Prof G Markets - Navigating The Most Top-Heavy S&P 500 in History

Episode Date: September 8, 2025

Scott and Ed break down what the deepening alliance between China, Russia, and India means for investors. They then examine the growing concentration of the S&P 500 and why the market looks more fragile than ever. Finally, they dissect the Trump family’s latest crypto play and try to tally up just how much the Trumps have made across their crypto ventures. Subscribe to the Prof G Markets newsletter  Order "The Algebra of Wealth," out now Subscribe to No Mercy / No Malice Follow the podcast across socials @profgmarkets Follow Scott on Instagram Follow Ed on Instagram and X Learn more about your ad choices. Visit podcastchoices.com/adchoices

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or is it croissant no matter how you say it start your day with freshly cracked scrambled eggs loaded on a buttery flaky croissant try it with maple brown butter today at tim's at participating restaurants in Canada for limited time today is number 12 million dollars that's how much the US Open made off the honey deuce cocktail last year at I went to the US Open last night

and I felt right at home as if I was in a key party in a suburb A bunch of rich white people and a lot of balls flying around. I made that up, Ed. Pretty good, right? Pretty good. Pretty good. What's going on?

How are you? I'm doing well. What do you think of my jokes, Scott? I think they're lacking. I think... Really? Do you need more? We need more dicks.

More sex jokes. Yeah, we'll look, Ed. You did not win most comical in Steve Martin in your high school poll. So you have sort of an unfair benchmark. It's, you know, you are kind of, I don't know, you are Fred Armisen to my Dave Chappelle. I don't know why I brought up Fred Armisen.

I'll take Fred Armisen. Fred Armisen's great. He's funny. That was the wrong one. Who's not that funny? I don't know. Sinbad. You're sin bad to my.

No, no, no, Fred Armisen. Fred Armisen works. Yeah, he's pretty good. your first choice. It was pretty funny. So let's talk a little bit about our team meeting last night, where we outlined the vision for Prop G Media. What did you think, Ed?

Critique the strategy and the plan from your dear leader. I think the strategy is on point. I'm wondering if you're going to disclose the strategy on the live podcast. Hmm. You mean this podcast? Yes. Sure. We generally hadn't planned that.

I'm... Well, yeah, because I could explain it for our viewers. Why don't you give it a shot? I'm curious what you're playing a role in this. I mean, you're a minor employee, you know, 15 bucks an hour, but we value everyone's contribution. It's the little people we love, Ed. It boils down to we're trying to build some enterprise values

so that we can make some equity and get sold. That's basically it. Let's probably a little more transparent than I would have guessed. That's the vision for the company. So what Ed is referring to, I think what Ed meant to say. So we're trying, this business has grown faster than we thought, and the difference between a practice and an enterprise or enterprise value is it's not dependent upon any small number of individuals. The majority of companies fail, but the vast majority, one in seven companies succeeds and then one in seven of those get to enterprise value.

What do we mean by that? I talk to a lot of small businesses that have great small businesses and they're frustrated that have many able to scale. And typically it's because they haven't done a couple things. haven't been, one, able to scale the company beyond a few very talented people. And we're trying to figure out a way to have multiple voices and distinct and somewhat, I don't know, singular cash flows. So we have Prop.G in the Prop.G universe office conversations and raging moderates is another voice, and then no mercy, no malice. And then we have Prop.Gee markets, which has grown like gangbusters. We're launching a China podcast, and we'll probably launch another voice in 20,

And my feeling is we need to get to five or six distinct voices because if you're dependent on Tucker Carlson, the newscore has no enterprise value. And they're not. When he left, they were just fine other than supposedly their viewership is down about 37% this year, but that's a different talk show. So we're trying to figure out a way to develop enterprise value. I want to position us as a fantastic enterprise. It maintains 40 points of EBITDA margin, but has real enterprise value for potential acquirer. But this has turned from a, I thought this was going to be a fun way to, you know, pick up chicks. And it ended up being actually a pretty big business. And so now I'm thinking about how we developed true enterprise value and economic security for you and the other 25 people at this Joey bag of donuts operation. Anyways, that's that. And then we gave, and we gave a watch to Mia Silveria. That's the most important part of the meeting. Mia got a watch.

Yeah, who I realized has now been with us five years. So that was kind of the highlight. But it was good to see everybody. When did you make this switch in your head? Because I'll just say it from my perspective. I've always thought that this is the direction that we've got to head into. We've got to become a proper media company. We've got to build this into an enterprise.

And I've always felt that I've been pushing against your feeling, which is for the longest time, has been, I don't want to go through that bullshit. I've already built a bunch of companies. Let's keep it small. Let's keep it simple. I don't want to deal with M&A. I don't want to deal with other investors.

Young expecting employees that are hard to manage. Young expecting employees talking about equity, trying to negotiate with you. All the stuff that comes with building an enterprise, which, and I'll just say, I mean, I think this is totally the right strategy. We just saw Barry Weiss, who just sold the free,

press basically did the same thing that we've done, sold it for $200 million, and she's going to sell that to David Ellison. But when did it switch for you? Because I feel like you've been resistant to enterprise value. The people who control this company is one people, and that's me. And what CEOs and controlling shareholders have a tendency to do is cloak their own personal desires and business strategy. By the way, that was one of your lines from our business meeting last night. That was the best line of the night. Quite frankly, I had to be blunt, my greed glands have gotten going. And that is, this business is just a bigger... Finally, I've been greedy all these years. Yeah. But this business started as, it was basically the podcast were a marketing channel for my

speaking gigs. And also, let's be clear, I'm more concerned about me than any of you, so I don't want a virtue signal too much, but I do want to create economic value for other people and what I wish someone had done for me that I didn't realize is the way you create economic value is through equity because current income you'll spend unless you're much more disciplined than most people and we have a I think a generous 401k on matching plan to try and do four savings but I have never been able to make money on current income I spend it the way I've made money is by building equity that was your other best line of the night yeah I just spent it all I've spent it all on beer and pussy anyways and worth it so worth it so worth it so worth

it. Anyway, where were we at? So the way you build equity in economic security for other people is through equity, because you can't spend it. It grows tax deferred, and then it has better tax treatment, and it's lumpy, so you get a slug and hopefully can put it away. And I look at what's going on in the media ecosystem. I see the traditional media ecosystem collapsing, and they are going to have to pivot to growth

vehicles. They're going to have to go in search of growth. And right now, podcasts are the fastest growing ad medium. Our viewerships up 20 percent. Our revenues are up 40 percent. I think, to be fair, I think Trump is totally inspired a boom in podcasting because everyone realizes that the most influential voters and consumers are turning to podcasts. So quite frankly, I'm like, I said to Catherine, I'm like, do we have one more in us? And so here we are back on the fucking hamster wheel with metrics and dashboards and, you know, trying to figure out if we can maintain this breakneck level of growth, and I'm going to have a stroke at my desk, as I promised myself, I wouldn't. But yeah, I'm really, what has changed? What's changed? You and Claire, Jess Harloth,

