. He says he wouldn't be surprised

but to me it doesn't mean that's the end

of of the actual bull market and in fact

I think stocks fully recover.

>> Those were some of the highlights that

we've heard. Uh and it is clear that

there is no single consensus. There's

similar themes happening. Uh AI is

obviously very important. That was the

most important thing in 2025. But then

questions of is there a bubble? Uh is

there not a bubble? How large is the

bubble? What is the impact going to be

on the markets? A lot of different takes

from very reputable, respectable people

um with very interesting answers. But

the question that we have yet to answer

is what do we do with all of this? what

should we actually be doing with our

portfolios heading into 2026. So that's

what we're going to get into today.

Scott, let's just start with your

reflections on the collage and then

perhaps your answer to that question.

>> The thing that kind of summarizes what

someone said and I can't remember if it

was a guess. I've never seen a bull

market that more people hate

and that is people just aren't feeling

very good about this market. They look

at it and think, "Okay, we're just sort

of," it's almost like when you're

waiting for someone to break up with

you, you just kind of wish they'd get

over it. Like you're too wed to the

relationship and you're just sort of

waiting for the next shoe to drop. Kind

of describes basically my entire love

life 18 to 38. You're just waiting for

the end. and

this market we're just waiting for like

I almost feel as if people would be

somewhat relieved if it just went down

20% and some air got let out in a weird

way. And the other thing that strikes me

about this whole thing is the term that

the market continues to climb a wall of

worry. We don't I don't like this

market. Things are overvalued. Oh, the

S&P is up again. It's just everything

can there's a little bit of a dip and

then it just keeps going up. Um, so I it

just it strikes me how anxious people

are, how they are

cautiously pessimistic is another

another great term. Um, in terms of

Well, I'll get your reactions and I'll

tell you how I'm responding and it might

not be the right thing, but how I am

actually shifting capital around.

>> Yeah, my reaction is very similar. This

the wall of worry, I think, is the is

the best way to put it. I think Tom Lee

really nails it when he says, "Yes, we

are experiencing returns right now. The

stock market is going up." But if you

talk to anyone about it, people don't

feel good. People are mostly speaking

with bearish sentiment. And we're seeing

that in the news, too. And we looked at

some of the news sentiment recently, and

we are seeing a lot of bearish sentiment

in the news. So, I think the wall of

worry is is a great point. I don't think

there are aspects to this market that

that people aren't aware of that could

surprise us. I mean, this AI bubble

thing, we all know what's going on here.

We all know the circular deals. We all

pretty much know what's happening with

the leverage, though, to Andre Sawkins

point, there's a lot of private credit

in there that perhaps might be

distorting things. But overall, most of

us kind of know what the risks are,

which I think should ultimately lessen

our concerns heading into 2026. And I

will just present to you my sort of

macro thoughts on the bare case for 2026

and then the bull case and then we can

get into what you're doing about it and

how we should how we should be thinking

about it. So the bare case, what would

it what would it look like and why would

a a significant draw down in 2026

actually happened? For me, I've got

three major themes. So the first one is

that AI is a bubble. So we've talked

about this a lot on the show. We've

we've seen the AI capex which came out

to $350 billion this year. That's up

from 200 billion in 2024. We're seeing

huge amounts of borrowing. Amazon,

Google, Microsoft, Meta, Oracle, which

of course had its bad earnings last

week. They have raised together more

than hundred billion in debt this year.

It's more than three times the average

of the previous nine years. Plus, we've

been seeing the circular deals where

Nvidia invests in OpenAI and then OpenAI

takes the money and buys compute from

Nvidia, which of course is very

concerning. So, we've talked about that.

I think people understand that and I

think there is still a chance that there

could be some sort of triggering event.

I think that it would happen most likely

with open AI that would cause some some

draw downs in the market that might be

painful. So that's the first thing. The

second thing is valuations just look

expensive. So you've got the S&P trading

at 31 times earnings right now which

isn't dot levels but it's like just

before the dot levels. It's like 1999

levels and that is expensive and to

Asat's point it's a little uncomfortable

to invest into a market when valuations

appear to be that expensive on a price

to earnings basis. That's number two.

And then the third reason is that maybe

we're just due for a correction. And

that is we've had a really good three

years. We had 24% return in 2023,

23% return in 2024. We are on track for

a 17% return in 2025. So that's three

big years in a row, which would make you

think, okay, this is not very usual that

you get this level of of return so

consistently across multiple years. So

maybe we are just due. Those are the

barecase components there and that's

three of them. Now I'm going to just

tell you my anti-bear case and the

reason I'm not saying bullcase I'm not

that bullish but I think these are three

good reasons why actually we won't see a

bare market and a significant draw down

over the year. The first is interest

rates and that is rates are coming down.

Rates are now at their lowest level in

three years. We we're gonna have one

more cut in 2026. That is according to

the Fed, but this is also Powell's Fed.

The reality is Trump's going to get a

new Fed chair in there in May and that

new Fed chair might just be a sickopant

and will just continue to cut rates. And

if you have a lower interest rate

environment, that should lift earnings

across the board. And so the idea of

investing or sorry, not investing or

shorting or selling when we're entering

a low interest rate environment to me

doesn't make a lot of sense. The second

is deficit spending. We've got the big

beautiful bill which is going to add

roughly $480 billion in fiscal support.

