Prof G Markets - Why Big Tech Is Losing to Boring Stocks

Episode Date: February 23, 2026

Scott Galloway and Ed Elson unpack why boring stocks are winning this year and debate whether they’re truly as recession-proof as investors believe. They also debate the latest wave of proposed wealth taxes and whether they can actually address inequality. Finally, they examine why AI is quickly becoming one of the defining political issues of the decade. Subscribe to the Prof G Markets newsletter  Order "Notes on Being a Man," out now Note: We may earn revenue from some of the links we provide. Subscribe to No Mercy / No Malice Follow the podcast across socials @profgmarkets Follow Scott on Instagram Follow Ed on Instagram, X and Substack Send us your questions or comments by emailing [e-mail] Learn more about your ad choices. Visit podcastchoices.com/adchoices

Support for the show comes from VCX, the public ticker for private tech. The U.S. stock market started history's greatest wave of wealth creation. From factory workers in Detroit to farmers in Omaha, anyone could own a piece of the great American companies. But today, our most innovative companies are staying private longer, which means everyday Americans are missing out. Until now. Introducing VCX, a public ticker for private tech. Visit getvcx.com for more info. That's getvcx.com.

carefully consider the investment materials before investing, including objectives, risk, charges, and expenses. This and other information can be found in the funds perspective at getvcx.com. This is a paid sponsorship. Today is number $2,026. That's the average amount of American pet owners spent on their pets in a year. True story. My pet parrot died.

Last thing he said, shit, I think my parrot's about to die. You have to think about it. That's what I like about that. joke. No, you don't. It's not a head scratcher. It's just a bad one. It's not that deep.

It's just bad. Yeah. Talk about the Pokemon card. You didn't read this? Excuse me? This show's going really well so far. I just got to say it's clicking. It is clicking.

It's $16.5 million. That's how much Logan Paul sold a Pikachu Pokemon card for on Sunday, which is incredible. But the more interesting thing was the buyer. It's Anthony Scaraboochie's son. son. I did see that. I thought it was pretty ridiculous, but I love Scaramucci. So, you know, I held my tongue on that one, but I'm not sure that was the best use of funds. I immediately texted him because we're friends and I said, can you adopt me? Where does his son get 17 million bucks? That's a

great question. I mean, I knew Anthony was doing well. I didn't know he was doing that well. Unless maybe his son is doing really well. How did Anthony respond to that? I haven't heard back from him. My guess is he's got a lot of text about that Pokemon card thing. Didn't appreciate the comment. What's going on, Ed? I'm doing very well. I'm doing very well. I heard you headed to London.

Is that right? I am headed to London on a secret mission with an advertiser. I'm not sure I'm supposed to be talking about it, but I am heading to London. Does it involve Prince Andrew? I don't think so. I think he just got locked up. Yeah, arrested. Can you believe that?

I can. it's pretty crazy that it's surprising, but yeah, it's a long time coming, right? But yeah, I'll be in London. I'm going to a Chelsea game. I'll see Cole Palmer. What about you? And Ed is going for, at the request of an advertiser, so I'm finally, it's fine, it's good to see you finally pulling your weight. Yeah, that's right. Well, as well as this banter's going, I say we head to the headlines. I asked you a question. What did you ask me? How's it going?

That's your witty banter. It's fine. I'm in Zermat. I don't enjoy skiing, but it's a beautiful town, and I get to hang out with my family. And I've mostly been doing podcasting every day. Do you see AOC was asked a question in Europe

about my resistant unsubscribe movement? What did she say? She said, it wasn't exactly like a full-throated endorsement. She said, you know, all of these things are great. And even if they don't work, I'm like, oh, well, thanks to that vote of confidence, AOC. True politician. She's kind of crushing it right now.

She's popularity, especially when young people, is absolutely exploding. She's powerful. She's a powerful young woman. Intelligent, quick on her feet. So you haven't gone skiing once, or did I hear that wrong? No, no, no, once. So what's the fun in being in Zemot, then? It sounds like it's just the same routine.

but with a different view. Yeah, that's pretty much accurate. But here's the thing, and I'm not in charge. You'll see. Just wait. Just wait. You're in a relationship now or you have like 50-50 decision-making. Just wait.

You just got to smile and get through it. Get through it. Get through the family ski trip in Zemark. Well, should we get into our docket here? We've got a lot to discuss. Yeah, let's do it. Today we're discussing why boring stocks are winning in 2026. We've got an update on the wealth tax debate, and then we will be discussing why AI is having a popularity problem.

And just a note before we move on, for coverage on the Supreme Court's tariff ruling, please check out our emergency episode from Friday. Now is the time to buy. I hope you have plenty of the world at all. Last year, the market was obsessed with AI and tech stocks surged on the hype. In fact, the math. Mag 7 rose 23% in 2025 alone. But this year, the vibe has shifted. Investors are piling into so-called boring sectors, including consumer staples, energy, and materials. All Mag 7 names are down on the year, wiping out nearly $1.5 trillion in market value. Meanwhile, consumer staples are up nearly 14%.

Materials are up 18%. And energy is up 22%. So the rotation is real and it is happening. fast. We will get into all of this, but first, Scott, I want to take a quick little victory lap here. Last year when we did our investment strategy episode, when we talked about what we're investing in in 2026, I was talking about how I thought that tech was a little bit overbought and that we would need to see some sort of rotation outwards. You need to diversify. I gave you three picks for 2026. They were the equal weight S&P, healthcare, and consumer staples.

and just, I mean, we're not done with the year, we're only a couple of months in, but the performance so far, S&P is flat, healthcare is up 1%, which is not that great, but it's still outperforming. Equal weight is up more than 5%, as some of these less loved names, start to get a little bit more juice. And then more importantly, as I mentioned, consumer staples is up nearly 14%, one of the best performing sectors of the year. So some of the names in here that are really winning right now,

Walmart up 12% year-to-date, Costco up 17% Coca-Cola, 15%, Johnson & Johnson, 18%. A lot of these names that people didn't really care about, at least in the past few years, are suddenly very, very hot stocks right now. So let's start with your reactions to this rotation that we're seeing. What do you think, Scott? The bigger story is just the amount of market cap

that tech or AI-related stocks has had, and then kind of the SaaS apocalypse. What's interesting is that it appears that people are still pretty bullish on the market and are going after or going into staples, that it's been a rotation. It hasn't been a rotation out of the market. It's just been a rotation into other stocks. So, and these companies, you know, they typically trade at, you know, reasonable multiples, I guess look cheap relative to everything else.

