The Compound and Friends - Responsibility Theater

Episode Date: July 15, 2022

On episode 55 of The Compound and Friends, Alex Kantrowitz joins Michael Batnick and Downtown Josh Brown to discuss earnings season, big tech, the outlook for crypto, Elon vs Twitter, and much more! This episode is sponsored by The Peak Group. To learn more about investing in single family rentals visit https://bit.ly/3OCu6GQ. Check out the latest in financial blogger fashion at The Compound shop: https://www.idontshop.com Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/disclosures/ Inclusion of advertisements by podcast sponsors does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers: https://abnormalreturns.us5.list-manage.com/track/click?u=f8843b0fc6f0ed7d35e67dcf5&id=33b07916d1&e=4e0f612ef0. Hosted on Acast. See acast.com/privacy for more information. Learn more about your ad choices. Visit megaphone.fm/adchoices

It's very lonely, you know? This is more fun. It's just like life is lonely enough. Why, like, create things that force you to be alone even more? Right? Right, and the thing has exploded since you started bringing people in. Even your doorman is talking about how great the podcast is. Stop. Come on.

He goes, hey, are you here for the podcast? I'm like, yeah. He goes, oh, I'm hearing great things about what's happening upstairs. Yeah. Wait, is that for things about what's happening upstairs. Yeah. Wait, is that for real? That's for real. Wait, which doorman do you think it is? Who do you think it is?

I think it's the cool one. The cool one? He was all business. And then he gets the call. He's like, okay, you're actually here for a reason. And he goes, man, this is a cool ID because I have the new New York real ID. And he goes, so are actually here for a reason. And he goes, man, this is a cool ID. Because I have, like, the new New York real ID. And he goes, so are you here for the podcast? Wait, what's the new?

Show me. What do you have? My license has been expired for four months. This is the one. I can't get anywhere. So you're going to need these to go through security. I heard. When do you need this?

Oh, oh, oh. I think probably, I think by the end of the year. It's for, like, as a passport, right? Exactly. What's different about it than what I have? Oh, I saw. That stuff. Yeah, yeah.

And like there's like that design. Shit. Wait, do I have to go to the DMV for that? I think you do need to. I mean, I just got it because I moved from California. And I needed New York. Where in California were you? I was in San Francisco from 2015 to 2020.

That's enough of that. Yeah. It was time. I mean, I'm a New Yorker, so it was like time to come home. I was reading about the new district attorney. And she like had a meeting with her staff for the first time. And her staff is the last guy's staff. She was also on the last.

She was also on Chase's staff. Well, she left. Yeah. In protest. Okay. What happened in this meeting? And then she got his job. Right.

So she came back as the person that left, right? And then she's just like, I think, laying down the law. It's amazing, yeah. Like, hey, we're actually going to try to clean this shithole up now. Are you talking about Thor, God of Love and Thunder? Exactly. No, she was like, all right, we're actually going to do the job now.

And I think there's a lot of people in that DA's office that still think their job is to like socially engineer a fairer city or something. Like they don't understand there's people getting murdered on the streets.

Well, that plan failed. I mean, that's why the guy got recalled. And she came out with this speech talking about how crime will now be punished in san francisco damn it it looked like a batman speech yeah but it was i think it's what the city needs it's like oh it's like it's like revolutionary the idea that like maybe we should punish people that commit criminal acts um because they've gone so long in the other direction. I guess I understand the, the initiative or like the impulse

to not put everybody into prison. Um, but I, I, I think it just swung way too, way too far into a place where San Francisco became lawless. I think like people were talking about San Francisco snow, which is, um, you know, windows that have been broken and you see the snow on the ground. And I, it was a, it was a while where it took me a while to figure out what was going on. Like I would see like shattered windows on my runs all the time. And I would be like, what keeps happening here? Then eventually I figured it out. What is it?

What does keep happening? Is people throwing rocks through windows for no reason? No, they smash the window and take whatever they can find inside the cars. Oh, it's like theft. Oh, car windows. Yeah, yeah. I mean, all right. So welcome back to New York. It's going to be back. Oh, it's like theft. Oh, car windows. Yeah, yeah. I mean, all right. So welcome back to New York. It's going to be back. It's not that much better. Well,

some parts of it are. It's nice. Look, I missed the entire pandemic here, which was good. So New York has always felt like vibrant and full of energy. Yeah. Which is lovely. I think it was probably worse to live in Manhattan during the pandemic just because the degree to which you're trapped in an apartment is probably greater than any other city, right? Like it's like just less of an opportunity to do something outdoors for six months out of the year, right? So California, everyone's quarantined, but you still go for a walk. You go outside. I remember being here February 2020 in New York City and seeing what was happening in Italy and being like, all right,

well, I better get a flight back soon. Otherwise, I'm going to end up quarantined here and I'd much rather be in a place where I could be outside and hike. So San Francisco is actually really lovely during the pandemic, despite the narrative of everybody running away. I mean, as much as you can enjoy life

during such a terrible period, I enjoyed it. And then life came back and a lot of people just stayed in isolation there. Or a lot of people had cleared out. And I just wanted to go to a place where I could have the best social life possible. Is that where you live? Or are you in Austin now? No, I'm in New York now. Oh, New York.

Yeah, I moved from San Francisco back here August 2021. Are you from New York? Yeah, I'm from Long Island. No way, where? West Hempstead. Got it. I was telling Josh, I listened to the Tim Dillon show and it was just like, I was like, oh man.

You know a million guys like that? Yeah, I was like, I'm back home. Now he's listening to Tim on the show with us. Yeah. Right. It's like sitting in a diner on Long Island. I was like, wow. I've heard this conversation many, many times. It just hasn't been as funny. Exactly.

Well, welcome back to New York. Glad to have you. You guys want to hear a fun fact before we get started on the show? Yes. Berkshire Hathaway. This is the quickest it's ever gone from a 52-week high to a 52-week low, with the exception of two very notable periods in time. 1987, right?

The crash where probably a lot of stocks went from a 52-week high to a 52-week low. And the pandemic. But this time is still shorter? No, no, no. Besides for those two times. Okay. So it went from a 52-week low to a 50...

I'm sorry, 52-week high to a 52-week low in 80 days. But consider that obviously October, 1987 and the pandemic were both like exogenous events, like shocks that came out of nowhere that were not market related, not economically sensitive. What's the percentage drawdown? I don't know what percentage drawdown is, but it's 80. All right, give us a million points. It's 80. You idiot. It's 80 days. Is it down 8,000 points? Isn't that pretty wild? 80 days. 80 days ago, it was at a 52-week high. Yeah. That's how quick things have changed.

And every single financial is at a 52-week low. Right. They probably shouldn't have bought all that Solana. I feel like that was the big misstep. Well, that, obviously, and they own a ton of financials. But you guys don't believe in this theory that we're just – our economic cycles move faster now than they ever have before thanks to the internet. I 100% believe it. But I'm hearing you, Josh, on air all the time talking about how we're in store for like a long period of decline. So how do you square those two?

Well, I think technically, it's been obvious that this was going to be a real bear market. You only had to understand two things, trend and internals. And if you looked at either of those, you knew we were in a bear market before we were officially in a bear market. So now we're in one, and there's no V-shape recovery. And the reason why is the V-shape was always predicated on either the Fed rescuing us or the Fed about to rescue us. This is the first time that it's the opposite. But the way they rescue us is by throwing us into recession. So I wish that weren't true.

I feel like I nailed that, but that was pretty obvious. That was pretty easy. When I said that there was no V-shape recovery time. It's not easy, though, for long-only managers who have to always find something productive to buy or do. It's not easy. That's really hard. It was not a brilliant insight to know that clearly things have changed and the fact that massive amounts of stimulus is being removed from the market. It was not a brilliant insight by the time you arrived at it.

Correct. F*** off. When I had that insight, it was still in that threshold where it could still be brilliant. I said this in March. I'm just saying. Hang on. When did you... You said what in March? I said the Nasdaq break. I definitely said that V-shaped recoveries were done before you did. Maybe. 100%.

Maybe. I said that what just happened with the Nasdaq has to happen to the rest of the market, and it did. That's all. That's the big insight that I have. Well, I mean, I was listening to Josh. All we do here is take victory laps. That's all we do. No, I said a lot of shit that's wrong also. Like I said, oil is in permanent secular decline. Wait, let's do this.

In 2019. The biggest blunder in hindsight that I said, and you were with me, was that there was a natural cap on interest rates just given how much demand would be sitting there for yield. No, no, no. I don't think you're wrong. Would be sitting there at 3%. Although, the 10-year still is kind of at 3%. You know, shit, it's below 3%. I think you're right.

So maybe. Maybe. Okay. What was your worst call in recent memory? I mean, I thought that Bitcoin couldn't clear underneath 20,000, like a lot of people. And obviously it's done that. But it's hanging in there at 20. That's right.

We'll talk about that later. And it's ripping right now. Do you know why? Are you hearing anything? I have no idea why it's doing that. It's technical factors. Maybe the Celsius thing is like the end. No way. I know. I'm trying to come up with one good thing to say.

All right, we're going to click it up. Hang on. ETH is up 10%. On the day? Yeah. It's been a minute since you've seen something like that. All right. All right, get hype.

Compound and Friends. Say it. Episode what? Welcome to the Compound and Friends. Welcome to The Compound and Friends. All opinions expressed by me, Michael Batnick, and our castmates are solely our own opinions and do not reflect the opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions.

Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast. Today's show is brought to you by Peak Housing REIT. A couple of weeks ago on Animal Spirits, Ben and I spoke with Joe Aulis about the single family rental market. Josh, what do you know about this? The single family rental market? I actually own some stocks that are single family rental REITs. Okay. Well, you could do better. So the Peak Group owns 1,850 homes. They're in seven markets, four states. They've got a focus. I don't know if you call this a niche, the Dallas-Fort Worth area. Okay.

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They are spreading their cost out across all of these homes and they can provide all these other services, everything from entertainment systems to alarms to landscaping. You want a ring? So all of a sudden you're not dealing with 80 vendors to be in a home. You're dealing with one company that's doing it all for you. I think it's the future. To learn more, go to thepeak.group.

All right, guys. Alex Kantrowitz is here. What kind of last name is that? Are you Italian? No, I'm Jewish. That's the Polish name. You are? I can't believe it. Alex Kantrowitz from Long Island is Jewish.

Holy shit. You are from five miles away from me. West Hempstead. Yeah, yeah. Okay, from West Hempstead, born and raised. That's right. Should we do the whole thing? Yeah, sure.

Let's do it. Uh, okay. But you've been in San Francisco. Now you're back in New York and you are one of my favorite writers. Do you call yourself a reporter or a commentator? Yeah, I'm a reporter. I'm making calls. So, and I, I publish it in my sub stack and on the podcast.