We're going to pump money into the

economy. It's going to accelerate GDP

growth. And yes, it's extremely

irresponsible over the long term because

the amount of money we're going to

borrow, but if we're just looking at

2026, that's free money coming in there

that's going to definitely prop up the

market. And then the third reason is AI

might be a bubble but as of now it's not

a particularly dangerous bubble and that

is there are a few AI companies that are

behaving dangerously I would say open

AAI coreweave Oracle maybe Palanteer but

the big tech companies that really

really matter Microsoft Google Meta

Amazon they're not they actually have a

ton of cash on the balance sheet they

already have these incredible businesses

that work with or without AI and the

reality is they're just making a large

bet and they have the money to make that

bet and maybe it doesn't work out or

maybe it does work out but the reality

is whether or not AI works Microsoft's

going to be fine Google's going to be

fine Meta is going to be fine Amazon is

going to be fine so that is the reason

why I would not land in bearish

territory I'm I it's I'm not fully

bullish but I'm I think we're going to

have sort of stagnant uh sort of subdued

returns next year I don't think it'll

look like 23, 24, 25, but I don't think

that we're going to see an overall

negative market by the end of 2026 is my

view.

>> Yeah, I thought that was really

thoughtful. I think most of it comes

down to one of two things. Uh, an

exogenous event that we can't yet even

anticipate. No one was anticipating

except for some really thoughtful CI

analysts 9/11.

um uh Bill Gates and a few other people

saw COVID, but none of us I don't think

were expecting that. The weird thing is

about these natural disasters is in some

ways they're less damaging to the market

because the markets have traditionally

ripped back so aggressively after um an

exogenous event whether it's COVID or

9/11 that now people see these things

they want to see the moment there's a

dip at all everyone's like buy. So the

recovery time is getting shorter and

shorter. the narrative.

I I just think we're just the

cyclicality, just probability,

valuations, everything you talk about

mean for me that the likelihood of some

sort of draw down is just greater than

it isn't. Um, and I think it kind of

mostly all centers around AI. I think

the market is being driven by the

unrealistic expectations built into the

valuations of companies now representing

40% of the market.

And so it feels like one false move, you

know, even just good results, not great

results, much less a study comes out

showing that um you know, 80% of

startups are using openweight Chinese

models and some big companies with big

contracts are cancelling them with

anthropic and open AI and moving to

these Chinese open weight. I I just

think there's a variety of things that

could say, okay, this business is going

to grow 60%, not 200% a year. meaning

their stock should be down 70%. So, and

if they go down and if you look at every

company in the Magnificent 10, they've

had draw downs of 60 to 90% at some

point and it just feels like we're due.

And the problem is that the markets are

much more fragile now. If these

companies lose half their value, the

markets the S&P loses um 20%. Whereas

when these companies lost more than half

their value in 2000, the whole the

market lost or it had a 5% impact. The

these companies are just now if Nvidia

sneezes the entire global economy is

going to get walking pneumonia because

our we become kind of anti- I don't want

to say no I was going to say fragile.

Anti-fragile is robust. We're

anti-roust. We're fragile. And I'm

genuinely believe that

there's no way we can have I mean to a

certain extent Ed again the markets

these indices are such damaging metrics

because they give the illusion of

prosperity and that everything is

healthy and I would argue that if we

wake up in a year and open AI and Nvidia

and the Magnificent 10 are much higher

than they are now that that willote a

certain amount of chaos in labor markets

and uh real societal pain because the

only way I think these companies move

higher is if they show that companies

are are massively increasing their

earnings by buying these site licenses

by finding efficiencies which is Latin

for layoffs.

You know, we're we're at a fork in the

road right now. And that is built into

these expectations of these stock prices

is the notion they're going to increase

revenues amongst their client base by

five trillion or find efficiencies of

five trillion or some combination of the

two. I don't see an incremental revenues

from these. I don't see Pepsi making

more money from these things. I see them

making greater earnings because they can

outsource or get rid of 70 or 80% of

their compliance customer service and

legal costs and brand management and

great. So PepsiCo stock will go up.

>> Fantastic.

>> They will lose, you know, they could

potentially lay off 10% of their

workforce every year for the next four

to six years, which create will create

huge tumult in society, in the labor

markets. So I mean, answer the question.

I think this is an interesting question.

If you had to go to sleep for a year,

would you rather wake up and find out

these stocks had doubled or they'd been

down 40 or 50%. And I'm not sure I'd

pick the former.

>> Yeah, I think I agree. Yeah.

>> If Nvidia is at $8 trillion and it's

bigger than the German and the Japanese

stock market combined,

have we found some new way of making a

ton of money off of AI that I don't see?

I think the two ways you make money are

probably

um autonomous and robotics, but even

those involve a massive destruction in

labor. So

if we woke up and said the stocks have

doubled, that would mean that literally

the middle class got massively kicked in

the nuts over and over over the course

of the next 12 months. So again, we we

obsess over the markets and I get it and

we get this notion that and like who

knows what Trump's going to try and do

if the S&P keeps going up. So I I I

agree with your assessment, but your

assessment kind of distills down to the

following. Like the rest of us, you

don't know.

>> I don't know. But my my my prediction,

if I if I'm making a prediction here on

what will the market do is that returns

will be meh. It'll be just a meh year

across the board. So I I don't know, but

I I'm saying I think that that's what

it's going to be because I think you

have these two gigantic forces facing up

against each other, which is that in a

lot of ways we are due for a correction

and a lot of the AI expectations are

simply expectations and we are going to

see like okay show us the revenue, show

us the business, show the real impact on

the bottom line, show us how this has

completely transformed your business as

you were pricing it earlier.

And I don't think we're really going to

see that or if we do see it, I think

it's going to kind of disappoint us and

we're going to realize actually it was

going to take a lot a lot longer than we

thought. But you also have at the same

time this other large force which is

you've got Trump in here who really

wants the market to go up and he has a

lot of power to make that happen. Either

whether that's through the Fed chair and

through influencing these interest rates

and I do think that we're going to come

down more than just one more cut. I

think we're going to have more because I

do think he's going to influence what

happens here with these Fed decisions as

well as the big beautiful bill and the

unbelievable deficit spending. So those

two powers are are are confronting each

other and it's going to come to a head

this year. And so that leaves me

thinking

they're both formidable forces I guess

is my point. And I think that that would

lead us into a place where,

you know, maybe you do see a draw down,

but then you kind of come back up and

ultimately you end the year sort of low

low singledigit growth.