George Hahn reading his thing, Catherine Dillon figuring out, I mean, our speaking events or books, our newsletter, everything, it sounds like a bit advertorial, so I'm sorry, but I do think there's a business learning in here, and that is, just as Ray Dahlia said, the key to building wealth is 12 distinct cash flows that are somewhat uncorrelated, the key to moving from a practice, which this is, we're always going to make really good money because I'm fucking awesome and we're monetizing my brand. That's the bottom line. But the way we create shareholder value is by creating distinct voices that are unique on their own. And part of Scott Friogus, in addition to the fact I'm lazy and I'm really good at not working, is to show that

I cannot wait. We're going to call Scott Free August. This is the part of the business plan. This is the business strategy. I'm sort of... Okay, let me go for this way. It's a free gift purchase. All right, let's get to the news.

Now is the time to fly. I hope you have plenty of the world at all. Last week, Xi Jinping, Vladimir Putin, and Narendra Modi were photographed together at China's Shanghai Co-Oafo Operation Organization Summit. It was Modi's first trip to China in seven years, and the two leaders struck a notably cooperative tone. She urged China and India to be partners, not rivals, and Modi said there was a, quote, atmosphere of peace and stability between the two countries. The meeting came just days after Trump's new tariffs on India took effect, hiking duties on some

exports to 50 percent in retaliation for India's continued purchases of Russian oil. Later in the week, China staged a military parade to commemorate the 80th and anniversary of the end of World War II, and she stood there side by side with Putin as they watched the display. So, safe to say, China, India, and Russia have formed an alliance. Scott, we got your reactions to this last week, but let's just get your top line reactions to the military parade. You know, hindsight is 2020 and fairly blunt or not very polite, and I think we're going to see potentially if America struggles and doesn't do as well relative to other nations. in the next 10 years. And it's always a bad idea to bet against America. But I think at some point

when you try hard enough to snatch victory from the jaws of defeat, you will win. And I think that's what's happening right now across a number of really stupid systemic and structural moves. I mean, it's basic strategy. Both the settlers, the British, the French, when they tried to, when they warred with Native tribes in Canada, the settlers in America, the first thing you do is you get your enemies fighting with each other. The last thing you want to do is crystallize and get your enemies to cooperate. And that is just, that's the worst of all worlds. And Nixon understood this. He thought, better I open up China and China turns west towards me versus Russia. We have done exactly the opposite. And when you bring these three countries together, I mean, you're talking

about a serious, I don't call it Axis of Evil. Call it an Axis of adversaries. But W coined the term axis of evil. And he thought the scariest thing was North Korea, Iran, and Iraq. Okay, those three countries basically have about a trillion dollars in GDP combined. Iran has some scientists, some very astute scientists. North Korea has the ability to be kind of blustery and aggressive and quite frankly kill a lot of its own people. That, believe it or not, I think, is a competence that we do not have or an asset we're not willing to bring to the four. And then they had some energy out of Iran and Iraq. Let's look at these three nations. 20 trillion dollars in combined GDP. Unbelievable tech.

and capital coming out of China, massive energy coming out of Russia, and the largest emerging consumer population in the world in India. So you bring these three things together. It's champagne, cocaine, and nitroglycerin. I mean, these three, this is a formidable force. This is kind of a breakdown or at least a shakeup of the world order at this point. I mean, if there was ever a moment where the axis of adversaries, as you, put it, sort of publicly and formally announced their alliances with one another. It was this week. And as you say, you know, it's China and Russia and India coming together. But it's actually not just them. I mean, you had the SCO summit, which brought together, yes, China, yes, Russia,

yes, India, but also Iran and Turkey and Egypt and Pakistan and many, many other world leaders. In fact, if you put those nations together, or the SCO nations together, you're looking at a group that represents 23% of global GDP and 43% of the global population. So that was the SCO summit. Meanwhile, you have Modi riding in the back of a car with Putin. You have that incredible photo of Modi and Putin and Shield standing together, chlamming it up together. then after that you have this military parade where Xi Jinping is walking down the Red Carbett yes with Vladimir Putin but also with Kim Jong-un

there have been multiple photos it's the two of the morning together and then it's the three of them walking together and by the way you had many other world leaders present for that you had the president of Cuba you had the leader of Zimbabwe the leader of the Democratic Republic of Congo You had the senior general of Myanmar. That's their military leader. You had the president of Serbia.

You had the prime minister of Slovakia. I mean, this was basically the biggest global get-together of the year, the summit combined with the military parade, and most importantly, America had nothing to do with it. I mean, of course we want to guess, but usually America is in some way hosting these kinds of things. We're kind of bringing the world powers together. But instead, no, we are isolating ourselves.

We're putting up tariffs on not only our enemies, but also our friends. And then meanwhile, China is off in China hosting this big party. And yes, you've got India, yes, you've got Russia, but then you also got basically the rest of the world. And this is turning into, as we've talked about, It's that great Norm MacDonald joke. It's America, going to war with, wait for it, the world, which is never a good idea.

And so I just think that that's an important thing to highlight, and it's important that we talk about it, because if that is what is happening, the investment implications go, I mean, they are endless, right? I mean, how are you supposed to, as an investor, say that is where we're headed, how are you supposed to react to that as an investor? Probably something to do with commodities or energy.

