The Pomp Podcast - #1240 Ross Gerber on Bitcoin, Elon Musk, Tesla, and ETFs

Episode Date: September 7, 2023

Ross Gerber is the Co-Founder, CEO, & CIO at Gerber Kawasaki. In this conversation we talk about Tesla, Elon Musk, bitcoin, ETF’s, various themes in the public stock market, AI, and other disruptive industries.  ======================= Pomp writes a daily letter to over 250,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/

What's up everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. Ross Gerber is the co-founder, CEO, and CIO at Gerber Kawasaki. In this conversation, we talk about Tesla, Elon Musk, Bitcoin, ETFs, and what Ross thinks about various different themes

in the public stock market, including artificial intelligence and some of the areas that he thinks are disruptive to the U.S. economy. I really enjoy talking to Ross, and it's always interesting to hear his thoughts, so I hope that you enjoy this conversation. Here's my episode with Ross Gerber. Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. How are you?

well you know i'm i'm in a really bad mood about elon right now why what's he doing well he's attacking the jews and you know he's accusing the anti-defamation league of defamation think about that for just a couple seconds like logically you know i'm supposed to be one of the smartest men on earth and here's an organization that spends their entire life like fighting racism forever nobody's perfect but you know they try really hard i support them for a long time and the bottom line is there's lots of hate speech on twitter you know like i'm sorry free speech if you're just not going to moderate speech you're going to get a lot of hateful people on your platform that's just the way it is imagine the video game platforms if they didn't moderate

speech right and um and so then adl is like well we can't recommend this as a platform for advertisers so elon goes after them you know and then he's like well i'm not anti-semitic i just support the people who are you know i'm just like do you think do you think that he is anti-semitic or do you think that he okay so here's the part that is always interesting to me in these situations is whoever the ceo of twitter is or whoever owns twitter what do you think is like the right move does he like play nice with the adl and like bring the hammer down on the platform, but you're trying to do free speech. Like, like if you were them, what would you do? Like, like how do you kind of handle, you know, a very complex situation?

When, when, when I'm an investor next, and when they called me and said, you know, cause I said, I'm interested. And they called me back and they said, you know, and I said, who's going to be CEO. And they're like, Elon. And I go, that's a horrible idea. You know, you don't want to be the person moderating speech. And they said, well, he probably won't be for long, but whatever. And I go, but, but don't you understand? You don't want to be the person moderating speech in America or the world. It is a horrible job to have. You cannot win with this job, right? So the way you do it is you put together like a group of people that are transparent, that create moderate rules. Okay. So it's not a hundred percent free speech.

It's just not, it's a private platform and you sell advertising. So my, my thing is if you want to do what he's doing, you can't be pissed at the ADL and you can't be pissed at all the organizations that say, this isn't really a great place to advertise. You just can't be pissed. So I'm saying, fine, do what you're doing, but don't attack all the people who don't want to be a part of your platform. Or you create a platform that's good for advertisers and users and advertisers will flock to it. So, you know, you can't have it both ways. That's what I would say. So in my mind, moderation is an extremely difficult thing. And so you take the two ends of the extreme and you put a panel together of the two ends of the extreme moderators. And then you look at

content and you take it down. And you're going to take down extreme left-wing stuff. You're going to take down extreme right-wing stuff. And people are going to complain about it. But what happens is the 95% of users in the middle have a better experience. And so it's kind of like running like an event, you have an event and people get too drunk, it's like, well, it was a drinking event. Well, do you want the drunk guy hitting on all the girls and getting in a fight? Or do you kick them out of the bar? And you're like, this is a bar. I came here to drink. Now I'm drunk. And you're saying you don't like it? You see what I'm saying? But they kick you out because the other 95% of people don't want this drunk idiot puking on everybody and hitting people. You know

what i mean so it's your bar so what's interesting about this is the other platforms do take down the content obviously they have the advertisers but people are pissed people being the users are pissed about censorship and the lack of free speech and all of that and so do you think that it's the loud minority of people on the free speech issue and like most of the people actually don't care or don't pay attention on the other platforms like how do you then approach the people i don't think people care that much i i i would disagree with that statement i think most people prefer to have an environment that's safe for their children to not be bullied. I don't know what your childhood was like, but I wasn't bullied most of my childhood. But there was a period of

time, I think I was in fifth or sixth grade, that there was a group of kids I didn't like, and they were the majority. And I started getting bullied because of it. And it sucked. And back then, teachers didn't help you. There was no, you just got your butt kicked. And I got my butt kick once. And I was like, you know, and I'll never forget it. And I decided I would really fight back next time. You know what I mean? And, and when you're on the other side of bullying, it sucks. And so when you have a platform for adults, do you want it to be a free sharing of ideas? That's the goal. Isn't it supposed to be the town square or free sharing idea, but you've got a bunch of Nazis in the corner that will bully and attack you.