All right. I read all your shit. I think you're great. You cover big tech primarily, but you've been branching out and you're on Substack. But bring us up to date. I'll tell everybody what you're doing now, but bring us up to the present. Give us like a brief history of Alex Kantrowitz. Like how did you get to where you are now? sales in New York City back in the day. I bought ads for New York City's Economic Development Corporation when they were like- Back in the day is what, 2012? Okay. That's not back in the day. Well, in the history of the internet, it's actually kind of early because they were doing all print ads and they're like, what is the internet? What is Facebook? I wrote the deck that was like, you guys should probably

do Facebook and not MySpace inside the company. Learn Google AdWords. That was a call. Yeah, okay. I'll victory lap on that one. And then I actually sold AdTech for a year because I was sick of doing support. I wanted to be in like the revenue side of the business. And so we talked about in the city how technology was the future all the time. Bloomberg was the mayor.

And I was like, well, what am I doing here? I want to actually go be part of the future. And for some reason, I picked advertising technology and sold order management systems to publishers for a year. And then the industry was changing so quickly. And I saw the reporting on it was terrible. The reporters had no idea what was going on. They weren't sitting in the industry.

That's why you guys are so good, right? Because you're here. You're able to deliver a podcast where people actually understand what's happening because you're doing it. Now, I'm giving you credit, by the way. Best financial podcast on the market, period. Full stop. Thank you. So, thank you, guys.

And then after reading these reports, I like to write on the side a little bit. And then I just said, screw it. I'm going to go write full-time. Freelanced for a little bit. Wrote for Advertising Age and Ad Publication. Five years at BuzzFeed in San Francisco. I published my book, Always Day One, towards the tail end of that and went independent in May 2020. Tell us about Always Day One.

I know the subject matter, but tell the audience. It's a book about how the tech giants are excelling at corporate reinvention. So you look at each one of the five companies, Amazon, Apple, Facebook, Google, Microsoft. They've been able to reinvent themselves over and over again throughout their histories, which is why they've been more dominant as they got bigger, which is totally reversible. We typically see companies get bigger bureaucratic. It's the first time in history that these companies have improved as they've gotten bigger rather than set themselves up for conglomerate status decline. Exactly.

I did a stat a year ago, six months ago, that Microsoft grew revenue as quickly like a year ago than it did in like 1998 or something, which is ludicrous because it was like 3000X bigger. Which is, yeah, and it's amazing, especially given that people counted that company out for 10 years, really. And it was stagnant for that long. And now to see these revenue increases is pretty amazing. So the book looks at each one of these companies, a chapter each, one on Amazon, one on Apple, one on Facebook, Google, Microsoft. And it talks about the systems and the processes they've put in place that have enabled them to reinvent. Who is it like a good book for? Like management

or investors? Or is there something for everybody in there? I like to think there's something for everyone. Okay. Definitely, I do look at financial decisions. But yeah, I mean, if you're working inside a company, if you're partnering with the tech giants, if you're curious how they operate, if you have a big company, maybe you're Brian Armstrong, you're running Coinbase.

Oh, we're going to talk about him. Figure out how to handle the size that you have, then it could be a book for you. And tell us about the Substack now. So I'm a sub. I love your stuff. I see you on TV a bunch. Tell people how they can follow you and what's going on with it. Yeah. So my Substack is called Big Technology. It's a story a week. It's completely free. And I try to basically assign myself the most interesting story of the week when it comes to the tech giants. And I, you know, put a handful of links of interesting stories at the bottom. It's reported. So I make calls during the week and then I write what I find out,

you know, on Thursdays. So you're not just reading everybody else's shit and synthesizing it. You're actually, you're doing reporting. Although there are definitely weeks where I'm just like, I got nothing. Let me do a take. But I try to do something reported, try to do a scoop as often as possible. And then I have a podcast, which you were on. Yes. It's called Big Technology Podcast. Yep.

And when I went independent, I was like, can I still speak with interesting people? I don't have the BuzzFeed brand behind me. Launch a podcast. And it's been super fun, you know, getting this podcast off the ground. Two years old now. Yeah, your podcast took off during the pandemic because these stocks were very much still in the news and people wanted information. That's right. Yeah. And they also had, you know, extra time. It was people were like, don't do a podcast during the pandemic. There's no commuting actually. And you guys know this well. Yeah. People have time to explore

different interests, try things out. And it was actually a great time to release a podcast. Absolutely. People had plenty of time. They were wandering around their neighborhood like zombies in their pajamas. And that's when they were supposed to be working. Right. And then gardening and baking. And you could do all of those things, listening to podcasts, drinking, beating their spouse, whatever. And like all of those things lend listening to podcasts, drinking, beating their spouse, whatever. And like all of those things lend themselves to good listening time. So I started mine during the same period of time. Right.

And this is now the descendant of my original podcast, which I mentioned to you is very lonely. All right. So we're going to start with earnings season. We're officially underway, Mike. Are you excited about this? Yes, I am. Yes, I am. Okay. So we started start with earnings season. We're officially underway, Mike. Are you excited about this? Here we go. Yes, I am. Yes, I am. Okay.

So we started off with a dud. Morgan Stanley and JP Morgan both really did not have much great to say. The good news is nobody expected anything. So that's what they got. Let's start with Morgan Stanley. So second quarter profit fell 29% from a year ago, reflecting a drop in corporate dealmaking. That sounds huge and it is, but the one caveat that I think is worth bringing up is that's versus the biggest bubble quarter of all time, Q2 2021, which was basically a SPAC every minute. When they weren't doing SPACs, they were doing IPOs, all kinds of activity.

And so, of course, this quarter would be down where you can't bring a company public. So I don't think it's as catastrophic as maybe that number reflects. Mike, what do you think about that? The number that I was looking for was the investment banking revenue, including fees for mergers and acquisitions, was down 55%. That actually sounds- That sounds catastrophic. It does, but consider, I thought it would have been totally dry.

I think next quarter might be down like 80%. Next quarter will not improve. No, it'll be worse. It'll be worse. Wealth management revenue was 5.7 billion in the quarter. That was down 6%. So that's like flat. But if you back out market effects, it's probably up a little bit.

Meaning they probably raised money but lost a lot from what happened with the S&P 500, et cetera. Wealth management revenue is 44% of all of Morgan Stanley's total revenue. That's the biggest percentage of any of the banks, right? Yeah. revenue. That's the biggest percentage of any of the banks, right? Yeah. And they don't... The number of retail trading clients at Morgan Stanley was 7.8 million at the end of June, up from 7.6 million. I think that includes E-Trade. Average daily number of retail trades the company handled was 880,000

this quarter, down 13% sequentially, so from Q1. Yeah, nobody's having fun trading. Look, I think it's a big, important stock. And I think for a lot of reasons, we should look at that and perhaps that should make us more cautious about the overall market. But then I would also point out like Morgan Stanley, Goldman, pretty unique. It's not like there are 20 other companies in the index. And I would point out that Morgan opened down, how many was it down? 5% at the open? Morgan Stanley? Morgan Stanley.

I think it was worse. Okay. It just went green. Is that where it's going at today? It just went green. We were just talking about this before we started. The S&P is flat over the last month. It feels a lot worse. NASDAQ's up 4%, which is what you want to say. The news continues to get worse, but the stock market has stopped going lower. At least the index has had. Does it feel flat to you?

It does not feel flat. If we didn't give you that stat, would you guess it's flat, up or down over a month? I mean, I would have guessed down, but not dramatically down. I think it's done most of the damage in the early parts of the year. The tech giants have actually fallen significantly,

I think, over the past month. But the S&P, you know, I'm looking at it all the time to try to gauge where these companies are. And, you know, I think it took that big hit early on. And now we're starting to test how low it can actually go. Let me tell you something. It's going to go lower? No, I wouldn't know. If Apple and Microsoft were down as much as Meta and Alphabet, this market would feel like 2008.

Like percentage-wise, that's where we'd be. That bad. It's very fortunate that those stocks have held up. I forgot to throw this in the doc. And they report in two weeks. I forgot to throw this in the doc. I did an equal weight version of the big seven. So Apple, Amazon, Google, Microsoft, Facebook, Tesla, and Nvidia.

Okay. And they're on an equal weight basis. they're in a 40% drawdown. If you equal weight the seven of them? Yeah. How? What's dragging them down the most? Well, Netflix is down like 75. Well, thank God they're not equal weight in real life.

Yeah. Microsoft has been – they're all getting hit except for Apple. Apple is the only one that's not in bear market territory on its own. But just a bit. It's down 19 percent this year. Josh, you thought last quarter that Apple was – the party was going to be over for Apple. It turned into a decent quarter though. We're out of some bad supply chain stuff.

When do you think that party ends? I think it's – Is this the quarter? I think a lot of it – a lot of – look, China growth or non-growth is going to be a really big part of the story. And then I just think like the rising cost of financing everything and how many people are really in the mood to pay up for the next phone and what that upgrade cycle looks like. And do we even care about the upgrade cycle as much as we used to?

that upgrade cycle looks like? And do we even care about the upgrade cycle as much as we used to? What's your take on how important phone sales are relative to services now? Are they still twice as important? Or are they only like neck and neck? I would say phone sales are more important than we've weighted them previously, because there's still 50% of the company. And when you had zero interest rates, all of a sudden, you looking at the services revenue and you're like, oh, okay, I can factor in X percent of growth. People are going on air saying, look, we got to value Apple as a software company, not as a hardware company. You can't do that anymore. So I think the phone stuff is really important and there is real risk now because we know that they went through massive upgrade cycles when everybody said, okay, I'm at home. I need a new phone.

I need a new computer. That's kind of tailed off at this point. People have upgraded. And I think you're totally right that we're in difficult financial moments right now. Sentiment's bad. And is this the moment where you're going to drop $2,000 for a laptop or $1,500 for a phone? Look at the semi-sector and explain to me how Apple is going to have anything good to say about MacBook and tablet. Apple was completely unimpacted by the pandemic.

Their earnings revenue were not impacted one iota. And as a matter of fact, I would argue that right now fundamentals, not that they don't matter, but macro is driving the picture, the ship. That's it. Actually, before we get into Apple, let's just do JP.P. Morgan really quickly because basically they reported earnings today too. Also a big miss. They actually are suspending their buyback because they have to get their balance sheet ready with enough capital for tier one and possible loan loss reserves. J.P. Morgan Chase opened down 4.25%. At the low, how bad was JPMorgan?

I think it was – It was down six? I don't know. It's down three and a half right now. All right. But at the highs of the day. But it hit a 52-week low this morning. It's not as bad in the afternoon.

They're setting aside another $428 million. So I think they have now reserved for billions since the start of this year in loan losses. Last year, there were no loan losses. Spending on Chase credit cards rose 21% from a year ago, 15% higher than the first quarter. That's because everything costs more. Chase customers also started carrying more credit card debt with card loans up 17% from a year ago. So this is where it gets weird, Alex. They're basically saying everything is fine, but they're going to prepare for a recession anyway. And that's like very emblematic of I think a lot that's going on right now just in general.

So this is Jamie Dimon. Quote, the current news is actually quite good. When you make a list of potential issues going forward, it could be a soft landing or hard landing. You do have a serious set of issues out there. And then the CFO goes, the truth of that is we've looked very carefully into the actual data and results, and there was essentially no evidence of any weakness in the actual results. The questions are about the outlook. You know that scene- That's why it's so hard.