I mean, energy is always dictated kind of the flow of power, and I think it will with this alliance. But, I mean, I think of that summit as like a common, it's like if all the bond villains decided to go to Burning Man, it was both scary and kind of cool, whereas our summits now feel like, I'm going to the U.S. Open tonight, it feels like watching a,

doubles tennis match. And that is, it's all white people who pretend to get along but really fucking hate each other and think that I should have taken that shot. I just, our summits feel so stilted, so dystopic, so passive aggressive with a bunch of northern European leaders in their pantsuits just trying to like not throw up in their mouth. Because they're all, they all got to like put up with this bullshit idiot. And they're like, oh my God, they're like that cool get together of villains and minions? Like, it's like monster school or villain school. They were having a genuinely good time together.

They have Riz. I'd like to see what kind of after-party shit is going on. What kind of crazy shit is going on, you know, I don't know. I mean... We'll move on to this, but I'm glad that you mentioned up energy before because I think that is a huge piece of this. I mean, we talk all the time about oil diplomacy, energy politics, all of that. I mean, that really has been the deciding factor in geopolitics over the loss.

call it 50 years, perhaps, throughout all of history. Just some stats here, as we've discussed before, China's energy production is double that of the U.S., their electricity production. We are at 4,500 terawatt hours. China is at 10,000. Their output is more than doubled in the past 15 years. Ours has basically flatlined.

It's up around like 5, 6%. So there's that. And then who are the next, the next biggest energy-producing nations in the world after China and then after America, number three, India, number four, Russia. So you've got that alliance forming. Meanwhile, as I said, as we pull back from clean energy

for kind of bullshit political reasons because we've decided that clean energy is woke. As we do that, China is, of course, doubling down. They produce more than 80% of the world's solar panels, wind turbines, and storage batteries. They've invested $10 billion so far this year in clean energy projects abroad, not just in China abroad, which is a record high since the initiative, since the Belt and Road initiative. We've seen 160 clean energy projects launched by China in those other SEO countries in the past year alone. And as we've said before, they are all working together on this. They are all,

I mean, Trump put it best, they're conspiring against the U.S. So China and Russia, they signed this gas agreement at the summit. India is now Russia's largest oil buyer. Russian oil now covers 40% of India's demand. And I know Trump is putting up a fit about that, but the point being, whatever you're doing is not working. I mean, placing tariffs on India, and then they go off to Russia, and they decide to basically up their oil agreements. The point being, whatever you did, it didn't work. So they're all working together on multiple different fronts, but I do think probably the most important one is energy. I really think that that is the issue of the generation. And they're going to win, probably. I mean, unless we get our act together,

we can keep saying drill baby drill for political purposes. And I agree, let's drill, let's get the oil out of the ground, let's not lose our edge there. But then you also got to invest in all the other stuff. You have to invest in clean energy, in solar, in wind, in nuclear. You have to double down on all of this stuff. And they know this. It's scary on so many levels. And I think when you look at the data and you look at just how much energy and electricity these countries are producing and how important that is in the age of AI, it becomes even more scary. There's already a short-term impact. Just in the last week, India, one of the largest weapons purchasers in the world, announced they are going to no longer or shift some of their

purchases from U.S. weapons manufacturers to European. And then I had one of those kind of aha-slash-oh-fuck moments. I was in Brazil last week, and I remember I take Uber's down there, and it's usually a Japanese car or a small American compact. Three times I got into a B-Y-D. And I asked the guy, why do you like this car? It feels like a Model 3, the low in Tesla, and he's like, oh, I got it for $19,000. And it's a nice car, no gas price, right, because it's electric for $19,000. And also, when we start saying to Brazilians, we're going to economically declare economic war on you, do you think Brazilians are in a hurry to buy GM cars right now?

These are, the goodwill erosion will directly, directly manifest itself in lower sales across traditional companies in the United States. And the thing I hate most about this is it'll be incremental, and that is humans are adaptable. What do I mean by that? In the movie The Sting, I think it was Paul Newman said, the ultimate sting is that the mark doesn't know they've been conned, right? They don't know they've been stung. They don't know they've been conned. And we're going to lose business so steadily that it's not going to reverse engineer

to anyone's summit or anyone tariff. It's just we're going to start to notice that our GDP is going down. We start blaming each other, our employment rate, everything. Our growth slows, all of this stuff, and we won't have the money to reinvest and hire back these people to CDC. Anyways, I'm feeling, I don't know if this is, I don't know if I'm just hung over, but I'm feeling especially bearish right now. Because of what we saw. I mean, how could you not? I mean, like, we're not calling this the end of America, but we are just observing what happened last week. We just watched the whole eastern hemisphere of planet Earth get together and say, let's team up against the West. That's what happened.

So, yeah, this is not delusional of us to be worried about that. And no, we're not saying, short the S&P. That's not the point here. The point is, just look at what happened. Look at the Prime Minister of India visiting China for the first time in seven years. the guy who is supposed to be our ally and is now against the U.S. rubbing elbows with the leader of Russia and the leader of China and all of Asia. I mean, we're just observing.

But I don't doubt that someone will call you hungover, depressed, and TDS. Well, I'm all of those things, but it doesn't mean I'm wrong. The saddest thing about this was this summit, the motivating, inspiring fact, for the summit. It wasn't cooperation. It was to develop a countervailing force against the U.S. They were not coy about that. I mean, they pretty much said that straight up. I went to the Oasis concert on Monday. Oh, wow. And I was shocked. I thought, I always commit to stuff and then I regret it. And a friend called me like, a week goes, you want to go to Oasis? I'm like, yeah, that sounds like fun. And then Monday rolls around, I'm like, do I really want to go see

Oasis? And anyway, so went there. By the way, great concert. And the backstory is the most interesting thing. It's two brothers and they hate each other. Supposed one is very straight laced and the other is a total partier. And 20 years ago, they decided they just couldn't stand to be around each other and the band broke up, right? Kind of Yoko Ono, but with more talent. So they break up. And then 20 years later, a promoter came to them and said, we've done all this modeling. We think you can do a billion dollar tour and each of you can take home between 50 and $80 million. And they decided we like money more than we hate each other. Let's put our differences aside. All of these people these summits hate each other, except they hate us more now.