And I almost think of it as sort of schmuck insurance where people said, all right, the AI and the tech trade has been the gift that keeps on giving. And we need to just be a little bit more diversified in case there is sort of a real. I mean, if you look at every single stock that's tech stock over, call it, two or three hundred billion in market cap, they have years in just the last five or seven years where they've been down between 40 and 70 percent. So if that happens, you're caught in that. down draft and especially when these things, these just things look like they got way out over their skis, you'd want to be, if you still want to be in the market, which it feels like traders still, or investors still want to be, just go into more defensive names and just diversification. I think that's exactly what we're seeing. The one thing that I would add, I mean, so to your point, the boring safe picks are the ones whose valuations have lost year, at least been cheap compared to, say, tech. but it is striking how that seems to be changing now

because the multiples on these so-called boring stocks are absolutely exploding now. So consumer staples, those stocks are now trading at 25 times earnings. That's their highest multiple in decades. Same thing is happening with materials, same thing happening with utilities, industrials, energy. They're all trading at historically high valuations. So it's this very interesting dynamic

where, you know, a month, two months, three months ago, yes, what you said is true, those companies and these stocks are generally cheap compared to tech. But there's been a flippening that has transpired in basically a matter of weeks, where suddenly it seems that actually now those boring stocks might be way overbought. There might be too much energy, too much momentum.

To the point where those valuations now look really expensive, last week we compared the difference between Amazon and Walmart and Costco. Walmart and Costco are trading in a multiple twice as high as Amazon right now. So it's a really interesting dynamic where last year multiples were being or premiums were being placed on companies that had high growth, that had an AI narrative, that were building and that were investing in CAPEX and data centers, etc. Now those companies are getting punished, and it's the companies that are, are very boring that have been doing the same thing they've been doing for decades that are so-called

safe stocks, those are the ones that are getting the real premiums right now. So the whole narrative has completely flipped on its head in literally like a month. And I think that is a very interesting predicament for investors, especially if you were buying into these safer stocks at the beginning of the year, like we were talking about, suddenly you're holding these stocks that a month ago look pretty cheap. Now they look kind of expensive. So what are you supposed to be? You to do about that? Are you going to hold? Are you going to diversify back into tech? I think these are the questions that investors are now having to reckon with. I think there's real opportunities in these fallen angels in the SaaS market, because who would have thought that these companies would

look like a bargain as a multiple of their free cash flow and their price earnings ratios relative to, you know, tied in Costco? I mean, in Walmart. So I think that I think that's the, the If you had a basket of these companies, I can imagine them doubling. I can't imagine Procter & Gamble and Coca-Cola doubling in the next 12 months. So I think that this is, even though these companies are quote-unquote, good companies in their own right, what's driving their premium is essentially fears from AI that, A, you need to rotate out of AI, which is overvalued, and B, fear of or finding companies that are quote-unquote A, AI immune, and Goldman has this AI immune index that they put together, and it's done really well. But I would argue that that probably means these stocks are a little bit rich right now. It's really fascinating how quickly this happened. Because, I mean, literally what we're describing is basically the opposite of what we were talking about as recently as like last quarter. And it's sort of the perfect example of you want to Z.E.

when others are zagging. And that is, yeah, software is getting absolutely demolished right now. I mean, one of the things that I was looking at, I'm not one for a technical analysis, but there is a technical indicator called the Relative Strength Index, and it's basically this formula that captures

how much buying pressure and selling pressure there is in a given stock or in a given sector. When the software apocalypse, the SaaSpocalypse was happening just a few weeks ago, I was looking at that relative strength index, a score below 30, an RSI of 30 or below. Generally, that means that the stock or the sector is very oversold. There's huge amounts of selling pressure happening. And back then, when I was

looking at it, the RSI for the software stocks was 18. It was below 20. So just a cascade of selling in what was the hottest sector. Now you look at the relative strength index for consumer staples as just kind of a stock counterpoint. The RSI on those stocks right now is north of 70 right now. So huge amounts of buying pressure going into some of the most boring stocks that you've ever known. And yes, those looked attractive a month ago. But I think to your point, these narratives are cycling through so quickly and so aggressively that you now have to be balancing and really understanding what is the sentiment in the room, how has it changed, and what has it done to pricing? Because the price and the multiples on these stocks is just going

haywire right now. To the software point, I mean, we've gone through some of the reasons why we don't think AI is going to be the SaaS killer that the market seems to think it is. We've talked about how the switching costs are extremely high, and AI hasn't really done anything to change that. I mean, it's offering another product, so maybe there's an incentive. to switch, but still the lock-in and the switching costs for these enterprise SaaS companies still really high. We talked about how these companies can still just integrate AI into their own products. That's what Google did after chat GPT. There's nothing stopping Salesforce or Adobe or even Figma, which is now partnering up with Anthropic to integrate AI into their own products. Nothing stopping

them doing that. And then we also talked about the fact that, like, trust and security are these really big priorities for companies that are licensing SaaS services for their. for their enterprises. And that's, again, something that AI hasn't really done anything to change. In fact, if everyone's out there vibe coding their own AI SaaS tools, that probably means that the trust and security, the value of trust and security, is actually higher. Maybe that actually incents more interest in these storied names that have a real record of success.