If you share your ideas, which is what happens to me now, you know, being an independent middle person. If I share any idea that's at all liberal, like you just get bullied out of the park. So it's like, you know, I'm kind of like, whatever, is that what's best? So I think a lot of people don't care. They want to just use Facebook and look at pictures of their friends and they don't want extremist thing. They don't care about politics. A hundred percent of people I talk to today don't want to be involved with politics or the news. They just don't. I like, I literally talk to people and they're like, I didn't read that. I don't want to read that. I don't read the papers anymore. I don't follow social media anymore. Like people just checked out from it

because it's so, you know, hostile, you know. What are they doing with their time? I thought everyone just spent a doom scrolling on the internet. They're on Netflix, right? You know, Netflix has got like 10 billion hours of viewing every day. You know, it's like, it's crazy. They're on YouTube. They're on Roblox. They're on Call of Duty. You know, like I play video games and we got a huge community of friends my age on Call of Duty. Like, my whole team is people over 50. You know, it's kind of funny. And so it's kind of a joke because we, like, kill children every day.

You know, it's, like, kind of funny. Now, they moderate speech on the platform because you can talk to the other players in-game. Like, when you get close to them, it's called proximity chat. And if they didn't moderate it, you get a bunch of racist stuff because that's just what happens. But because they moderate it, it's, like, the funnest thing ever, you know? It's like you're taking out kids and you hear them crying and complaining, you know, and we're laughing at them.

And, you know, it's just, it's a great platform. Call of Duty is a great platform. So we all go there and try to kill and, you know, blow each other up. And because there's moderation, it's a lot of fun and people, you know, enjoy playing the game. What do you think of Elon's job so far with Twitter or Axe? Do you think it's going well? It's not going well. You're an investor.

So like, would you knowing everything you know now, would you have invested again? No, I wouldn't have. I wouldn't have invested again, but it has nothing to do with the investment possibility or thesis. It has more to do with what X has become. I don't agree with it personally. I don't need to make money. See, I'm one of those people who has enough money. I don't spend so much money that I have to keep working or this or that. So I'm one of those people that chooses the way I want to live and what I believe in. I don't need to invest in stuff to make money if I don't believe in it. And I originally believed in the vision of it. And now it feels like it's gone off the rails and I don't, I just don't need to make money from it. So I would personally not necessarily want to be involved.

Now I hope it writes the ship. You know, I hope, I don't think Elon is like ignorant. I just think his skillset isn't really these things. And so he's just constantly like making errors. You know, so I think that's a bigger issue with Linda in charge. You know, that was a big plus, you know, in the right direction, I think. But I still think as a economic vehicle, Twitter will struggle mightily without advertisers. And why would anybody advertise on the platform?

They have made no argument of the value proposition of advertising on Twitter versus spending my ad dollars on ad supported Netflix, which I know people are watching Outer Banks right now. I put an ad on Outer Banks. I got all this young demo watching it, you know? So advertisers are dumb. They need to maximize their ad dollars. So as an investor, I think he's making mistakes. And as a person, I think he's making mistakes. I think he's hurt his brand.

So you can say, oh, his brand's, you know, grown among a group of people that don't buy Teslas. And it's gotten destroyed among people who are his best customers. You know, people have bumper stickers in California that says, love the company, not the man. and they put it on their Teslas, you know, and I saw that the other day. I was like, geez, that's a statement. You know, it's like people want to drive Teslas and they literally feel

bad buying them because they, because they Elon, you know, and it just doesn't make sense. The whole thing doesn't make sense to me. So do you think that, do you think that there's a lot of people with those bumper stickers or it was like a one-off? No, I don't think there's a lot of people, but, but I think that, um, I don't talk to anybody in California now that doesn't hate Elon. Like it's, it's almost like I was at a party the other day and they were asking me what I do and whatever. And I was like, and the guy was in the investment business section. I was like, you don't watch CNBC. You don't follow Tesla. You don't follow Nvidia. You don't watch the podcast. You don't watch me, Kevin. You don't read the wall street journal. You know, you know,

