Prof G Markets - The AI Bubble Is Real — Here’s How to Prepare for the Pop

Episode Date: October 13, 2025

Scott and Ed break down why America has become one big bet on AI, and what that means for investors. They then unpack Tesla’s tough year, its push to reinvent itself, and what’s in store for its valuation. Finally, they explore whether or not America’s edge in innovation comes down to one factor: the freedom to fire. Subscribe to the Prof G Markets newsletter  Order "The Algebra of Wealth" 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

Support for the show comes from Workday. New people to develop, new products to launch, new goals to crush. Workday Go is designed for smaller mid-sized businesses because there's never a dull moment and it can be a lot to keep up with. With HR and Finance on one AI platform, you'll have everything you need to think big, go big and grow big and go live in as little as 30 to 60 business days. Simplify your SMB with Workday Go. Find out what Workday Go can do for you.

Visit Workday.com slash go to learn more. Support for the show comes from public.com. You've got your core holdings, some high conviction picks, maybe even a few strategic options at play. So why not switch in the investment platform built for those who take it seriously? Go to public.com slash provg and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com slash prop G paid for by public investing. All investing involves the risk of loss, including loss of principle, brokered services for U.S. listed registered securities, options and bonds, self-directed account are offered by Public Investing, Inc., member FINRA, and SIPC.

Complete disclosures available at public.com slash disclosures. Today is number 50. That's the percentage of teenagers who say they never read. Ed, what does a pregnant teenager and her unborn baby have in common? What's that? They're both thinking, oh, shit, my mom's going to kill me. Is that the line? Is that the line, Ed?

Totally inappropriate. What's going on, Scott, I'm going to Vermont this weekend. No man goes to Vermont of his own volition unless he's raising labradoodles or is in a kind of pretend marriage and sneaks out late at night to go visit Javier. in the park. Oh, God. Who can't we offend in this show right now? Who's left? So you wouldn't be excited about that?

I'm not surprised by that. You don't enjoy the outdoors? In 2008, so I wanted to keep my partner around. She was much higher character, much hotter than me. And she's like, I want to have kids. I'm like, well, I'm not getting married. And she said, well, we don't need to be married. She called my bluff.

And I basically just looked at her, and she got pregnant, and then we had a second one, and then she, like, you know, did what she does or what women do or what, anyways, and said, we need to get married for the kids. So, okay, fine. So the evening of the wedding, by the way, nicest day of my life.

So we get married on evening. Why is you anti-marriage? Is it money? What's the problem? No, I actually, if we're being honest, I think marriage is a good thing. I think it keeps, it creates exit costs pretty substantial, so you're more likely to engage in a long-term relationship,

which I think is a good thing. Actually, I have come around on marriage. I actually think it's a good thing. I know you're a pro. I'm just wondering why you anti-marriage at that point. Because it's part of my fucking rap. Just go with it, right? Okay.

Anyways, so not that this was a bad omen, But the night we got married was when Lehman filed for bankruptcy in 08. Oh, wow. And I was on the board of a couple companies, and I was trying to get my career started, and I'd made a bunch of investments, and I was working with all these hedge funds. And for some reason, we went to fucking Vermont for our honeymoon. And all I can remember was doing board calls as we were trying to figure out how to save these companies. And then my newlywed or my bride just being furious at me that I was spending the entire honeymoon on board.

calls and then going to the beach and being really stressed out and seeing all these really nice lesbian couples and their dogs walking up and down the beach. And beautiful fall leaves. God. I'm stressed just thinking about it. I'm excited about it. I'm excited about Fall in Vermont. I think it's going to be very nice. Oh, I'm sure it's going to be beautiful. Do you have any fun travel plans coming up? What about you? Oh my gosh, you got a lot coming up. Going to New York or D.C. And then we start the Pivot Live tour. We do D.C., New York, Brooke, Toronto, Chicago, San Francisco, L.A., and I'm forgetting one in there. Oh, Boston.

Then I'm doing my book tour, which ends with Bill Maher on the 14th. And I do Halloween. I'm going to do Halloween in New York, which I'm super excited about, although I don't know what I'm going to do. What are you doing for your costume, do you know? I think I'm going to have to go with Deadpool again, the Deadpool after the fire. You're always Deadpool. You've got to switch it up. Well, my assistant, Mary Jean, wants me to go as Larry David, but I just, I can't.

I'm sort of just already looking like him, and I'm insecure. I'd rather look like, try and look like Ryan Reynolds. How about you? Do you know what your costume's going to be? No, I need to figure it out. I was thinking, I mean, cowboy, cowgirls, like, you know, it's an easy one. I could do that. I'd love some suggestions, though. I always struggle with Halloween.

You look like, I'm telling you, you look like the automated profile generator from a video game. where you just pick a generic figure, you're that guy. What is the default character where? That's the question. The automated character generator from any video game. You're the first thing that comes up. You're pleasant looking. Just neutral.

You're not ethnically ambiguous. You're pretty ethnically biguous. But yeah, that's what I would do. I would go just as like a default video game character. Again, I need to figure out what a default video game character actually was. But that's good I'm glad you'll be in New York Maybe we'll cross paths

You never know Scott Ed Ed Ed you know I don't like to mingle With the employees of the company Cross pause with you a couple weeks ago That was fun Oh this is a great story We're at one of these Dushi members clubs And all of a sudden this big handsome guy

Comes up to me He's like Scott And I look up and I'm like I recognize the voice That's pretty fucked up at the time And I'm like oh it's Ed And I said you I said oh let me come meet your friends

And you hesitated And you got very anxious No. Wrong. Not true at all. I apologize if that's what you think. I was very excited for you to meet my friends. You were with your girlfriend and another couple. That's right. Well, that was a great story. Should we get to the headlines? Let's do it. Let's talk about the news. Now is the time to fly. I hope you have plenty of the where we're all. A few weeks ago, we warned that the AI economy might be headed for a collapse propped up by a web of circular deals.

Since then, those deals have not stopped. Last week, we saw a new circular deal between AMD and OpenAI. And just a few days later, we saw another one between NVIDIA and XAI. So at this point, the mainstream media is kind of catching up. The headlines are everywhere, and everyone seems to be saying in unison, and at the very least that we might be in a bubble. Everyone is recognizing these circular deals. Everyone is building on this point and saying,

okay, we might be getting into dangerous territory. Analysts have pointed out the fact that when you froth up a market like this, it could lead to a bubble, and the original sin of this bubble could have been like circular financing. Valuations in AI are at a bubble. You cannot...

Public or private? Both. You cannot value... a $50 million ARR company at $10 billion. Is this a bubble? I mean, it's peak bubble, AI bubble, yes. So everyone seems to agree, Scott, we're in a bubble, CNN headline, concerns amounting about a bubble, semaphore, circular deals, spark bubble fears.

We've heard investors talking about this bubble. We've heard even leaders of the tech community talk about this bubble, and yet we're still looking at all-time highs in the stock market. we're still seeing these deals roll on AI continues. Your reactions. Well, we know we're in a bubble, but typically what happens is when people like you and me call the bubble, there's another 20 or 30 percent an upside to go.