So those are some points that we've discussed about why, you know, AI isn't going to necessarily kill software, like a lot of people seem to think it will. I think two other points that I would like to just point out, Microsoft and Amazon have gotten absolutely killed. Microsoft is down, let's see, I think Microsoft is down 15, almost 15% over the year to date, similar with Amazon. And again, the reason that this is happening is because there's this feeling that AI is going to kill them. it's going to, you know, massively disrupt their business model. And this all happened after Anthropic came out with AI tools and OpenAI came out with AI tools too.

But there are two facts that I feel like no one is really considering, which is that, one, Microsoft owns 27% of OpenAI. So anything that OpenAI does that is impressive, that may disrupt the business model of legacy software companies, like Microsoft is taking a third of that. So that's the first point. And two, Amazon owns more than 16% of Anthropic. They're one of their largest and earliest investors.

So again, if Claude comes out with something interesting, the idea of just going and selling your Amazon because Claude's going to be a disruptor, it's like Amazon owns Claude. Amazon's one of the biggest investors. So this idea that these older tech companies are on the other side of the AI trade, to me it just doesn't really make sense.

Like, they are literally shareholders in the businesses, the largest shareholders, in the businesses that are supposedly going to disrupt their own industry. Yeah, but I think that their exposure to those companies or the belief that their exposure to those companies would be their growth vehicles, and maybe the growth that won't be as growthy as one had hoped, has maybe had a negative impact on sort of their parent companies, being Microsoft or Amazon. But at the same time, there's a recognition that AI is a fundamental game changer. and as you pointed out, has destroyed a trillion dollars in value in SaaS companies, despite the fact there's absolutely no evidence that their cash flows or their top line have been affected here. The other thing I would point out about quote-unquote recession-proof stocks or that they're safe. I find that conventional wisdom or when wisdom becomes conventional, it's no longer wise. Now, what do I mean by that? There's a basic bull case or kind of this trope that

that with these types of staple companies, that people will always need toothpaste and shampoo and that it's recession-proof. I think that is total bullshit. You know what I think is more recession-proof? Enterprise software that runs mission-critical operations in a company. And what I would offer up just from a consumer level is that when a recession hits,

consumers stop buying lattes, companies stop buying new office chairs, but companies don't stop using Salesforce to manage their customer pipeline. So this notion that this group of companies is somehow shielded from a recession, A, they're not, and B, I would argue they may be less shielded from enterprise software.

Demodentza might hit their margins, but when you talk about CRM, ERP, cloud infrastructure, cybersecurity, these aren't discretionary spends. They're the nervous system of these companies, And the switching costs are enormous. The churn rates are low. Salesforce's churn is sub 10%.

You know what? It has higher churn? Cable TV subscriptions. People were saying that Netflix is a recession-proof trade. I mean, that was the idea at the beginning of last year. Everyone uses Netflix. Who cancels? It's like a lot more people are canceling their Netflix

and they're canceling their Salesforce, right? Discretionary consumer. The operative term is discretionary. and they say, okay, they're staples. Well, okay, you might buy detergent, but you might go to a private label, and you might decide to have, you know, bigger loads or fewer loads or whatever the term is.

But if you have Salesforce in your company or ServiceNow or Workflow or S&P or whatever it is, that shit is hard to rip out. And you may not, you know, procurement may get off its heels and onto its toes and ask for some price concessions. But I don't see any reason why these SaaS companies aren't as recession-proof is what we have come to believe are recession-proof

consumer staple stocks. I think that's 100% right. It is so fascinating how many different narratives are fighting against each other in this market right now. Like there's the idea that AI is going to be the killer that's going to destroy these business models. There's the idea that there is just general uncertainty which is going to lead to a recession. So you need to move to, a flight to safety. So maybe that means you move into some of the more boring sectors that we talked about. Then there's the question of like, who will be the AI winners and who will be the losers? A year ago, if you were a tech company, if you were a software company, that generally meant that AI was going to be a good thing for your business and your multiples went up. Now that

there's a different question where it's like, oh, actually, no, we think that AI is going to be a killer for your business. Then there's the question of, is AI like a bubble? Like, is the whole thing overvalued? What's happening there? Then there's a question of like, if you're moving into safety, why are you going into toothpaste? Why aren't you going into fixed income? Why aren't you going into bonds? Maybe that means you're going into gold. I thought gold was the biggest safety play. So all of these stories are floating around right now. And it seems like over the past two or three years, the story seems to be pretty anchored in consensus. People seem to agree on what the major market narratives were where the trends were moving over time. But it seems like there's

so much disagreement right now over who's winning and who's losing. I look at Amazon as another example. Warren Buffett just dumped his entire, practically his entire Amazon stake. Meanwhile, Bill Ackman is going out and buying up Amazon more than ever before. That's a huge disconnect on the narrative on who's going to actually win this. So all to say, very interesting time to be in the markets, to be an investor. The level of disagreement that I'm seeing, both by looking at the prices and also just looking at the conversation online, on CNBC, among Wall Street analysts, I mean, no one seems to agree on anything right now. The net net here, and I think we feel fairly confident around this, which is dangerous.

The close you get to certainty, the more likely you are to be wrong. But in sum, the market is paying a 50% plus premium multiple for low growth, low margin commoditized physical goods over high growth, high margin, sticky digital products. So I would argue it's not a flight to safety. It's simply put, it's mispricing. And I don't think that it would be a overconfidence statement to simply say that software, the risk-adjusted return on software stocks, on the IGV. basket right now is very, very high relative to anything else.

You know, that's not saying that it's going to massively outperform, but based on the numbers, yeah, the risk-adjusted return is pretty awesome right now. Those stocks have been beaten down to death. It's unlikely that they will fall that much further, but the possibility of them going up is very high, just on a multiple basis. Do you know what else has been beaten to death? Yeah. This.

This story. What's the next story, Ed? It's like, our listeners like, all right, enough already. We get it. We get it. Ed loves Salesforce. We get it.