You know the scene in Awesome Powers where the dude is like saying no and there's like the steamroller that's like 100 yards away from him moving in slow motion? Yeah. It feels like that's what everybody's- like everybody feels like a storm is coming and they are battening down the hatches, which is very weird because most of the time you don't have like quarters run, what multiple quarter runway to prepare for an oncoming economic downturn where it seems like everybody is ducking for cover. So how do you guys read it? Because we are seeing some good signs. Labor market is strong. It's very weird. And you know, I mean, of course the Fed is raising the rate, so we're going to expect some type of slowdown. But like Josh mentioned, people are spending more money.

Okay, there's inflation, but people are spending more money. On a real basis, they're spending more money too. How much of this do you think is a factor? A lot of the job loss layoff headlines so far are in tech, telecom, media. Or maybe it's just that those are the only companies anybody pays attention to. It's just the biggest companies. That's where the headlines are coming from. But you could have a scenario where NASDAQ-listed companies, venture-backed startup companies, former SPACs, like that whole group of stocks, which are heavily concentrated into four or five industries, do lay off a lot of people and withdraw a lot of offers.

You lay off a lot of people and withdraw a lot of offers. But then you still have this massive shortage of pilots, truck drivers, nurses, school teachers, manufacturing people. Like both things can happen at the same time. And we talk about the economy like it's all one economy. Economies are very local and they're very industry specific. And so like both things can be true at once. Absolutely. And you look at the magnitude of like slowing down and layoffs in the tech sector, which is, again, the one that's getting all the headlines. It's not really that bad. It's not.

I mean, you're talking about what we're going from. Yeah, we're going from expecting 200,000 something jobs to like 196. And people are then you see a headline. Oh, you know, this is a major slowdown. OK, it's not as many jobs as it was in the past, but. You know, Alex, I had in the doc an article from the journal, Tech Hiring Cools Off.

Yeah. And I read it this morning and then I deleted it. You know why? It was just a headline article. There's nothing in there. The data was so uncompelling. That's exactly, yeah, I'm picking up on that. So here's the line.

I deleted the doc, there's nothing in there. Here's the line from the story. Yeah, Janko Associates Inc. wrote in a report on Friday's numbers in which it projected the economy would add 196,000 IT jobs this year. Right. Down from about 213,000. Oh, my God.

It's like the 30s. I'm glad you mentioned that. It's like the depression. I literally deleted it because I'm like, wait, why is this a headline? Exactly. There's nothing. I will explain to you. It's Twitter.

It's Netflix. It's Tesla. That's right. It's the big ones. It's companies that people recognize when their names are in a headline. But it's not that impactful. It's great Netflix, it's Tesla. That's right. It's the big ones. It's companies that people recognize when their names are in a headline. But it's not that impactful. So it's great for journalists. Yeah, and there's something that someone brought up

on my podcast recently, talking about how we're starting to see what he's calling responsibility theater, where you have companies that are broadcasting the fact that they're cutting, or you know there was that Mark Zuckerberg line. Yeah, and then Reed Hastings. Exactly, yeah. They both said the same thing. What did Zuckerberg say that Mark Zuckerberg line. And then Reed Hastings. Exactly.

They both said the same thing. What did Zuckerberg say? Mark Zuckerberg said, we're going to raise our goals, and some of you might leave, and that's okay. Now, I think they're going to do a layoff. It looks like they're looking for low performers. But there is this sort of race for companies to puff their chests and talk about how responsible they're being.

Here's a quote from Mark Zuckerberg. Especially the VCs. They want to like our— VCs in particular, because they're going to go's the quote from Mark Zuckerberg. Especially the VCs. They want to like- VCs in particular, because they're going to go to their LPs and be like, all those other people are spending like, drunk sailors, look at the numbers,

but we're telling our companies you got to be strong. What did you call it? Responsibility theater. It's actually, you guys had Paki McCormick on the show a couple of weeks ago. I think he's the one that brought it up on my show.

Okay. It's a great phrase. So Mark Zuckerberg said, quote, realistically, there are probably a bunch of people at the company who shouldn't be here. It's funny how you say that when the stock's down 58%. Right. Reed Hastings said—

It's a bunch of companies and people at every company that shouldn't be there. Reed Hastings said, if you'd find it hard to support our content breadth, Netflix may not be the best place for you. What? Well, no. Netflix is f***ed up. Why? Like on a lot of levels. Well, it sounds like you know something.

Everyone knows this. This is f***ed up. Why? Like on a lot of levels. Well, it sounds like you know something. Everyone knows this. This is like out there. Did you listen to Andreessen talk to Joe Rogan? I'm partway through that one. Okay. Did you get to the part where they were talking about Netflix, just Netflix stuff in general and how do you lead a company when a third of the people working there want to be like protesting in the street?

Okay. I didn't listen to that part, yeah why don't you so really well i don't know if it's true but it's a really funny anecdote where uh joe rogan is talking to a friend of his she's an executive at netflix and she said somebody that works for her like comes in the office and it's like saying blah blah blah like whatever they want to. And she says something back and the employee says this to her supervisor. How do I know you're not with the enemy? Yeah, she's like, I'm your fucking boss. Right.

Like, it's just, I think we've lost track of that. So if you're Zuckerberg or you're Ted Sarandos or whoever's calling the shots at Netflix, and you do have these people who are low performers with big mouths who are not there for the same reason as everybody else, maybe a mild recession is like not the worst thing because it gives you pretext to say, hey, A, you're a distraction. B, you're not really doing your job anyway. And C, we need to lighten up on headcount. So maybe if your social issue bullshit is keeping you from doing your work and you'd rather do that,

here's your chance. Here's six months severance, GTFO, you know, best of luck. So I believe that there will be some of that. And Netflix has always been, I think it's been a bad culture. That's just my perspective on it. But when people ask me,

which one of these thing companies should I work at? I'm like, have fun, but just don't go to Netflix. It's a culture that's straightforward to the point of almost being mean. It doesn't seem like a place that I would want to work at.

It's feedback. He fired one of his senior, senior people that he built the business. I forget her name, but she was like a very- They fire a lot. That was a huge story at the time. Was this coming from the top down? Like this is weird.

It was from him. Yeah, it is. So you a huge story at the time. Was this coming from the top down? It was from him. Just ruthless. So you have two types of feedback cultures. You have a feedback culture that's supposed to circulate ideas inside the company. You should feel good going to your manager and saying anything because if your idea all the way at the bottom of the chain can get up to the top, we don't want

that to be lost in the middle of management. We want that to go. So feedback should go up and down. What would you guys say? In Netflix. Oh, I... Yeah, I mean, yeah. We have that culture? We have that culture, right? Yeah. I think so. That's a tepid yeah. You're fired. You're fired. I'm going to be honest. I wasn't

fully following. I was multitasking for a second. At Netflix, you see the culture that we have? This is a good culture. He wasn't fully following a podcast that he's producing. I was trying to think of a name of the book. I really liked that book, the Reed Hastings book. Are you mining crypto? Conference call stuff.

All right. This is tough stuff. I ask my podcast editor all the time for feedback. He's like, bro, I was just trying to make sure the audio sounds good. I was like, all right, thanks, Nate. He's not there for the content. He's there for the quality. It's true. He's like, I like the show, but I'm mostly listening at, looking at the levels. But so the Netflix culture is different than Netflix. So the other culture it's, I think, uh, uh, Ray Dalio has this culture too. It's culture, it's feedback culture to make you stay

in your place. I think that's so stupid. I think that like trying to keep people, if you put people in their place, right, you're, you're encouraging them to be afraid and to think small. I'd much rather have a company that encourages people to dream big and share those ideas. So I think Netflix is – and that's going to collide. I also think there's a thing though that within a company, you do want people to express their opinions and their ideas but not about everything. Oh, for sure. I've heard Ray Dalio say this publicly not about his employees but just like generally so i meant the economy and whatever i've heard him say

he's a believer in this concept of ask yourself if you've earned the right to have an opinion right on the surface that sounds gross right like on the surface that sounds like oh you know everything and nobody else is qualified. But there's something to that. Like not everybody should weigh in on everything. Like, listen, I went through this. I have a lot of opinions. I don't know if you could tell.

My wife was going through ankle surgery. I was very, very generously sharing my opinions with the surgeons. And I know in the back of their head, they were like, listen, this is a process and we all do have to come to a consensus, but not you asshole. You work on wall street. Like we don't really need your opinions all over this like thing. Like let the doctors confer and they didn't say it out loud, but I could just sense the vibe off of them.

sense the vibe off of them. So if you're at a Bridgewater and your job is to be like the booth babe at the hedge fund conference or the guy whose job it is to write code for a specific natural gas trading algorithm, maybe you don't want to stop Ray Dalio in the hallway and be like, I think we should get overweight commodities this week. Right? So like, I don't want to stop Ray Dalio in the hallway and be like, I think we should get overweight commodities this week. Right? So, like, I don't know where that culture should start and stop. But I do think it's, like, really hard to figure out where the line is. So, anyway, Netflix is pivoting to the ad subscription service. Oh, yeah.

Microsoft partnership. What is that? That sounded weird to me. But does that sound weird to you? I don't really know anything about that. No, not at all. What is that? That sounded weird to me, but does that sound weird to you?

I don't really know anything about that. No, not at all. Microsoft has a big digital ad business, and Netflix is going to need a trusting partner. So Microsoft's been selling trust basically its entire side in a Della era. You can trust us. We're good for security. We're a good brand, and we'll look out for your brand. When you have a salesperson like that inside of Netflix HQ, they're likely going to win the deal. And that's what happened to Microsoft. And I think Microsoft is also fairly desperate to be associated with cool companies, even though Netflix has had a kind of a rough go of it. But

remember, they tried to buy TikTok. So what does that mean? They're probably going to come in with pretty favorable terms to Netflix to be like, we want that shine. And so therefore, we will make this deal for you, you know you so we can work with you. Microsoft, I guess I wouldn't say outbid, but they were competing with- Who else was at the table? Google and NBCUniversal, Comcast. NBCUniversal, not big enough. Google, tons of brand safety concerns.

I was going to say NBCUniversal not techie enough also. Right, exactly. So they're a bad fit. What do you guys think about this? I heard this, I don't know if it's a rumor or whatever, but someone said this might just be the early days of Netflix trying to get acquired by Microsoft and this is their first step to partner together.

I don't think so. So big, even still. $77 billion. It's down huge, but it's still so big. So the thing is, down 75%. What if this ad thing is not an absolute complete disaster and they convert one out of five? I'm low on the stock.

Actually, that's exactly what's going to happen. I think that Netflix has been too punished, like punished too badly for its subscriber base slowing. Isn't Peacock working? Ad-supported Peacock, ad-supported Hulu. These things are working in the wild. Hulu is killing. Of course.

This has always been – it's so interesting because it's always been the model. You show content, you run ads. And there was a while where there were these companies that were religiously against advertising. But people don't love advertising, but they don't like spending more and more money. And then when you're a company that needs to grow, you have two options. Charge them more and worry about churn. We know that Netflix churned. Or run ads and you can make more money.