And they've decided to put aside their differences and go on fucking tour together. And it was totally unnecessary. We'll be right back after the break with a look at the growing concentration in the S&P 500. If you're enjoying the show so far, and you haven't subscribed, be sure to give proxy markets a follow wherever you get your podcasts. Support for the show comes from Vanta. This message is for startup founders, engineers, IT professionals, and business leaders who need to prove trust and manage risk efficiently. I know we have those people in the audience, so pay attention.

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Visit Mercury.com to apply in minutes. Mercury is a financial technology company, not a bank. Banking services provided through Choice Financial Group, Column A, and Evolve Bank and Trust. Members, FDIC. We're back with Profi Markets. The S&P 500 has never been more top-heavy. The 10 largest companies now make up a record 40% of the index's value. Investors are now worrying that the market's dependence on a handful of mega-cap stocks

could leave it exposed to a prolonged downturn. For example, on Wednesday following the Google antitrust ruling, the S&P ended the day firmly in the green. But it wasn't because of a broader market rally. Actually, the majority of the S&P declined that day. is because Google's 9% rally, which we discussed last week, that lifted the entire index. If you took Google out of the equation,

then the S&P would have been flat to down. And in fact, you can just look at the Dow that day. The Dow, of course, does not include Google, and it closed in the red. So we basically have a market now that is driven entirely by tech, or at least by a small handful of companies. And, you know, Scott, we already knew this, and we've been talking about it for a while.

But I think this new 40% number really puts it into perspective. That is how much the top 10 stocks account for the entire of the S&P 500. So that's Nvidia, Microsoft, Apple, Amazon, Alphabet, Meta, Broadcom, Tesla, Berkshire Hathaway, and J.P. Morgan. So if those 10 stocks alone, by the way, were their own stock market, it would be the second largest stock market in the world. it would be larger than China's stock market and it would also be larger than every European stock market put together. Those top 10 stocks also account for

56% of the S&Ps gains since April. So when people say the market's back, it's like, well, big tech is back. They account for 31% of the S&P's revenue growth in the past 12 months and 55% of the S&P's net income growth. in the past 12 months. So we are in, I mean, this is the big tech market. The stock market has become simply put, a tracker on the well-being of the top one,

maybe if you're generous, the top 10%, and shocker, spoiler alert, or at least on their economic well-being, they've hit 40 new highs this year. In addition, the market, the metric itself is a bit flawed, because as you referenced, half the value is in 490 stocks, and then the other half is in 10, and the U.S. market represents half of the market cap of the global economy. So if you were to wake up tomorrow and decide, okay, open AI is not worth 50 times revenue and Palantir is not worth 100 times revenue, and those stocks were to get cut in half, they wouldn't be cheap. I mean, you'd say, well, of course they did. So let's assume those 10

stocks on average get cut in half, that would mean a 10% decline in the value of equities globally. If you cut the valuation of markets globally by 10%, there's no way it doesn't affect the rest. Markets would be down 15, 20%. You're not only in a U.S. recession, you're in a global recession. The string that could be pulled here is simply put, one company announces they are scaling back their investments in AI because they are not seeing the return. to justify the investments they had made. The moment they do that,

and it becomes clear that they articulated what everyone else was thinking, and you see a drawdown in these 10 companies, you see a global recession. Nassim Talibat wrote a book on fragile and anti-fragile. Some industries are robust. The fast food industry is robust. Any one fast food company could go out of business.

Any four of them could go out of business, and you could still get your Chipotle or your coffee, it's a very robust business. Our economy is becoming less and less robust and that it is becoming way too concentrated, not only on a small number of stocks, but quite frankly, on AI. AI has become the litmus test for whether or not we're going to, you know, what the market is going to do. And I saw a stat, I had dinner with a friend of mine from Apollo, and he said, built into these valuations of these AI companies is the following. An assumption that, they will be able to cut costs or grow companies' revenues through the use of AI by $1 trillion

in the next 24 to 36 months. I don't see how AI is going to create a trillion dollars in new revenues for these companies, but I can see how it might cut $1 trillion in expenses, right? Lawyers, consultants. I mean, you just need fewer people, right? The arbitraging, again, of the means of production with AI. In order for these valuations to be justified, one of two things, two things needs to happen, either the valuations need to come down, or these technologies need to show a trillion dollars in efficiencies across their client base. Assuming a wage of high, high value, high salary employees, let's regenerate, $100,000, that's a destruction of 10 million jobs. In the U.S., 150 million people work. There are, let's call it, 50% of industry is somewhat

immune, right? Pipe fitters or chiropractors or masseuses are somewhat pretty much immune from AI. So let's assume half the industry is not directly impacted by that quote-unquote efficiency. That means you need to find 10 million jobs in efficiencies amongst 75 million employment bases across industries that are more vulnerable to this, the information intensive industries, right? If you lose 10 of 75 million jobs, you're talking about a 16% erosion or destruction and employment across what are traditionally higher paying jobs, whether it's media, banking, consulting, the legal profession, the medical profession, the health care profession, the pharmaceutical industry. So if you were to lose 16% employment in certain industries over a 24 to 36 month period, you would literally have, that's a total collapse in the employment dynamics of certain industries. So one of two things needs to happen. Either these stocks need to come way down, or we need to see a fairly massive destruction, short-term, in employment across certain industries. I think you're emphasizing the valuation and the premiums too much, because the valuations of these companies,

in some cases, they are totally insane. Like, you look at Palantir, the valuation just doesn't make really any sense. But you look at, you know, the mega-cap, big tech stocks, you look at, like, Google, for example, like, these are not insanely, these are not insane valuations. And what is really happening is, you know, in some cases, yes, you're getting a premium, but it's the businesses themselves that are completely crushing the rest of America in the real economy. And just this stat that I think is unbelievable. In Q2, last quarter, Mag 7 stocks, the average earnings growth year over year was 30%.