They want to get rich. We're going to get rich here. There you go. We'll be right back after the break. And if you're enjoying the show so far, send it to a friend. And please follow us if you haven't already. Support for the show comes from VCX,

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Shipstation.com code markets. We're back with Profji Markets. Wealth taxes are suddenly back in the spotlight and the proposals are piling up. Back in September, a French economist proposed a 2%. tax on French residents with over 100 million euros in assets. In the Netherlands, lawmakers just approved a plan to tax unrealized gains on assets, such as stocks, bonds, and crypto. And in California, a proposed 2026 ballot measure would impose a 5% annual tax on individuals worth more than $1 billion. That proposal in particular has sparked a lot of debates. Here are some of the headlines we're

seeing from the San Francisco Standard, quote, the billionaire tax back. is spreading far beyond billionaires from CNBC. California's Rocahnia faces Silicon Valley backlash after embracing wealth tax and from Politico, billionaire tax sparks intra-party war in California. All of this backlash underscores the bigger question, does a wealth tax actually make sense? Scott, we talk a lot about inequality on the show,

income inequality and wealth inequality. This is a proposed solution to the problem. What do you think of the way? health tax. So first off, let me just put a land acknowledgement or an asterisk on this, and that is, I don't think the top 1% are paying their fair share, especially the superowners. The super earners at the 1% that are, you know, moms, a ball or partner in a law firm makes a million, million, a dollar dollar. Dad's a successful chiropractor makes $400,000. Combined income, $2 million, they're paying a ridiculous amount of taxes because it's current income. The person who

makes their living, buying and selling assets, has a lot of assets, and then occasionally sells them, pays a much lower tax rate. And what people don't recognize is what they do is they borrow against those assets, thereby deferring the tax liabilities such that their bigger pre-tax asset grows exponentially bigger, faster because they kind of never pay taxes on it, or they defer the taxes. So I do think we should have alternative minimum tax. I think we should tax assets if you borrow against them. But a way, wealth tax in some does not work because income is easier to tax. It's a flow of money from Company A to person B, and basically the government can fairly easily intercept that transfer and

figure out what percentage they're taking. And it's also pretty easy to estimate what someone's flow is. The problem is with the wealth tax is you get into an enormous war that will create a pretty sizable industry trying to figure out the value of these things. So if you're a net worth is $10 billion because you own 15% of a company, where $67 billion, the reality is you don't have 10 billion sitting in a checking account, so you would have to sell stuff, so it would create unnatural acts. In addition, how do you assess someone's art collection, the value of their homes? So it's sort of like you're trying to tax someone's house based on what Zillow says it's worth, and then demanding that they pay

cash for it. And what if they don't have the cash on hand? Do they have to sell the house? But if everyone's forced to sell their houses or assets to pay well tax is what happens to asset values? They probably go down. I wouldn't think they collapse, but they go down. And valuation is an absolute nightmare. How do you value a Picasso, is it worth $3 million or $30 million? How would we value, say they wanted to take, say it was a 10% wealth tax, how would they value what my stake in property media is worth? And then where do I come up with that money? So I spent three or six months fighting with auditors and consultants and trying to get letters saying that property media is worth $2 million, not $20 or $100, right? So it's just fraught with

risk. In addition, they don't work. Sixteen countries that have had wealth taxes, all but three have repealed them. The Uber wealthy are the most mobile people in the world. Also just philosophically, I think there's something to the notion that it violates private property loss. And that is once you get through the current tax regime, whatever it is, fair, unfair, and you have that asset, that cash post-tax or that house

and you've already paid taxes on it, whatever, and it's gone up in value about the house, it's yours. and no one has the right to come in and force you to sell it or to take a portion of your assets you already have. So, A, I don't think it works. Billioners will immediately hire the best tax attorneys and accounts to argue their assets are worth 40% of what the government says it is. The IRS does not have the resources to fight this. And you would literally need 10 times the budget of your auditors and your IRS to administer a wealth tax.

and most of the money would go to paying lawyers to argue about your yacht valuations. They just don't work. So I think, quite frankly, just as AI in our previous story was having sort of the shadow effect on consumer stocks, I think Epstein is having a shadow effect here.

I think that the general public is just so fed up with the entitlement and what is arguably the depravity of the Uber wealthy here, they're like, okay, we've just sort of had it. So, you know, I can understand the sentiment, the social pressure, the basic philosophy.

We need to increase taxes on corporations and the Uber wealthy. This is not how you do it. I agree with some of what you said, and I disagree with other parts of what you said. I will start with where I disagree. I, so, I mean, you talk about how taxing illiquid assets is too complicated, like, how do you value it? If it's not current income, like, what do you do about that? I mean, my response to that is like, that, that's exactly what property taxes are. Like, property tax is you have a home, we're going to come up with a valuation, we're going to figure out an appraisal, and then you're going to pay a certain,

amount of cash as a percentage of the value of that home. So I don't see any reason why the exact same thing shouldn't apply to everything. I mean, we do tax the liquid assets, specifically real estate, through the form of property taxes. So, you know, like, how do you value property media? You have an auditor come in and look at the cash flow statement and figure out a valuation and then determine a tax rate based on that valuation. In the same way that we do that with houses. So I think that, I mean, I agree it's a lot of work and it is like more complicated than just tax and current income.

But I don't think it's crazy and I don't think it's out of the question. And I think given, as you say, the pushback against the Epstein class and the billionaire class, though, to your point, I like Epstein class, I think that's better. An argument against it, I think, needs to be stronger than it's too difficult. Because, you know, I think the people at this point say, screw you, we can figure something out. We'll figure out a way to tax it.

And I don't think it actually is too difficult. So that's one piece of it. On the other side, I do think there is a valid point that it doesn't really work. And that is you bring up all of those countries that have tried it, and then repealed it because it didn't work. And it seems like the common thread among those repeals is that actually people tend to leave. Billioners tend to leave, at least.