What I have found, having been through a few cycles, is that when it's about to pop is when everyone throws in the talent says, well, maybe we are in a new economic reality where the markets are recalibrating. Because what you saw in the bubble I experience, the dot-com bubble, is that people said, this is a bubble, but they said it in 97. And it screamed up another 30 or 40 percent to 99. And then you started seeing articles that maybe the internet is ushering a new economic age. They started going to this like new narrative that maybe it's different

this time, right? Some very smart people, though, are saying that we're probably in a bubble based on their actions. So Sam Altman has said, is actually articulated that he think we might be in a bubble. Warren Buffett, by virtue of his action, says we're in a bubble because he is selling like a madman. I think he's sold something like $150 or $200 billion in stocks. In addition, the news that Tim Cook is leaving at the age of 64, which is young, given that a lot of people just, a lot of people just refuse to leave, I think he's decided that this is the top. I want to leave at the top. and so and then the the chart that scared the shit out of me and I posted on threads that said this is what a bubble looks like was that amazing chart that Bloomberg put together showing all the interesting or the the incestuous dealmaking that's going on how every investment is flowing through invidia out to another company and then back to invidia that to me is the biggest evidence that we might be near something of a reduction

or a drawdown. The other thing that just blew my mind, Kyla Scanlan said something that I thought was so interesting. She said that essentially what you have is America right now is just a giant bet on AI. And I thought that was such an interesting way to frame America right now. And also, if you think about Trump and you think about what's going on here and how many people theoretically and from a constitutional and from kind of a democratic norm standpoint are just horrified by what Trump is doing. The cloud cover for Trump to do these things is the fact that the S&P is up, I don't know, what is it up, 20, 23 percent this year. If the S&P were down 20 percent, I just don't think there'd be troops going into Portland. I don't think you'd have the cloud cover to keep doing

this sort of stuff because as long, again, these are the most damaging metrics in the world, As long as the markets are up, there's a general indication that the person in the White House, whatever they're doing is okay and it's right and it's correct because the markets are up and that's all we're kind of obsessed with. That is basically the cholesterol test, the temperature to indicate whether the corpus is doing well or not doing well. And the markets right now are being driven by 10 companies. So basically what you have is AI is enabling the president and a small number of companies are providing cloud cover

for the current administration. And again, I just love this notion that right now, America is just a giant bet on AI. And they're all in bed with each other. And actually, you know, we've been talking about this for a few weeks, probably a few months now. But actually, we really brought it up more than a year ago.

The first time we talked about this, it wasn't about these circular investments, but it was about these circular relationships, specifically the fact that all of these companies, the directors of the boards of these companies sit on each other's boards and then they start creating all these partnerships. We talked about this in April of 2024.

This is everywhere in AI. Right off the bat, I can name you three illegal board positions in AI right now. Name them, you high IQ bitch, nominated for Best Go Host. Name them. I'm calling your bluff. Name them. Microsoft's on the board of Open AI. It's, you know, they say it's a non-vercube

voting board seat, but that's still a board seat. And Microsoft is also an investor in Mistral and Inflection, which are both AI companies that directly compete with Open AI. That's one right there. Another one is Reid Hoffman. Reid Hoffman's on the board of Microsoft. He's also a co-founder of Inflection. Brett Taylor, he's a chairman of the board of Open AI. He's also on the board of Salesforce, which is an investor in Anthropic and Mistral. So that chart that you reference, where all of these investments are going in and out of each other. This has been happening for a really long time. We've been trying to sort of point to this for a while now. Now we're seeing what this all is culminating into. You also mentioned this

idea that America is a giant bet on AI, and there was a good article in the FT about this, which is 100% true at this point, or at least when you look at the stock market this year. AI companies have accounted for 80% of the gains in US stocks. So far, this year. You look at how much money is in the stock market at this point. Stock market wealth as a share of GDP is 50% higher today than it was in 2000. You look at the companies that are driving these games. It's the big AI companies at the top. So, Nvidia, Microsoft and Apple, they now account for over 20% of the entire S&P 500. That is a record high. In addition, the top 10 stocks in the US now account for 25% of the global equity market. So a quarter of all stocks in the world or all market

value, 10 US companies are contributing to that. NVIDIA's market cap is now larger than the entire UK stock market, is larger than the entire Indian stock market, it's larger than the entire Japanese stock market, it is actually larger than all of healthcare put together. So the point being AI is driving everything at this point. It is driving the stock market and it is driving a lot of the GDP growth too, by the way, technology and software investment. So AI, it's responsible for 92% of GDP growth in the first half of the year. So without AI, basically the stock market would be flat and so would productivity, so would GDP. So this all spells overinvestment. And I we've discussed, it's kind of artificial demand because these companies are stoking the demand

by investing in these companies so that the companies turn around and spend the money on the chips and the compute, which is all very dangerous stuff, all says bubble. And as I mentioned earlier, most people agree on this. So then the question becomes, okay, what do you do about that? I mean, if you believe that we are in a bubble or a bubble is building, what are investors is supposed to do? If you think we're going to see a correction, what are you supposed to do? I think this is the big question that now needs to be answered, because the question of whether or not we are in one, most people agree. We're in one. I think this is where, and it's our favorite word, really kicks in and that as diversification, and that is if you've been lucky enough

to be an investor in Nvidia or one of these companies, you want to look at what percentage of your portfolio it consists of right now and perhaps think about selling down. I'm selling down. And if you think, well, I'm diversified because I'm in an S&P fund, I would argue now, just being an SPY, you're not diversified because 40% of it isn't 10 companies. So that's not real diversification. And we've talked about international diversification. I am now for the first time contemplating a friend of mine is a well-known podcaster called me and said, I'm thinking of going short the S&P. And I said, okay, but keep in mind, there's two S&Ps. There's the S&P 10 and the S&P 490, and I think what you're talking about, or what he was saying

is the reason why he's word is you're worried about the S&P 10, and that is the Magnificent 10. And I started looking at there are ETFs and special funds that basically go double and triple leverage on the Magnificent 10 or the NASDAQ 100, and I'm contemplating buying some of those shares just as a hedging strategy. Now, don't do that unless you're willing to lose it all. You're considering buying those magnificent 7 ETFs of those magnificent 10 ETFs, or you're considering shorting those ETFs? There are now inverse short-leveraged ETFs.

Okay. So, for example, ProShare's ultra-short QQQ, it's 3x, triple inverse, the daily return of the NASDAQ-100. Now, there's different ways to short a company. You can write covered calls, or you can write calls, excuse me, they're not covered. You can write calls. But the problem with that is your downside is unlimited. If you write a call against Palantir, that strikes me as the kind of stock that could go from 600 to 900, and you can get hurt really badly.

Writing calls is sort of like collecting dimes in front of a bulldozer, and that it feels like it feels like easy money until it's fucking disastrous, right? And so I wouldn't recommend that to anybody. What I am looking at is what these companies do is they create a synthetic where they go out and they write calls against a basket of companies and then turn it into a stock and they close it out every day and then they sell it as a fund.

