Rich Habits Podcast - 180: Is The AI Bubble Popping? w/ Charles Payne (Fox Business)

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Starting point is 00:00:41 always earn high regular interest rates that grow the more you save and invest conditions apply visit scotia bank dot com slash h i sa to learn more scotia bank you're richer than you think hey everyone and welcome back to the rich habits podcast we're so excited our guest today has spent nearly four decades, studying the stock market and helping everyday investors navigate it. Before becoming one of the most recognizable faces in financial television, Charles Payne worked on Wall Street as an analyst, founded his own independent investment research firm over 30 years ago, and built a career around one simple idea that wealth creation shouldn't be reserved for institution and head funds only.

Starting point is 00:01:27 It should be accessible to everyone. Today, millions of Americans know him as the host of making money with Charles Payne on Fox Business, where he spent almost 20 years breaking down markets, interviewing CEOs and helping retail investors, make sense of everything from financial crises to AI booms. Charles, we're super excited to have you. Welcome to the Rich Abbots podcast. It's great to be here. Thank you.

Starting point is 00:01:51 So, Charles, I'm going to dig right in. You've been reading markets since you were a teenager. And when you look at the markets right now, here as we're filming today in the summer of 2026, what's the one thing you're seeing the most investors are completely missing or ignoring in the markets right now? I think the focus is on too much on when it's all over. When does it end? When are we going over the clip? When is this the dot-com boom all over again?

Starting point is 00:02:21 You know, honestly, I don't blame investors. I think that, you know, the financial media is really. made it this way. It's sort of so interesting, the dynamics is like it's always going to some point hit a brick wall. Everyone will lose everything and it's all going to be, you know, you wonder why people aren't in the market, although something happened and I think around 2020, I call it the new investor revolution. Main Street started to filter out the news differently. They started to look at this whole thing differently on a number of levels, by the way, and that's just one way, but in a lot of different ways. And so, you know, people who are in the

Starting point is 00:02:52 market. Let's call them Main Street retail investors. They kind of get it differently, but people who are casual watchers that just occasionally listen to the media or read the, read the, you know, the journal, anything like that. They're missing out on what is a generational opportunity. And I think that's a shame. I completely agree. And, you know, to your point, I think a lot of this, like, when's it all going to come, you know, crashing down on us? When's the AI bubble going to pop? A lot of that is, you know, people comparing the exuberance we've seen with AI to the dot-com bubble. But, you know, we then, and I'm sure you've seen the chart on X and a couple other people have shared it, right? But it's essentially overlaying and it shows you Cisco stock

Starting point is 00:03:32 price versus their earnings per share. And then it compares it to invidious stock price and their earnings per share in the stark difference between those two companies, right? Cisco, you had it, you know, trading up to the moon with profits essentially, you know, ticking a little bit higher, but not really propelling that stock price higher, where the flip side, you know, you see NVIDIA over the years, obviously up 510, 20X, whatever it's been, but their profits have followed. And I think that's the big difference between what we've seen with the rise of AI and this sort of AI bubble that people are calling it. Compared to the dot-com bubble is the stock action we've seen is driven by fundamentals versus back when it comes to the dot-com. A lot of

Starting point is 00:04:14 that was just optimism and exuberance and all this stuff that came back with that. And I knew that was going to happen. I have a book called an Unbreakable Investors. that's three years old this October, and I have an entire chapter on that. I even dive in a little deeper because more recently people were saying, well, you know, those who say this isn't like the last time, remember earnings were going fast back then too. It was still smoke and mirror-ish, put it that way. In other words, if you look at Cisco, they were acquiring a lot of company. It wasn't a lot of organic growth.

Starting point is 00:04:43 And I think that's one of the big distinctions, right? So even if someone says, well, you know, some of those companies back then were growing, they were, but you've got to look at where that growth came from. And again, so this is completely different, the valuations in terms of whatever you want to use, PE ratios or Ford PE ratios, or PE ratios. They were completely different. And so it's a bad comparison, but it also wasted a lot of time. It creates a lot of hesitation because, again, I'm not sure how long this window is going to be open. But I do know that it's going to be generational.

Starting point is 00:05:14 Now, one of the things I've been doing recently is even trying to compare it to the railroads. Because this is the fourth industrial revolution, the second industrial. Revolution was based around the railroads, 1860, right after the Civil War. And if you look at what happened between, let's say, 1860 and 1915, or right before the Federal Reserve was created, it's just, it wasn't even the railroads. It opened up a way of thinking and all of the other inventions that came along and the idea that we can just sort of break mental barriers to do things and create things. It was just a wonderful time.