And I don't like that answer. I mean, I don't like the idea that we're having to cater to this very small subset of people because they're so wealthy and we need their money so badly that we've got to tailor all of our laws just to have them, day. To me, I find that ridiculous and annoying. And to be fair, it isn't always the case that billionaires leave. I mean, we saw what happened after Mamdani was elected. Everyone said, I'm going to leave. It's going to happen. And then the luxury market, housing market started to rip and inventory

went down because there was so much demand. Like, they were kind of faking it. But there are cases where actually that does happen. It happened in Norway. It appears to be beginning to happen in California, Mark Zuckerberg just bought a house in Miami. He apparently is going to move to Miami in April. So I think that that is a legitimate reason why it actually might not work. And then another reason that I would add on to why it probably won't work is that, I mean, these billionaires are just not going to let it happen. Like even if it goes through in California, I guess there'll be some movement out of California,

but in addition, it will be hundreds of millions of dollars funding lawsuits to make this not happen. And if there's anything we've seen over the past few years after Citizens United, it's that rich people kind of control politics. So if you come up with a plan that rich people, the very, very rich people really, really, really hate, and they hate this, my view is they're just not going to let it happen. So this is total populist bullshit. that defines the term the difference between being right and being effective. The super rich are not paying their fair share. They've registered unparalleled prosperity and haven't paid their fair share.

And we need to do something about our deficit. And just for the good of the Commonwealth, when the genie coefficient is where it was during the French Revolution, all right, we've got to do something. A hundred percent right. And then let's go to the part of the program where we try to be effective and not do a non-DOM tax where we're going to collect less money in the UK than we did before the non-DOM thinking we were going after billionaires, right? So how do we actually, if the net net is to help address income inequality, raise the funds we need to have a social safety net in a military, that's the goal. The goal is to get more money, not less, and then feel good about ourselves. So you brought up the notion of basically property taxes or kind of a wealth tax.

I think, theoretically, I understand. I own one of 14 units in my building. There are transactions every year, and they can say, all right, your unit is worth approximately X. Ed, what is the value of Prop G Media? Serious question. What's the value? What's the value? No better.

What's the value range? Shall I answer it seriously? Yeah. Yeah. What do you think the range of value is for Prophegee Media? right. I would argue one of the reasons people like the show is we give them behind the music. We try to be more transparent than any fucking show. Joe Kiernan isn't going to tell you how overpaid he is. You own a large equity stake in property media because you believe it's going to be

worth something. And owning equity in a company is how you build wealth. It grows tax deferred. And I, the reason I give you ownership in property media is I want you acting like an owner and I don't want you to go be Joe Kiernan's successor. So what do you think Providea, give me a range. What does Profitu Media? I can give you within 5 to 8%

certain, with 5% to 8% variance what I think my condo is worth. What do you think the range of value is for Procter Media? I'm going to go with $75 to $100 million. But if David Ellison were the buyer, I'd double it.

Okay. The range is zero. The bottom range is zero. What is this company worth if I show up in the Epstein files tomorrow and I'm arrested? Serious question. What's this company worth? It's worth, we'll go $5 million. You think someone would pay $5 million for this company without me? I'll figure it out. I'll make it happen, Scott. All right, so let's say $5 million. I buy your high end. If we continue growing, it's the, you know, podcasts are doing well. We have crazy even to margins. We're going 20 to 30 percent a year. We have done some diversification away from the angry professor. People want to get into the space. It's hot. I get it. I believe the range of this company is somewhere between zero and $100 million right now. So say they pick the midrange, $50 million, right? Let's say someone owns 10% of the company. All right. That means they have a $5 million liability. They're saying your assets worth $5 million. They want 3% of it. Could you come up with $150,000 right now? No. Now, to be fair, they're saying for people who make over $50 million, but let's walk through practically Senator Warren's proposal, who by the way, keeps getting richer and richer as a congressperson, as a senator who continues to oversee. a Senate where taxes go down while she constantly complains about income inequality. Well, do your

fucking job. And you know, you're the referee on the field complaining about the officiating. Anyways, her proposal is a 2% annual tax on wealth over 50 million, 2% annually, 3% on wealth over a billion. So let's take it through. So she estimates it would raise $3 trillion over 10 years. That's assuming people don't start piecing out to Madrid or Dubai or turn her in the passports and go to Singapore as one of the founders of Meda did, right? So let's say, let's give it to her, 300 billion a year. The 26 federal budget is $7 trillion. So this radical, administratively complex, constitutionally questionable tax raise is 4% of the budget. And that's before accounting for evasion, avoidance, capital flight, depressed acid values from forced selling, the cost of enforcement.

the annual revenue would likely be 30 to 50% lower. You're likely getting 150 to 250 billion in year, less than we currently spend on interest on the debt. And compare that. I'm not one of these don't tax the rich, but here's an idea. Get rid of the carry-interest loophole on investment firms and get rid of the lower capital gains tax. Everyone pays 37 percent, not 21. By the way, do the those two things, you raise the amount every year that she claims this highly speculative, dangerous, weird, well, tax would. There's no reason I should be paying 21% when I sell my stocks, and you're paying 37% when you make money. There's no reason that the private equity billionaires should be paying long-term capital gains on their carried interest, which is essentially a commission, whereas if you sell a copier as a salesperson, you pay current income. income, but when I get a commission on buying and selling assets, I pay long-term capital gains, even though I haven't put any capital risk. There are much more pragmatic, enforceable,

acceptable means of raising taxes on wealthy people. Totally agree with that. I think the thing that I, the tax solution I think is best is the borrowing tax. As you pointed out, like, why don't billionaires pay taxes? It's because they just never sell their assets. And then it's like, well, how do they come up with the money? It's because they borrow against their assets. And if you do that, triggers a taxable event. Exactly. So if you make that a taxable event, then you're solving the problem right there. But I think just to play devil's advocate on this wealth tax thing, I think the way a lot of people probably see it is, you know, you're presenting an alternative. You're like, this doesn't work, but how about we do this? No, but the billionaires are just like, this is a bad idea.