like I'm literally on every channel. You've never heard of me. And he's like, no, I don't watch any of it. You know, I go, I thought you're in the investment business. It's like, yeah, I do corporate financing you know or whatever but you know then you bring up elon and it's um it's like everybody's like f him you know and i was like and they're like you know him and i was like not really you know it's like i i was a tesla investor i am a tesla investor and it used to be like i'd go to a party and everybody would be like wow this is so great oh elon's great you know not anymore do you think he cares no i don't think he cares i i think if you surround yourself with people people who love you and you pay them a lot of money, like they love you. Now I've managed to

not be successful at that. I surround myself with a lot of people. I pay a lot of money or make a lot of money who don't necessarily love me all the time. And I think that's a huge benefit to my company. When we look at Tesla, what do you take with the price cuts? Some people think that it's a huge advantage and they're cutting prices while giving more value to customers. When you look at other people, they're like, they can't move cars. And so the best way to drum up demand is to cut prices. Which one do you think it is? It's number two. It's number two, 100%. Okay. Now, I just drove to work and I saw a Mercedes EQS, the new Mercedes EQS, and it's sweet. I'm sorry. It's a nice car. You got to compete with it now. Okay. My business partner just bought the BMW i7 electric.

It's a beautiful car, massive, but the inside is great. My business partner, my other one just drove in with his new Rivian RTS, beautiful SUV, wonderful car. Okay. People driving the, what is the Ioniq or something? Five, the Hyundai. I see the ID4s. I see Polestars. I see trucks, the Rivian trucks, the Ford Mach-Es. This was not the case two years ago. You know, like when Tesla was at a high two years ago, 400 bucks, trading 100 times earnings, okay? There was nobody like this. And remember, Tesla could only make a million cars a year. Now, they rapidly increased production. Now, they're 2 million cars a year, but same with everybody else. So, the CEO of the company figures, what's the best way to sell cars? Piss off all my customers, okay? Like, just piss

them off. Now, one great way to do it is have them buy a car, let's say last year for $75,000 that they can now buy today for $45,000. Okay. What do you think the customer says when that happens? They're like super pissed. So you have like two years, the majority of Tesla buyers have gotten screwed essentially, where they paid a certain amount for a car, not knowing that they would rapidly decrease the prices within a year. And it's like a free fall in prices. I have a Model X Plaid that I bought for like, I don't know, 135 two years ago. And today I can sell it for 82,000. But a year and a half ago, I could have made money on my car. Teslas were growing in value because the supply and demand were opposite. It was like huge amount of demand, not enough

supply of cars. So how do you increase demand when you have an increasing supply, you have increasing competition, right? So the first thing you do is you advertise. This is what I've been saying for now seven months. Now Tesla's idea of advertising is they have upgraded the referral program. They've done all kinds of cool ways in the past. You know, I just saw them have a booth at the Malibu chili cook-off and it's out in the corner and I got a booth and two guys standing there. I go, that's not advertising. So football season starts next weekend, this weekend. Okay. How excited are you pumped? Cause I'm excited. Okay. I think every man in America almost looks forward to this weekend, right? Like I'm in MGM stock. I couldn't be happier.

Sports books are open. Vegas is going to be back. The stadiums will be filled with fans. Like where's Tesla advertising. So all you have to do is ask somebody who doesn't own a Tesla, what they know about electric vehicles, and you'll quickly learn they know nothing. They don't know any of the advantages. Like, it costs six times less to operate the vehicle than a gas car. Just that alone, okay? Most people have no idea. Most people think that, oh, it's a real big pain to charge, okay? It's not, you know? It takes 10 minutes now, you know, 15 minutes to charge in a supercharger. It used to take 30 or 40 minutes. Not at all. People don't know. So here they could be taking football ads. It would cost them 20 million,