And so this is natural. The last two quarters for Netflix. I mean, we remember this one. And then this one. And now it's just going sideways. Are we setting up for another? Is it going to be another? Two of the worst gaps down in a large cap stock.

And you know what's so bad? Not even a f***ing attempt really to fill either gap. No. Like not even nothing. A waterfall. So this stock, how much market cap did Netflix? Was it 250 at the peak? No, I think it was bigger.

I think it was 300. Let's see. I got you. Wide charts to the rescue. Have you seen how many commercials Hulu shows you on the like- It's abusive. It's so abusive. I pay premium.

Come on. It's crazy. 305 at the peak. 305 billion and it's 77 now. That's too much. And maybe 306 was too much. Like everything was bid up too high, but 75 seems like way too low.

What would the reaction be in Microsoft stock if they made a bid for Netflix? If they paid, what is it? 170 right now? What is the price? 77. He talks about price like price. Oh, 174. The market cap of Netflix is where it was all the way back in the summer of

2017. Microsoft bid $225. What would be the reaction? I think both stocks would go up. They could probably get it for less. And yeah, I think it would be a good move for Microsoft. I don't know if they can get it for less because I think that brings out other bidders. This is still a crown jewel.

Right. It's still the biggest. It's still the biggest streaming service and it's so global. It's not a company that's like, oh're gonna try to go global it is huge in so many countries insurmountable lead in some of the most important countries if they're they're hearing that for every shit every shared password there's like four or five people that share it so netflix might serve a billion people good Good for your advertising business, if that's the case.

Yeah, that's exactly right. Yeah, keep the password shared. So if they convert, one out of five, two out of five. That could be serious numbers. Yeah, and we all know that TV advertising, which is what Netflix would sell next to,

is the most valuable form of advertising. He has... Because it can reach big audiences. Satya Nadella has studiously avoided media. Like he watched... He wanted TikTok. Did he he though or he wanted to be in the conversation because to your point they want to be associated with cool right but i mean you go in and you're you're a deep in negotiations there he was i saw him talk about it at code about how what happened to the tiktok deal and he did seem kind of disappointed that he got ghosted by the company. Did the Activision deal go through?

I don't know yet. And then Oracle was involved in the TikTok negotiations. What the hell was that about? Well, that was a weird one. That was weird, right? I really haven't understood much of what Oracle has been up to. You're not even including them with the tech giants and it's still pretty big. It's big, yeah. But it's also, I mean, it's database business

in an age where we're moving to cloud. It's very not sexy. How long is Oracle going to be able to handle that? I don't know. I don't either. Let's do Robinhood and Coinbase. One more tech giant we don't really talk about that much, I guess, is also boring kind, Adobe.

Adobe and Oracle are both $170-ish billion. Both mega, mega caps. Right. Boring. Adobe is a very straightforward company, right? They seem to, now they figured out their recurring revenue model. Everything seems good.

Nobody cancels. Is that basically what's going on there? Question is, you know, what their growth prospects are. Because if you're a longtime designer, you know, you're going to use Photoshop, Illustrator. Yeah.

If you're just coming up, the're going to use Photoshop Illustrator. Yeah. If you're just coming up, the hot software to use is Figma. So you might- Who makes that? Sorry, what is it? Who makes that? Figma. It's their own, they're a private company now. Yeah. So if you're going to use Figma to start, then, you know, are you going to then move to Photoshop? That's the question. So it's possible that these companies that decided that they wanted to start web native and not download might impact Adobe's growth potential in some ways. It might be so long before that shows up though. Yeah. That's why, I mean, that's why Oracle is still a tech giant. You know, inertia is one of the most underrated forces in corporate America. I totally agree with that. We've got the tech giants, I think in two weeks,

what are you most looking forward to? I mean, I always – I look forward to meta earnings the most. It's such shit. Like, it's a cheap – it's 16 times earnings. Sheryl Sandberg just left. It's such – the messaging around this company is such a shit show. Like, nobody even understands what they're talking about anymore. Right. Their messaging is like on another planet divorced from what their real business is, which is Instagram.

And I don't – at what point do they like give this meta thing up? They just started. They're so committed to this. Yeah. So, I mean – well, also I'll say with their earnings, they could end up actually having a decline in revenue I think. They were 29 – Yes, their first ever. First ever.

Yes. And if that happens, what's going to happen to this stock? I mean, that's what I'm particularly curious about. Well, you'll find out why it's 16 times earnings. Well, so this is what I wanted to ask you about. Do you think that the beatdown of the $10 billion or whatever they lost on the metaverse is maybe not what Wall Street is focused on? It's like, no, no, no, no.

We know that they are one of the most highly sensitive companies to the global economy via advertising which is the first thing to go and they're getting beat down because we know that that's going to slow down and the 10 billion dollar loss it's a drop you're right about that because i think because i think you're seeing that reflected in snap in alphabet google now like right google didn't change its name to Meta. It's a big advertising business in a global slowdown. Right. Sometimes things are more straightforward than we think.

I think you're right about that. But the thing with Meta is they are cheap. They are still producing gobs of free cash flow, and they already got annihilated. Stocks in half, right? I mean, I think it's down 60. 53% on the year. So what do you think they're going to do on the call? They already got annihilated. Stocks in half, right? I mean, I think it's down 60. 53% on the year.

So what do you think they're going to do on the call? What do you think they want to focus on? I mean, I think they're really going to have to answer some questions about what's happening in their business. Because there's, you know, we talked about a few of them, but there's so many. It's almost like when you talk about the challenges for them, you can lose track. So you have the Apple anti-tracking changes that are making it impossible for advertisers to measure whether their ads are working. And of course, the company is working on solutions to that, but you can't really beat the fact that you used to have a pixel on a website that would tell you if someone bought, and now you just can't tell. So how do you optimize?

I think that's one. I think they're getting their ass kicked by TikTok. People now use TikTok more on an average day than they ever used Facebook on an average day. Oh, yeah. So if you use TikTok, you're going to spend more time there. And the younger you are, the more likely it is to. Exactly. And so that leads into the third issue, which is Instagram. So Instagram right now is in the middle of a pivot to start to try to take, you know, to compete with TikTok in some ways. It's a very confused pivot because, you know, you have different things you go to social

networks for. You have your friends and family and you have the things you're interested in and you have entertainment. Instagram and Facebook has always made their money. The bread and butter has been friends and family with some interests involved. What TikTok is doing, sorry, what Instagram is doing now when it tries to compete with TikTok is it's changing the entire dynamic of the feed. And it's going- Showing you people you don't follow. Right, exactly. And now it's trying to get in on that entertainment, which is where TikTok

has had all this success. The problem is you end up in this situation where you're going to forsake your bread and butter to try to half-heartedly introduce some of this stuff that's been really good for a competitor. And you almost end up stuck in the middle. And that's why I really think that if they want to try to compete with TikTok, just go, you got to go all in on it. You can't go half. And I think- Should they have come up with a new, completely new app to just be a TikTok clone? What I would have done is taken, and this is what they did with Stories when they were getting their butt kicked by Snapchat.

They put Stories in the top of the feed. And we said, we don't care that this is the most, you know, important real estate in Instagram, Stories up top. What I think they need to do now, if they want to compete with TikTok, the front feed of Instagram has to be exactly like TikTok. Wow.

And then- Open it up onto Reels. Exactly. And then you can preserve friends and family content, one tab over. Look at it separately. TikTok tab, friends and family content tab. You can't have one feed with both.

It's confusing and it doesn't make any sense. So two things. Creators like myself have realized the cheat code for more followers on Instagram is to just feed reels. So when John and Duncan create video clips of the show, I'm like, can you please make that a sub 60 second reel? Because I know five times the amount of people will see it than if I just upload it as a timeline video. And that I think makes it very clear what Facebook's corporate strategy is. If you give them reels, they will give you an audience because that's like killing TikTok or fighting back against TikTok is the whole ballgame right now.

And that's what I'm saying is if you're going to go that way, go all the way. You might spend five minutes on Instagram checking out what friends and family are doing. Then you'll spend an hour on TikTok. So in your version, you open up Instagram and it's on the real screen. Period. So it's a full screen vertical video. Correct. And it's most likely somebody you've never heard of.

But you're being served that because a lot of other people who were served that either liked it or engaged with it. And remember how you said that you're going to use this cheat code of creating reels for them? Yeah. They have. That was like two seconds ago. Yeah, they have them, right? So they have a billion people. Yeah.

And TikTok, well, TikTok might have somewhere close to that, but they still have this massive user base that's going to want to get reach. Remember how bad. So that will, putting it front and center will end up improving the product because it can't really compete if people are going halfway. What do you think the odds are that they announce that or just like slip it out surreptitiously, just start doing that? What do you think? I think it's more than 50 percent.

OK. So on that day, TikTok slash Chinese government is going to get pissed off. They're going to have to figure out a way to fight back. Yeah, it's going to be a tough fight between the two of them. But yeah, this is where we're heading. Remember how bad Facebook was at the IPO? Obviously, it was a complete disaster. Facebook is in a worse drawdown now.

It's deepest ever. And I do think- 60% is the worst drawdown it's ever had. Yeah, I do think that a lot of these percent off high numbers are going to get investors into a lot of trouble. Now, I'm not saying with Facebook in particular particular but you're talking about names that probably had no business ever trading where they were and people are anchored to fake to like those old prices were based on literally nothing yeah so speaking of let's go to robin hood i can not wait

when is this shit show so throw up this chart chart. This is from Vandatrack. The premium traded in small options, out of the money options, which are retail. And we're looking at a chart of puts and calls, and they are just drying up. They're just rolling over. So

you know the stat where like 90% of all options expire worthless? It's 100. It's 100%? Yeah. Right. But like the problem is one time it works and it was like you bought a lottery ticket, but you don't look at it like a lottery ticket. You look at it as like I'm a great options trader. My first big options trade was Netflix 2010 when they split the DVD service. I bought puts.

The stock was down 35% and I thought I was going to retire in two weeks. I said, if I just keep doing this. You thought you were Tudor Jones. If I just keep doing this, it's over. So there was an article in Statum Market Watch today. An analyst at Mizuho, Dan Dolev, was talking about Coinbase because Coinbase is the same thing, right? Trading is just drying up. Its market share among 30 of the largest global exchanges averaged 2.9% in July, far below the Hades of 2021 and below Q1's 5.4%. So it's probably, this guy said it's probably outside the top 10 of exchanges as measured by global volume. Holy shit.

And the stock of Coinbase, which is one of those ones that you should forget about the anchor, but I'll do it anyway, 86%. Is that – really? Holy shit. It's almost hard to believe. It's 86% off its all-time high. What was the price of the stock at the high? It's like a $500, $400 stock? Who – I mean – I care. It's just truly unbelievable, the price of the stock at the high? It's like a $500, $400 stock. Who cares? I mean, I guess it's just truly unbelievable.

The price, the price was let's yeah, it was a $300 something stock. Right. So it's not normal for, it's not normal to have a $300,000 stock after right after an IPO. An IPO at like 300 bucks. I know. So let's just start with that though. That is not normal. And this is way more normal. Where is it now? 55? So the market cap was 76 at the peak. It's at 12 today. Unreal.