Starting point is 00:05:48 You know, by the way, America was sort of, you know, dragging behind way, behind all the European nations. And by the early 1900, you can say 1893, the Chicago World's Fair was a coming out party. We eclipsed the rest of the world during that period of time. Our life expectancy grew longer. We ended up with disposable income for the first time ever. And so it was just a wonderful time that lasted a long time. But along the way, there were bumps. In 1800s, you had three panics. You have four total, right? One in the early 1900s, all mostly revolving around railroads. The same thing that propelled us into the future, the speculation around it was nuts, and that's even something else you can look at and say, yeah, you know what? None of all the

Starting point is 00:06:29 AI winners today may be relevant 10 years from now. But at this very, very moment, while we're living in this moment, I really wish more people would take advantage of it. Because one of the distinctions also, you know, you hear about the robber barons is that only a handful of people were able to truly financially benefit in terms of being from an investment point of view back then. I think it was 1910, maybe there were 10,000, a thousand investors, period. You know, and so now everyone's got an opportunity to get involved in to ride this wave. Oh, my gosh, dude. You are just singing to the choir.

Starting point is 00:06:59 I'm so excited about this. This is great. And Unbreakable Investor, everyone watching right now will have a link to Unbreakable Investor on Amazon and the show notes below. So definitely go check that out if you're interested in purchasing Charles book and reading that one. But, you know, kind of like keeping on this theme here, something that retail investors have not been ignoring. is the memory trade. Robert has been talking about Micron for a long time now. We've recently seen a massive surge in these memory stocks, and more and more investors realize that they are important when it comes to actually training these large language models. So despite the

Starting point is 00:07:33 5-6-7x move in micron stock, it's only trading at six or seven times 2027 earnings. So some might say, wow, this is a screaming bargain. I need to go pile into these memory stocks. It's historically very cheap, but others might be saying, hey, this is a very cyclical business. Maybe seven times is too expensive to pay for the stock. What's your take on memory stocks, especially now after we've seen the crazy surge in price, as well as this S.K. Heinex listing on the NASDAQ. We've got a couple of really phenomenal things going on here. And to your point, memory, if you go back for 50 years, it's just a, that goes straight down, right? Every now and then there'll be a cycle where they can get a little bit of pricing power, but it's very short-lived.

Starting point is 00:08:20 And so their pricing power really over 50 years has been reduced to nothing. In fact, maybe three years ago, if you said memory, people might say, oh, yeah, I was at CVS and I saw a little sand disk thing with a chip in it, you know? So it was, memory was completely written off by everyone, by everyone. There's no doubt about that. Even as this boom began after Chad GPT began, the focus was on picks and shovels. And what no one really thought about is like, even if you use that analogy and you go back to the gold rush, what happens when you show?

Starting point is 00:08:47 strike gold. Where do you store it? Where do you put it? That part hadn't been thought out. And of course, here we come. We need memory. We need storage. We're doing, you know, and the good thing for some of these names is that there's not a lot of competition, right? Just a few years ago on the storage side, Western Digital and Sandisk, they had to merge to stay alive. And so it's an amazing trade. Right now, Sandisk and Micron, where they're trading now, their P.E ratio would be cheaper. If everything goes according to schedule, cheaper three years from now. than what it is right now. That's just how much money they've got in the backlog,

Starting point is 00:09:21 how much money they're going to be making. But, yeah, they've made these extraordinary moves. And you brought up the Korea part of this because you've got S.K. Heinex and Samsung. Essentially on the memory side, those are the three big names, right? Micron, Samsung, and the Heinex. There's a phenomenon in Korea that, I mean, I was around for the dot-com era,

Starting point is 00:09:40 and I'm not sure we had that kind of a frenzy, even back then in this country. A country of 52 million people, over 100 million accounts have been open. People are cashing in their life insurance policies. Every day you're reading articles. I've read one the other day, a 24-year-old kid. He's got his, wherever he's doing his trades.

Starting point is 00:09:59 He says, all he had to do is hit the red button, and he just kept making money. Of course, he's, he had five times leverage. His account went up 15-fold. So he started with something like 50 grand, 30-grand. And, of course, now, you know, he's saying it's all gone. So there's an emotional side to this trade. that got way out of whack in Korea.

Starting point is 00:10:18 And listen, I understand. Another little tidbit. So Korea, at the beginning of the year, passed up China and Japan for the worst birth rate in the world, the lowest in the world. Two months ago, they had the biggest one-month jump in birth rates in the history of the country. So that's enthusiasm.