25 million. That's a drop in the bucket for Tesla doing a hundred billion in revenue, right? And educate the public, which is a bunch of NBA and Superbowl ads where they've got all these great creators make all these great videos that get everybody pumped. And if they ran these ads, I think people would go nuts. Like it would be, wow, you mean I could buy a Model Y for 45K and get a bunch of tax credits to get this thing down to $30,000. People don't know. I can sell Teslas all day long. Okay. All day long, but they don't do this. They don't do this. So then lower the price. At one point, I saw you talking about potentially joining the board of directors of Tesla. Is that the big thing that you would be focused on? Is the marketing or are there other

things that you think are important for the business? Well, back then I was trying to force the board. Well, it turned out I was right. The board was all paid hundreds of millions of dollars by Elon, not to say anything, which now in a lawsuit they have lost. And the board of directors of Tesla will be returning $730 million in compensation to shareholders that they were paid, which I guess you could say not illegally, but not correctly. And they're returning money. I mean, like it's a crazy amount of money for five or six people to have to return 700 million, Wait, explain this a little bit more because I don't think most people understand this is happening. So what happened and then what are they having to do? more time connecting brands with the moments and fandoms that matter most.

Learn more at Accenture.com slash Spotify. So what happened was last year when Tesla, when Elon decided by Twitter, Tesla's board did not protect Tesla shareholders at all. The stock fell 60 to 70%. It was very detrimental to many people. It was very costly to people like me as well. You know, I was probably down, you know, 50, 60 million on the position. not this profits that we lost, but like still, it's like, what are you doing? And then Elon was

selling stock in the open market throughout the year and often at inopportune times. So you had this 20 or $30 billion of stock sales on top of, you know, he's buying another company and the board did really nothing to protect Tesla shareholders during this period of time. So I finally got pissed when the stock hit a hundred and this guy from Singapore calls me Kogan Leo, and he's one of the biggest individual shareholders in Tesla. And he's like, Elon, this is not good. Somebody needs to rein in this guy. I love him, but it's like, he's killing us. And I said, well, maybe I'll run for the board, but you have to support me because I can't win anything without some real votes. And he's like 100%. So I had a good chunk of stock that was

going to vote for me. And then it turned out that most of the institutional shareholders are very unhappy with the board as well. And it turned out I probably could have won. So that's when I got scared, you know, because at first I was just an activist. And then I really realized I had a tremendous amount of support. But then when I looked into it, I was like, dude, this is like diving into World War I, you know. And part of it was the fact that the board was each paid $200 million each by Elon. And I had never seen that in a board in my life. And I didn't know that until I started looking into this. And then I was like, how the hell is Robin Dell home worth $300 million or something

when she worked at Telestra in Australia? Like, there's no way. And then I looked, it was all options from Tesla. And I go, how is this possible? Board members make like 400K a year, you know, like at most companies. And that's like reasonable. That's more than reasonable, you know, for a couple of meetings a year and whatever. So how do you get from 400K a year to like 200 million, right?

So I knew something was off. And how much of that was options that were given at a really low price, the stock price explodes and that accounts for a huge part of it versus they're literally getting $200 million at a high stock price. And it's almost like I'm issuing this person $200 million. Right. It's a combination of both. So he didn't issue people 200 million, but many of them had only been on the board for two or three years.

So it was like, they were kind of given this gift. So they got a huge amount of stock options that was way more, like a board member should not get a million dollars in stock drop-ins or $5 billion in stock options. It's just, it's like absurd, you know? And clearly shareholders weren't really privy to this. And so there was a lawsuit

and the lawsuit was just settled by the board of directors of Tesla for 730 million. And basically each individual board member has to give back like 200 million. it's crazy. Okay. I've never seen this in my life. And I go, no. And, and so when I started pushing for things like advertising, transparency, succession planning, you know, some sort of like normalcy at a, you know, $700 billion company, um, you know, the Tesla started adjusting to those things. So when I talked to Tesla, they were like, we want to do all these things, but it's Elon,

And I was like, so they're basically like, yeah, go ahead, Ross. You can go try to convince him because we'll all get fired. So if you go to Elon and you say, this isn't a good idea, he'll fire you. So nobody's going to go do that at Tesla. So they're like all for it. So after much negotiation, they ended up doing investor day, which I flew out for. And they did all this like song and dance. Here are all the executives.

And then they fire Zach, who they present as the next guy. You know, so Elon gets Linda Iaccarino and comes back to Tesla and the guy they anoint as the number two of Tesla, Zach, they fire or whatever happens to him, right? And I'm not, it's just like, what's next, dude? You know, the whole purpose of succession plan was to build Drew and Zach and all these other leaders, Tom Hsu. And the minute he gets back, he fires the best guy. And they can say, oh, he didn't fire him.