This is a bad idea. It doesn't work. It's too complicated. How are you even going to figure it out? I own this company. Like, and when they do that more and more times, at a certain point, it starts to sound like, okay, you guys are just making up a bunch of fucking excuses because you don't want to pay taxes. If you do this, we're all going to leave. So you can't do it. It's like, okay, well, propose another solution because the inequality in this country, everyone agrees at this point has gotten out of control. Let me give me another one that I think is a better way to taxation. is threatening to leave, right? I think he will leave. Yeah, he bought the house. I don't know. I think he's got between 80 and 120 billion, let's call it $100 billion in metastock. He probably realized it's been an amazing run. It's pretty high. Maybe it's time to start liquidating, and he's going to come up with a bull. I've had it. I'm out of here. I don't like the homeless encampments. I can't stand. He'll come up with a bunch of Keith Rabeoy bullshit reasons for why he just wants to pay lower taxes. Here's the bottom line. Mark Zuckerberg has enormously benefited from the University of California, the great Cal State system, our highways, the fact that we have massive investments in social programs that make it a really nice place to live. For all the shit posting, the most, the wealthiest people in the world, which is Latin for the people of the most options, all decide to stay in California. And it's because there's enormous investments in the infrastructure paid for by California citizens. So if Mark Zuckerberg aggregates $100 billion in wealth while in California, he can piece out to Florida, but when he sells his stock, he is subject to state taxes on the amount of money accreted while he was living in and leveraging and enjoying the California infrastructure. So when Bezos moved from Washington State to Florida, and this is my favorite, to spend more time with his father.

What a guy. What a guy. When he starts selling down his stock, which he did immediately after getting to, I guess his dad talked him into selling his stock. Because the moment he moved to spend more time with his dad, he started selling stock. Okay. When you leave, they go, Zuck, here's a mark, 100 billion in wealth. until you have paid 14% on that $100 billion, maybe adjusted if the stock goes down in value.

But if it goes to $200 billion, fine. Pay the 0% in Florida on that $100 billion. But on that first $100 billion are selling that you accreted in California as a function of the amazing culture and infrastructure of California, an amazing human capital that is drawn to California such that they can go have

eat sushi at Nobu and Malibu and go sailing in the bay and go see the Rams player I'm trying to come up with cultural references for just how fucking awesome or go to the Greek theater

or go to stay at the pool at the Beverly Hills Hotel all the amazing things that are singular about California you are paying for what you accrued here there are a lot of common sense taxes

that are in defense it's indefensible to argue against them indefensible if you made all this fucking money California and then want to piece out and not pay back California? No, no. You are paying California taxes on the money you made and the wealth you accrued in California. Get rid of the carried interest loophole. Do away with the tax, the reduced taxes on capital gains, and your state taxes follow you on the capital and wealth you have accreted while enjoying the privilege and

investments of that state. Boom. And make borrowing a taxable event. There you go. That's right. Trigger's a taxable event. Exactly. Just the final point. And then we'll move on.

It is just so frustrating when you've got this rampant inequality where 19 households control 2% of all the household wealth in America. We all know the stats. The top 1% come on is a third of the nation's wealth, never been higher, inequality going out of control. None of these rich people who appear to, to care about or say that they care about the state and the health of the nation, no one says a word. And then the wealth tax is proposed. And suddenly they're all triggered and they're all up in arms about how this doesn't make sense. And suddenly they have this

great analytical minds about, you know, what is best for America, what makes sense in terms of the tax code, et cetera, et cetera. And it's like, it is so obvious how self-interested you are with your motives here. And I think what they need to get through their heads, is that this train isn't stopping. I mean, billionaires have never been as unpopular in America as they are today. I mean, the statistics are just striking. Seven and ten, Americans think billionaires need to be taxed more. More than half think billionaires are threatening democracy.

People do not like billionaires. And you can say that that's unreasonable or they're being jealous or whatever it is. But that is the reality of the situation. And it's a function of how to control. inequality has gotten. So this argument of that doesn't make sense, we're going to leave, it just, it doesn't really work. Like, I think you'd have to take a poll of the people of California who would probably say, okay, leave, we don't care. From our view, you're not really paying taxes anyway. We don't really like you. Get out of here. Fine with us. And, you know,

maybe that will be a mistake later down the line, but that's the reality on the ground right now. It is reality and it is a mistake. That was the sentiment here in the UK was People are like, fuck you, leave, and they did. And now they're going to collect less money. And maybe it will be a mistake. And to be fair, like, I'm not a huge fan of this wealth tax compared to others. But I think the billionaires should be, if they want to take this seriously, propose alternatives. Don't just sit there and say, no, it doesn't make sense and then peace out.

I mean, give a real solution. The billionaires themselves will never do that. The billionaires will never come up with, I mean, I heard, I saw a clip of, basically what is the right-wing version of this podcast. And it has a couple billionaires. And they said, you can't get the taxes we need unless you go after the middle class. That's where all the revenue is. I'm like, okay, let me get this.

Is that that? You guys are suggesting the pragmatic solution is to raise taxes on middle-class households. They're going to lose? I mean, they're so out of touch. The Epstein overlay. Look at it. The president, the wealthiest man in the world, and the guy who's considered the kind of prototypical,

icon of billionaire wealth and technology, Bill Gates, they're all in the Epstein files, dozens if not hundreds of times. That is not helping their case. Let me get this. Income inequality is out of control. And now, I believe, unfairly, every billionaire, I think there are no,

I think there's a decent size of the population right now, a decent segment of the population right now, that feels as if the majority of billionaires are pedophiles. Yeah. I mean, so, oh, tax them? Yeah, I'm down with that. Whatever it is. I don't care how pragmatic it is. I don't care. Just, yeah, hit them hard. Hit them hard. We've had it with these guys.

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with Profi Markets. AI is quickly becoming one of the defining political issues of the decade. What once looked like a breakthrough technology with broad upside is now drawing scrutiny over its real-world costs, from energy demand and infrastructure strain to concerns about jobs and economic disruption. That concern isn't coming from just one side of the aisle. Politicians across the spectrum, from Ronda Santis to Bernie Sanders, have started sounding alarms about the industry's impact.