Starting point is 00:10:36 That's enthusiasm, right? I mean, like, you know, we're dying off. All of a sudden, we've got something to live for. I'm a boy, you're a girl. Okay, so they discovered the births, the bees, that's how great the rally's been. And so that part of it, you know, is it's a sidebar. There may be a little bit of unwining to go. I read somewhere maybe 70, 80 percent of the retail side over there. Maybe it has to be washed down a little bit more. Maybe 50 percent on the institutional

Starting point is 00:11:01 side. The government has stopped, those levered ETFs, which is, you know, we've thought about that in this country, too, because it does invite the sort of crazy gambling stuff and risk that, you know, listen, it's amazing when they go up. It's painful and confusing when they go down. So, fundamental part of this, I think, goes on. Now, somewhere along the line, you know, maybe someone figures out a way to get these KV cashes, to expand them somehow or to get around this. China's got a company CMXT, just listed on Hong Kong. It was 212 times oversubscribed, the IPO, the listing. They have a very cheap version of this that they're trying to get on the market, and Apple is threatened to use it, which I think is kind of interesting in a sense that

Starting point is 00:11:46 A couple years ago, Micron begged Apple to pay more. I mean, they had to beg them over a barrel. And of course, Apple, you know, their business people know, we'll pay you this. They said, well, if you paid us a little bit more, we can build out capacity. Fast forward to now, and Apple's complaining that DRAMs are up through the roof, that memories through the roof. And the company's saying, yeah, well, this is what happens. We have little capacity and extraordinary demand. Maybe if you had paid us more, it wouldn't be the case. But it's a story that's going to go on for a long time.

Starting point is 00:12:16 There obviously will be these periodic bumps in the road. And at some point, maybe the wild card will be if there's a way to sort of stretch to manipulate memory in a way that takes away some of the pricing power. And Charles, I really enjoy this because you're taking us down memory lane. And I think it's really important for this episode and with your experience because we've been down this road before. We've been through industrial revolutions. We've gone through all of it.

Starting point is 00:12:42 And I remember the Milton Friedman quote that Elon talked. about recently where he said that when bulldozers were first introduced, if you remember that story in this quote, Milton Friedman was quoted on saying, well, if you're afraid of the bulldozer so much and you don't want this achievement in moving forward with efficiencies, why do you have them digging the ditches with shovels, have them use spoons? It really does speak to what you're talking about because we have this right in front of us. You talk about this generational growth and all these amazing things happening. And there's so many naysayers because they're always afraid of the next phase of

Starting point is 00:13:20 humanity and technology. And I'm really glad you're touching on it for our listeners just to keep them to understand. You have to look at where things are going and the upsides of all this. So I really appreciate you touching on that. And so I'll get back on track with Micron posting a 56% profit margin right now. And again, going back to history, says memory margins don't stay fat like that. for very long and they don't hold on for very long. So what's the first crack you'd watch for in the memory trade? Pricing power. The moment maybe Micron has the lower prices or except smaller

Starting point is 00:13:55 pricing. I would think that would be something of a crack. Now, to your point, you know, we've got this, we have this chart going down. We're breaking through that, that trend, that five-decade trend of lower and lower, lower pricing. We're breaking through it. I think they'll get a point where we'll get up to a certain level. Then I think it won't go down. This is where I think the cycle breaks or there's a new cycle. And I think we'll get to a sort of a plateau and we'll have a cycle from there because the data centers that are being built, the demand for memory is through the roof. And here's the irony of the whole thing. So we talked about the beginning in these GPU chips and that's where it all was, training, training, training, training,

Starting point is 00:14:34 you know, going out essentially acquiring all the information you can, you need these robust GPUs from Nvidia. All of a sudden now we're in the inference, I'm sorry, the acquiring of the information, now we're the inference training part. And the irony is that we're creating more data, more information. And so it's a virtuous cycle. It's a, and you'll have to dig for that at some point and dig even that new information out and then, you know, have it massaged and the inference part and the training part. So it's sort of a virtual cycle. I would think that at some point you'll hit a place where the growth, right? So the growth rate will slow. It'll still grow, but the rate of growth will slow and we'll get to a point where someone will start to say, okay,

Starting point is 00:15:16 ouch, or I told you so. So I'm focused on selling price or their average selling price. Now, what they've done is they're locking in longer term contracts, right? And I, you know, I just kind of talked about the inability to get Apple to pay a certain amount of money. They see this coming and they're also being pretty smart about this with these strategic contracts. They go out three years or longer now. Yeah.

Starting point is 00:15:36 No, that's definitely strategic. And I appreciate you kind of breaking down that LLM training versus like, the inference and you want to make sure everyone's on the same page of that, especially as we continued this episode, right? So, like, to your point, it was a race to who had the best model. And it still kind of is, right? But, like, you know, we just saw that chat GPT 5.6 soul or whatever it's called. It is a IQ score of 136, 140, something of that nature, smarter than 99% of humans. So, like, we've got smart models now, right? Like, the model race is, like, kind of eclipsed into, like, we're all kind of playing on the same field now. Now, to your point, it's not who has the

Starting point is 00:16:12 smartest model, it turns into how quickly can that model send information to that end user, right? And so like after you prompt your chat, GPT or your Gemini or your clot, and you hit enter and it kind of like spins for a little bit, that's the inference, right? That's how many tokens per second can be taken from the model and sent to try and answer or do whatever you're trying to make it do. And now people are realizing with the rise of autonomous vehicles and humanoid robots and all these other different things, it's not who has the best model, but how quickly can you? Can that information, that inference, right, be sent to that end user? And that's why Cerebris, in my opinion, is a really interesting name here as we enter the back half of the year.