What I'm looking to do is the following. If the market, if these guys get cut in half and it triggers a global sell-off and everything's down 30%, which I don't think would be unusual at this point, you end up being down 10 or 15, not 30. I'm not looking at this as a means of creating alpha, but as a means of just buying some insurance

because a lot of my investments right now are diversification and what I'll call the avoidance of mental anguish. And that is, it was losing, basically losing my shirt in 2000 and 2008, where are damaging financially. But I've always made decent money. I knew I was going to be fine. I never had trouble paying my rent or my mortgage. I wasn't blessed that way. It was the emotional and the mental hit. And so a lot of my investing strategy right now is trading off potential upside, trying to protect myself just emotionally and mentally from so much, someone who sees their total self-worth wrapped up in how much money I have, which I realize is pathetic, but it's true. I will be less emotionally and mentally hit if I go short something

and I lose my money there and it doesn't work out, then that the market just throws up because I'm going to look back and think, well, Jesus Christ, I knew it was going to, and I didn't. But this feels just, this feels crazy. Now, at your age, I think it's a little bit different. I think at your age, you might want to have a little bit of fun with a fund like this, but for the most part, you can ride out cycles because you're young enough just to stay invested. It's also very hard to time the markets here, and over the medium and long term, which you have a lot, you have a lot more long term in you than I do. You can absorb more risk.

Your earnings are increasing. As my earnings are decreasing, that's why I need you to start a third and a fourth pod. But anyway, it's another story. As my earnings are increasing, I'm not looking to get rich. I'm looking to not get poor. So a lot of it is situational, but I'm thinking of going, trying to find an instrument where I can go short effectively these 10 with some leverage, recognizing I might lose 50, 80, 90 percent of my investment almost as like idiot insurance. Because if these things pop ed, we're all going to feel like fucking idiots for not investing against it. In addition, if the market does go down, say, 10, 15%, it could be a bit of a downward spiral because you won't have panic selling, but when the top 10% who base a lot of their consumer or discretionary spending on the market, the thing that is great about rich people when they get rich is they can spend a lot more money because they have it. The awful thing about them is that

if a chill comes over, the wealthier they feel less wealthy, they can take their consumer spending down 30 or 50 percent. Middle class people can't do that because they got to eat and they got to pay their mortgage. Rich people can take their spending down 30 to 50 percent if they really need to for three, six, 12 months. And now that that accounts for 50 percent of the consumer economy, I mean, there's really two things right now, you could argue. America is a bet on AI and it's a bet on rich people continuing to spend. I just want to push back a little bit to the short big tech strategy. And I appreciate that you make that point, which is, you know, you're doing it as a hedge because you basically just don't want to feel that

emotional pain of coming down 15, 20, 30%, so you're trying to hedge a little bit. Just a few things I would say. First off, this question of, you know, when does the bubble pop? I would point out that valuations among big tech, specifically, these big tech AI companies, the valuations are very high, but they're not crazy, crazy high. I mean, if you're If you look at the Mag 7, you look at the average forward PE ratio, the 24-month forward P.E. It's an average of 27 times forward earnings in the MAG-7 right now. Compare that to the year 2000, the height of the tech bubble. The average in 2000 was 52 times forward earnings. You compare it to the Japanese bubble of 1989. Average was 67 times forward earnings.

So we are definitely experiencing these rich valuations, but they're not crazy, crazy rich. And you look at something like a Google or a meta, these valuations are not totally out of control. So what I would say is, yes, this bubble is forming, but I don't think we're at a point where we can say it's about to pop. We're about to see this massive correction. I just don't think we're there yet. Which brings me to the other point, which is, you know, I think there's, you know, I think there's, this tendency, this feeling that we have a responsibility to sort of predict when the recession will hit and try to time it. And what I can tell you is, one, impossible. And two, even if you get it

right, the impact on your portfolio is actually not as meaningful as you might think. And it all goes back to what you said, which is the long-term time frame. If you look at a five-year time frame, If you were to only invest at the highs during a time frame of five years, your returns would actually be equivalent to if you had invested at all of the other dates. You get equal returns over five years. It's not true over a one-year period when you're looking at like one-year returns and you're looking at shorter timeframes, yes, you would rather not invest at the highs. But the reality is most of us, and that's why I appreciate your point about especially young people, If you're investing over five years, 10 years, 15 years, the crucial point is this. Investing at the highs is almost no different. And the reason is because the long-term trajectory of the stock market is just up and to the right. And we're constantly hitting new highs every single year. So that's the thing to remember here. You might be thinking, oh, a reception is coming. What do I do about it? Honestly, I mean, you could try to get some alpha. You could try to hedge yourself against that downturn. But over the long term,

you're not going to get that much of a benefit from it. The other side to it is the following, and that is you have actually a lot more time than you think when you're trying to predict when a recession happens. In recessions historically, the average amount of time between the point at which the stock market peaks and the point at which the recession is officially called, and everyone agrees we're in a recession,

the average amount of time is nine months, which basically means you don't need to call the recession before everyone else does. You might want to because you'll feel smart and you'll feel good about yourself. But generally, the money you make in the bull market, which everyone has made so far, the money you make will buy you enough time to wait

until you know for sure that there is a recession, at which point then you can make your decision. But I think in these times, especially when we're talking about it and we get a lot of, there's a lot of, you know, angst and energy being put into, when is this recession going to hit? We can get caught up.

in the excitement of calling it. Everyone wants to be the Michael Burry. But the reality is there actually isn't that much alpha in doing that. You are barely rewarded. And if you really want to make money, you want to be a bull and you want to keep on investing over the long term. So I just think that's important for people to keep in mind. If we're in a recession, that doesn't mean, oh my gosh, I'm going to sell. By the way, we said this during Liberation Day too. We said don't sell America, hold America, but go buy other places to diversify your portfolio. The same applies here. Yeah, so your point is a solid one, and that is if you look at 99, even if you look at the percentage of CAPEX as a percentage of the economy, it's less than the investments that

were being made as a percentage of GDP and CAPEX around infrastructure on the internet and less than investments that were made, you know, 100 years earlier around investments around electricity. So this might be, this might feel like crazy town, but it's, but we've been to crazy town before. And the earnings growth has not been commensurate with the expansion of the stock prices. The peas have gone up, but they haven't gone up as much as you referenced in 99. But let's assume if I had to predict, I think this is a bubble. I don't think the pop is going to be a sonic boom. I just think it's going to be a pop. It was a sonic boom in 2000. Keep in mind, Amazon, from 99 to 2001, lost 90% of its value.

So say this isn't nearly as overvalued, but there's still a drawdown, so it goes down 30 or 50%. What do you do? You do mostly nothing. Because at your age, in terms of emotional well-being, the thing that really fucked me up was I would have rather have lost money by being in the market and having it go down than miss opportunity. The biggest angst I felt when I was a younger person was missing out on upside. It's firmer. Yeah. I got less emotional pain having a stock go from 10 to 7 than thinking, I should buy this

stock and I didn't and then watching it double. That drove me crazy. But all roads lead to the same place. Diversification, always be in the market, and low cost, low fees. We should also mention the other big trend that is happening in the markets right now is gold hitting $4,000 for the first time ever. It hit $4,000 last week. It's up 121% since the end of 2022. It's up more than 50% so far this year. It is the best performing asset class of the year. By far, it's doing better than Bitcoin. Global gold ETFs hit $472 billion in AUM in September.

that is up 23% quarter over quarter. So huge growth, all-time high. I think this is the other part of the markets that we need to kind of think about, why is this happening? And it really has to do with this issue of loose monetary policy and this idea of debasement.