It's like, well, why would he quit? You know? How long had he been there? 13 years he was like the guy you know this guy was maybe you think maybe he was tired he just wanted to retire go home 30 years old he's 30 you tired he started working at 17 no he started like out of college so maybe he's 35 i mean he's a kid he's a fucking kid bump are you tired how old are you i'm 52 i'm not tired you give me 500 million i'll get up early You know what I mean? Come on. He doesn't even have a family to spend time with, you know?

But one little known fact was he is gay. And so, you know, there's all kinds of things that go on that we don't see, but he lost a key guy. I don't care what you want to say. You can spin it. You can say this or that. He lost a key guy who's really good, really good. You know, I'm like, I'm sure he's going to show up at Google or somewhere pretty soon. But nevertheless, I I feel like the board, even to this day, you know, pretty much lets Elon do what he's going to do. And that's that. Look at the SpaceX article today. SpaceX gave Elon a billion dollars to tie him over during the Twitter nightmare, you know, so he could sell more Tesla stock and then pay back SpaceX. That's basically what happened. So he didn't even have enough cash to buy Twitter. So when the deal actually went through, he's like borrowing money and all this kind of stuff.

So it's front page of the Wall Street Journal today. He's like just using SpaceX as his piggy bank, basically. Now I'm going, this is like a massive $150 billion space company. And the CEO can just borrow a billion bucks for the month so he can do something else. It's only a Tesla or SpaceX or whatever. So in SpaceX case, it's a private company, so they can do what they want. But in Tesla's case, it's a public company and you can't do these things. And that's why there's so many lawsuits and SEC investigations and nonsense

that goes on around Tesla. Tesla has the glass house investigation. The glass house. What's going on with that? That's nonsense. Nonsense. I mean, first of all,

Elon's crazy. So he might do stuff that, but he doesn't care about himself at all. Like, like he's the most non self wealth interested person who's wealthy that I know. like I hang out with some of these billionaire people and you go over to their like mini hotels because they're not houses anymore. If you have a big house, you're not that wealthy anymore.

You have to have a mini hotel. Okay. So that's what they do here in California is the billionaires build these mini hotels that they live in. It's like going to the Four Seasons. Okay. So like you show up at their house and they've got like the staff and the whole bit and they take your car and then they offer you hors d'oeuvres and drinks it is the four seasons that's how these people live elon sleeps on a couch like at the factory he's sleeping he got in trouble at twitter because he put a bunch of beds upstairs in the offices it's like we're all sleep here you know and like he's legendary for this he has like massive back problems because he doesn't sleep on a regular bed half the time like he's perfectly happy sleeping in a car kind of guy so the idea that he's somehow

absconding with like resources of tesla to build some glass house you know sec is getting a little bit desperate in their investigations that's what i think but one thing i'm sure of is that he is 100 focused on his goals whether it be mars or tesla or noralink or ai now and like personal wealth stuff is not him you know if he was used to have houses and stuff but he sold them all you know if elon started another company tomorrow and he called you up and he said hey i want you to invest would you do it probably yeah all right what would cause you to sell what would cause you to sell the Tesla position? Well, right now, you know, I'm a long-term investor. So my firm and my basic wealth belief system is you own these great companies that produce tons of cash and

take care of their shareholders. And you just hold those forever. You know, it was funny because Jimmy Buffett just died and I was a huge fan. I had met him once, got to spend the day with him and it was just a super amazing day. And he owned Berkshire Hathaway because he knew Warren Buffett. And that was like the only stock he owned. And he just owned it for like 25 or 30 years. And I was like, yeah, it's got the highest returns of any investor, right? He's got Berkshire Hathaway for 30 years. You can't do wrong with that, right? Have you ever heard the story of the first time they ever talked? I have heard that story. It was like coincidental, wasn't it? Or something like that. So the part that I heard is they get on the phone and Buffett's like, hello. And Jimmy Buffett

says, cousin Warren. And Warren realizes what's going on. So he goes, cousin Jimmy. And supposedly for the rest of their lives, Warren Buffett and Jimmy Buffett called each other cousins because they shared the last name. Yeah. I think that's true. And that was in the paper today. Yeah. You know, I think Jimmy Buffett was one of the greater business people I've ever met. and I was so lucky because I got to have lunch with them. And, you know, whenever I get these, like, it's pretty rare where I get these opportunities to be around these people. I don't like, I ask questions, you know what I mean? I'm like, I've been, I'm with a legend. I'm not going to sit here and just like blow smoke, you know, back and forth. You know what?