Alex, I want to ask you about this. So Brian Armstrong wrote a post that he called operating efficiently at scale. Did you read this one? Yes, I did. So I want to ask your opinion on this. So he speaks about driving more efficiency, the transition from a hungry, scrappy startup to a bloated company that got out over its skis. And I want to ask, what the fuck is with these companies,

the KPIs, the CPPs? Like what is with all these, I made that up, but all of these acronyms that, can't we just talk like normal people? Here's a direct quote. We use DRIs, in parentheses, directly responsible individuals to help us execute faster.

DRIs balance input from the team and make clear decisions in a timely matter. DRIs, it's like Harvey Keitel in Pulp Fiction. It's like the wolf. It's like you call the DRI, listen, we got a body in the backseat of the car, I feel like I'm taking crazy pills. DRIs, just call them.

We need you to execute. Team leaders. Yeah, it's terrible. And I thought this was an extremely concerning post to read from the leadership of Coinbase. I'm not concerned, I'm out. Yeah, you know, acronyms and all. It did feel like Brian Armstrong was kind of going to the Jeff Bezos school of managing a big company. So we're like three different things that I saw in that

post that like made me think of Bezos. This DRI thing, basically he wants people lower down to make choices. At Amazon, they have this thing called one-way doors and two-way doors. A two-way door is a decision. You guys know about this? A two-way door is a decision you can go back on right away. And Jeff Bezos is like, if a decision is a two-way door, make it and then just see what happens and you go back. A one-way door is a decision you make and you can't really take that back. So that should be something that we decide.

But we have to make the two-way door decisions quickly. So I think that that was what he was saying with that point. He also said organize teams into small pods of about 10 people. That's another Jeff Bezos thing. You want to operate in what he calls two pizza teams, which is teams that can be fed with two pizzas. And then the other thing he said was like directly out of the Bezos school of management. I'm my own team, so I can definitely be fed by two pizzas. Me too. And then the last thing he said was ship products, not slide decks, which is, again, like banning PowerPoint in Coinbase, banning PowerPoint in Amazon. They did that. But for me, the question is not whether Coinbase can – I mean Coinbase should know. The fundamental question for this company is not about whether it's innovating fast enough or reinventing itself.

It's the fact that the assets that are traded through its platform are now out of favor. And to have this long post about DRIs. That is not going to be the thing that matters. What's going to matter is, does the underlying commodity that you built a brokerage for ever recover?

And it just showed, to me, a tremendous lack of awareness of what the real issue is with the business. Which is? He should have written his take on Bitcoin and whether or not it's going to bounce because that's all that matters for him. I don't know what you can write if you're Brian Armstrong right now. We messed up. I mean, we spoke about this last time they reported earnings. They ended Q1 with 4,948 full-time employees, up 33% from last quarter, and are pleased with our ability to attract and retain talent.

So we've spoken about this chart a million times. But the stock-based compensation of Coinbase was so far out of control. You had retail trading down 51% last quarter. It went from $177 billion in Q4 to $74 billion in Q1. What's it going to be in Q2? $20 billion? I mean, honestly, it's going to be a shockingly large drop. By the way, I think this is entirely reasonable. After 18 months of 200% year-over-year employee growth, many of our internal tools and organizing principles have started to strain or break. Yeah, no shit.

Yeah. So maybe that's the real point that he was trying to make. The drop here is going to be so bad in trading volumes. And if you read between the lines here, why are you going to give your employees this stock-based compensation that's out of line with market realities? You're part of a financial movement that's part financial movement and part religion and you're in this amazing moment which he was you know in the past couple years what's the religion you mean like

digital assets crypto yeah bitcoin you know jack dorsey bitcoin will bring you should pay them in doge it'll cost nothing exactly right right so um so when that is in the moment where you where you know the religion seems like it's doing real well, and it was last year, all of a sudden, good financial management, all that stuff goes right out the window. Because you're like, oh, every Bitcoin is going to be worth $100,000, $200,000 real soon. And we're going to be the number one place for people to trade these things. Obviously, that hasn't panned out. And now, when the water recedes, you start to see what the real issues are. Well, not to beat this dead horse, but I'm going to do it anyway.

Last quarter, there was a 35% increase in stock-based compensation. We know that's not going to repeat. While revenue was down 53% of the same period. So that quarter looked ugly. This is going to be a freak show of a quarter. Can I say what? Can I tell you why though? Also like why that's so true?

Do you know anybody that right now is like on Coinbase trading crypto? No. Isn't that like doing the Macarena? Like can you think of something that's more ridiculous? Like an out of step with how people are living their lives right now? Oh, that is a good joke. What did you do today? Oh, I did some like buys and sells on crypto.

Really? You did? Why? So, all right. So that won't be forever. And maybe the asset class gets its bounce. But this is the thing that nobody seems to have spotted. The inherent flaw is that the trading commissions

for every asset throughout the course of history have only done one thing. They've contracted until the point that trading was free. And now you have the guy from Binance comes along and he's got the capital and he says, hey, free trades. If you're a Coinbase user, unsophisticated, you probably don't even know how much they're charging you. I know I don't. It was one and a half percent. Is that it?

It could have been eight. I wouldn't have been. Honestly, how would I know? Because first of all, I don't. It was one and a half percent. Is that it? It could have been eight. I wouldn't have been, honestly, how would I know? Because first of all, I don't even think it's a real market. I think you're trading against them. That's number one. So maybe you're trading against other people on their platform. My orders are definitely not being shown to like the global crypto markets. So I think it's a fake market to begin with.

I'm probably trading against their own market making operation. And if they were scalping 6%, 8%— No, no, no. Wouldn't they have to disclose that? They would be making so much money. That's the point. Have to disclose that to who? It's a publicly traded company.

No, who is the authority? Literally, the Wizard of Oz? That's the point. The SEC. They are? The SEC currently oversees Coinbase's trading operation? Tell them that. I don't think they know.

So this is the fascinating thing. So if you believe in this asset class, you almost can't be bullish on Coinbase unless you think that all the other services that they're going to sell their customers will outweigh how much of that trading spread they are inevitably going to lose. I actually disagree. Short term, I think if you are, and this is my opinion, I could be wrong. If you are bullish on crypto, I'd rather own Coinbase than crypto, than Bitcoin. I think you're getting more juice. Wicked cold take. No way.

If you're bullish on Bitcoin, Bitcoin rallies, Bitcoin doubles. Coinbase more than doubles from today's price? Why? I think you're getting more juice. You think you're getting leverage on the price of Bitcoin? By the way, this is not an opinion. Recently, Bitcoin – what the hell is the name of it? Coinbase is a higher beta trade to Bitcoin.

Bitcoin's up 8%. Coinbase is up 12%. Yeah. I just don't think that lasts the whole way. Well, it's not going to last the whole way. It's like short term. Short term. If free trading becomes a standard,

it'll happen in the next bull market. But don't you think that's also one of the reasons why, again, I keep saying Bitcoin, Coinbase is down 86%. Everybody knows trades are going to be free. Agree. Agree. Maybe it shouldn't be down 86%, but we'll find out.

I just find it hard to believe that in the next bull market, we don't see all of the exchanges and brokerages and trading outfits try to take share. And the way they're going to do it is free trades. 100%. And this is what I'm curious to see. So all this bad shit that we're talking about, how much of it is in the price of the stock? And unfortunately, recent experience shows that there could still be downsides to prices when you think everything bad is priced in. And I hope we're at the point where we could get some really- I wouldn't short, by the way, I wouldn't short Robinhood or Coinbase.

I hope we're getting to the point where we get some really gnarly numbers and the stock stopped going down. And then we're like, all right, thank God for- You think we could be there? I was about to ask you guys that. I wouldn't short either one. I mean, I wouldn't, I don't know. I'm not shorting any companies. I'm only like in index funds. You think Robinhood ends this year as a standalone company? I don't.

That's a great question. But I think that they already have some acquisition interest. I'm sure that they do. Here's my most recent nothing is priced in. Bed, Bath & Beyond, there's nothing but sell ratings. Everybody knows it's a piece of shit. After Target and Walmart just reported a gigantic inventory build, you would think that Bed Bath & Beyond,

legitimately 97% off its high. All right, we get it. This stock is bad. It's bad. They had one of the worst quarters I've ever heard, and the stock was down 26% in a day after being down 90%. So I know it's just one example, but you just see we saw it for the last three quarters.

Oh, the stock's down 70%. It's got to be priced in. Nope, it's just one example, but you just see, we saw it for the last three quarters. Oh, the stock's down 70%. It's got to be priced in. Nope, it's down 28% after hours. Remember, though, that, you know, like the Ant-Man and the Wasp? Of course. And like that's, you know how they go into like the quantum verse or something? Yeah. Where like none of the laws of physics behave the way they're supposed to.

When a stock gets below five, it's the equivalent of being in the quantum realm. It's a great take. Because look at Revlon. This is a company in bankruptcy with a stock price that's tripling. They could literally sell stock right now and fund a portion of the cost of bankruptcy and pull themselves out of it or fund some of the liabilities that they couldn't prior. I think it's REV. I don't know if we have a charter.

But like below a certain dollar figure, throw it all away. You could have a stock like Best Buy fall another 26 percent even after it's been crushed. Because at that point, there's no institutional loan. But you could also have Hertz or AMC or GameStop or one of these companies like literally have the most miraculous rally based on nothing. And Revlon is just the latest example of this. It's literally a bankrupt company where people YOLOing into the stock are being rewarded for how bankrupt it is. I'm surprised people are still YOLOing into the stock are being rewarded for how bankrupt it is. I'm surprised people are still YOLOing into stocks. I thought that that was almost like a phenomenon of free money and zero interest rates.

Dude, this is – OK. OK. This is the Wall Street Journal today. Revlon shareholders – That's a hilarious headline. Say bankrupt company has equity value. Well, sure it does. Just let's pause on that.

Think about that statement. Every textbook at every business school in America does not have a sentence that says that. Minority shareholders say the stock is in the money. It's like the onion. But that holders won't be adequately represented by controlling owner Ron Perlman. So basically there's a group of Revlon stockholders who say that minority owners should have a louder voice in the Chapter 11 case because they're there. What do you call a group of Revlon shareholders? I don't know.

I don't have a good joke for that. Oh, okay. I would say bag holders, but they'll probably make money. What's this Carl Quintanilla tweet? Worst week for the cloud since the beginning of the pandemic. What are we looking at here? Just what you said. John, throw this up.

You said it. So this is First Trust Cloud Computing ETF. What's in this? Let's see. It's got to be Google Microsoft. You know what grinds my gears? When you Google something very specific and it's got like the ads on top.

So for example, I Google SKYY Holdings and – oh, now it comes up. But you got a bunch of shit come up beforehand. Like what? Invesco, whatever, whatever. All right. Anyway. That's why Microsoft won the Netflix deal. There we go.

Fair. All right. So we've got – oh, Alibaba. Really? Yeah, they do cloud. They're the biggest holding. I would not have guessed that. Pure Storage, MongoDB, IBM.