The idea that we are getting looser and looser with our monetary policy around the world, we're seeing inflation that is higher and longer around the world. And when you talk to people about, okay, why are you buying gold? It really goes back to central bank policy. And that is, according to surveys, 95% of central banks around the world are planning to expand their gold reserves over the coming year. So I think this is the other thing.

You know, a lot of people, if you're not super excited about AI, a lot of people are super excited about gold. and it's been one of the best performing assets of the year. Going back to your point about FOMO, a lot of people seem to, there is a belief that gold is this hard asset, it's this sort of safe asset, and in a lot of ways, I think it gets this sort of narrative protection

against the concept of FOMO, which you just brought up. I just want to point you to a quote that one of our guests, Robert Hayworth, said on the podcast when we talked about gold, This is what he said about why gold is ripping up so much right now. We don't see evidence that central banks are buying yet. We're seeing some evidence that speculators are actually pushing this up.

ETF holdings are moving higher. If we look at the commitments of traders' data from the CFTC, right, we're seeing more futures demand coming into the market. So it's really speculatively driven at this point. We don't, and it takes a long leg to see what central banks are buying to know if that's really kicking it off. So I find this really interesting because gold has been positioned as this hedge against exuberance in a way. You know, if you're worried about the stock market, if you're worried about too much concentration in AI, maybe you go for gold instead.

If you're worried about government's printing money, maybe you go for gold instead. It is sort of the safe haven asset. But what Robert is basically telling us is actually the same forces that are driving up, AI are also driving up gold, and that is momentum and speculation. It's not that central banks are actually buying the gold. Yes, they're buying more gold. But what's driving up the extreme rally, the reason it's at 4,000 all-time high, is because people are anticipating what the central banks are going to do. It's not the actual gold itself. It's the gold ETFs. It's the gold futures. So this is actually a momentum trade that is happening right now, which to me is,

It's very similar to what we see with Bitcoin, and it's very similar to what we see with AI. In other words, the speculative assets are the ones that are driving up prices right now. And, you know, a lot of people would disagree, say gold isn't that speculative. I think we just heard it from Robert Hayworth. Actually, it is speculative, and that's why the price is at $4,000. I just want to get your reactions to that. I would have thought that it was one, kind of a debasement trade, that the weakening of the dollar obviously sends it up. I think gold being in the news every day largely also creates it as a more sort of viable asset class

and people think, oh, I should probably buy a little bit of gold. So I think that's part of the momentum narrative. But also, I think of it as when you kind of want to flight to safety, the ultimate go-to was treasuries or U.S. treasuries. And I think that there is more risk around treasuries right now or less confidence than there's been. And you'd think that'd be reflected in the yields going up. But I also think it's reflected in people thinking, well, maybe I should diversify my more, you know, conservative investments and gold is seen as one of those. So it's, I think it's benefiting from the fact that people no longer think of treasuries as the ultimate safe haven.

And so they're looking for other stores of value. But the momentum, the momentum point was interesting because just us talking about gold and the fact that it can, it's not, it's not your father's gold anymore. it's not a sleepian asset that it can go up this much, brings in a new level of speculative investor that thinks, I want some of that, that juju or whatever, that mojo. Because traditionally, growing up, gold was sort of this thing that you held onto it, but it was like holding on the cash almost. It just didn't do a hell of a lot. But I see it as, and again, I tend to look at the current administration through, you know,

clouded glasses. I see it as less faith in the full faith and credit or the government's ability to pay back interest on treasury bills that they're looking for other safe havens. Yes, that is certainly what's driving it at the first level. And that's why you see part of the increase. But I think what's really interesting is that that has formed the base

for which a larger momentum trade has emerged. And when I think about like defining 2025 in terms of the stock markets, financial markets and investing, me, it's sort of like, this is the year of the risk asset. I mean, I think what we're seeing is that risk assets across the board are exploding. The counter argument to that would be, well, no, look at gold. Gold is the safe haven asset. Gold is the anti-risk asset. But I think what I would point out is that actually, this is kind of a matter of perspective. And in my view,

you look at gold right now, actually gold is a risk asset. It's got no cash flows. It's got questionable underlying value. And, you know, if people aren't buying for the value of gold itself, if people are buying because they think other people, i.e. central banks want gold. If they think that there's some distant hyperinflationary future, again, that is speculation. This is a risky asset. This is a risky investment. So I think actually that the rise in gold, the rise in Bitcoin, the rise in AI, to me, those are all pointing to that. to the same direction, which is people are making more speculative bets in 2025. They're actually, it's not this safe haven that you think it is.

That was the beginning of the story, but the story has sort of transmutated over time, and it's now really a momentum trade. We'll be right back after the break. If you're enjoying the show so far, hit follow and leave us a review on property markets. Support for the show comes from Framer. So you've decided you need a website. Well, there's a few ways to do that. You could spend hours and hours of your one precious life learning to code.

You could go with one of those cookie cutter side builders and get a very predictable site, or you could try a free, full-feature design tool that lets you design and publish in one place. In other words, you could try Framer. Framer already built the fastest way to publish beautiful, production-ready websites, and now it's redefining how we design for the web. With the recent launch of design pages, a free canvas-based design tool, Framer is more than a site builder. It's a true all-in-one design platform, from social assets to campaign visuals to vectors

and icons, all the way to a live side. Framer is where ideas go live, start to finish. Ready to design, iterate, and publish all-in-one tool, start creating for free at framer.com. com slash design and use code Markets for a free month of Framer pro. That's framer.com slash design and use promo code markets. Framer.com slash design promo code markets rules and restrictions may apply. Support for the show comes from Betterment. Nobody knows what's going to happen in the markets tomorrow.

That's why when it comes to saving and investing, it helps to have a long-term approach and a plan you can stick to because if you don't, it's easy to make hasty decisions that could potentially impact performance. Betterman is a saving and investing platform with a suite of tools designed to prepare you for whatever is around the corner. Their automated investing feature helps keep you on track for your goal. goals. Their globally diversified portfolios can smooth out the bumps of investing and prepare you to take advantage of long-term trends. And their tax smart tools can potentially help you save money on taxes. In short, Betterman helps you save and invest like the experts without having to be an expert yourself. And while you go about your day, Betterment's team of experts are working hard behind the scenes to make sure you have everything you need to reach your financial goals. So be invested in yourself. Be invested in your business. Be invested with Betterment. Go to betterment.com to learn more. That's B.E.T. T-E-R-M-E-N-T-com.

Investing involves risk, performance not guaranteed. Support for the show comes from Grooons. They used to say that an apple a day keeps the doctor away. Well, that's a nice thought, but even so, you still won't get all the nutrients you need that way. Here's a tip, add Grooons to the mix. Grunz isn't a multivitamin, a green gummy, or a prebiotic. It's all of those things, and then some at a fraction of the price.

And bonus, it tastes great. All Grun's daily gummy snack packs are packed with more than 20 vitamins and minerals made with more than 60 nutrient-dense ingredients and whole foods. And for a limited time, you can try their Grooony Smith apple flavor just in time for fall. It's got the same snackable, packable, full-body benefits you come to expect. But this time, these tastes like you're walking through an apple orchard and a cable-knit sweater, warm apple cider in hands. I've tried Grooons.