We'll be right back after the break. And

if you're enjoying the show, send it to

a friend and please follow us if you

haven't already.

We're back with property markets.

>> I find I can't trust my emotions and

that is I have a bias a huge bias

against Trump, President Trump. I think

it's a stain on the American experience.

So I naturally look for a connection or

rationale for why the market is going to

collapse under his watch. When he was

elected in 2016, I thought this guy is a

village idiot and I should I and I

literally sold all my stocks. I'm like,

there's just no way this guy should be

in charge of the or have any influence

on the US economy.

>> I still can't believe you did that.

[laughter]

>> Oh, trust me. I've done much stupider

things. Have you ever been out with me

drinking? That that's like that's

literally that's a bronze medal of the

gold medal of stupid decisions I've made

throughout my life, Ed. Anyways, so I

sold everything, incur a huge tax

liability because my stocks had run up

and then bought back in 6 months later

at a higher price when I realized I was

acting like some dumb, you know, dumb

jerk. So, I probably destroyed, granted,

I've never had, you know, I was

diversified by that point. I had most of

my money in L2 or most of my net worth

in L2 and real estate at that point or

or a lot of it, but I probably lost 10%

of my net worth in uh 40 or 25% of my

stock market value by acting out of

emotion. Also, what I find is that when

people hate a market like this, it

usually goes up. And that is again this

notion of climbing a wall of worry. And

that it's when you're expect it's it's

really interesting the the stuff you're

expecting to take the market down or the

disasters you're expecting usually don't

happen because people start preparing

for them. It's the [ __ ] you're not

expecting that gets you right because

naturally when you start worrying about

something you start preparing for it or

hedging against it. It's the things

you're just not thinking about that

sneak up and grab you. If I had to pick

one person just to listen to said,

"Okay, you can only pick one." And to

run my portfolio, it hands down would be

Professor Deoderan. I find he has just

an ability to take his heart outside of

his body when he's making decisions and

just make purely unemotional decisions.

And I've always just found him just

almost like a little bit sociopathic is

a negative term, but he just seems

totally unfased by whether MET is good

or bad for the world. He just looks at

the numbers and I remember him telling

me, "Oh, no. It's a great buy right now.

Yeah. Yeah. Maybe kids are cutting

themselves, but it's an amazing buy

right now. He's And so I would trust

Asth quite frankly freaked me the [ __ ]

out when he basically started saying I

have never

>> It was crazy.

>> I've known ASW for 23 years. I've never

heard him say, "I can't think of what to

buy right now." When he says baseball

cards and collectibles,

>> baseball cards.

>> Yeah. But you're going deep in the

barrel. Um, by the way, I'll come back

to how that's impacted my own personal

investing. But I thought, "Oh my god."

After I got off the after I listened to

him, I don't make any financial

decisions now, no matter what's

happened, without talking to a bunch of

people, and giving my my time myself

time to regulate. After that, I thought

I immediately need to like sell half my

stocks, maybe more, and develop a bit of

a cash hoorde. And then I started

remembering I have never been able to

time the markets. I have never I've been

investing in stocks since I was 13. I've

made more money in stocks than I've made

buying and selling businesses. And I've

made a lot of money buying and selling

businesses, but I've made the majority

the 60 70% of my net worth has come from

granted I needed the capital to invest

that I got from selling businesses. But

of as a percentage of my if you look at

my total net worth and all the money

I've spent, twothirds of it has come

from capital made uh in the markets from

capital I got from selling businesses.

And I have never once been able to say,

"Oh, I'm selling now." And then a year

later the market's down and I go back in

and and buy stuff on the cheap. I've

never been able to figure that out.

>> And it seems so simple when you hear it.

It's like, "Oh,

>> yeah. In theory, it makes just a ton of

sense."

And you don't know because when [ __ ]

starts going down, you think it's going

to continue to go down and then it rips

back up or it goes down, you think it's

a great buying opportunity and then it

goes down another 20%. It sounds easy in

theory. I remember uh by the way, I just

got invited back to Davos, so I don't

know if I told you that, Ed. [laughter]

20 [ __ ] 25 years later, they invite

me back. Anyways, but I remember being

in line going through security and I saw

this guy with curly hair and I'm like, I

recognize this guy. And he introduced

himself to me and he's like, "Michael

Dell." I'm like, "Oh, hey, Michael. I'm

Scott Callaway. We're both

entrepreneurs, similar similar weight

class. [laughter] Um,

look what happened to his career. Look

what happened to mine. Anyway, and we

started talking and I think Bush was

president. This is how long ago this

was. I think it was Clinton was just

leaving office. I was there in 99. And

he was really excited about George Bush.

I'm like, "No, I'm I think the market's

overvalued. I'm going to" And he goes

like, he's like, "Oh, you're trying to

time the markets." He's like, "My

experience is that's really hard." And I

remember thinking, "Oh, he's Michael.

There's a reason he's Michael Dell.

[laughter] Like he's right. It's really

hard. I have never been able to time the

market. So in general, and this lends

to, okay, I don't like to give a

financial advice even though I do. Is

that true? Um, but I think it's more

important to say, what are you doing

with your actual [ __ ] money? What are

you doing? That is what you really

believe, right? Y

>> and what I'm doing is I've decided all

right of all people that ended up saying

something really interesting about the

markets. Tony Robbins said something

that always stuck with me. He did an

analysis of investing. He was his book

like the 20 best ideas. And if you look

at bull markets, generally speaking,

there are 12 days of enormous upside.