So, Scott, I think this is the defining issue for the next 10 years. I think this will make or break careers. I think it's already breaking careers. The question of AI, do we want it? How do we want to handle it? How do we want to regulate it? It seemed like it was sort of a technological nerd bro conversation. It is now very quickly becoming a mainstream conversation.

It is spurring all of these great. grassroots organizations across the country, people who are protesting against data center constructions, it's becoming a really big deal in Washington and basically across America. So a lot to say there. I guess I'll just start with what are your initial reactions to the notion that AI is now the new political football? It's easy to highlight the problems or the causes and not necessarily the solution, but the way I see it is, all you have is a bunch of quote-unquote very smart people. There's two things going on here.

The chocolate and peanut butter of the disgenital distaste of AI from the American public is a function of two things. One, I'm really sick of hearing all these quote-unquote founders of AI who, the moment they vests their 100 or 200 or 300 million dollars in shares and sell them on a secondary market, all of a sudden get very concerned about AI. You know, bitch? that's not helpful now. You built this fucking code.

What have I done? While you were creating your wealth, you didn't say anything, and now that you've decided, okay, I got my 3% of Anthropic, that's worth $10 billion. I'm going to go write fucking poetry.

Well, fuck you. And all they talk about is the massive peril. Well, what do you mean exactly? And use all that. You, you coded this peril. Any thoughts on how we uncode it, bitch? And by the way, are you so worried about the peril that you're going to give your money back or realize that you have created such an existential threat? You're not entitled to the options? Or are you just going to catastrophize and scare the shit out of us while you're

writing poetry from the coat d'Zor with your fucking Belarusian whores? Yeah. Yeah, that's really helpful. You're a great citizen. Thanks so much. And then the second thing is on a pragmatic level, you have millions of households who've seen their electricity rates go up 67 percent because there's some fucking empty building that supposedly has, you know, computers and chips, this data center down the road that's not employing anybody that's sucking all the energy off the grid. And all I see is my bill, my electric bill's gone from 80 bucks a month to $100,000. So there needs to be legislation. I mean, one legislation is pretty simple. We need to start taxing the shit out of data centers. Yes. I mean, at least to at least tax them to the incremental cost of the incremental energy and the incremental price increase. His middle class household shouldn't be subsidizing AI companies right now. So, but I am, I am really fed up with the post I've made my money catastrophizing. and I don't buy it. I don't see any reason why AI can't be used as much for defensive as offensive measures. And maybe I might be missing it here. There's people much smarter than me claiming it's really dangerous. Fine.

But what do we do? Fine. You built it. Fine. What do we do? Come up with some solutions. I don't want to hear the word peril. I want to hear the word solution.

And two, let's figure out a way that all this wealth creation, not only at a minimum, if it's not to make the economic lives of the middle class easier, at a minimum, they can't raise their prices. I also think that Wall Street is kind of underestimating the impact on future revenues here, specifically the political backlash against AI. Like, you know, you got big tech spending $660 billion on AI, 3,000 data project, data center projects underway across America. Everyone's so excited about what AI is going to do, and they're figuring out, okay, how are we going to set up the chips and how we're going to set up the energy, and how is it all going to work out,

and who are going to be the winners, who are going to be the losers, et cetera. But I do think that Wall Street is neglecting a very large question, and I wrote about this last week, which is like, how many people actually want this stuff? Is it possible that the American people have decided, similar to our previous conversation on a wealth tax, in the same way that Americans decided we really hate billionaires, what is that going to do to the structure?

of our economy if most Americans hate them. What happens if most Americans hate AI? What happens if most Americans decide, actually, you know what? We don't like these data centers that employ the third of the number of people that work at an average Walmart and also send our electric bills through the roof, which is something we have already seen. It's been well documented. And also, most analysts and most economists agree, this is only going to continue with more AI, more energy usage, also happens with your utility bills as well, because these data set has consumed like millions of gallons of water per day. So if all of this happens and all of this builds up, and I get that it's kind of more of a popular politics conversation, and one might argue that's separate from markets,

but I would argue actually, no, these two things are very, very linked, because we're already seeing all these activist groups shutting down data centers, saying you're not allowed to build this on our property. We've got, there's a talent. in Wisconsin, they want to recall their mayor because he allowed an open AI data center to get built. So if that happens on a mass scale, what does that do to the future cash flows of a Google or an open AI or an Anthropic or any of these other companies that are building data centers? Does that hurt your top line? I would argue definitely.

And I think the question is, how big an issue is this going to become in the political realm? And what I'm seeing, and we've talked about this months ago, we said this is probably going to become an issue. What I've seen over the past basically two weeks is that this is rapidly accelerating into like the biggest issue in America right now. Every politician is figuring it out, talking about it. And now it's on every politician, every elected official to decide what is my stance on AI. Do I like it? Do I support it or do I not? And I think increasingly, as it gets less popular, you're going to see a lot.

lot more politicians saying, I don't like AI, I'm going to be against it. I don't know if that's the right position. It might be the wrong position, but I do think that is going to be a position that becomes more popular. Again, I think it all stems back from, to a certain extent, Epstein and the war on, you know, I won't call it the billionaire class with the Epstein class, because essentially AI has become inextricably linked, whether it's Musk or Trump's support of it or Sam Altman and, you know, prostrating himself to Trump. AI has become kind of the business of billionaires and tech and everything that's bad about it. And also with the Internet, you got to at least reserve your plane ticket or something.

I think those of us who are what I'd call AI literate are getting a lot of value from it. But I would argue that GLP1 is actually having a more positive impact emotionally on more Americans than AI right now. I think people are experimenting with AI, but I don't think people think wake up or a lot of people. People don't go, God, I just love chat GPT. It's so much fun. Or I'm getting so much utility. I think people are blown away by it. And there's a lot of people in business going, this is hugely important.