Google, Oracle, I'm sorry, Addyston Networks, Microsoft, Amazon, VMware. So it's the NASDAQ 100 plus Alibaba, basically? Okay. It's time to sell meta until it figures out the metaverse. So you wrote about this in May. How do you figure out the metaverse. So you wrote about this in May. How do you figure out the metaverse

if you're inventing it as you go? Aren't they building the tracks while the train is coming down them? Exactly. And this is kind of why I'm skeptical of it. I think Marcus Brownlee, who's a tech YouTuber, said it best. Like, it sounds like a cool idea,

but I need to know what you're going to do with it. And right, but I need to know what you're going to do with it. And right now we really don't know what we're going to do with it. I had this, let me see if I can pull it up. Don't we kind of know though? They're going to basically do animated Zoom meetings and sell ads. Exactly.

So I think that it's a enterprise thing mostly. Let's see if I can find it. So while you're looking for that, I love this quote from your article. You probably have it up. Nick Clegg, who is Meta's president of global affairs. This is an actual quote. It's an amazing sense of presence

being in that virtual space. I feel like we should have music behind us right now. My voice relaxes so much more when I'm speaking to people in the metaverse. They all- How much mushrooms does this guy have? Yeah, yeah, yeah.

That's a very acid-y- I mean, he's just moved from the UK out to San Francisco. It usually takes about two years until you do acid. Let me repeat. He's right in the pocket. My voice relaxes so much more when I'm speaking to people in the metaverse. Well, he's talking about the meetings that they'll

do with VR goggles. And, you know, maybe he's trying to say that that's much better than on a Zoom meeting where you're basically yelling into a monitor because you're actually, we all know it's better to kind of hang out in person than it is to talk through a monitor. And so they're trying to say that this is, you know, what the selling proposition of the metaverse is, that you can be next to somebody. And so he's trying to say, OK, you're going to feel like you're next to them. You'll feel better about it. So what's your overall take, that it's too early to have a very harsh judgment about this? No, I think that right now, the most potential here is enterprise. And you should factor that

into the way that you're thinking about what the metaverse is going to be. Here's the quote I was looking for, that about 75% of Americans live less than 30 miles away from a parent or adult child, and only 7% live more than 500 miles away. So this whole idea of like, we're going to want to be in the metaverse with our friends to do fun things, like we already have them, most people have them close by. And Silicon Valley has this, you know, I guess it's a plus and a minus. It has a way to think outside of the box. But sometimes you can become too detached from the reality of the lives of, you know, real people in the world. And the fact that like, and of course you move there from wherever town you grew up because, you know, the headquarters of Meadow or Apple or Google are out there.

So you think everybody lives away from your family, from their family and closest friends. In truth, that's not the case. Most people live close by to the people they want to hang out with. We don't, you know, we might need a Facebook once in a while to check in what's happening with our long lost friends, but the people we actually want to spend time with, because spending time is the biggest investment you can make in anything. They're right there almost always. And so that leads me to believe that the social impact, the social element of the metaverse, like, you know, we will eventually have a society in virtual and augmented reality, less likely. The idea that maybe we want to do stuff at work

so we could all like work from home and then get in a conference room together. Or if you're using augmented reality. I could buy that. You know, see like, I watched, I used the Magic Leap 2 device and watched like on a table. What is that? The, it's augmented reality glasses that you can put on and see things that are like actually like, you know, appear in 3D

and interact with the physical spaces that you're in. So I watched as like a wildfire spread across like a table that matched the topography of like real world terrain that like a fire department could the topography of like real world terrain that like a fire department could use to track the progress. And you see all these options come up like, okay, now we have 9% evacuated. Now we have 20% evacuated.

To me, these uses of VR and AR make a lot of sense, but I just don't see them as the next phone. Phone everybody uses. It's a way that we in the real world interact with the digital world, wherever we are. Yeah. So like teleconferencing is like a 30 year old or 40 year old thing. Phone everybody uses. It's a way that we in the real world interact with the digital world wherever we are. Yeah. So like teleconferencing is like a 30-year-old or 40-year-old thing. So this is like just a much better version of teleconferencing with more bells and whistles.

Potentially. But ultimately it's enterprise. Although you know what's crazy? How not long ago we were at this very conference table and we had one of those machines. I don't know who made the product. And it was like a three-pronged thing, right, with like a speaker in the middle. And when we would do these calls, we would like lean over it. That was like three years ago.

The phone. New research says that Generation Z actually hates working at home. Now, that makes sense because they don't have kids yet. So I was going to say like wait five years. But like the benefits of working from home or having a whole remote workforce might be overblown. So if this whole metaverse concept gets lumped in with the other work from home shit, it's not great. I love working from home, but I think a lot of people do.

No, I think a lot of people do. I don't think they love it to the point where they want to spend their whole week in a virtual. No, true. But you're also, you're still seeing office occupancy at like 50%. Nobody wants to be back in the office five days a week again, ever.

I agree with that. So if you see it as part work from home, part training, a lot of trainings get done. So for instance, how could you, you know, let's say you're training for different scenarios and different jobs. How do you get practice doing that? You could actually get a lot better at that using virtual reality.

It could also be used for, you know, different therapies. You have different fears and you want to face those fears. Look, maybe you want to look over a high building, but just do it in virtual reality. So, you know, you're safe. You could do that. You could be wearing augmented reality glasses in the factory. You could be using augmented reality glasses in the factory. You could be using augmented reality glasses with other people. For instance, I use that wildfire example to collaborate and look at how things look in the real world.

I think these are all real applications. But I think Josh is spot on on this. When you think about what the potential is and if you look at the way that it's talked about and the way that it actually has a chance to make its way into the world, way that it's talked about and the way that like it actually has a chance to make its way into the world the these pie in the sky ideas of us all living in a metaverse you know just don't really seem to be practical you know in the real world i also don't see i also don't even see it as pie in the sky like who really wants that other than people whose like real lives are that's what i was gonna say i don't know anybody in my real life that's like dying for the universe but josh when you were on you were on my podcast you talked about how we're right we see it in one particular

application which is gaming like roblox is the metaverse right now that's right kids do so you have kids right like i've seen not my my kids beat up the kids that are on roblox really okay yeah but i know kids that are on roblox and they're nice they're nice kids they're just not my kids right exactly my kids don't want that shit. They want to be outside. So by the way, it goes to show you the limited – we're not going to all want to be in this metaverse thing. That's right. And there are kids that will spend –

It's not the whole world plugging into the metaverse. I agree. But the people that want to be on video games all day, they will love it. Yeah, exactly. And so when you take a look at what is the potential market for this stuff, it just gets narrower and narrower the more you think through the real world use cases. It's a $70 million, Tam. Until they do porn and then throw out everything we just say.

Exactly. Because porn is what saved AOL and porn saves every version of the internet eventually. So that's the real game changer. But we won't go any further there. What's this Klarna chart? Are we shareholders in this piece of shit, Mike? We own this. Don't tell anyone.

It's down. We own a very, very small amount of this. Well, Affirm is down like 85%. So what do you think it is? Of course it's down just as much. Of course. I'm not surprised. For our listeners, could you read the

heading of this chart? Buy now, cry later. Swedish fintech startup Klarna's valuation history. So let's just narrate this. It was worth zero in 2017 ish. And then they got a really big investment from Silverlake in September 2020. And then they got a

really big investment. And then at the top of the bubble, June 21, SoftBank came in and just said, how much do you want? We'll give you double. So they invested, that's a $40 billion valuation. I think it was 45. $45 billion valuation from zero.

And now it has collapsed. How do they know what it's worth today? Did somebody just put money in? Yeah. Or did they write it? I can't remember. $6 billion. No, they raised money. They raised money. $6.5 billion. They raised money. They raised money at a $7 billion valuation a year after

raising at $45 billion. Alright, but that's exactly what it is. That's what the market is. You're not surprised by that at all? I'm surprised by it. Why would you raise money? They needed it. Yeah, I don't know. Why do they need it? What are they doing? What are they doing with the money? They needed it. Yeah, I don't know. I mean, by now, it's already later. Why do they need it? What are they doing?

Giving it away. What are they doing with the money? Growing. But if you raised at 45, you need money a year later at six? That's a really poorly run, no offense. We love you, Klarna. I don't know. I mean, do I have to even hold back and say that that is not good capital allocation? Most likely. Most likely. Maybe you say you could deploy it, though, and end up making more deals with people. have to even hold back and say that that is not good capital allocation most likely most likely

maybe you say you could deploy it though and end up you know making more deals with people uh yeah i suppose i don't think that's what's going on i think maybe they see a firm in the public market down to your point down how much 80 percent whatever wait no if that's five years we didn't uh uh 77 since jack dorsey buy one of these was that a firm he bought the huge no he bought a huge australian one i can't remember what it's called was it square pay no no no uh after pay after pay okay uh is that what it was? Yes. So Affirm is down 87% off its highs. Oh, my God. All right. So then this makes more sense.

So I think maybe why they're raising money is maybe they're getting ready for losses, for people to stop paying. Buy now and pay never. Okay. Obligatory. Elon Musk versus Tesla. Give me your spiciest take. I think Elon's in –

We haven't spoken about this yet. Right. I'm going to... I mean, I've been getting killed for this, and I could be wrong, but I'm just going to go with what I believe. So, Elon has clearly violated this contract. He agreed to buy Twitter.

He's not buying Twitter. He doesn't care. Exactly. So, the question is now that we know he violated, what type of remedy is the Delaware court going to rule on? What do they say? Okay, you're right. You violated the contract.

Here's what we're going to do in response. Hey, back up. How about he violated every disclosure rule on the books? Correct. He went up to 9% without saying what he was doing. You can't go to 5% without saying what you're doing and whether or not you're passive or active. He filed passively and then made a bid to, and then called them and said, put me on the board or I'll buy the company or I'll start a competitor. So like he already starts off before

he even makes a bid to buy the company in violent, nobody cares. He could literally drive drunk and kill five people and I don't think it would matter. Well, this is, yeah, and there are different jurisdictions here. So some of this stuff is SEC. Some of this is going to be now looked at by the Delaware Chancery Court. You know what happens when he does something like that? Where he violates a norm?

The same thing that happened with Trump. Five people get upset. The people who are really in a position to do something about it don't because they say, A, oh my God, I can't get involved with this guy and his army of Twitter psychos. And B, why would I go after him for this when he's about to do something so much worse? Like his next atrocity is two weeks from now. So I think that momentum of like no one is going to bother me because wait until you see what I do next, that's why he's probably going to get out of this thing. What do you think? So I think that that's – I think he's probably going to get out of it.

He might pay a billion or come to a settlement. That's a little bit ahead. But the reason why I don't think the court is going to enforce this provision called specific performance that's going to make him close the deal is you listen to the people who have been on the court and you listen to the lawyers who are dealing with the court. And you just get a picture that they really don't want to rule. First of all, specific performance to force someone to buy a company they don't want. It's not going to happen. It's an extraordinary remedy. It doesn't happen very often.