the average earnings growth of the other 493 stocks in the S&P, the average earnings growth was 8% year over year. So in addition to the way that the market is reacting to these businesses, the reality is like on the ground, these businesses are absolutely crushing. And we saw this kind of inaction last week when the judge in the Google case had said, Yes, Google is an illegal monopoly, and they have been for many, many years. And then suddenly when he decides what the remedy is, he decides just kind of let them keep doing their thing

because I don't want to jolt the system. That was his exact words was, we shouldn't jolt the system. And then Google rips up another 9, 10%. And so what's really happening here is, like, it's not just the market's perception of these companies. These companies are actually becoming the entire economy. And it's even spilling into like the consumer economy. I mean, you mentioned the idea that all these wealthy people whose holdings are all defined by those tech stocks. Meanwhile, I mean, those wealthy Americans, the top 10%, they're all doing very well right now because, as we've said, we've seen stock markets at all time highs because of how these companies are doing.

and they are now accounting for half of all consumer spending in America, which is a record high. So all of these things are kind of playing into each other. It's not just the valuations, that plays a role, but it's also the real economy itself, which is being dominated by this handful of companies, which makes the portfolios of rich people, it makes them feel a lot better, which makes them willing to spend, which makes them become an outsized part of the real economy and the consumer economy. And all of this is going into a place where, as you say, you talk about fragile versus anti-fragile, the way I see it is

this is all about diversification pretty much. And what we're dealing with right now is probably the least diversified market in history, not just in terms of the concentration at the top, but also in terms of the types of businesses that we're seeing. They're all tech companies. And I just want to compare this to the top stocks in the 1990s, and this kind of shows you how the landscape has changed. So I went through the top 10 stocks today. They're all tech. Apart from Berkshire and J.P. Morgan, you could arguably call Berkshire a tech company.

I mean, half of the – 20% of the portfolio is Apple. But here are the top 10 stocks in 1995. They are General Electric, Exxon, AT&T, Coca-Cola, Walmart, Walmart, and. Philip Morris, Merck, IBM, P&G, Microsoft. That is a balanced picture of the economy. That's tech, but also industrials, and energy, and telecoms, and retail consumer staples. It's diversified. It's far more representative of what is actually happening.

And so we've gone in the opposite direction. Now, what that means right now is we're all doing pretty well because it's AI season all these stocks are ricking but I think the thing that we need to keep an eye on and that people should be pretty worried about is like what happens when the AI story runs out and you are

so overweight tech and it's not just people who are into tech or consider themselves tech savvy it's the S&P itself 40% of which is completely reliant on this AI

story. What happens if that burns out. I mean, it's, it seems like one of the least stable market pictures we've ever seen. It's doing really well right now because it's AI season. But, you know, what happens a year from now, as you say, if one of these companies decides we're going to pull back on the AI spending? And that's the thing that I feel like we should be a lot more concerned about. The dynamic here that's driving these stocks is the following.

In addition to their earnings growth, which has been exponential, If you're the CEO of PepsiCo, everyone wants to hear your AI strategy. And the earnings call is, how do you reduce costs using AI, essentially? And it's not like, well, we're going to open new markets using AI or maybe some product development. He tries to put a good spin on it such he doesn't freak out his entire employee base. But so they start with we can reduce our vendor costs, you know, reduce costs on outside vendors because that's fine.

That's not going to upset my employees. if I say we're going to, I'm charging them with cutting their legal fees. How about PepsiCo spends $300, $500 million a year on legal fees? And he said using AI, I need you to get this down to 200 within 12 to 18 months to find more efficiencies there, quote unquote. And every time, the easiest way to say you have an AI strategy for PepsiCo is to say we are spending a billion dollars this year on AI investments. And the marketplace right now says, oh, we love that. We're going to take PepsiCo stock up a billion and a half dollars. So this is essentially, the market has been responding to these very aggressive Cappex investments in AI by traditional industry. And as long as

that continues, and what these companies are hoping is it is a self-fulfilling prophecy, that the more they invest in this, the more new uses, new ways of finding utility, finding innovation by investing in this very promising, exciting technology. That can all unwind just as fast. And again, when a big credible company says, yeah, we're scaling back our AI investment. But this has been, the exponential earnings growth here has been just absolutely staggering. And then on to what was our big tech stock pick of 2025? Because at the beginning of the year was trading at a P of 17. The average S&P stock is at 24.

I always use Dow and P&G as average kind of S&P companies, which are great companies. Would you rather own Procter & Gamble or the largest video? platform in the world, largest streaming service company in the world, the largest search company in the world, which has 96 times the traffic of chat GPT, by the way, five different companies with over 30 billion in revenue, five different companies with over 2 billion consumers, the greatest concentration of IQ and history since probably NASA, and it's trading for less until a few days ago when the cloud got lifted. And basically, the remedy of this quote-unquote monopoly finding was to slap them on the wrist. It's as if my 15-year-old came home and I found out that he'd been doing meth and knocking over 7-11 stores. And I came home and said, that's it. We're punishing you. We're going to, you can't be on snap to the next 10 minutes. I mean, it's like, I keep getting my heartbroken by the DOJ and the FDC. I thought finally they found them guilty. It's crazy. It's crazy. The monopoly abuse. And the remedy is fucking nothing. And what happens? Upon news of what the

remedy was going to be, i.e. nothing. Apple and Alphabet added a half a trillion dollars in market cap. I want to know what on earth happened to Judge Amit Mehta in the past three months. Did someone show up and put a gun to his head? Peter Thiel. Peter Thiel? Yeah. Was it Peter Thiel? Was it J.D. Vance? I mean, who was it that got inside of that guy's head and said, yes, we recognize that you just declared Google an illegal monopoly, but, you know, you can't shake the system up too much, that would be too crazy. They went, oh, my God, you're right. And he decided to slap him on the wrist. What the fuck happened?

We had someone at our team meeting last night whose mother recently passed away and he inherited some money and he asked me what to do with it. And I said, well, the smart thing is just by two or three fairly non-correlated ETFs in Vanguard. I'm like, but personally, just by four or five monopolies. Just pick your favorite monopoly because while the S&P's gone up, you know, 8 or 9% over the last 10 years, the majority of that has been driven by a small number of companies. And I don't see getting any different.