Starting point is 00:16:51 But speaking of, you know, entering years here, we entered 2006, Charles, with the Federal Reserve expecting to cut interest rates by three times. Now, as we enter the back half of the year, the market is pricing in maybe even some rate hikes over the next 12 months, which, if you ask me, is an insane flip-flop in expectations. You've been one of the sharpest critics as to how the Fed operates for years now. So my question is, are they getting it right so far in 2006? Are they behind the curve? If your name was Kevin Warsh, what would you be doing differently? I like what Kevin's doing. I really do.

Starting point is 00:17:25 And I got to tell you, late last year, I was on the fence about Kevin Warsh. And I had a chance to speak with them. I went to an event. It was a pretty small, intimate gathering. And I got a chance to talk with him. He blew me away. Absolutely. It blew me away.

Starting point is 00:17:40 I mean, his thinking, Scott Bessent, Myron, who's back in a private sector, but his thinking, these guys have thought about this long and hard, and they do have some unique ideas. And I think what Kevin Warsh is doing, he's buying time, but he also is trying to buy legitimacy to usher in a new way of thinking at the Federal Reserve. Now, if he had to work off the business as usual, this is what we do, you know, when X hits this, we do that. Then he would have to raise rates. But he doesn't want to do that.

Starting point is 00:18:10 interpretation of what inflation is is different already, I think, than what we accept. He doesn't like or think core PC is the best way to go about it. Even a couple of weeks ago, when we beat, you know, the CPI and the PPI came in better, you know, in testimony, he said, it's good, but they're still antiquated. You know, you think about the jobs report. As soon as we get it, it's, first of all, very few businesses are taking the survey anymore, right? It's gone down from like 80% to 50% jolts is down in the 20s, I think. So this is the kind of data the Federal Reserve has been using to dictate our lives. This old data, this old surveys that hardly anyone is taking, and then they have to be revised over and over and over again. So the data is incomplete and is

Starting point is 00:18:52 misleading. Now, the Federal Reserve itself, the philosophy that if people make too much money, that inherently is automatically inflationary. And so they have to come and somehow tamp down purchasing power, whatever it is. It's sort of unfair to Main Street. It's like, I'm working hard and I'm finally getting the raise. And so as my reward, you're going to make life more expensive for me. Or the other part of this is crude oil is up. Food prices are up or whatever might be driving inflation. And that's core.

Starting point is 00:19:22 A core, you take those out. Okay. Think about what's up the most. Auto insurance, life insurance, tuition. No matter what the Federal Reserve does, those things are not coming down. And this whole idea about the psychology of the consumer, no consumer wants to pay higher tuition or higher insurance costs. or whatever it might be.

Starting point is 00:19:41 So my reward for these things being extraordinarily high and already stretching my household budget is for you to take my credit card from a 16% rate and ultimately to a 24% rate. Like that really, you know, I wasn't going to overspin. I barely was making bills meat ends meet to begin with. And so I just think they always say, well, the Fed has blunt instruments.

Starting point is 00:20:02 So I'm hoping with these task force that they get to a place where they are able to analyze the day, a better in real time and also come to a different understanding. Every time after the statement, Jay Powell, he always had that line, we had the Fed understand that the things we do, yada, yada, hurts, helps everyone, you know, Main Street. I don't think you really do understand it. And I don't think you really do care. For instance, give back the spending. If the top 10% of Americans are doing 50% of the spending and some and these economists say, well, you know, there's too much,

Starting point is 00:20:34 you know, it's too, you know, it's too high, it's too aggressive, it's not reflective. Again, so they're going to be able to spend, but if you make like more expensive for the other folks at the bottom 50%, then how have you helped them? You just, you don't. And then if you think how many times they raise rates when they thought the inflation was going to be transitory, he'd end up popping rates so high that CDs came back, right? No one had his CD. No one was buying money markets. All of a sudden you go to money markets, and now we're at $8 trillion in money markets. And so someone like a Warren Buffett can be in record amounts of cash, $400 billion, and even miss out on the rally because, you know what?