And if you miss any of those days, you

underperform the market. And the only

way you don't miss those days is to

always be in the market. And so one of

my tenants that I still hold on to is I

am always in the market. Now I take

leverage up and down. I have felt sort

of insecure about the markets for the

last four years. So I have paid down and

this is a story of privilege. I've paid

down all my mortgages. I don't have any

I have a small amount of debt on my real

estate but almost none because that

gives me firepower. And also what I've

done is I've been diversifying like

crazy for the last two or three years.

Mostly because I'm traumatized by having

lost all of my wealth, not once but

twice. And so I've been diversifying.

What I am also doing is the following. I

am making some moves. I have a home in

London and

I'm thinking of most like we're

thinking, okay, we're moving back to the

US. Should I either should we either

sell it or rent it out? And I wish I had

never sold a house. I wish I'd still

held all of them, but I'm thinking,

okay, I would like to have some cash.

I'm really long real estate. I have 40,

maybe 50% of my net worth in real

estate, maybe more like 60%. Because I

get to I like it. I like the fact

psychologically I don't I don't have to

check my stocks every day. If it goes

down, I don't know about it. There's a

consumption effect. I buy really nice

homes. I enjoy visiting them. I'm hoping

my boys will come visit me. I just enjoy

it. I like to fix up homes. I'm good at

it. So, but I am so long real estate now

that I think okay you you talk a big

game about diversification maybe take

some capital off the table and also

interestingly enough when everyone's

saying that real estate prices are going

to crash in the city that means that

means you should probably go long

everyone's been predicting a crash in L

London because of non-dom I have found

at least people I'm talking to luxury

sales are kind of quietly quite robust

right now and I don't the data says

something different but the people I

talk to here are getting their number

for their homes because a lot of people

seem to be moving here, which shocks me.

But anyways, same in New York. Luxury

sales are way up right now. Despite mom

Donnie was supposedly going to scare

every billionaire millionaire out of New

York, luxury sales have had their most

robust month in a long time since he was

elected. But I'm thinking about getting

out and um I'm doing a couple things.

One, and this is a total story of

privilege. I get access to certain

investments where if I go on the board,

I get additional equity as an adviser.

So, I'm trying to, if you will, do more

of those and take money out of the

market and invest in small companies

where I get uh uh equity plus. So, I

invest alongside a VC and it's like

paying negative carried interest. I

agree that's not helpful to people

because they don't have access to those

deals. What I've also done, I went and

bought for the first time a very

expensive piece of art because of what

Deoteran said.

>> And I've never done that before. I don't

know anything about art. But after

speaking to Deoteran,

um I thought maybe I should put some

money just for fun into a piece of art

in case, you know, unfortunately I can't

shove it up my ass and head to my bunker

in New Zealand. But if [ __ ] gets real

and the zombie apocalypse happens, it's

going to be me in a kitchen knife in

front of this piece of art. uh trying to

f fend off the zombies. But more than

anything, what I'm doing is

um I'm about to make substantial

investments in Section, which is the

company that upskills the enterprise for

AI. It's part of the adoption layer, as

we call it, that I started in 2018 or

2019.

I'm about to make a multi-million dollar

investment there because uh the

valuation will be pretty good and I the

the company is booming. You know, after

going sideways for a good six, seven

years, all of a sudden it's exploding,

which I'm really happy about and didn't

expect. I'm also about to make what

should be a substantial investment in

this company, Prof. And that is this was

a company that I thought will be fun,

good influence, make some good money,

work with people I really like, kind of

getting the team back together again to

do another company, but I mostly thought

this would be a lifestyle business. And

now, and because of the good work of you

and some other people, and I'm not just

blowing smoke, it all of a sudden is and

the market's coming to us, podcasting is

booming. I'm like, "Oh, you know, my

greed glands are going again." I'm like,

"Wow, we might actually get an exit here

or real enterprise value." And you

brought this up on the editorial call. I

I'm investing where I've made the most

money outside of markets. And that is

I'm investing I hate to say myself

because that sounds egotistical, but I

have influence, control, and good

valuations in the companies I control.

Um uh so I'm investing there and I'm

slowly but surely winding down some of

my public markets exposure. I'm going to

sell my Apple stock. I've sold 60% of

it. I'm going to sell the rest. It's

trading at a P of I think 33 or 35 and

it's growing single digits. Amazing

company. By the way, thank you Tim Cook.

I bought it in 2010 and it's paid for a

lot. Um I'm going to hold on to Amazon

because that's my big tech stock pick of

2026. Uh but I am I'm not selling a

bunch and going into cash. What I'm

doing is I'm diversifying. I'm trying to

create a basket of wealth such that if

the whole market goes to [ __ ] I'm down

30% not 120% where I have been before.

Uh and that's how and I don't know if

it's the right strategy. I wish I had

>> little assath on your shoulder.

[laughter]

>> Yeah, it's so funny. I have access to

the I have access literally like you to

the brightest people in finance in the

world and I still wake up like I don't

know what the [ __ ] to do. [laughter]

Um I work with [clears throat] Goldman

Sachs Asset Management. And I have the

brightest tax people in the world. We

have access. And literally I walk around

most time going buy, sell. No, I should

buy. I should sell. I I So my point is

if if you're out there and you're not

sure what to do, welcome to the club.