I find it very convenient. and in general, just super easy to get kind of that health boost, if you will. Grab your limited edition Grooony Smith Apple Grooons available only through October. Stock up because they will sell out. Get up to 52% off when you go to g-r-un-s.com and use the code PropG. We're back with Prof-G markets. Tesla's year is not exactly going according to plan. At the start of 2025, Elon Musk pledged Tesla would build 10,000 Optimus robots for internal use. But last week, the information reported

that the company has abandoned that plan, and the head of the Optimus Project has just left for meta. That setback is just one example of the broader challenges Tesla is facing. The company's U.S. market share just dropped to its lowest point since 2017. Sales in Europe dropped 43% year over year in August. Meanwhile, last week's launch of cheaper versions of the Model 3 failed to impress investors. The stock fell 4% on the news. And as former president of Tesla, John McNeil put it when I interviewed him on our daily show, he said Tesla is a car company in transition. So, Scott, not looking good for Tesla right now. We can get more into the details of why. Your reactions to what's happening with Tesla at the moment. Well, in transition,

I mean, essentially, you have a company, what is it worth $1.4 trillion, trying to figure out a way to go into a company that might be worth $1.4 trillion, because they'll do anything to try and fool people in the believing this is not a car company, because if it was a car company, it'd be worth 10% of it's worth now. So let's say it's a robot company. And my understanding is the person who was running the optimist group left to go to META and took a cut and pay because he wanted out of there so badly. I mean, it's just, it feels like the David Copperfield of the modern economy is Elon Musk who's saying, look over here, well, I try and stuff, you know, a car company that's rabid back into the hat here and fool people that this is an AI slash SaaS company. He's trying to, I mean, the transition is the following. He's trying to transition to be kind of this AI company with mobility, with satellites, with broadband, and with an LLM with GROC. And the robots were nothing but an attempt to say, I mean, keep in mind at the beginning of the year, he said that they were going to, he put a projection on it and said that ultimately 80% of their EBITA or their 80% of their enterprise value would come from robots. And

they basically just now said they're kind of putting the robot thing on pause. So I just wonder at some point when everyone yells at the magician, you know, you're a fake because they're doing everything they can to try and keep people, keep people's gaze diverted from what this is. and that is a company, an EV company, that is declining dramatically. They've delayed production of these bots, right? So that's not working. The bot thing isn't working. They said it was going to be 80% of a Tesla's enterprise.

That's clearly not true. And the core business is struggling. Tesla's had a 7.4% sales increase year over year. But that mass real weakness because this was the last quarter where that $7,500 tax credit was available. So you should have seen a massive sugar high as you did at Ford, where UV sales were up 20% and GM, they were up 107%.

He's got a limited amount of time, just as the kingdom of Saudi Arabia has a certain amount of time in a fuse burning around transitioning away from a fossil fuels economy. Otherwise, it's just Russia, and it's a very vulnerable economy. Tesla's the same thing. They have to transition out of an automobile

company. And he keeps, again, using this weapons of mass distraction, he just raised a ton of money for GROC. I don't know if at some point he's going to fold in SpaceX, but the autonomous thing isn't working. I mean, autonomous isn't working, or he's definitely a distant number three player right now. The optimist, the latest weapon of mass distraction, is clearly just that, a mass distraction, the optimist robots. And the automobile, the core business, which is now worth more than every other automobile company combined is not collapsing, but it's getting, you know, the business is maturing and other people are catching up. So the amazing thing is that the stock is still up 14 percent this year and trades at 17 times sales. Ford and GM trade at less

than 0.5 times sales. B.YD trades at 1.1 time sales. So Ford and GM legacy companies, not as profitable, not the same margins. They trade at Tesla trades at 34 times with those companies trade at, and BYD, which is eating Tesla's lunch in the sense that it is producing way more, has a better car to lower price, Tesla's trading at 16 times what BYD trades at. And again, this isn't financial advice, but this, with the exception of Palantir, I would argue, is the most overvalued company in the world. But it's become, I believe, a meme stock, an investment in Musk, an investment in AI. But he's lost one of his weapons of mass distraction

because it's clear that the optimist was all jazz hands. 100% agree to most overvalued company in the world. I mean, every time the data comes out, I cannot understand for the life of me how on earth you can justify this ridiculous bat-shut valuation. I mean, just to re-emphasize some of the data there, you mentioned those September sales that everyone was like, oh, great, Tesla sales were up. They were up 7%.

Again, you might think that's good until you realize that was pull forward demand because the EV tax credit was expiring. So everyone was trying to buy their electric vehicle before the tax credit expires and the prices of these EVs goes up. So you think, oh, it's good. And then you realize, oh, wait, the Ford EVs, those sales are up 20%, the GM EVs, those sales are up 107%. and you compare it to Tesla sales up to 7%.

So that's not good. Then you look at these cheap models that they unveiled last week. And this was supposed to be like a big deal. Oh, we've got these great new cheap Teslas. Those cheap models cost $37,000 and $40,000. They are actually more expensive than what a premium Tesla cost

before the EV tax credit expired. So this is what the EV tax credit has done to the price of Tesla. Tesla's are up, and now their cheap cars are actually more expensive than their premium cars used to be. And then as you mentioned, BYD, compare it to the Segal, their cheapest option in China, which costs $8,000. So what's going to be really interesting, now that their cheap model is $40,000, that's a cheap Tesla. What's going to happen when we see sales after this EVTAC credit expiration, which just happened? what's going to happen to sales next month

and the month after that? These are real questions. So what we have here is a car business that is in decline. It's just not a debate. That is what is happening to Tesla. And so you think, okay, how do you justify the $1.4 trillion evaluation?

Well, it's got to be the robots and the robotaxes. We just learned that the robot, the optimist robot, the production is being delayed. We just learned that the guy who was running that segment, running that business, he just left to go to META,

and then you might think, oh, Zuckerberg must have offered him like some billion dollar pay package like he's been doing to all these AI researchers. He left, and he took a pay cut to go to META. He willingly decided to leave what is supposed to be the business that's going to drive 80% of Tesla's market value.

He took a pay cut to go somewhere else, to go to META. I can't think of a more bearer signal for the optimist robot than that, which leaves you with, okay, the only thing that could justify this, the only thing is the robotaxie. That's the only thing that makes sense here.

And again, clearly the market is in over its head in some way because Waymo is the leader. So if Tesla's worth $1.4 trillion, you should be adding a trillion dollars in market cap to Google. Waymo is far and away the leader. You have all of these other, competitors, you have Uber getting into the autonomous game. Like, nothing should indicate to you

that Tesla is set to take over autonomous taxis, or at least you need to be a lot more discerning if that is your belief. I think essentially this company, well, let's ask ourselves, and Josh said this, what could go right? Like, what could, what could happen that would justify Tesla's valuation or maybe put the stock up? One, I think the closest path to show, to justify this valuation would be if they made real progress, if they accelerated and made a ton of progress around autonomous. And they do have a built-in advantage. One, they have more data. I don't know if that data is useful, but they have digitally tracked, you know, hundreds of millions, if not billions of miles with their pre-existing built-in fleet of cars, too. They can go more vertical. Their technology,

they can produce technically an autonomous car for, I believe, $30,000 or $40,000, whereas Waymo cars are somewhere between $200 and $250,000. And that will probably come down as they get more scale, but there is a built-in advantage or cost advantage because Tesla is vertical, so to speak, and it's chosen the less expensive technology. So it strikes me that if someone were to say, okay, what is it about? And then if someone were to say in a year, the stock is up, I would say, okay, they've shown really. progress around autonomous, or they've been able to link in terms of usage, synergy, whatever you would want to call it, a booming grok, right? That basically Tesla shareholders are now, if they were any way to wrap it into grok and X and create some sort of like AI company that's vertical around autonomous.