Now, the person who's a chancellor of the Delaware court who's going to hear this has actually enforced it in the past, but $500 million deals, not $44 billion deals. And there was an amazing interview on CNBC this week. I dropped it in the doc. Carolyn Berger, who's the former vice chancellor there, said some things that just really made my jaw drop. So I'm going to read a little bit if that's okay. So she said, I think Twitter is in a very strong position to be on the winning side. Everybody agrees with this. Elon violated this contract. Now the question is in a very strong position to be on the winning side. Everybody agrees with this. Elon violated this contract.

Now the question is, what are they going to do? So she says, now that's not to say they necessarily will get specific performance. Why? I mean, like the damages are capped at a billion. It might not be anywhere close to what – They're in a strong position to what? Exactly. Well, the legal case is strong.

But now the question is, does the court want to enforce this specific performance remedy? And this is where it really gets interesting. So she says, the problem with specific performance, especially with Elon Musk, is that it's unclear whether the order of the court would be obeyed. are very concerned about issuing a decision or issuing an order that is then ignored, flouted, and reflects poorly on the court in terms of being able to give relief to the parties that are asking for it. You know what that means? Can't they put him in handcuffs if he just ignores them? No.

You can say, all right, I'm running it. The second part of her quote talks about what they can do. So, yeah, she then says, so they're able to fine him. That's the power that they have. Fine. And so they say— Fine the him. That's the power that they have. And so they say- Fine the richest man in the world. Exactly. And this is the former vice chancellor of this court. She says,

it's hard to imagine an amount of money that is going to be persuasive to him. So it enters an order. And even if it's a million dollars a day or $10 million a day, it'll just, this is amazing, it'll just pile up in terms of being on some ledger somewhere, basically admitting that it's powerless. But that won't necessarily result in Elon Musk doing anything. So even if Twitter has a lock-tight case, they're going up against a court that thinks like this. And they're going to have to settle with Elon because they can't risk going all the way and losing. This is not just any court. This is the Delaware Chancery Court. Yeah, how you whispering? Because every single major corporate merger or acquisition

in some way, shape, or form involves the authority that we all thought this court had. Yes. It's like everything else, why the country's falling apart. Because all these things that we thought were rules and had to be obeyed, it turns out, they're like just norms. This is horrible. It's bad.

But this is 80 versions of this. Right. That we've all collectively, traumatically experienced in the last five years where you're like, wait a minute, you could do that? Wait, you could do that? You could do this? You could just, anybody could do that? What a dick bag.

So that is the problem with extreme wealth and extreme money in politics and people who become so invincible that they shit all over our institutions. Because now what – forget about – who gives a shit about Twitter? What does this mean for just corporate law in general if the out is I have enough money that I don't give a fuck? How about just the rule of law? It sets a terrible precedent. But in the back of my head, guys, I'm just like, well, what if they actually do try to make him buy it? Alex, I don't want to live in a world

where you can't rely on the Delaware chance. Come on. No, the church is done. Congress is done. Now Supreme Court is completely partisan hack hack joke the electoral college there's like nothing there's literally nothing left i do feel like especially during the trump years the last thing standing was the stock market and bond market and like

even the fed fought for its independence to the extent it could. That's now going to start slipping away. And this is a really good example of that. And I got nothing else good to say. Yeah, my God, it's enough. Let's talk about how absolutely horrible some of these social media companies have been for their shareholders as publicly traded companies. John, can we throw up the chart of Twitter?

Please. I like how you went out of your way to make sure these charts were unviewable and unreadable. Well, it's the lights. Is there even a ticker symbol on this chart? I'm telling you, asshole, it's Twitter. Okay. That is a lifetime chart of Twitter.

Just a sloppy, disgusting mess. I'm offended by this chart. Let's throw up the next one, Snapchat. Wait, before we go to Snapchat. He's offended. Can we also point out the fact that Twitter's being held up? Twitter should be much further down,

but it's being held up by this potential. Why did it rally today? People are reading this case and they think there's a chance that Twitter might win. What? What did you win? Exactly. Well, it might get a settlement from Elon. What do they think? He's going to write a $10 billion check? I think that is

what people think. I happen to disagree with that, but that's what some people think. This stock would be at an all-time low if Elon wasn't involved. Matt Levine, I think, broke this down better than anyone, as usual. Basically said, in court, there's only two outcomes. Billion dollar fine? Billion dollar fine or Elon two outcomes. Billion dollar fine.

Billion dollar fine or Elon owns Twitter. Billion dollar fine. That's why I think it's going to be a settlement. For 44 billion. Yeah. But that's in court.

No, here's the deal. In the real world, a lot of different things can happen while you can settle. I think that, I don't know if this is giving him too much credit. He wanted to sell his Tesla stock

and this was how he did it. And it was one of the greatest, Josh made this point. It was one of the greatest sales of all time. This gave him the guys to unload $10 billion worth of Tesla stock or whatever it was. And he, the penalty- It was 12 billion, five or 10% off the all time high. And he, and this was the penalty. And by the way, how many times over the years has Elon tweeted the price of Tesla stock is too high? And this gave him an out. Well, here's the problem I have with that one. If you're going to offload the Tesla stock, fine. But then why not just use it as to become like an influential shareholder in Twitter versus sign the deal that will now get you into all this trouble.

That's a very fair rebuttal. There's no thought behind any of it. It's pure impulse. That's a fair rebuttal. Next chart. Look at this piece of junk. Snap. This is snap. Oh my good God. This is round trip to when? 2019 price? To forever.

I mean, just pure steaming trash. Do they make a lot of money at least? No. They actually have more users than Twitter and less revenue. How is that possible? Less revenue than Twitter? They're worse at more users than Twitter and less revenue. How is that possible? Less revenue than Twitter? They're worse at monetizing than Twitter? They are worse at monetizing than Twitter for a few reasons.

One is people are there for the messaging, not the media. It's really hard to inject ads in media. My kids use it as text. Exactly. They're on Snap all day. Right. And if you're on Twitter, it's kind of easier to inject an ad into that feed but if you're on snap and you're having a chat with someone exactly you put it in the media side

of the thing so that's why they have snapchat discover and nobody uses that it's used less yeah and they also their ad their ad practice is not very well built out they've been slow what do you think of him relative to the people running the real tech giants, Evan? Is he like impressive or did he just have a really cool idea 10 years ago and he's been riding it ever since? Well, you got to give him a little bit of credit for it. I do. I do. Yeah. I give him credit too.

I think that he – it looks like Snapchat was going to be killed by Facebook. And they weren't. And it's still used by a lot of people. I'd much rather own Snap. So Snap is on Twitter's trail in terms of revenue. It's closing the gap. And if you look at free cash flow, unlike Twitter, which is hemorrhaging, they're actually, boom, crossover.

Snap's going in the right direction. How many more users does Snap have than Twitter? It has about 100 million more per day. Wow. And those people sit on more per day. Wow. And those people sit on it all day. Yeah, because they're using it for messaging. Twitter, I feel like you check in, you hate check, and then you run away as quickly as you can.

You go, wow, why did I just do that? Snap, you love it because it's your friend sending you pictures of their faces and whatever else. And it's also used – I mean, young people love it. They love it. It's used by like what – I had the stats in a previous newsletter but like by 95 percent of teens in the US. So I drive my daughter to a party and she likes the way she looks that night. So the whole way there, we don't talk. But she has the phone in her face and she does a snap to every single person she knows. And that's just how they communicate and Facebook couldn't disintermediate that.

Yeah. It's 115 million more daily active than Twitter's, 217 million. That's a big number. We're going to go to this 3AC thing, and we're not going to spend much time on it. But just before we get into favorites, have we learned anything from this? Is there anything?

Here. For all the complexity of the new crypto ecosystem, the smart contracts, reams of online white papers, heady talk of decentralized finance, it still proved to be a giant wager on the simple idea that there would always be more money for buyers, more buyers for digital coins, and prices would mostly keep going up. Is that like a fair postmortem on three arrows,

or did we learn something new from this? I feel like it's a very old school kind of – like the money dried up, and somebody had to feel it first, and that's really what – I don't think it was a matter of the money drying up and the borrowers slowing down. It was just they blew up, and I think the lesson was everybody was exposed to them even if they weren't directly exposed and people didn't know it. How will that change now?

Are people going to be more – are people going to demand that their counterparties disclose who their other counterparties are? I can't imagine that not being the case going forward. But again, nobody's in charge. So. What do you mean nobody's in charge? Nobody's, nobody's imposing rules like that. Oh, you mean regulatory wise? I think that Genesis, for example, who sits in the middle of a lot of this is going to be much more, uh, or much less forgiving with what sort of transparency they're seeing from their borrowers and lenders. What's this article from The Guardian? They couldn't scream anymore. They were just sobbing.

The amateur investors ruined by the crypto crash. It's an unbelievable story in The Guardian talking about people who thought that they were in the beginning of a financial revolution and were finally going to get their chance to get rich. And some turned like $2,000 on a credit card into $500,000 only to be broke, you know, a few months later. And it talks about the pain that, you know, these people have gone through in a way that like tells this story in a human way that I don't think has been told before. And the headline is that there was no, you know, they couldn't scream, just sob. And that is in reference to, I think, a telegram group where people who had lost lots of money on crypto do like screaming therapy where basically they just yell. And some people

can't even bring themselves to yell and they're just crying. And I learned something really fascinating in that story, which is that there are actual rehab centers that actually do rehab for crypto addiction. There's this one place called the Castle Craig Hospital. And here's from their website. It treats cryptocurrency addiction for people addicted to trading, spread betting, and I guess trading of cryptocurrencies

such as Bitcoin, Ethereum, Ripple, and Litecoin. We treat all these as a form of gambling addiction. Yeah, that's what it is. It's not even funny. I shouldn't laugh. That's what it really is. Right, it is. And some of the symptoms that the cryptocurrency users should look out for suggesting an addiction

are feeling of muscle tension and anxiety, constantly checking prices online even in the middle of the night, and thinking about cryptocurrency trading when doing other things. And a lot of the people

in the story exhibited those symptoms. The difference is, though, if you're a degenerate gambler taking, like, Lady Vols, Tennessee female basketball games and shit like you're taking games you don't even watch or Sunday you sit down and you have a bet on every game on the schedule. If that's what you're doing, you're not simultaneously tweeting out how you're changing the world and better than everyone else who isn't doing that. That's what makes people hate these folks.

It's the messianic bullshit about how you're like taking on banks or whatever nonsense you think you're doing combined with the degenerate gambling. That makes me not feel bad. Yeah, they call themselves degenerate gamblers also. Degenerates. Degenerates, yeah. Yeah. So like in other words, like if you're – it makes it less sympathetic even though, yes, of course, gambling addiction is horrible.

It's like addiction to everything else. Well, that's like in the 3AC story. I'm addicted to carbs. It's bad. Like I know that. In the 3AC story that we're talking about, like one of the 3AC guys talked about how only boomers trade stocks. Meanwhile, he's putting $200 million into – Buying a fire. about how only boomers trade stocks. Meanwhile, he's putting 200 million into Luna.

And this, exactly. It's like, you know, have fun being poor and please, you know, have sympathy on me. Have fun running away from Interpol. All right. The vibes are off. Let's do chief vibes officer. And then we'll get to, this is like the most crypto thing in the world to me.