There's nothing in the way. Not only is there nothing in the way of these guys, but this tariff nonsense is especially taxing. General Motors has to figure out a way to deal with these tariffs with products that go back and forth over the Mexican and Canadian border sometimes 10 times. The tariffs don't affect meta. They just not, I mean, the tariffs don't really affect Google. There's no, if you're watching a YouTube video, to the best of my knowledge, he's talked about it, but it hasn't happened. Talked about it for a moment, and that shit went away. They don't have to pay a tariff to, you know, if whatever Spain sends in content over YouTube, I mean, whatever the analogy is, these guys, 490 companies have been held back or hamstrung by the JP Morgan so far, they get a free pass on the tariffs, right?

So we're transferring capital for the 490 companies that have done poorly and are the biggest employers, the biggest traditional employers, to the 10 companies that have just killed it. It's as if, all right, you won the gold medal, we're going to give the bronze and the silver to you, and we're going to shoot everyone else in the knee. We'll be right back after the break with the Trump family's latest crypto launch. If you're enjoying the show so far, hit follow and leave us a review on property markets. support for the show comes from quince it's finally starting to cool down hallelujah that said it's not yet time to switch all the way over to your winter wardrobe so if you're looking for timeless wardrobe staples that can seamlessly transition from summer to fall quince has you covered quince is the place to find high quality luxury clothing you can actually afford

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Alcohol and select markets. Product availability may vary by Regency. for details. We're back with Profty Markets. The Trump family has launched a new token under its crypto venture, World Liberty Financial. The token, under ticket WLFI, briefly surged to about 40 cents last Monday after its debut, but by Tuesday morning it had fallen roughly 50% from its peak. Despite this plunge, the family's holdings of the tokens are valued at around $5 billion,

plus Trump and his sons also take a cut from the token sales, and that's already reportedly brought in more than $500 million. Scott, there's a lot to get into here. Maybe where I'll just start is just like the level of fraud, that is implicit in all of the sentences I just said. And let's start off, for example, with that $500 million number. So what everyone's saying is, which by all accounts is correct, is that Trump family brought in $500 million because they have the rights to 75% of the company's revenue.

So basically, they generated $750 million in revenue, and they get 75% of that and that is $500 million. So everyone's calling it revenue, but the first part that we should be clear about, it's not revenue, it's investment. I mean, what happened was they sold $750 million worth of tokens

and then they report that as revenue that is generated by the company and then because they're entitled to 75% of the revenues, they pocket that money and people say, oh, they generated $500 million in revenue. So that's the first part of the scam. There's a difference between generating revenue from a business versus selling shares. They would say, oh, no, they're not shares.

They're tokens. Therefore, we generated sales. No, we all know what's going on here. They made up these, they issued this bullshit token, which is a fake share, and then they sold it for $750 million, and they pocketed $500 million. So that's the first part. Other side of the fraud here, and where it gets confusing again, turns out the company that bought those $750 million in tokens,

turns out that that is a company that is majority owned by the Trump family. It was, it's this company called Alt 5 Sigma, and World Liberty Financial recently took a majority stake in that company, and then they appointed Eric Trump to the board of that company. So what happened here is World Liberty,

they go and they buy a majority stake in this random company, Alt 5 Sigma, they use that company as, a vehicle to purchase $750 million worth of these tokens they made up. And then they pocket 75% of that, $500 million, and then they call it $500 million worth of revenue. And then after they've done all of that, they go out to the crypto community, say,

hey, we've got this cool new business. We did $500 million in sales. We're doing defy and crypto and a crypto exchange, and we're launching a stable coin. blah, blah, blah, blah, blah, and then they do their initial coin offering. So that's the first piece of it. Now we can talk about the token itself, which just went live. We could talk about Trump's holdings in this World Liberty Financial token.

According to the company, the family controls 20 billion tokens. That's where we got that $5 billion number. Based on current prices, their position is worth $5 billion. The big question everyone probably wants to know is have they sold? Is it liquid? And the answer again is it's pretty confusing. Technically right now it isn't liquid because the insiders aren't allowed to sell yet. There's this lockup period. There's this vesting schedule. And so the question is, okay, well, when does the lockup period expire? And the answer is they haven't decided yet. According to the company, quote, the unlocking schedule is still off limits, but it will be decided. in a community vote. So we haven't sold. We haven't sold. We're subject to a lockup.

When does it end? We'll figure that out later. So presumably they haven't sold yet. But then again, that is assuming that we trust them on any of this, because the other part of this is we're taking all of this information at their word. Why? Because we don't know whose wallets are whose. All of these wallets are anonymous.

And so the only way we can actually know if the Trump family sold is if they decide to announce that they sold. All of the reporting here that I'm describing, it's all just based on what the Trumps have told us. I mean, they told us we have 20 billion tokens. And so that's why we're saying, okay, their stake is worth $5 billion. But the anonymity of crypto basically means we don't know anything. So all to say, there's so much confusion here and so much opacity, so much darkness, that we can pretend like we're tracking and we're doing this investigative reporting on stuff, and that is what the Wall Street Journal is doing and CNBC is doing. But the reality of the situation is no one has any fucking clue what is happening with these crypto companies and these crypto projects. And it's not just World Liberty Financial.

There are a ton of others. There's Trump coin. There's Trump Media Technology Group, which is doing their crypto treasury strategy now. There's American Bitcoin Company, which also went public last week, run by Eric and Don Jr., reverse merger. So that's the update on the crypto situation, which no one's really talking about right now. I think because it's so confusing. But let's be clear, we are again. is saying the greatest grift, or at least the most shameless grift in American history.

Okay, I wanted to get that all out on the table. Your reaction, Scott. Oh, I think it's great. I don't think there's anything to worry about. When I was, I grew up in 70s, California. I was raised by a single mother, and she was, you know, wanted to go out, wanted to have fun, was hoping to meet somebody. And she came home one night and said, I went to the most interesting thing and you'll love it, you know. And I said, what was it?