Buy lowcost index funds and make sure

you're diversified. What are you doing,

Ed? [laughter]

>> I that was great. I I loved hearing

everything you're doing. So, um, by the

way, one thing that kind of occurred to

me, your point about selling and that

it's ne you've never successfully just

sold at the top and then waited and then

got back in. This is one of the great

things about value investing is if you

are investing over the long term, if

you're following the Buffett strategy,

the Benjamin Graham strategy, you never

really have to sell. You don't even have

to consider that because you're

continually buying for the purpose of

holding for the long term for 10, 20,

30, 40 years. if you're selling, it's a

very very rare event. So that's just one

of the benefits of value investing. You

don't have to even ask yourself that

question. Okay, as for what I'm thinking

about for 2026. So the way I think about

it, this is the year of derisking and it

sounds like it's the same for you, but I

think that it's pretty much the case for

everyone. And that is by virtue of this

incredible runup that we have seen over

the past three years particularly in

tech almost exclusively in tech almost

everyone's portfolio is completely

imbalanced right now and that is if you

were a good investor if you invested in

the S&P every year if you were dollar

cost averaging in as we recommend you

are now overexposed to big tech and that

is because as we've said before the top

10 stocks in The S&P now make up 40% of

the entire index. Since 2023, those 10

stocks have delivered 65%

of the total returns in the in the S&P

in the market. You look at Microsoft,

Apple, Amazon, Google, and Nvidia, which

together have contributed to half of the

returns. And this is a combination of

things because the stocks went way up in

price, but also they have extremely high

waiting in the S&P. the S&P gives more

weight to those bigger companies, which

has actually been a great thing for all

of us in the past few years because it's

those companies that have outperformed.

So, what to do now given everything

we've just said? I think it's time we

take our win. We've had a really good

run and it's time to derisk and

diversify because I can tell you with

almost 90% certainty, I would say you're

not diversified enough right now just by

virtue of what's happened in the S&P. So

how to do that? The things I'm thinking

about first very easy pick which I would

definitely which I'm doing definitely

recommend buy the equal weight S&P 500

and it's very simple instead of the

regular S&P which naturally

overconentrates into big tech. That's

what has happened. Equal weight will

just invest you evenly across all of the

companies in the S&P.

>> So it's not indexed.

>> Correct. So the the 490 stocks that we

keep on saying are being left out, well

this way you give them a little bit more

light in the sun. So that's the first

thing. Second thing, let's start

diversifying into non- tech sectors. So

uh a couple of sectors that I'm looking

at that have underperformed relative to

the market, consumer staples, also

healthcare. And I think you could take a

look at many other sectors and figure

out which works for you. But those are a

couple of sectors which just have not

really tracked with the market thus far

and I think are due uh for a bit more

momentum. And then the other thing and

we've talked about this before as well

but non US equities we've talked about

it a lot but you should be looking at

China and India and if you want to keep

things simple just emerging markets

funds and we called this at the

beginning of the year after

liberation day and we nailed it. It was

a great year for emerging markets, but I

I don't see any reason why that won't

continue, especially if we are in a

lower interest rate environment, which

historically is pretty good for emerging

market stocks. So, those are the main

things that I'm thinking about. I think

it's also worth looking at small caps.

Um maybe the Russell 1000 versus the

2000. I like that idea, too. And then

what are they trading at? They're

trading at crazy. The Russell 2000 is at

a record high right now and it's up 16%

year to date.

>> Yes, but I I would just bear in mind

that we we had a huge downturn coming

out of CO. So if you actually look at

the past four years, we're only up 5%.

On the Russell 2000 because there was

this gigantic trough.

>> It's at a PE of 38 up from its 10-year

average of 16. I mean I I just hear

demon in my ear. the these are companies

that are smaller and have in many cases

they don't actually have earnings

because they're a lot smaller which is

why we're seeing that disparity. But I

also think that that's that's a fair

that's what you're saying is all true. I

don't have like 100% conviction in small

caps. But I think that if if you don't

have that exposure already, you should

certainly be considering it purely for

the sake of diversification.

>> Mhm. Final thing I would say and you

inspired this is just investing in

yourself. I mean Asworth told us there's

no place to hide and then we had this

whole episode where we were asking the

question what are you supposed to do

with your money if there's nowhere to

put it if there is no place to hide and

he talked about collectibles. I

personally just can't get on board with

that. Um it just goes against everything

that I believe in. I think a better

strategy is what you're doing and that

is if you don't know what to invest in,

you might as well invest in yourself.

And I think there are so many different

ways to do that. As you say, you're

investing in your company that you have

control over that you own that you can

steer the trajectory of. But I think

also if you're just a regular person,

maybe it means investing in some

coursework or some certification or some

education. Like maybe you were thinking

about taking a finance course, an online

course, but you're like, I don't know if

I should be shelling that out right now.

Well, if you have cash, you're not

you're not sure where it goes. That's a

great this is a great time to consider

that. I also think you could even think

about your health in this way. Like

maybe you were thinking about a gym

membership and but you were like, I

don't know, like I'm kind of worried

about savings. Well, if we're in a

subdued market, then actually now would

be probably a good time to consider

getting the gym membership. You can

always cancel, but that's an example of

an invest investment in yourself, which

it makes more sense when you look around

and you see that there is a market in

which the returns are probably not going

to be stellar. So, I really like that

point. I'm not sure exactly what I'm

going to do to invest in myself, but I'm

going to really think about it and

consider ways that I could take some

money and figure out how to upgrade

myself.

>> I love that you've convinced me. I'm

finally That's it. I'm going to get the

scrotum lift.

[laughter]

We just had our first spit take from

Edson. [gasps]

[panting]

Yeah. Invest in yourself. Join a

membership. Go to business school. Nope.

Staple the twins back [laughter] a

little bit and bring them up. Bring them

bring them up. Bring them [laughter]

high and proud.

I need a vacation. [laughter]

I need a vacation.