So hang on. So we've got, we had six topics in the doc today. And for number six, Josh wrote, you wrote this, right? Josh wrote, what the f*** is this? So I clicked on the article this morning. Did you laugh as soon as you saw it? Well, because I saw this and then I clicked on the link and

of course I laughed out loud. The headline is, it's from The Guardian. Can chief vibes officers and NFT influencers keep things positive amid the crypto collapse? You know what? I hope not. I honestly hope not. If somebody, I own crypto, I believe in it. I hope not. Please collapse. Don't call it a collapse. It's just a vibe shift. Since January, the market for NFTs has been locked in a downward spiral with sales on one popular platform falling to less than one seventh of their January peak. And the buyer of the so-called Mona Lisa of the digital world, a $2.9 million NFT of Jack Dorsey's first tweet, being forced to sell for just $6,800.

So these are the people you can't feel bad for. If you could spend $2.9 million on a picture of a tweet, you're fine. Yeah. To shore things up, NFT projects have turned to a new kind of role, the vibes manager, also known at some companies as a chief vibes officer or director of vibes. The CVO. I don't hate the title, and actually I want to give it to Nicole. I was about to ask if we could hire a chief vibes officer.

We have one. She's kind of building the vibe here. Yeah. I was about to ask if we could hire a chief vibes officer. We have one. She's like kind of like building the vibe here. Yeah. I don't hate the title. I just hate the idea that you could mask 90% losses with vibing out. So what are they going to do? Are they going to dress up in costumes or – I don't know. I just wrote one note on this story and that was this is the goddamn problem.

Yeah, yeah, yeah. There's this quote in there from a person that says, you know, I'm just another DJ on Twitter that wants to make a quick, quick flip and have fun. I mean, it's insane. It's the, this is the entire problem that got people, you know, over leveraged and putting their life savings into this stuff. And they end up at the, what's it called? The castle, whatever, Castle Craig hospital after, you know, they get locked up in the vibes. Listen to this. Among the first to hire a vibes director was an NFT startup called Fractional. called, quote, a super influential commentator and tastemaker in the NFT space and, quote,

the most public-facing person at the company alongside the founder. So it's like when you go to – what's it called? When you go to like a Philadelphia 76ers game or the baseball team, the Phillies game and the Philly fanatic comes running out it's a it's like a not an avatar a mascot a mascot yeah yeah that makes sense so do you guys remember shingy shingy yeah they're all well yeah he was their uh digital profit i feel like these are all like shingys but worse we said that we said that the price of a firm is down 87 percent or whatever um somebody recently told me that they invested in a firm is down 87% or whatever.

Somebody recently told me that they invested in a buy now, pay later company for NFTs. Oh my God. Imagine thinking that somebody would buy now and then pay for it later. When it's down 99%. It's time for them to raise more money. Okay, make you installment payments now, but at the initial price. Oh my good God. All right, so Vibes Officer is not the worst idea, but Vibes Officer for Ponzi schemes, probably not great.

We don't like that. But what are you going to do? All right, let's go to favorites. I'm going to go last this week because somebody mentioned that I always go first. Like I'm in some kind of a rush. What do you got for us today, Alex? Has anyone done Be Real as a favorites before? Be Real from Cypress Hill?

I never heard of it. Be Real is my new favorite app. I figured since I cover a lot of social media, I'll talk about a consumer social app that's kind of fun. And for folks who know about Be Real, we'll just give it some love. Be Real is an app that gives you a notification on your phone once at a random time a day. And you have two minutes to take a picture. And it takes a photo from the front camera and the back camera.

So like almost like a selfie and what you're looking at. And then it posts it. That's it. And if you- Ooh, I kind of like this. It's like a game. Exactly. If you post late, everybody's going to know that you're late.

Okay. So the idea is you want to – You can follow your friends on there? Yeah, you can follow your friends. And I like – so Casey Newton tweeted like, you know, unless like we've gone out to dinner or something like that, don't ask me to be your friend on Be Real. Like it's supposed to be like, you know, your close friends. And it's like – it's actually like the name Be Real. It sort of talks about what it is.

It's like a dare. It's a dare. And you're serious. It's a cool dare. It's a dare and you're serious. It's a cool one. And you can't fake it really. And so it's very different. Your Be Real feed is so different from your Instagram feed because you're just going to see people going about their daily lives

and you're going to get a sense of them like authentically. All right, I'm following you. Why were you at a seedy motel two hours ago? Is that me? Yeah, that's you. Oh, no. Sorry. The wrong Alex Kantrowitz.

Couldn't be you. Hey, breaking news. Ivana Trump dead at 73. We have any opinion on this? Nope. Rest in peace. Rest in peace. Okay.

What do you got for favorites, Michael? What am I watching? I've been watching a lot of Netflix. The content, the original content on Netflix is still whatever, but they've been expanding like their library. Greatest hits movies. Yeah. A lot of tons.

A lot of 90s. I rewatched Goodfellas, I told you. I've been, this week I watched the original Jackass again. Haven't seen that in a long time. And then last night I watched Jackass 2.5 or Jackass Forever, I think it was called. And Robin walks in, she's like, why are you watching so much Jackass? And she goes, I hate, she goes, I hate when you laugh like that. It was like just my uncontrollable belly laughter.

A few things get that funny bone going, but Jackass got it going. It's good stuff. Classic. You're a grown up at this point. You can't have your wife come in the house and you're belly laughing over Jackass. Belly. And these guys are like lighting each other on fire. And and your belly laughing over jackass. Belly. And these guys are like lighting each other on fire.

And you're sitting there cackling. Dying. Oh, that's great. Michael, you also suggested Ozark Season 4, I think, on a recent episode. I loved it. Was that you? Did you not? Some people didn't like it. I loved it.

And just wanted to say thanks because after you shouted that out in favorites, I was like, oh, I might as well check this out. It was amazing. I thought they landed it perfectly. Marvelously. Some people get that wrong. They was like, oh, I might as well check this out. It was amazing. I thought they landed the plane marvelously. Some people get that wrong. They're like, oh, they got off the hook? Got off the hook. It was a fucking debacle. Now their son is a murderer.

They're never getting out. Exactly. That was the point. That was the point. It was a horrible ending. Yeah. Right. They didn't end up changing their identities or whatever.

They ended up in a car fleeing one shit show with all the baggage that came with it. And everyone that they touched died. Yes. It was horrible. Yes. Could not have ended worse. I thought they nailed it. In that whole season, the tension was just like there the whole way through.

I was really waiting for a letdown after people were like so mad about it. But it was amazing. Thanks for that one. I would have taken a Ruth spinoff. I don't think they had to kill her maybe they had that what yeah but you know what you know why they did they didn't but it hurt that hurt yeah yeah yeah it definitely hit home uh favorites for me i have two nick majuli's blog post this week which uh i know duncan ben and nick covered in video form on our YouTube channel for Portfolio Rescue this week. I just thought it was really a brilliant way of reframing something that he has already done a lot of work on.

So Nick is well-known for doing all these posts about dollar-cost averaging versus investing a lump sum. And somebody asked, if I'm going to withdraw 4% of my portfolio every year, what's the best way to do it? Take it all out in January or do it in quarterly installments throughout the course of the year? And he ran the numbers and actually it proves what he's always said about lump sum investing versus DCA. You should buy all at once if you can because markets have an upward bias. The data suggests lump sum is smarter than dollar cost averaging. But then when you sell, you should sell slowly in installments rather than all in January. That's fascinating.

Fascinating. But it's like the opposite of what he was originally saying, and it proves it. Because again, markets have an upward bias. So you- But wait, it's the opposite, but consistent with what he's saying. Completely consistent with what he's saying. So you want to buy all at once and then you want to take your time selling out.

And that's because over long periods of time, markets have an upward bias. Unless it's 2022, in which case you should have sold the giant. Well, that's one of the points he made was this year is the exception that doesn't prove the rule, but just shows you there is no rule. But he's looking at five, 10, 30 year increments of time. If you did this over 30 years,

a hundred percent of the time, it works every time. Also the new podcast from Colossus, our friend, Patrick O'Shaughnessy, he dropped this in his main invest like the best feed. Otherwise I might not have found it. William Thorndyke, who wrote the outsiders, Patrick O'Shaughnessy, he dropped this in his main Invest Like the Best feed. Otherwise, I might not have found it. William Thorndike, who wrote The Outsiders, one of the best books about business and investing ever, is doing a podcast for the Colossus Network called 50X. And he's going to interview management from stocks, companies that have had a 50X or greater return for shareholders. Very cool. So the first episode was the guy from Transdime, which was like this defense company conglomerate

that compounded at 30% a year, like for 30 years or some ungodly return. And it was great. And Thorndyke is a very thoughtful interviewer. He doesn't talk much. He asks a question. He lets the guest go. And I thought it was definitely worth checking out if you're an investor. Well, actually, a lot in that book is all about the capital allocation.

I am very curious to see what happens to a lot of these companies that raise a ton of money where they're just sitting on money. We're no longer in growth mode. What are they going to do with all this cash yeah are they going to spend it on stadiums are they going to rebuy back stock are they going what are they going to do so the guy from transdime makes so many great points about how like everybody wants a decentralized business where you empower your managers and they make decisions on the ground and blah blah everybody wants that until things are going wrong and then it's like, I only own my good decisions. So there's a lot of great stories from how they built this massive aerospace and defense

conglomerate that I think everybody can get a lot out of. So shout out to Patrick O'Shaughnessy and William Thorndyke and Colossus. OK, that's it for us this week. Did you have fun? This was amazing. It was cool, right? It was great. Like I say, I listen every single week.

This is my favorite podcast. I've learned a ton from you dudes over the past couple months that I've been listening. Well, we're learning from you now. I appreciate it. We're reading you. We're listening to you. You're doing a great job. Let's give everybody the URL again so they know where to find your stuff. I'll just say if you're interested in hearing more,

Big Technology Podcast is the place to go. Big Technology on Substack. Big Technology on Substack, Big Technology Podcast. Round of applause for Alex Kantrowitz. Thank you. You have something for me? Yeah. Can I read a couple of podcast reviews? Go for it. Okay. If they're good. Yeah. So up first, we have one that made me laugh. Unhinge My Heart wrote, it's all right. I only to every episode and uh and then let's see we also have um a name i can't pronounce said so so good so there's two two great ones right there and then we have from sms murray great podcast these guys are really entertaining smart and appealing to younger people i saw josh on tv and found this okay i could listen to these all day you want to

do 20 more or you got the gist? Next week, maybe we'll do another. Okay. So what should we tell people to do? If they haven't written us a review yet, what do you want? What do they do? Go on Apple Podcasts. Immediately.

Yeah. And write us a review. We appreciate it. And we read them. My God. We read them. We appreciate them. And the reviews go really far.

They tell the algorithm in the app what content is valuable and what's not by a lack of reviews. Don't write any negative reviews, but if you love a show like ours or Alex's, go ahead and leave a review. Guys, a lot of fun this week. Thank you so much for listening. We will be back very soon. See you next week.

Take us out. Thank you. You guys are amazing. You are amazing. Take us out. Bye-bye.