And she was like, it was a party. and it's called a pyramid party and they had these parties in the 70s in California where you'd go have wine and then someone would announce they were starting their own pyramid and they'd put $1,000 in

and then they'd try and find two people below them to put in a thousand bucks and then those two people would be responsible for recruiting two more people to support to build out the layer below that pyramid and once they got I think to like eight levels

the eighth level investment started, that money started going back to the top people. And basically, you could make $16,000 to $64,000 as long as you kept the pyramid building. Now, as you can imagine, eventually it collapses and a bunch of people lose money. And she came home and she was all excited and she explained the concept to me and said, should we do this? And I'm like, I don't know. So I went to my algebra two teacher in the eighth grade, Mr. Martinez, and I explained, to him, and he said, a small number of very, he asked me something really interesting. He said, is your mom really charming and I have a ton of friends? I'm like, well, not really. And he said, then she shouldn't do this because your ability to get your money back is based on your ability

to find vulnerable, gullible people and use your charm to get them to invest. But she said, and then Mr. Martinez said, eventually, whoever does this will have fewer friends, because so many people by virtue of the pyramid are going to lose money, and you're going to make money. Where is Mr. Martinez? We need to get him on the podcast. I love that. He asked exactly the right question. Public school, Emerson Jr. High School. So that was my experience. And you've said this. I do believe Bitcoin has established some utility in the sense it is a legitimate store of value because I think they've established legitimate technology that creates scarcity. And whether you, and I understand people's reticence around it. All the other stuff

like this, no store value, no utility, it's just a pump and dump. Now, what you described, to me, this is the pure textbook definition of something that is illegal in the majority of Western markets, and that thing is market manipulation. Market manipulation is when someone intentionally alters the supply or demand of a security to influence its price. This can involve spreading misleading information, executing misleading trades, or manipulating quotes and prices. And market manipulation comes in different flavors of illegality. One story I've heard that totally freak me out is that private equity firms are going into housing markets where there's, say, a new housing development of 64 new homes in a suburb of Orlando, Florida. They buy the whole thing

pre-construction for a number. They get 20% off. They say to the developer, you don't want to market this shit. Just give all 64 to us a 20% off. Average price. 400,000, give it to us for 320. We'll take all 64. Boom, sales done. They delay construction by a year to create some distance between that purchase and when they go for sale. And then they have a non-related arms distance entity that is, however, affiliated with that private equity firm to come in and buy two of the homes for $700,000. And then all of a sudden the mark and the realtor and Zillow and Curb all report that those homes, the only mark is $700,000, meaning if you get it for $670, you're getting a good deal. They're creating a false mark to try and mislead people around the value of something. And they end up making $700,000 to $6.50 on something they bought for $3.20 with low interest rates because of their access to cheap. capital. This is taking money and creating an illusory false signal around pricing, right? It's if you go in and buy your own shares with the purpose of sending a false signal to get

the price to go up such that you can then dump it, that is market manipulation, and it is illegal. And this from what you just described is just, is literally the textbook case of market manipulation. Well, the good thing is we have a strong SEC that is going to be really cracking down on crypto. Oh, wait. They had a crypto fraud unit. And what did the deputy, the deputy SEC commissioner do when his first action with Trump as president? He eliminated the crypto fraud department of the SEC. There's no one even to investigate. No one to investigate any of this. And this all ends in tears. This is all, and by the way, just an epilogue to my mom's pyramid store when she would come home, I'd say, did you find my new daddy? Did you find

my dad? No, I didn't say that. But essentially, these parties ended. Within a few months, these parties weren't happening any longer because a lot of people lost a lot of money and got really fucking angry at Frank and Mary and weren't going to go over to their house for wine again because the last time they went, they gave them a thousand bucks and it's gone. But Frank is driving, you know, a new Toyota Celica. That's a good reference from the 80s. That's a good reference. Toyota Selica, you don't even remember that. Or a Volkswagen Shiraco. Oh, that was an awesome car in the 80s. Anyways, or a Grand Cortoba with rich Corinthian leather. There were so many shitty cars in the

70s and 80s. And literally that the auto industry deserved to go out of business back then. Anyways, as you can imagine, these parties went away. This is straightforward market manipulation. And again, it just goes back to the same thing. The Democrats and Republicans have been engaged in insider trading. I think Speaker Emerita Pelosi is about to leave Congress of $440 million in net worth. And Trump is doing the same thing more elegantly using technology, but he's being much more aggressive, much griftier. And he's the president. I mean, this is the pyramid policy, but now it's happening in the White House. So the difference is you can get away with it when you were the president. You can get away with it when you can basically call off any investigation

you want. And that's literally what he has done with the SEC. They have completely gutted, I mean, it's all this pro-crypto argument, but all they've done is gutted the SEC's ability to regulate, investigate, and litigate fraud in the crypto industry. And we know that this is rampant, the whole industry. I mean, I would say maybe like 90 to 95% of this entire industry is basically just people scamming each other, rug pulling, market manipulation. I mean, you described it perfectly in the case of the housing market. That is exactly what is going on here. And the estimates are that as of today, crypto now makes up three quarters of Trump's net worth. And by the way, that's why you're also seeing a scramble

among all of his understudies and his acolytes to try and build the crypto company. You've got Fight, Fight, Fight, Flight, LLC, which is doing Trump coin. You've got the other company that's doing Melania coin. You've got, as we said, World Liberty. They're all fighting because they know how much money is in this and they want to be the ones to leverage the brand.

And they're scrambling. You know, we talk a lot about the flood the zone with shit strategy, which is, I mean, originally the way we talked about it is that Trump would just say so many lies, so many lies, so many lies to the point that it's overwhelming and we kind of forget about it and we just surrender. Well, they've taken this to the next level now. It's flood the zone with fraud. There are so many crypto projects, so many tokens.

to the point where we can't keep track of it. And they've done such a good job of overcomplicating all of this stuff and covering up their tracks and not allowing reporters, investigative journalists, or law enforcement officers to actually go after them

and figure out what on earth is going on here and they're printing money. Stalin used to say that one death is a tragedy, but millions of deaths is a statistic. And if Obama had had an affair, it would have been much bigger news and much more damaging to his brand than if you have three wives, you're banging a porn star while your wife is home nursing, you get accused of sexual assault, shoving a woman in a dressing room and penetrating her, having a jury of your peers, likely including Republicans, after hearing all the evidence, decide you were guilty on all 34 counts, unanimous jury for a conviction, and then have 27 other accusations. and be chummy with a convicted pedophile, you don't want to, if you're going to start committing crimes or engaging in this type of fraud, do a lot of it and just overwhelm everybody with it, especially if you're in a position to run roughshod over your Department of Justice.