We'll be [music] right back. And for

even more markets content, sign up for

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We're back with Profy Markets. A couple

of weeks ago, it looked like Netflix had

effectively won the bidding war for

Warner Brothers Discovery. But last

week, Paramount blew the process open

with a $18 billion hostile bid, asking

one of the shareholders directly to

choose its offer instead. And now it

looks like investors think the fight

isn't over. Warner stock surged around

4% last week and then again later in the

week as Paramount quartered investors in

New York. So Scott, last time we talked

about this, we said Netflix wins. That's

it. done and dusted. Now Paramount's

back and now on top of that, Wall Street

seems to believe that this is only just

beginning. The bidding war is going to

escalate. Hence why we see that the

stock is moving upward, was moving

upward throughout the week. Um let's

just get your reactions to what's

happened in the past few days.

>> Well, one, don't listen to me. I I the

Ellison's are going to walk away with

it. I thought then, oh, Netflix is one.

Oh, no.

Look, this is

this is an interesting case study and

why acquisitions almost never work.

Two-thirds of the time they end up being

not accreative to shareholders, which

means if you could go back in time, you

wouldn't do the acquisition. Uh people

still continue to do them for a few

reasons. Uh one, a good acquisition can

be a tectonic shift. I I think the best

acquirer in history is probably

Zuckerberg.

>> Yeah, true.

>> He bought um Instagram for a billion.

It's It's probably worth somewhere

between 200 and 500 billion on its own

at least. Uh, by the way, a month later,

Marissa Mayor bought um Tumblr for the

same amount of money and it got sold for

1.1 billion and it got sold 7 years

later for $3 million. And at the time,

they were both seen as comparable. And

he was pillaried for the boy king

spending a billion dollars for a company

with 19 employees. And then he went on

to spend $19 billion for WhatsApp, which

I think is going to end up being worth a

lot more. So the the draw or the thought

of making a big changing, you know, kind

of groundbreaking acquisition is really

seductive. Uh it also can make sense in

terms of a roll-up strategy. So I was on

the board of a yellow pages company. It

was pretty simple. We'd wait till we got

a call from every Yellow Pages company

in the world who said, "We want out.

We're dying." We're like, "Okay, we'll

buy you. We can cut costs faster than

your business is declining which makes

it accretive to shareholders. If you'd

bought a Blockbuster in 1999, you could

buy them for two times cash flow and

they went out of business but they

didn't go out of business for 13 years.

So you made 3 to 5x your money. So there

are rollup strategies when you're trying

to acquire growth assets. Occasionally

you connect and you hit a grand slam,

but most of the time you strike out and

a lot of the time you get beaned in the

face. So these things one they

underestimate the complexity of the

integration and cultures they

overestimate the synergies but the thing

that's going to make this acquisition

out uh looking back and think this

probably was a bad idea and just to

clarify for both bad idea for both N

you're talking about both companies

right now whoever gets it

>> I think the only possible winner here

from a shareholder standpoint might be

Netflix because they might make the

argument that with whatever it is a $400

billion a 25% dilution wasn't

gamechanging and we have wrapped up and

put a bow on streaming and my co-host at

Pivot would say she had a really good

argument that Scott it's not about

streaming it's about the market for

eyeballs and YouTube is a bigger

competitor and she doesn't believe it

should be blocked in antitrust.

>> Totally disagree. Yeah, I think it

probably should be blocked because I

think original content creation based on

a subscription model is its own unique

market and that basically Disney,

Disney, Hulu, Paramount Plus are all

basically Apple TV are all basically

[ __ ] They're all going to be the

seven dwarves and uh and and Netflix/HBO

would be an unassalable Snow White, so

to speak.

>> But sorry, I interrupted you. you were

going to say what we will look back at

this being a bad deal for a reason.

>> It'll be a bad deal for shareholders, I

think, for almost in any scenario

because there simply put, it's not that

these aren't great assets. It's not that

there aren't synergies to be to be

garnered. But the only way it makes

economic sense is if it's a non-economic

deal for consumers and labor. And that

is it consolidates a market. And my fear

around Netflix, and I love Ted Sandos, I

love Netflix. My fear is that

consolidating taking Walmart and the

LVMH of streaming will effectively

create so much pricing power that it'll

leak advantage from labor and consumers

to the shareholders of Netflix. And

there's always attention, but I think

the FDC and the DOJ, should they do

their job and not have a president away,

shut the [ __ ] up. The president should

have no view on this. I'm going to be

involved. Why? So you cannot pay the

subcontractors and take the company

bankrupt. Anyway, th this is this is

what should happen. Highest bidder wins.

This is a dual this is not a dual class

share company. Whoever shows up with the

biggest check gets preliminary approval

for the deal. They then have 12, 18, 24

months to close. It goes under DOJ and

FDC review where very smart economists

and consumer behavior experts come in

and say, "Is this a distinct market or

is the market all streaming and all

video and Tik Tok and whatever it else

you do and we should let it go through

and then it should go under a CPHAS

review or a national defense security

review where if it's paramount and Jared

Kushner is part of the deal on raising

money out of the Gulf, does that present

a security concern? turn when the Gulf

states have influence or control over

CNN. So, we have very smart people who

are supposed to make these decisions,

not a guy who's nodding off in cabinet

meetings and knows nothing but how to

put companies out of business or

podcasters. We can pontificate on this,

[laughter]

but we should decide. But my sense is I

have a view on who would be the right

owners or the wrong owners. But my I

mean for Cara really doesn't want the

Ellison's to own it. And I'm like you

know what David Zaz loved David Ellison

pick your poison. I mean I don't I don't

we don't get to decide who we like or

don't like. I like Ted Sandos. That has

nothing to do with it. The question is

who shows up with the biggest check and

who can who can convince regulators that

this will not be bad for competition and

increased prices and and seed advantage

from labor and from consumers to such an

extent that it's only the shareholders

of of Netflix um that win here. But when

I have been on boards and we've acquired

companies, they almost never work

because and finally the thing that has

entered the room here that will make

this likely a nonreative acquisition for

almost any of these players unless it's

what I call a monopolistic acquisition

see above Netflix is the thing that's

entered the room here is testosterone.