Starting point is 00:21:09 you got $400 billion at 5%. That's not bad. You're doing okay. And so I just hope that they find a way. And I, and I have extreme confidence that Worst is a thinker that he's thinking outside the box that he will. And as far as a September rate hike, that would be in front of the midterms? That would be, yeah, you know, would that be the ultimate statement that Donald Trump doesn't pull my strings. But I think it would be one heck of a one heck of a mistake. I agree. I agree. Now, before we jump to our next question, with Charles. Got to give a shout out to public.com, the investing platform for those who take investing as seriously as we do here on the podcast and obviously as serious as Charles does. On public, you can build a multi-asset portfolio of stocks,

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Starting point is 00:22:08 20% year over year. You can literally type any prompt and put the AI to work. It screens thousands of stocks, builds a one-of-a-kind index, and even lets you back test against the S&P 500, all with just a few clicks. Generated assets are like ETFs, but with infinite possibilities. They're completely customizable. They're based on your thesis, not someone else's. So go to public.com slash rich habits and transfer your portfolio today. That's public.com slash rich habits. paid for by public investing, full disclosure in the podcast description. Back to our conversation with Charles Payne. Let's linger on this for a few more minutes and maybe spend some time talking about how

Starting point is 00:22:48 rate hikes would impact the equity markets and how investors should be looking at positions for their portfolios because we always hear the phrase, don't fight the Fed a lot. But what does that mean exactly and what would these rate hikes do to the equity markets if they happen? Well, you know, what's interesting now is that because bond yields are high. higher already in anticipation perhaps of a rate hike. Investors who wanted to make a choice, you know, have had the opportunity already. I think the initial rate hike sort of slows the market. The market kind of got hooked on the notion of an accommodative Fed. And that goes back to Allen Greenspan, the so-called maestro. Listen, he left his legacy. There's no doubt about that.

Starting point is 00:23:28 And he was on a job only a month when he had Black Monday. But I felt from him on, the Fed was far too focused on Wall Street, not Main Street. So you had helicopter been you had all of these Fed officials in. Anytime Wall Street got in a pickle, they came to the rescue. So I think there could be initial downward pressure, but I think the Fed would probably articulate that this is a one-time hike for now. We're going to wait and see. Not that they're going to be on a new hiking cycle, and that's a distinction that everyone has to understand. So you don't want to get caught up in the emotions of an initial sell-off thinking that this is the way it's going to be. If, in fact, the Fed saying, we just think we need to make a

Starting point is 00:24:07 one-time adjustment or one or two-time adjustment, and that's going to be the trick right there. People go to the old safe havens and like utilities and those kind of things. You know, maybe give yourself a little bit of insurance, but again, if you're a long-term investor and you're focused on the fundamentals of individual companies, don't panic too much. In fact, if you really have the right wherewithal, try to make a chance for you to be opportunistic. You talk about utilities. Yeah, utilities have kind of been, you know, six, seven percent this year. But it's something you were just alluding to that I kind of want to linger on a little bit longer. Kevin Warsh has been pretty vocal about not signaling, not forecasting so much, right?

Starting point is 00:24:49 Like he doesn't want to like tell everyone what he's thinking and what the Fed wants to do. How do you feel about that? What does that mean for you, Charles Payne, in your portfolio? I love it. I love being able to hopefully one day be able to invest based again on the fundamentals of the company. You know, you always have a macro view. You want to make sure that macro backdrop is sufficient enough so that if these companies do execute, they're rewarded. But the idea of having to figure out what you're going to do your portfolio based on what the Fed is thinking about is just a heck of a game to play.

Starting point is 00:25:20 And it's just tiring. It leads to short-termism. It leads to excessive volatility. And I think it leads to missed opportunity. So the reactions should be, okay, this is what this is. I don't have to necessarily try to guess or think what the Fed is going to do. It's going to be a long time before people truly break away from that. We'll see if Warsh is able to really pull that off.

Starting point is 00:25:41 But we shouldn't look at all news through the lens of what the Fed is going to do and rather look at them through a lens of what it actually means. What does the news actually mean? I can tell you for me, when CPI comes out, I'm usually looking for industries with pricing power, and then I drill down and try to find the companies in those industries. I always kind of look at the data, not from a Fed's point of view, but what it means for individual stock opportunity.

Starting point is 00:26:06 I like that. Speaking of individual stock opportunities, 2003 and really 2024 was defined by the Magnificent Seven, as they were the only companies in the country with the resources to build out these data centers and invest hundreds of billions of dollars into artificial intelligence. They've continued to do this over the years and some names have pulled ahead of others. But that said, the MAG's ETF year to date in 26 has dramatically underperformed the S&P. 500, which tells me the markets now are assigning more value to the S&P 493 year to date than the Magnificent 7. So we're seeing names like meta, Nvidia, Amazon, things of that nature, trade at these multi-year low PE ratios and multi-year low premiums to the rest of the S&P 500. What's going on? Is this

Starting point is 00:26:57 a buying opportunity for patient investors like myself and like many others that listen to the show? I think so. So here's what's going on. You know, you have people who say, well, emerging markets have outperformed, relative equal weight has outperformed, this is outperformed, the 493 is outperformed, but if you drill down on any of that stuff, you'll find out that it's still technology. So it's not the Mag 7, but the layer beneath them, right? We just started this whole thing off of Micron that's come out of nowhere to crack the top 10. The software name, semiconductor names rather, through the absolutely through the roof. So it's not Mag 7, but still has been overwhelmingly tech.