I think he's trying to figure out a way to wrap all of these things under sort of an AI umbrella, but it would be, one, autonomous, or two, some sort of ability to create an AI halo from GROC over Tesla, because just standing alone, it's just becoming increasingly clear that Tesla is what it is, and that is a company that wraps steel around an accident of battery. It's a car company. It's an EV car company, which should trade at a hire multiple because it's a bigger potential market, and they're better at making EVs, I would argue, than the, you know, Ford and General Motors and Stalantis. So they should be trading at one-time sales, not, you know, not 17 or whatever it is. I feel like the biggest distractions

in history are Trump's attempt to keep Epstein out of the news and must to try and say anything about Tesla and trying to get people to believe that, no, this is not a car company. This is AI or autonomous or something else. I just reemphasize what you said about what he said. He said optimist robot, these humanoid robots, he said it's going to make up 80% of Tesla's market value. And the guy who runs that business just left to go to meta. I'm just so freaked out about all of these synthetic relationships.

Would you want a robot in your house? If it did the laundry, maybe. Maybe cooked or something? But that's not going to happen for 20 years, 30 years. I mean, he keeps on telling it's going to happen next. Yeah, they haven't even started production. Actually, this really is a better question for your girlfriend. She could answer this.

What's it like having a robot in your ass? We'll be right back after the break. For more markets content, hit follow, and sign up for our newsletter at profjimarkets.com slash subscribe. With Amex Platinum, access to exclusive Amex pre-sale tickets can score you a spot trackside. So being a fan for life turns into the trip of a lifetime. That's the powerful backing of Amex. Pre-sale tickets for future events subject to availability and varied by race.

Turns and conditions apply. Learn more at Amex.ca. Slash-YANX. Did you lock the front door? Check. Close the garage door? Yep. Installed window sensors, smoke sensors, and HD cameras with night vision?

No. And you set up credit card transaction alerts, a secure VPN for a private connection, and continuous monitoring for our personal info on the dark web? I'm looking into it. Stress less about security. Choose security solutions from TELUS for peace of mind at home and online. Visit tellus.com slash total security to learn more. Conditions apply. This episode is brought to you by Peloton.

A new era of fitness is here. Introducing the new Peloton Cross Training Tread Plus, powered by Peloton IQ. for breakthroughs, with personalized workout plans, real-time insights, and endless ways to move. Lift with confidence, while Peloton IQ counts reps, corrects form, and tracks your progress. Let yourself run, lift, flow, and go. Explore the new Peloton Cross-training Treadplus at OnePeloton.ca. an article that investigated what is holding Europe back. Europe doesn't have a single company in the global top 25 companies while the US has 20. They also have a startup ecosystem that is

really lagging behind the US. And their conclusion in this article is that it's too expensive to fire people. And because it's too expensive to fire people, it creates a risk-averse culture where companies hesitate to bet big, which got us thinking maybe one of the reasons why the US is so dominant, so innovative. Maybe it's because we can fire people, the freedom to fail and take chances that might be what gives America its edge. Scott, you've been on both sides, you've done hiring, you've done firing. What do you make of this idea, this idea that actually because you can fire, because we have weaker severance laws, weaker severance protections in America, that might be the secret to America's innovation.

I think it's a big part of our innovation. I mean, there's so much when people ask me, what is the difference in the UK between the UK and the U.S. I mean, if you just say, in 1995, equal productivity, $45 per hour, Europe and the U.S., it's gone to like $75 in the U.S. per hour, and it stayed flat. Europe literally, for the most part, hasn't grown in 20 or 30 years.

And I think a lot of that comes down to risk aggressiveness. People are willing to take much more bigger swings. There's $5 million, a lot of its capital, $5 million in venture capital available for every startup in the U.S. versus $1 million in Europe. And part of that is that if things don't work, you can pivot. So I'll use an example. I started a company seven years ago called, I think we called it Section 4, then we changed the name of section. It was meant to be, don't laugh. Jesus Christ said, don't laugh. You're laughing at my startups.

I'm more than that you don't remember the name of the company. Jesus, I don't remember. My job was just to sell it and raise money or just to, anyways. Sorry, this is the craziest statement of all the time. I founded this company a few years ago. I think it was called. What was it called? It was either called Google or Joey's Edibles. I can't remember. Anyways.

It was called Section 4. Section 4. That's right. Thank you. Mia Silverio, our lead, the analyst work there. So now it's just called Section, and now we've changed the name to Section AI. Initially, it was meant to be 80% of graduate degree classes or graduate business classes for 10% of the price. And then we started using AI, and then essentially we found that people were coming to us and saying, you seem to understand AI, can you help us upskill our employees? And the pivot has been to what I'll call the adoption layer, and that is,

per some of these studies, you've had a lot of companies spent a lot of money on site licenses with Anthropic or Open AI only to find out six months later, their employee, their workforce has not adopted it and is not using it. So income section to help L'Oreal or whoever figure out, all right, how do you train employees, how do you get them upskilled around their specific tasks, make them more efficient so that they're not threatened. That company, we went to them 20 to 120 people, all right now when things weren't working and we got to like 10 million down of cash if i had if this had been a company in france we probably would have had to have closed down the company because that 10 million dollars would have been needed for severance and in addition we never

would have gotten to 120 people because when you can't fire people the reality is you're much more reticent to hire them so if you want a flexible workforce if you want to more innovation, if you want more risk-taking, you can't punish people for taking risks. And along the same lines, one of the other incredible features about the United States is our bankruptcy loss. And that is we're fairly forgiving. If a company has too much debt, it can go BK, and basically gets to start over, crush down the debt, or take out all the equity, the equity holders get crushed, go to zero, reformat the debt, and keep the assets inside of the company, because it might be a good, be a good company that's just over levered. Also personal bankruptcy. You're out of college. You think

you're making good money. You're spending a lot. You don't really understand how much money you're making. You get in out over your skis. Credit card bills keep mounting. You're paying stupid interest rates because no one ever people taught you calculus, but not how to calculate the interest rate on your credit card. You can declare bankruptcy. And while it's terrible for your credit, you basically get to start over. And that is a wonderful thing. What does that do? It encourages risky behavior on the part of people and of companies. And you're not afraid or as afraid in the United States to hire people because you know you can fire them. And I remember my first few companies, we never even hired people initially. We'd always hire them as contractors initially and then

moved them to full-time employees. So I think this is really a key component of the U.S. economy is our ability to hire and fire. And also something I didn't realize, or, you know, young people, especially your generation that have been in an economy that's kind of been up into the right, I find that because of concierge parenting and social media, that kids, when they do see them, when they do get laid off, it was never easy, but it seems like kids of your generation take it especially hard. And what I would say is, is that the worst thing that can happen to a young person is that they stay at a company and the company doesn't really think they're great. The company, they're just good enough. And I've had conversations