I can guarantee you that all of the

biders had a maximum number that they

told their bankers 90 days ago. Okay, if

we can get it for up to if we really

stretched uh Larry and David have said,

"Okay, to the bankers, if we really

stretch, we offered 19, we could maybe

go to 22 or 24." Every one of these

players has had a maximum number. They

have all blown by their maximum number

because this is what bankers are great

at. They get you to climb a wall of

valuation. When I was selling my company

to Gartner, the illusion of a third and

a fourth bidder, okay, can you do this?

Can you do this? Do this. And then

finally when they walk away, okay, if

you just come up 10% it's yours and we

can move on. And their greed glands get

going. And if David if if Paramount gets

this,

then David Ellison is on the cover of

every magazine like the winner, the

king, the new king of Hollywood. What

the [ __ ] does he care about

shareholders? He's a 34 year old looking

to like get out of the shadow of his

father and and you know take take

I don't know Sydney Sweeney to the

Oscars. He doesn't give a [ __ ] if this

is a low ROI for shareholders. His

father's much more shareholder driven.

But even his dad might be talked into,

we're so close, Dad. If we just come up

a little bit, we win.

>> And that's why his dad ends up calling

Trump saying you can't let this happen.

That's right. The fact that the

Ellison's are even saying that this will

pass regulatory muster because we have

our thumb up the ass of the president is

an acknowledgement of the kleptocracy

and cacostocracy we now have in America.

Highest bidder that clears regulatory

review both for defense and antitrust.

That's how this should go down and

unfortunately it's not. But what's h

I'll give you an example. I met a woman

named Ruth Peret who's the CFO at

Google. Total adult in the room. she

showed up to Google, if she was in

charge, if she was the CEO of any of

these companies, that company would have

already said, "We're out. Thanks very

much. Enjoy playing in traffic." And

there's something about men and

testosterone. And it's okay if you

distinguish between the sexes as long as

you're critical of men, so I'll do that.

[laughter]

And that is these guys have now got

their fly down and they're all sword

fighting with their dicks. And they all

want this thing distinct to the fact

they're probably going to overpay for it

because they all want to be the winner.

And Ruth Per, the CFO of Google, when

she showed up to Google and Larry and

Sergey were spending hundreds of

millions, if not billions, on like

curing death, she's like, "Okay, it's

time to pretend we're grown-ups and they

were fiduciary for shareholders. Stop

all the stupid [ __ ] you are spending

way too much money on your pet projects

and pretending that shareholder money

that you are not a fiduciary for

shareholders. And she imposed real

financial discipline. That was probably

probably the most accreative thing that

happened at Google in the last 10 years

was the CFO who came in and said, "All

right, let's pretend we're adults and

this might be fun and everybody, Larry

and Sergey, want to pretend it's a good

idea cuz you're you're the largest

shareholders here. It's not. It's

[ __ ] stupid. Stop it. It's not good

for shareholders. And she cleaned out a

bunch of these projects. These guys have

now lost all sense in my view with maybe

the exception of Netflix because if they

can get this thing by Ted flying to

Washington, I underestimated how

Mavavelian Ted is or how shrewd he is.

He went and he met met with Trump

realizing if I don't kiss this guy's

ass. I mean this has now become

all of these guys trying to trying to uh

curry favor with Trump to make sure they

get regulatory review which is again see

above

you know oligarchy cacistocracy

but this is they have lost it at this

point. It is now hormones have taken

over, competitive gene has taken over

and they are all all they are doing is

making one of uh crowning this will be a

bad acquisition maybe with the exception

of Netflix if they can impose true

monopoly power which they might be able

to do which will be bad for consumers

and Hollywood and the creative

community. Um but this will be a bad

deal at this price for almost any other

acquire. just won't pencil out.

Basically, this whole process is going

to create the wealthiest man who

destroyed the most shareholder value,

and that is David Zazlav. David is going

to walk away. He is a beast. I

completely underestimated him. All the

things I thought he was going to screw

up. He's completely proven us wrong.

Like, that absolutely crushed it. He's

going to make a billion dollars for

dramatically underperforming the S&P for

five years

>> by turning this thing into a into a dick

measuring contest. That is what he did.

And and I thought he wouldn't be able to

do it. And he absolutely did. The the

testosterone is pumping. It's now he's

turned it into a bidding war. And I I

remember thinking, he's trying to make

this happen. It's not going to happen.

They don't want it. They don't want it

enough. He did make it happen. I just

wanted to make a a a little amendment to

something you said earlier about you

know I think you correctly point out the

question is like who shows up with the

biggest check and that is true and in

this case Paramount has showed up with

the biggest check they've offered $30 a

share Netflix offered 2775 so they have

the biggest check but the qu so you'd

think like oh so Paramount has to get it

the other question that is part of the

calculation just in terms of fiduciary

responsib ability is which one is more

likely to go through. So there are

various concerns with both. With

Netflix, it's really an antitrust issue.