Starting point is 00:27:35 Because they've taken hundreds of billions, soon to be trillions of their free cash, all that cash that they make, and it funneled it into this massive investment. And so that money goes somewhere. And it's reawakened stocks and industries. And again, like the primary beneficiaries, of course, have been semiconductor companies.

Starting point is 00:27:54 But even as you start to drill down, right, photons and optical, wow, what are these names? You start to drill down. there's just so many layers to this thing. I got to tell you, every day I feel like I'm going to college. Every night and every morning, I'm reading, and I may have to learn Korean or Japanese or both. Because since so much comes out of there, it's like a lot of this stuff is in the media, and I'm like, no, give me the English translation.

Starting point is 00:28:17 But soon, I may not need that. The point is, is that all of that trillions of dollars are seeping into this, like, the nooks and cranny of the market, and each of these nooks are amazing opportunities. So on one hand, listen, take advantage of those, but you're starting to see. research reports come out that are going to show this inflection point. So yeah, free cash flows off a cliff here. But when it rebounds, if it started here, it's going to go way, it's, I mean, they're talking about free cash flow 2030 for these companies that unheard of. The return on investment starts to emerge. We started to see why they put all this money to work. And I think these names

Starting point is 00:28:55 become a screaming by again. But it happened long before the numbers, because the market will anticipate it happening. Well, it's funny you say that. And then, Robert, I want you to chime in here. You know, we just heard from Simeon Hyman over at ProShares. I'm sure you know who Simeon is, Charles. And, you know, he was on our show just the other week talking about, you know, EEM, the emerging markets, ETF from I shares. 29% of that ETF is S.K. Heinex, Samsung, you know, these names that you think it's commodities, right? Because that's what emerging markets are. Commodities. And you know, I think, no, to your point, it's tech. And to your, all of that hundreds of billions of free cash flow that's leaving the mag seven,

Starting point is 00:29:36 you know, you're totally right. It's going like this. And then that money is going to other people. And then over time, by 2030, I think it was Apollo that came out with a really cool graph recently that showed that by 2030, we're talking a trillion plus of free cash flow across these seven names. It's bonkers. And I completely agree, if you're a patient investor, these Amazon just had Google report, Microsoft meta, like all these names, Apple. It's just, it's a no-brainer. my humble opinion. But over to you, Robert. Yeah, I love this entire conversation because you're right.

Starting point is 00:30:06 It's all about being patient. Charles, I love where your brain's at on all this because you mentioned something earlier in the episode that I can't get out of my mind. And that is when you said, when's it going to be over? In the Rich Habits Network every day, as soon as Micron or InVIDIA or Palantir, or one of these high flyers for the past few years, takes a small retraction. Everyone's like, What's the next Micron? What's the next Nvidia? They're so in a rush to get to the next thing. And the next thing, like you mentioned, photonics,

Starting point is 00:30:38 that might be three, four, five years before we're fully at scale. And we're seeing this really take over and be growing at a rapid pace. So I think it comes back to I would love to see anyone listening to be more patient because I personally feel that Amazon and Austin does as well, Amazon and Invidian, some of these stocks, are right in front of us that we've ridden the wave with for years now are still inexpensive compared to what they have on the books for profits in the coming year. So I really love where you guys headed with that conversation. I think it's important for everyone to understand that.

Starting point is 00:31:14 But Charles, I want to get off the topic a little bit of the markets themselves and I want to go into a mindset moment here. You've interviewed thousands of CEOs, investors, policymakers, entrepreneurs over the years. And when you think about, these people who've built this extraordinary wealth. Is there a common mindset or habit that separates them from everyone else from your perspective because you've had so much experience in interviewing some of the greatest minds in modern history? You know, I've got to tell you, something interesting has happened with me over the last few

Starting point is 00:31:48 years. A lot of amazing people have reached out to me and I've had private conversations. These are even more in depth than the interviews. And I'm talking like the who's who. And, you know, someone will say, you know, so-and-so wants to meet you. Someone-so wants to talk to you. Okay. I can't get them on a show.

Starting point is 00:32:09 But. But. And I'm so, I've gone there or they, we've gotten on the phone and we're talking 40-minute conversations, one-hour conversations. And it's just like surreal. You're kind of pinching yourself. Like, okay. I think the most important thing with all of them is that they just have no limits.