But the catastrophizing far outweighs the perceived utility at this point. Whereas with the Internet, no one was, you know, catastrophizing about it. The narrative here has gotten away from them. And that is the everyday consumers sees nothing but higher electric prices. and some supposedly very brainiac person saying, it's the end of the world. I say, well, okay. I'm done with this bullshit.

And if this doesn't pan out for Sam Altman's $850 billion raise, you know, I'm okay with that. And a lot of these folks don't see how this is going to affect them economically. There's a small number, you've pointed this out, there's a small number of companies where you have exposure to AI. And so I don't think, you know, I don't think, Consumers, the bottom line is right now, consumers aren't rooting for it. Exactly. And that's such a big deal. And the comparison to the internet is the right one.

Just some polling data in front of me here. Back in 99, two-thirds of Americans said they liked the technology of the internet. Among users, that number was nearly 80%. Today, less than half of Americans say they like AI, that they have a favorable view of AI. Less than a third of Americans say they trust AI. And I think your Epstein point, some would call it a bridge too far. I think it's exactly right. I think the two things are related. I think there is a lot more public, popular interest in the way companies are built, in the way wealth is built. There's more interest in business and markets and power and who runs the world and who runs these tech companies. You combine that with the explosion that we've seen over the Epstein files, the fact that we are seeing a lot of these leaders showing up to the island and potentially assaulting children.

And to your point, yeah, there's probably people are painting this with a broad brush and saying all billionaires of pedophiles, which obviously isn't true. But let's be real, a lot of them or a lot more than we had expected, did go to the island and potentially might be or potentially might be abusing young girls. So I think these two things are related. and the popular pushback against the Epstein class, against the wealthy individuals who are part of that ecosystem, who are controlling the technology of tomorrow, which is AI,

I think that that is a big deal. And I think, you know, it's a big deal in the political realm, but again, we're a markets show. This is one of those situations where I do think there will be spillover effects into the markets. I think this actually will damage a lot of, of these companies. And it's interesting how politics and markets are just, they're totally blending together at this point. I mean, the two, you cannot divorce the two in 2026.

I mean, sort of investment thing that's going out is go short, kind of direct AI-related companies, the, you know, Nvidia's, Microsofts of the world, and go along the companies that have supposedly are under threat of massive disruption from them in the tax sector, the SaaS guys. Okay. Let's take a look at the week ahead. We'll see inflation data from the producer price index for January. We'll also get a read on consumer confidence for February, and earnings will roll in from Home Depot, Lowe's, Alibaba, Constellation Energy, Paramount Skydance, Warner Brothers Discovery, Salesforce, that'll be interesting,

and Invidia, that will also be interesting. Scott, any predictions? I hate the cold. I'm becoming so old, Ed. You asked me if I was skiing earlier. I don't like the cold. I want to be in Palm Beach drinking an Arnold Palmer in playing shuffle. board and playing gin rummy. I'm getting sold, and one of the things I notice is that I'm obsessed with war.

And I follow all these amazing people on TikTok, including this guy, the Geohusar. And I follow all these content creators that are fascinated with weapons and troop movements. We are so fucking bombing Iran. From what little I know, I would agree, yeah. We have two carrier configurations and massive air assets deployed to the We have 13 warships in the Middle East with a second aircraft carrier also on the route. And by the way, that doesn't even include the support. You know, it's not like one aircraft carrier and aircraft carrier comes with dozens of support ships.

We got the Gerald Art Ford, the world's largest aircraft carrier, is currently in the Atlantic Ocean en route to the region. And the SS Abraham Lincoln is already operating there. The USS Gerald Ford has an estimated arrival window of less than a week. And if you take all of these, and you include these, I think it's called an Arleigh Burke-class guided missile destroyer carrying Tomahawk land attack cruise missiles, you have more than 600 Tomahawk missiles. We're soon going to have the ability to do like 800 sorties a day. Just the cost to organize all this and move it there is staggering. A two-carrier battle group is not. a show of force. It's literally a strike force. And so we have the military option fully ready. Talks are ongoing but described as very far apart. The window for diplomatic resolution is measured in days, not weeks. And if talks collapse, which I think I would argue they already have, the infrastructure for strikes is already in place. Now, those are rational reasons while we'll bomb. Again,

The reason we're going to bomb? Epstein. Trump is mentioned in the Epstein files more times than Jesus is mentioned in the Bible, or the term meth is mentioned in all seasons of Breaking Bad combined. He loved the flex in the macho light of the Venezuelan raid, which was incredible. And he's like, let's fire up the macho meter again. And by the way, I'm in favor of this. I think the Islamic Republic has been one of the most brutally.

oppressive, misogynistic regimes in recent history. I think that this would, there's always a non-zero probability in risk when you, whenever you take military action against a country, I think the risks to the upside here are wonderful in terms of peace and stability in the U.S. in the Middle East. But anyways, if you follow some of these creators that follow troop deployments, and we basically have the world's largest gas station in the sky now with these refueling tankers that are in the Middle East, ready to fuel sorties. This is, here come the Marines. So the America First President,

and I agree with all of your reasons why this is going to happen, is going to drag us into another war because he wants to distract us away from the fact that he is likely a pedophile or at the very least. I mean, keep in mind, the UK in the last 24 hours has demonstrated more institutional credibility than the U.S. has demonstrated in the last five years. They arrested somebody. and they arrested somebody very powerful. They arrested their prince.

Yeah, very powerful and very prestigious. Meanwhile, you know, what are we doing? We're, anyway, I'm not going to go there. We're bombing Iran. We're bombing Iran. This episode was produced by Claire Miller and Alison Weiss. Mia Silverio is our research lead. Our research associates are Isabella Kinsel, Dan Chalon, and Chris Nodanuck.

Benjamin Spencer is our engineer. Drew Burroughs is our technical director, and Catherine Dillon is our executive producer. Thank you for listening to Property Markets, from Proftly Media. Tune in tomorrow for a fresh take on the markets.