Oh, you're great. You're great. I'm like, let's talk business. Like, how have you done this? Like, how do you manage this? Like, what do you own? You know? And he starts telling me about all his projects. And, and one of the things about Jimmy Buffett that really caught me like right off the bat for successful people, number one was he loved business. Like he was like a relentless marketer, you know, like he wrote a couple of great songs, you know, like, but they're like three chord songs. And he turned these songs into a brand and he turned this brand into like multiple verticals that ultimately, I think he was worth hundreds of millions of dollars from hotels and retirement communities to live shows and bars and restaurants. And, you know,

I mean, this guy, it just like went and went and went in a hundred directions. So number one, he just like loved business and he loved doing business with people he liked. He didn't, he was not solely focused on profit. He wanted, he very much believed in his vision and wanted to work with people who were great, like that he liked, you know, so there was like, he didn't have a lot of conflict because of that, you know, going into business with the wrong people and he would partner with really good people, but he had just a relentless energy and a tremendous love of life. Like I've never, like, for me, that's the tough thing is the balance between like having fun and work. You know, it's so easy to like do too much of one or the other. And Buffett was like great

at that, you know, like he was known to be super fun and he was super fun, but he also was like a relentlessly hard worker, a perfectionist and his people were super loyal to him. He took care of his people, you know, any, any, and we walked through a couple of things and I was like, man, this guy is a legend. And I hope somebody writes a business book on Jimmy Buffett. What do you think was his greatest like insight? Was it building the brand? Was it expanding outside of just the music? What would you say, you know, after analyzing, after talking to him, was the insight that he had that other people could implement and potentially recreate some of that success? People. Okay. Every business is about people. Okay. Whether you're podcasting or

whether you're selling crypto or investments like me, or you're in the entertainment business or you're selling social media, whatever you do, it's about the people. And this is kind of how we started this podcast. The goal is to make the world happier. Okay. Look at it this way. The purpose of life is to bring goodness and happiness to the world. And then we are gone. It's pretty quick. Okay. We have this little moment, you know, and he very much believed that his brand brought a little bit of happiness and goodness to people in the world. And that was what Margaritaville was, it was an escape. It was like, wherever you were, if there was a Margaritaville, you can go in there and get this little, you know, Southern Florida vibe and have

the margarita and put thin, you know, and like, and people love that. They just loved it because it was a little bit of happiness that he was spread. And I try to do the same thing. I say this to my firm all the time. This should be the happiest place on earth. You know, we help people plan their futures. This is not a bad job. We help people plan their futures. We want people to have a better life. It's fun. Enjoy what you do. But if this job is about buying and selling Tesla stock and trying to make money all day like a hedge fund, it's a lot less fun. A lot less fun. Because then it's just about money and results. And it's not whether that person who got married and wanted to buy a house, you actually helped them do that.

You know, like that's a lot of fun because then they get the house and they're like super happy. And so I think most businesses and what Jimmy Buffett did so well was really focused that every business that he was in had to have this really positive vibe. It was like positivity and it drew people into his brand and people loved his brand

because it gave them a little bit of happiness. And I think that's something everybody can learn from a marketing perspective. talk about the ETF. You guys have a GK and it seems like you guys have done decently well markets up to start the year. You guys have done about what the, uh, the, the market's done. What is going well there? What's not going well there. And, uh, when you look at that ETF structure, are you still excited about, you know, investing out of the ETF structure versus other types of fund structures? Yeah. So ETFs for us is a little bit different than let's say like an ETF company

like my friend Gary has or the Roundhill guys I know or the Global X guys we know where when you're building an ETF company, it's really a difficult thing actually and not necessarily what I want to be doing. But when you run a financial services firm with $2.5 billion in assets. And you start thinking about like, how do we scale, you know, so we got to a point now where we got 45 employees, you know, 12,000 clients, we got hundreds of millions a year coming in, you know, certain amount going out, but our net new flows are hundreds of millions a year, you know. And so it goes into like, how do we manage money and scale. So we use index funds and ETFs as part of our investment strategy, mostly because they're low cost strategies that