with people, with people I really liked. And I'm speaking in one specific example, a great kid. And I sat him down and said, I don't know why, but the CEO just doesn't think that much of you. I think you should look for another job. Because I think you're really good. And for some reason, the person who's going to make all kind of have a tremendous amount of domain over your future here is just not impressed with you. And I want, I like you enough, and I want you to do well enough. And he ended up going to work for another company I was on the board of, and he's done really well. But you're not doing yourself any favors. Oftentimes, it's a blow in the short term. And look, people got to pay their mortgage and all that. But if you're somewhere where your human capital

isn't being put to good use and isn't appreciated, that's not the place for you. You want to get out. You want to find a place where you excel. The company's growing. They can afford you. They can, they like you. And what you have in Europe, I think a lot of times are these kind of zombie companies and zombie employees where they think, okay, they're just good enough to hold on and they're more expensive to hire, to fire than they are just to keep around and let them go sideways. So also, just for morale, and people don't like to say this out loud. Everyone talks about, look, the key is great hiring, but occasionally on a regular basis, as a CEO, I believe it is good for morale to have what I call a strategic firing, and that

as someone is clearly not pulling their weight, and you get rid of them. Because what that says to everybody else in a weird way is, we appreciate you. Not everyone just gets to be here. You are working harder and you are better than the people we let go. And we recognize that. Other Otherwise, there's a tendency to regress to the median and everybody says, why am I working so damn hard when Bob over here is just not that good? So, again, the faster you can fire, the quicker you can hire. Just to go over the data that really backs this point out, so the cost of firing an employee in America costs the company roughly seven months of that employee's wages.

When you look at it in Germany, the cost of firing an employee is 31 months of their wages. And in France, it is 38 months of their wages. So essentially what you have here is it's a lot cheaper to fire people in America, which makes companies more willing to fire. And I think I agree with you. It makes companies more willing probably to hire because, you know, you're calculating less opportunity cost. It's not going to be a huge issue if you need to let them go.

So you're down to be nimble and pick them up, and maybe that's good for innovation. That's, I'm sure that could be true. Along these lines, though, a lot of this got me thinking about a conversation with Catherine Ann Edwards, the labor economist, who, you know, her point that really resonated with me, at least, is one thing that we need to emphasize more in America is just stronger labor protection laws. And we weren't talking about severance, and I think I'm actually with you on severance laws in America. But, you know, she was talking about, for example, universal paid sick leave, universal paid

maternity leave. She was pointing out that these are issues, especially for women, that actually lowers labor force participation, makes it more difficult to join companies because they don't get the kind of benefits that you get in Europe, specifically when it comes to sick leave, specifically when it comes to family leave. And I thought that was the right point. But then there's the other side to this, which is, okay, well, maybe if you take a the Europe model, maybe if you lean into benefits for workers, for employees, if you make it more

expensive to keep them, essentially, then that could be, again, a suppressor on innovation. But I'm not the founder, and I'm not the CEO here, so I want to get your reactions to that. It's complicated because the species needs to continue, and we need young people to have kids, So to say, to constantly preach about the importance of young people meeting and having the opportunity in the economic war with all to have kids and then to say, no, all employees should be at will, I just think that's hypocritical. And I remember how hard it was from my partner working at a Goldman with two kids under the age of five. The market is solving for a lot of this, not for not all of it, because the best companies recognize that 60% of our college graduates are women and most women at least want the option to have kids. And so their criteria for selecting a company is how they treat women. It's specifically, you know, how are they around maternity and leave benefits?

So the competitive pressures have naturally, I mean, I'm not exaggerating. Women used to get two weeks off to have a kid back when I was a kid. I mean, there was no Google in six months maternity leave. That just wasn't, that didn't exist. There was absolutely no recognition that women have ovaries and actually. actually need to give birth and should be at home with the baby. You know, this is a, this is a tough one. Where do you land? The species needs to continue. The market is figuring a lot of this out because women are the most qualified and most educated, so they want to make family-friendly offices

for them. I do think that the government has a role here. We're the only one of the G7 nations that doesn't have universal child care. And if we want to bring more women into the workforce and increase workforce participation, there's a myth that America loves to work. America, work hard, but we actually not that many people work. Up the 350 million people, only 165 million work. So if we want greater workforce participation, I think universal child care is an absolute is an absolute must. But I just want to go back to hiring and firing because I've thought about this lot. I think I've probably hired 12 or 1,500 people. I've probably fired 3 or 400 people. If you're put on a PIP, a performance improvement plan, start looking for another job.

the moment fairly or unfairly you've put on a quote unquote performance improvement plan it means somebody no longer has confidence in you and you should just try and find another job too as a manager or a CEO of a company uh i don't think i've ever fired anyone on the day i was supposed to i always put it off i hate it you're rocking someone's world it's a awful it is hands down the worst part of the job it's just awful and what but my advice to any manager is i would say 90% of the time I have fired someone too late. I don't think I've ever fired someone too early. You have a gut it's not working out. In a small and a medium-sized company, you don't have the resources to wear with all the bandwidth to try and figure out. The kind of the progressive woke view is, oh, it's all about the company. And if they only have the right role and if we switch bosses and they have a bet, no. No, when you're a small or medium-sized business, it's hand-to-hand combat. If someone can't figure out a way to figure out how to add value, almost from the get-go, you should probably move them out.

And my view is around firing is the following. Higher, slow, fire fast. And what you can do when you fire fast is then you immediately become exceptionally generous. You can give them more severance. And essentially, my approach of firing has always been the same thing. We're letting you go. Here are some reasons. We can talk about it, but it's not going to change the outcome.

What I want to move to is a conversation around what we're going to do for you. you should be, you can be angry, you can be upset, you shouldn't be scared. We're going to keep you on for as long as you need, and we're going to try to help you find another position such that this is a win for you. But I find that your ability to be generous like that oftentimes is based on your ability to fire quickly. Instead of keeping someone way too long and then it becomes totally obvious, and then quite frankly you can't be as generous. So my attitude is you're rapacious about the decision, but then you're very maternal, paternal, whatever the term is, around the terms of them leaving, and such that they're not scared. You know, they go home and they have a terrible

conversation with their spouse, but they're not afraid. It's like, okay, you're going to have health insurance. We're going to pay you for as long as you need, and we're going to help you find another job. What do you think of this thesis, this idea that this is part of the reason why Europe is behind, and this is why they're lacking in innovation. I mean, I kind of like it as a theory, but I'm also hesitant to just be like, this is why. I mean, I think there's got to be a lot of reasons. But what do you think of that as one of the explanations? It's absolutely multidimensional. There's a lot of reasons, but this is a big part of it, because the West's attitude towards business is ready, fire, aim. Let them, we err on the side of a lack of

regulation, right? Let Uber go into Argentina, not even get business licenses, let Airbnb start renting out people's apartments without getting any licenses whatsoever. Let AI molest traditional IP. Now, in every one of those instances, you can make an argument for why it's wrong, but generally speaking, a lack under-regulating has worked out really well for the U.S. versus over-regulating. Because as they're sitting there trying to figure out how to save the whales and how to be carbon-neutral and what's right for, you know, special interest groups, we're just blowing right fucking by them with companies that are moving a lot faster.