Starting point is 00:32:32 Like they're not ever thinking about the limits, you know, and I think they all feel like in their heart of hearts, they're doing something great for humanity. And so, you know, and of course there's like particularly around AI, a big debate. We started off talking about where it is now on the scale of human intelligence and the whole AGI, soon to be ASI and what that means for humankind. But I think they all believe they're doing something great. for humanity. And so it's not, it's not the money. It's the legacy. And, and that is actually more powerful. You know, you, you see these charts, a lot of these charts about founder-led companies,

Starting point is 00:33:09 outperforming everything. It's hard, not impossible, but it's hard to replace a founder with someone with the same exact passion. Because no matter what, whenever you hire a new CEO, part of their skill set is checking the numbers, right? You know, think about Amazon and how long it went before it turn to profit. And all the grief that Jeff Bezos got from Wall Street, he wanted to build something. He didn't care how long it took he was going to take every nickel he made and put it back into the company. Think about the grief that Elon Musk took with Tesla. Again, not marching to Wall Street's beat and their beat is, we want to see something great from you every three months. And these companies that get caught up in this three-month report card, I don't even know how they can have a five-year

Starting point is 00:33:54 vision because if you miss buy a penny and the stock is down X amount, you freak out and you do this and you change everything, they have a vision. They're visionaries. Again, you know, talking about the robber barons, they had visions, right? And, you know, yeah, they made a lot of money. And but everyone made money. We got off the farm. We went from living as a society, 70% of us hoping that the crop came in because if it didn't, there was hell to pay. So having enough money to take our girlfriend on a date on the Ferris wheel and buy some Briggily's chew to spear and gum while we were on it, you know, the world changed dramatically. So the thing I find is that they are visionaries. And it's, it's hard to find visionaries. Policymakers, it's a,

Starting point is 00:34:37 that's a tough one. Now, we have more people from the business side, they run, they go down there to D.C. But it's still tough. You know, I mean, it's, it's, I've seen a few of them to quit in the last couple years or, you know, not run for office again. That's a, that's a, that's a really, tough game and being beholden to this election cycle, I think is where hurts us a lot. And if we ever had a way to get both parties to just say, hey, let's try to find something that we can agree on for the sake of the nation so that business leaders can make long-term plans. So if you're going to have tariffs right now, you know, and the next party comes in and removes them, then this group may just say, we'll just keep our manufacturing over there and never build a factory

Starting point is 00:35:22 here and just waited out for a couple of years or with some other policy. So I just, unfortunately, I think the weak link for us is our policy makers. I think the strength right now is from the entrepreneurial spirit. You know, someone like a Palmer Lucky as a teenager tinkering with this thing in a garage, you know, that everyone gave up on, you know, we tried it. The people had headaches that didn't work. We gave up on it. He jiggered around with it and he figured out how to make it work. That's what I'm most excited about. And that's what blows me away is the internal fortitude and the notion that I am going to make it not for me, but for society. Golly, man.

Starting point is 00:36:01 I just, I completely agree. And I think that's so powerful. And yeah, shout out, Plummer Lucky. Now before we ask Charles, our next question, got to give a shout out to Nios investments. Nios offers ETFs that seek high levels of monthly income with a keen focus on tax efficiency while providing core portfolio exposure across equities, fixed in. income, real estate, cryptocurrency, and cash alternatives like T-bills. NEO's ETFs may be especially interesting for investors looking to generate that tax-efficient monthly income inside of their own portfolios.

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Starting point is 00:37:28 and NEOS ETSs are distributed by four side fund services LLC. All right, back to our conversation with Charles Payne. Everything you've said doing this conversation, Charles has been incredible. And again, hopefully we'll have you back here very soon on the show. For people listening right now that might be doing this investing stuff and they've been up to it since maybe the pandemic and they're part of that main street and they're excited to be going

Starting point is 00:37:52 and doing this and building wealth, what advice could you give them? What's that one piece of advice that's going to stick with them throughout their investing career? If they're watching this podcast, they're already on their way to doing the right thing. And that's never stop learning. Never stop learning. Know what you own. And whenever I see a company or stock that I'm really intrigued by and I think I want to own it, I always go back to the original founders.

Starting point is 00:38:16 Almost every major company, publicly traded company, you could almost make a movie about these folks. A couple of years ago, I had Iron Mountain. And so I went back and the story of Iron Mountain, right, just blew me away. You know, it was like, years ago in this country, mushrooms were a big deal. Everyone was eating mushrooms, right? And so upstate New York, you know, we got, we have some mountains. Someone started like a big mushroom thing inside a mountain. And then I know what happened, but all of a sudden people stop eating mushrooms.