But he's kind of turned it into a superpower with flooding the zone here. And I want to get our listeners to weigh in on this idea, my idea about our own crypto venture that I pitched you yesterday. Do you want to explain it? No, you explain it. Ed, Ed, Ed, Ed. Okay, so the resistance coin or the, I don't know, the purple seal team or something, or the, I don't know, the fight, the anti-fascist coin, whatever it might be, or the Spitfire, something that connotes something more like pushing back on resistance. resistance, the rebel force coin. And basically you launch a coin and you say to people, you may want to speculate on this fine, but you should assume you're going to lose all your money. And all the sponsors

the coin who pay for the mining or pay for the project say, we will never have, we will never economically benefit from this. You put together a fiduciary board. You say you're going to sell the coins after a certain amount of time and you use the proceeds to elect moderate candidates. Basically a resistance coin, that if you want to give five, 10, or 100 bucks towards pushing back on this and we need the capital to do it because they're essentially they're amassing an armada of capital that they will use to run Don Jr. or J.D. Vance or go after pay legal fees to establish nuisance lawsuits against people who cross them. We on the other side of this fight are going to need capital. And so my idea is a coin that says, yeah, assume you're going to lose it all. It's not for

speculation. Some people might make money. Most will not. But this is an opportunity to try and fund moderate candidates, moderate causes, and push back. And you come up with a cool name, you brand it. And the key is that nobody involved in the coin can economically benefit from it. That there's a fiduciary oversight board that allocates the capital to moderate causes, moderate candidates, mostly Democrats, but I think you'd want to throw some Republicans there too or to fight back on certain, you know, certain issues, if you will, like getting RFK Jr. fired. But Anyway, the resistance coin. Yeah.

Well, thank you for that thoughtful analysis, Ed. Also, just to be fair on crypto, I think you're being a little rough. I do think there is a clean, well-lit corner of crypto emerging. I think stable coins are somewhat legitimate. I think Bitcoin has become an asset class, a legitimate asset class. So I do think there is a bigger, nice well-lit corner. of crypto than you were, you're describing. I don't think it's, I think it's going to be around a while,

and I do think there's going to be some legitimate uses of, of, Can you name one? Well, Bitcoin might be an easy. Bitcoin, I accept digital gold. That's the only one. Okay, and that's responsible for the majority of the market cap for crypto. By the way, just as a side note, I was trying to think, what is so, I'm in New York right now, what is so fantastic about New York?

And it's like, well, obviously, fall in New York is beautiful. But I think it's the absence of all these douchebags who are into crypto or wellness, because they're all a burning man. Ladies come out tonight in New York because all the guys here, you're not going to hear about someone's crypto project or how they're, you know, kind of read your iris to see what your liver health is like.

Thank God. Let's take a look at the week ahead, Scott. We'll see the producer price and consumer price indices for August, and we will be watching that CPI inflation data closely as a signal for the Fed's next move. Scott, great to have you back. First full episode back.

Any predictions for us? So the impeller court has said that the Emergency Powers Act that Trump invoked as a means of justifying tariffs, the appellate court has said, no, there was no real emergency there, that what you're claiming was a security threat isn't a legitimate or does not meet the standards of enacting the Emergency Powers Act, which he used such that he could implement tariffs without congressional approval. it has been traditionally the case where Congress has to approve tariffs. And so they've said these are illegal. And if it's held up by the Supreme Court, there are still workarounds where Trump could decide to try and implement tariffs in a different means. However, however, I'm not confident this will happen, but it could happen. If they were to decide, okay, Peter Navarro, in fact, has his head up his ass, and this isn't working out, and we're not getting the kind of results we'd hoped. And it's pretty clear that for every increase, one percentage increase, and tariffs, GDP goes down 10 basis points. So an increase of tariffs from 3 to 16 percent will take our GDP down 1.3 percent, and figures have been revised almost exactly down from 2.8 projections for GDP growth to 1.4. So it almost tracks perfectly to that pattern in terms of the correlation between increased tariffs and reduction in GDP. If the Trump administration were to say, okay, declare victory and leave and walk back from it and say,

Oh, it was my plan all along. I'm a great dealmaker. I was negotiating and we got these amazing new deals out of it. But I realize that, you know, we have great partners. So we're going to relax some of the tariffs. If there was a way to sort of have peace with honor here and back off this shit and go back from what is now an average of, I think, 17 or 18 percent to an average of three pre-independence day, I think we would likely have one of the biggest one-day gains in the history of the stock. market, because there are few ways where you could basically assure the U.S. and global economy that we're going to increase GDP by one and a half points. And one and a half points may not sound like a lot, but the difference between one and two and a half points of GDP growth is the difference between doubling your economy in 30 years versus 76 years. So I think that this might be an opportunity. Now, I can't predict what they do. But if I, if I, if I were them, I'd say, let's declare victory and leave and walk back these tariffs, because the Supreme Court has said it's illegal. Do you think they will uphold it? I don't know. I don't think so.

Oh, really? I'm more confident than you, but I get this wrong. I don't know. I don't know. I think conservatives don't like tariffs. It's a battle between, it's going to be close because there are a couple of conservative justices who and their previous decisions have shown a bit of a disdain for this type of unilateral tariffing. Anyway, we'll see. We'll see. But if that happens, market screams upward. This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mir Saverer is our research leader, research associates are Isabel Kinsel, Dan Chalon, and Kristen O'Donoghue. Drew Burroughs is our technical director and

Catherine Dillon is our executive producer. Thank you for listening to Profty Markets from the Vox Media Podcast Network. Tune in tomorrow for a fresh take on markets. as the waters and the dark flies. And the dark flies in love, love, love.