work. Our basic philosophy is index plus alpha. So we very much believe the S&P 500 is a great place to invest and investors can do great just doing that. And so we'll layer the portfolio with either one ETF or a group of ETFs that sort of look at the overall market. Now we don't invest in oil and we don't invest in like chemical companies and railroads, you know, so we kind to try to strip out. I don't like the, you know, things we don't believe in. And we invest more in like climate and technology, you know, and consumer. So our three main themes are climate, technology, and consumer. And so the ETF was built to be the alpha portion of the portfolio. So it's about 35 stocks right now. And the idea with it was that there are these advantages that

ETFs have, which basically all, there's no capital gains tax, you know? And so for an investor like me, when we bought Tesla and we put, I don't know, I don't know, 6 million, 7 million in Tesla. And we made, you know, a hundred times our money, but we had sold some along the way. So we made a couple hundred million and we ended up paying tens of millions in taxes for clients, tens and tens of millions of taxes. And I was like, how could we do this in a way that next time we have a big kill. You know, it's not like we lose 30% of it, you know? And then Noah from advisors just calls me up and says, well, there's this thing called ETFs where Vanguard lobbied for a tax exemption, basically that says you can trade like a 1031 transfer out of one stock into a bunch of

other stocks and not have to pay capital gains tax. I said, well, that's, that's amazing. You know, now I just have to find the next Tesla. So, so the ETF was a way for us to now build portfolios, use our investment strategy, manage more money in scale. And because we manage lots of small clients, we can't buy and sell 30 stocks in a small account. We can just drop the ETF in. And then when it goes up, we're not going to be producing capital gains out of this thing. So it's almost like ideal, right? For a growth investment. So I was like, active ETFs are a great idea. It's just a great idea. And the government looked at the tax break just recently in the last thing, and they just move on because it's Vanguard and BlackRock and StateGee, and who

knows how much they pay, right? So most people don't realize that you can invest in my ETF. I traded every week, and there's no taxes, no capital gains tax. Now, we do earn income because we have dividends and dividend stocks in there. So unfortunately, it's always at the top of the market when everybody has these great ideas. Let's start an ETF at the top of the market. And I knew it was. It was just like, you know. But then if you would have told me the Fed and the war and that Elon was going to go berserk and stock was going to go down 75%, it was a brutal year in 22. It was just a brutal year for us, you know. And my traditional accounts were balanced. So we lost half as much money that we did in the ETF in 2022, because we're balanced,

you know, but in the ETF, you're only seeing that strip of alpha of stocks that we manage. So this year started and we were well ahead of the S&P for most of the year until the correction in August. And now we've kind of pulled back in line with it. But we're heavily concentrated. So you see lots of volatility in our portfolio relative to our overall portfolios for clients. So I'm pretty happy with it. Cause you know, this year has been much better. You know, a lot of the things I invest in have had some struggles recently like cannabis and now we're seeing some progress in cannabis, but that was, you know,

sort of painful in 22 gaming, video gaming crypto, you know, crypto was, was brutalized in 22, but I have every still belief in these themes, you know, and we're out of a lot of the themes right now, but we have every intention to get back in there cheap, you know, like a lot of these themes are cheap. And, and so, you know, we're just having to deal with this sort of post pandemic world where arc has dealt with it a lot worse than we have.

So originally we're like, hopefully we'll beat arc. We're doing twice as well as arc since we started. So, so, you know, that, makes me happy. You know, we could have done better in some ways, but it's always easy to do that in hindsight. You know, what is the difference in the investment process? Let's say for private clients with a portfolio that's kind of shielded from public scrutiny versus through the ETF. I'm assuming a huge piece of this is also like you hear noise, right? Whether it's on Twitter or the mainstream media is people can see what you're buying. They can see what you're selling. God forbid you buy something and it goes down or you sell something and then it goes back

up, right? That there's always that kind of armchair quarterback. Do you guys have a different investment process or kind of system in place for the public ETF versus maybe things that you do in the private market because of that? This episode is brought to you by Accenture. When your advertising operations fall out of sync, everything else follows. Spotify and Accenture are working together to reinvent the rhythm of ad sales using automation, analytics, and smarter workflows to simplify campaign delivery and access better data across the business the result less time spent on operations more time connecting brands with the moments and fandoms that matter most learn more at accenture.com spotify no and i own a ton of the etf like so the idea is like i put i i don't know

i got half a million in the etf personally and then our firm has money in the etf because we We don't want conflicts of interest. And so it's like, you know, like, I think it's a great vehicle, you know, and I've been buying my ETF, you know, dollar cost averaging. So I'm up on it. And, you know, it's like, it's great because we own NVIDIA and I got $800,000 in gains on NVIDIA in the ETF that, you know, people aren't going to have to pay taxes on. It's a wonderful thing.