Starting point is 00:38:46 Right around that same time, World War II, all these refugees are coming. into New York City. And, you know, most of the Jewish refugees, they had no identification at all. None. And so a banker's trying to help them. You have no idea. He's like, and he came up with the idea. I got to find a way to this to have people's alternative to where their information is always secure, hence Iron Mountain, bought one of these empty mushroom mountains. Movado, guy in Cuba, right? You know, it's right as Castro is taking over. before that some guy owned a factory and say, hey, can you get me a clock, an American clock?

Starting point is 00:39:21 He gets it for him. It was a buck. Next time he says, hey, can you get me another one? He says, yeah, but do you mind if I make a little money? He says, all right, you can make a buck too. The capitalism spirit was sprung. He believed in the Castro Revolution, and then it only took him about a week to figure out he made a mistake. He's trying to get out of there with his family.

Starting point is 00:39:40 The army is at the airport. He doesn't think he's going to make it. He looks over, and one of his best friends is like a commander. And he lets him through. So, I mean, just these, you know, all I'm saying is that there's so much more than X's and O's is so much more than numbers. There's stories, the indominal spirit, the stories in all of these companies that you would just never know how phenomenal Ruth Chris, you know, some woman whose husband dies, she has

Starting point is 00:40:05 no money, she's trying to make money by sewing stuff together. She looks in the classified ass and Chris's steakhouse is herself. Never owned a restaurant. So learn what you own, learning ethos of the company and the founders. make sure that the people who are running it now are somewhat keeping it along that same line. Because we know the mistakes. Crackerbell, that was a mistake. They didn't, you know, they went against the ethos. Tractor supply.

Starting point is 00:40:27 You know, they recently have gone against the ethos of the company. Now, sometimes these companies figure it out and get back on track, right? But just know what you own and be committed to learning every single day. If you put money and time into a fantasy football league or whatever you do, carve out some time. because this is what we work. We work hard for our money, and we want to make sure these investments work out, and we want to avoid the biggest mistake you can avoid in the stock market,

Starting point is 00:40:54 and that's reacting emotionally. It's hard. It's a lot easier when you know what you own, though. 100%. And if you want to always keep learning, again, we'll have a link in the show notes below for Unbreakable Investor. Definitely go check that out. Charles' book is a great one.

Starting point is 00:41:09 Charles, thank you so much for joining us on the podcast. It's great. Thanks, guys. Charles Payne is an absolute goat. so grateful he joined us here on this episode of the Rich Habits podcast. And I could not agree more with that first, like, just like opening statement that he shared around like, everyone's waiting for this to fall. Everyone's waiting for this to collapse. Everyone's waiting for the AI bubble to pop. And they're just, they're, they're so ready to say, I was right. This was a bubble. See you later by.

Starting point is 00:41:38 And don't get me wrong. There are bubbles taking place that are around this, this AI trade, you know, quantum computing, SpaceX. Exploration, like do whatever you want, talk about whatever bubbles you think are taking place and, you know, throw some, some stocks around and you'll see some bubbles for sure. But it's obvious that artificial intelligence is here to stay. And, you know, everything we're just talking about with the Magnificent Seven and, you know, being a patient investor and how long-term focus these founder-led companies are. It's just, it's such a great conversation. And again, so glad that Charles is able to join us. Yeah, what an incredible conversation. And I just really enjoyed it because, he's right. We've been down this road with multiple industrial revolutions. And every time there's this new technology taking over, you know, money and markets and progress, people run for the hills and they're fearful. And that's why there's so many permabairs right now that just can't wait to be right. Like you said, Austin. So what a powerful episode. I can't wait for everyone to really dig into this. And listen to everything, Charles, I had to say, just incredible insight from him.

Starting point is 00:42:45 Thanks everyone for joining us on this week's episode of the Rich Habits podcast. As a reminder, we've got a Thursday episode coming up, Q&A, and our Friday episode coming up. That's the Rich Habits Radar, the biggest headlines impacting you and your money. So be sure to come back for those episodes. And if you want more access to Robert and myself, consider joining the Rich Habits Network. It's our community for our biggest fans. We host two hour weekly live streams every Tuesday night. You can invest alongside Robert and I into Start.

Starting point is 00:43:15 startups and different pre-IPO companies have a really interesting pre-IPO opportunity happening right now inside the Rich Habits Network that we're so excited about. And there's eight hours of video coursework covering all things personal finance and investing. So be sure to click the link in the show notes below to check out the Rich Habits Network as we're running a seven-day free trial. So you literally can join seven days completely for free. Decide if you like it and stick around. Or if not, no hard feelings. We're just grateful that you watch and listen to the Rich Habits podcast. Thanks, everyone. And we'll see you. you on Thursday.

Rich Habits Podcast - 180: Is The AI Bubble Popping? w/ Charles Payne (Fox Business)

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