With Paramount, it's also kind of an

antitrust issue, but less because

Paramount is smaller. But also, as you

say, a national security issue because

Jared Kushner is out collecting funds

from all these sovereign wealth funds in

the Gulf and do we want uh the Gulf

States having an ownership in in in our

largest media company. So that's the qu

that's the calculation that if they're

doing this fairly will go into the

review and it could be that they say

we've decided the Paramount deal is less

likely to go through and that is where

the Trump relationship starts to to play

a role. If they do believe that there is

a higher likelihood because Trump likes

Ted Sandos more or Trump likes David

Ellison more then that will be part of

their calculation too. one wrinkle that

should be acknowledged. Also, Jonathan

Caner pointed out, maybe we're

overestimating

Trump's power because Trump could say

no, but then the courts could say yes. I

mean, the courts could just strike down

his opinion. I always get kind of like,

well, how how much faith do we really

have in our court system to sort of hold

the president to account? But there are

all of these all of these questions

happening in here. And and it it is a

really interesting question of fiduciary

responsibility. What is the fiduciary

responsibility and what is the best

decision because it's not just the

money, it's also the likelihood of the

deal happening. This will take two years

and in

I think six months the Republicans are

going to lose the gavl in the House and

I think in 18 months there's going to be

open all of a sudden the Republicans are

going to see the writing on the wall and

go this guy's a lame duck and he's

nodding off in every meeting and I I'm

going to speak out again. This thing is

going to become so politicized and the

political force of the last 10 years,

Donald Trump, is going to be massively

neutered. I think his power is only his

power and influence is only going down.

But you're going to see

it's going to be fascinating to watch,

but I don't I don't I mean, keep in

mind, Ed, this is a stock that 15 months

ago, 18 months ago, was trading at eight

bucks. It's now at 29.

>> I got to tell you, I'm such a David

Zazzloff fan at this point. I've

completely turned around on it. I think

he's an absolute legend. I think he's

like the worst and the best at the same

time. I'm just in awe of how he's run

this auction.

>> He's the Adam Newman of media. I'm going

to figure out a way to lose other

people's money and make a [ __ ] ton of

money. If he just surfed and smoked a

lot of pot, he and Adam should hang out.

He's turned it into that trophy asset

that you were talking about in the

previous segment that all rich people

want and crave because there's scarcity

and they want to be there, they want to

be involved. He's somehow done that and

people thought it was just this crummy

little media company literally 12 18

months ago.

>> Yeah. But he's done more than that. He's

cherrypicked a board of people who are

willing to give him ridiculous

compensation for adding very little

shareholder value.

>> But he he did he did come up with the

shareholder value. He's done it and he's

done it in about a couple of months.

>> I'm sorry. What was it acquired when he

did the merger? What what was the stock

price at?

>> That's a great question. Let's find out.

>> Oh, was Okay, hold on.

When they announced the deal, Warner

Brothers shares were at 2775.

So, basically, the company's a little

the guy's going to make a billion

dollars [laughter] for adding no

shareholder value when the S&P is up

50%.

>> Take it back. [laughter]

>> Yeah. No, no, no. He's the most overpaid

investment banker in history. That's

basically what he's done here. And he's

created a bidding war. And he's found

he's found friends and family to stock

the board and say, "Okay, tell you what,

you don't add any value. You've actually

underperformed the market and we'll give

you a billion dollars." That's what he

There's a skill defining total suck of

fans and just basically saying in every

board meeting, your job is just to

swallow hard. [laughter]

>> I'm torn. I'm torn. I I think I respect

him. I think those those photos of him

with all the all the Hollywood stars on

sitting courtside at these basketball

games. I don't know.

>> Let me think. I'm producing a show for

Netflix and I just said Netflix

shouldn't get this from Monopoly

Behavior and the other bitter was HBO

and I've just said David Zazzov has

found a board members of People who

swallow hard. What do you think my

future in Hollywood is looking like

right [laughter] now?

>> Council culture is dead. You're good.

>> No, I'm not worried about being

cancelled. I'm worried about a bunch of

old dudes saying [laughter] we don't

need this [ __ ] dick around. We don't

need this guy around heckling from the

cheap seats.

>> Fair enough.

>> Oh [sighs] god. It's lucky I own a big

piece of art. We're going to need to

find out what that piece of art is. Are

you going to Are you going to tell us?

>> It's a Brazilian artist. I don't like to

talk about my art. I have It's my second

piece of art. My other piece of art is a

picture of Otto Frank sitting in the

standing in the attic where he and his

family hid until they were betrayed by

people and were shipped off to

concentration camps. I just thought I'd

change the mood here for a moment. And

no joke, no joke, I look at this photo

every day and it makes me feel grateful.

>> That's a good piece of art. I'm going to

change the mood dramatically here. I

think everyone should find something in

their life, a piece of art, a picture,

and it can be sad like this one is, or

it can be inspiring, but I think

everyone should try and identify an

object in their life or something and or

a note or something and it that makes

them feel good about themselves, good

about their situation, grateful, and

look at that thing every day. I look at

that photo every day. It's first thing I

do every morning is I I walk down the

stairs and I stare at that photo for a

good five or 10 seconds.

>> Yeah. I have a friend photo of you in my

office does the similar thing for me

[laughter]

>> and you realize

>> I will I can get through this.

[laughter]

>> I can

>> I can get through this.

>> All right. We [laughter] Let's take a

look at the week ahead.

>> Thanks for mocking my moment, Ed.

[laughter and gasps]

>> Okay. All right. We'll see the

employment report for November and

partial October data will be included in

there as well. We'll also see inflation

data from the consumer price index for

November. And Nike, FedEx, and General

Mills are all reporting earnings. Scott,

any predictions?

>> Uh, my prediction is that the best

performing assets or investments are

going to be in weird investments that

most people don't have access to, but in

Venezuelan assets. I think that there's

going to be a regime change and an

oilrich and culturally rich Venezuela is

going to boom over the next 3 to 5 years

and people who take enormous risks and

find a way to invest in Venezuela are

going to come out [music] uh with just

extraordinary returns.

Thank you for listening to Profy Markets

from Profy Media. Tune in tomorrow for a

fresh take on the markets. [music]