So there is a certain, if you were to just look at economically, where I part company with what I'll call the techno libertarians and the people who claim to be capitalists is you want full body contact corporations, you want to let them, you want to let your winners run, but quite frankly, you want to tax them at higher rates such that you can make, you can afford to have, have retraining, greater unemployment benefits, universal child care. But in terms of the actual

combat on the field, give them the weapons they need and then stay the fuck out of the way. And then tax them. Corporations have their lowest tax rates since 1939. But try and do away with as much regulation as possible that gives them the opportunity to move faster than their European or their Chinese counterparts. And then with that full-potty contact violence, they hopefully become the best in the world, generate a lot of profits, and then tax them at a real rate. And when people get laid off, because they're in that full-body thunderdome, we can give them more unemployment. When women can enter the workforce because they have universal childcare, right? Basic, we can reinvest in worker retraining when someone loses a job because

they're in an industry that's in decline. So I'm of low regulation, but high taxation. So I guess it's a mix of the two. But I think it's a big component of why I'm on the board or was on the board of a French company. We were very careful about hiring people because it's like if it doesn't work, I mean, basically, you almost can't fire them. You can't afford to fire them. Three years, you'd rather keep them around, even if they're bad, than have to pay them what amounts to three-year severance to just do nothing. Yeah, just find something for. for them, anything, right? And so this is, I absolutely, also to a certain extent, Ed, I mean, I hate to say this, but that anxiety and a little bit of that fear is very motivating.

You know, America at the end, my dad, who was a Scottish immigrant, said something that always stuck with me. He said, America is a terrible place to be stupid. I would argue America is a worst place to be unlucky, but America is comfortable with the following. We are comfortable with a zeitgeist that is winners and losers. We want really talented, hardworking, and lucky people to garner more assets than any individuals in the world. At the same time, we're also comfortable with, quite frankly, having a safety net that is much more porous and lower to the ground. We have made a conscious decision that if you don't work in this country or you're not lucky, your life is going to be worse here. But if you're really good at what you do and you keep trying and to

keep taking risks, your life's going to be better than anywhere else in the world. America has basically decided that they are comfortable with that complexion of a society. I think the only part where we run into trouble is, yes, it's good to have a system where it's full-body contact, more innovation, more wealth creation, more valuable companies. It's all well, and good. But again, to your point of the taxation, it's like, well, why do we live in this incredibly prosperous society, this incredible economy, and yet many Americans are unable to afford their groceries? How could it be that someone in America is living with that situation, living in the most prosperous nation in the world? And then meanwhile, you've got Bezos, who's deconstructing 100-year-old bridges and flying his 400-foot yachts through those bridges. Point being, I agree with you in terms of you want to loosen regulation, let companies do their thing. I also agree with it when it comes to taxation, but you can't have it both ways.

You need some way of redistributing that wealth. distributing that value creation such that people live decent lives. And it shouldn't be that we have this incredibly innovative and prosperous and wealthy society. And yet we can't get our act together on something like universal child care. I mean, that exists in all of the European nations that we as sluggish and low growth. You'd think they don't have the money to pay for anything. Somehow they figure it out. There's a difference between just the kind of libertarian view of the free markets and capitalism. And that is, we're moving towards this. basic free markets and kind of a libertarian, low touch, low government involvement. That ends up

with a small number of people who garner most, if not all of the resources, most of the romantic opportunities, most of the political power. And then they don't think of themselves as bad people, but they give money to the right people and figure out a way to soak all the oxygen and all the resources into a smaller and smaller group of people. And then at some point, the bottom 99% realize the fastest way to triple their income is to kill the 1% or to overthrow them in some form of revolution. That is the basis. As has happened throughout history over and over again. The greatest innovation in history is the middle class in America. It's an accident.

Republicans would have you believe that it's a self-occurring organism, that if you just let the market go, the middle class will thrive. No, the middle class is an accident. It's not supposed to exist. People who are very talented and well-connected, garner a disproportionate amount of resources, use that economic, power to weaponize and overrun government and create regulatory capture and just fucking run away with it. And that's kind of the story of the S&P over the last 20 years. You have to redistribute money back. Let me use the R word. Redistribution. You have to tax. Our periods of greatest economic growth are when our corporations have been paying 50, 60, 80 percent tax rates. And I go back to Daniel Conneman. The difference between making $10 or $15 million a year makes you no more

happier. So why on earth would you not have incremental tax rates about a certain amount of 60, 70% on individuals and have an alternative minimum tax of at least 30% on corporations such you can have universal child care, such that you can have training, such that you can have Pell grants, such that you can have tax incentives to create more housing to bring down the cost of housing. You also need, I'm going off base here or off script here, you need a massively aggressive FDC and DOJ to make sure no one set of companies like 10 control 40% of the S&P. But all of these are common-sense solutions that other governments have implemented, and we implemented basically from 1945 to about 2010, but we have become weaponized by old people and by rich people who are basically following the same tact as every third world nation, and that as they've said, you know what, enough is just not fucking enough for me, right? I want policies that take me from $1 billion to $8 billion, then to $80 billion, and that to $280 billion. I'm not saying we don't need billionaires, but do we really need someone worth $400? billion dollars while we're cutting, while we're about to double the tax credits for Obamacare to children. I mean, like William Gibson said about the future, it's here just not evenly distributed. Well, prosperity, unprecedented historic prosperity is here in America. It's just not evenly distributed. Capitalism does not work. It collapses on itself unless you consistently redistribute capital from the most fortunate, most blessed, and best performing companies and individuals back into the middle class. And if you don't do that,

there's no basis to build an economy. The whole point of an economy is to build a middle class. Full stop. Anyways, thank you for my TED Talk. Let's take a look at the week ahead. Earning season will kick off. We've got J.P. Morgan, Goldman, City, Bank of America, Morgan Stanley, and Wells Fargo, all reporting. We'll also see earnings from ASML and Johnson and Johnson. Scott, Do you have any predictions? I don't know, Ed. Let's just say that either Pallenteer or Tesla are off 40% or more by end of Q1, 2026. Let's put that down.

Palantir or Tesla off 40 plus percent by end of Q1, 2026. What do you think? I always want to say yes. And we're always wrong. Yeah, I wouldn't be surprised if you made the same prediction last year. It should be, I mean, it makes absolutely no sense. I'm just, I've really struggled with this company. It never, it never seems to fall down.

But it has to at some point. I just, I just don't know about the timing. I know it will. I know it will come down by 40% at some point. I just don't know about Q1. It's hard, it's hard to say. Either that or you're going to decide you've had it with my bullshit, move to Vermont and raised Labradoodles,

raised hypoallergenic Labradoodles with that lovely girlfriend of yours. And maybe you're going to fire me. You apparently love to fire people. Yeah, it hasn't happened yet. It hasn't happened yet, you know. You know, 18 bucks an hour. You're a decent deal. This episode was produced by Claire Miller and engineered by Benjamin Spencer.

Our associate producer is Alison Weiss. Mia Silverio is our research lead. Our research associates are Isabella Kinsel, Dan Shillan, and Kristen O'Donoghue. Drew Burrows is our technical director, and Catherine Dillon is our executive producer. Thank you. listen to Profty Markets from Property Media. Tune in tomorrow for a fresh take on the markets. and the dark flies in love, love, love.