We've also harvested all the losses from, you know, 22. So like, let's say there's six or $7 million of losses that we harvested. So if you buy my ETF today, you're getting this like embedded tax advantage, huge, because you didn't lose the money, but you get the embedded losses. So it's a super advantageous vehicle for taxes, which is wonderful. So as far as the investment process, it's the same. And being public versus private accounts and versus my own money, remember, I own all this stuff personally.

so losing money is much more painful to me than like somebody on Twitter saying I suck you know what I mean like I don't give a crap about what people say on Twitter I do care about my clients very much so but if you don't think clients are just as you know they watch their accounts you know it's like they're not dumb if you're not doing well they call you up and they say why aren't we doing them? And we try to do the best we can. Now in years like 2022, remember we had 2021 and 2020 and 2019. So we had clients who had massive gains from tests, mass. I mean, we had a huge run, 2019, 2020, and 21 were just massive for our firm. And our asset center management more than doubled during those three years, over a billion dollars, you know, so those clients are

not unhappy, even if we had a bad year in 22. So they, you know, our average account was probably down over 20 to 25% last year. So it was kind of in line with the market, though, I mostly because bonds did not help us, which also sucked, you know, bonds went down just as much as stocks, pretty much. But now this year we bounced back. We're up 17, 18% for clients, especially clients who we got last year are up nicely. And the clients that, you know, started at the top of the market in 21 are still down or even, you know, so, you know, it's not ideal, but it is what it is. Now, what I tell people is I've been doing this for 29 years, 30 years. And in 2008, I lost half my money, you know, as we were down huge. I mean, it was a disaster. And, you know, within

two years we had made back all our money and, and rode that bull market till the, till the next disaster, which, you know, was 2014. So, you know, 2001 and 2002, you know, it was really brutal for me as well. It was, it was actually three years, 2000, 2001, and two, we had three bad years in a row and we were down like 50%. And then in 2008, we were down over 50% at one point and pretty much the whole system I thought would be done. And we had Bitcoin. And then 2012 was now my third worst period of time over 29 years. But 26, 25 other years have been really good. Yeah. What do you think about Bitcoin and cryptocurrencies? And obviously there's a lot of talk about an ETF. love it more than ever why because everybody hates it okay what people don't understand is

bitcoin's not going away i i'm i'm a bitcoin investor you know like and that's what's kept me whole through all this stuff never gotten into all the coins and all the okay always been a bitcoin investor since 2014. okay and i've made a lot of money on bitcoin over the years i've never realized any profit but i i still have all this okay Okay. What is horrible about Bitcoin is the constant pain the industry goes through because of criminality of the players. It has nothing to do with crypto. Okay. So in my mind, Sam Bitcoin Freed is the worst thing that's ever happened to Bitcoin. Okay. He's the worst thing because he goes out there, takes all these ads out, spends all this money. And from day one,

I knew this guy was crooked. It was just shady. The whole thing, taking pictures with Giselle, you know and i'm like this guy so now he's in jail thank god right but he's put this like paul on the industry he put all the regulators on the industry the regulators have no idea what to do so they're just like boom boom boom because they got to do something right and they don't like i'm like sec just call me like i'm happy to help you with crypto regulation it's not complicated because we do it here okay just treat it like a damn security and be done with it you know, it's like, just be done with it. Everybody can follow rules. If the crypto exchanges don't think they can follow the same rules I'm following because it's too costly, they're full of shit.

Okay. They can follow all the same rules that I follow. I just went through an SEC audit for six months last year. That was the other fun part of last year, by the way, was in the middle of a bear market, getting a letter from the SEC going, we're going through your tweets and we would like to talk to you about eight of them. You know, I'm like eight out of 10,000. That's not too bad. else. So I had to do that for six months, but you know, it was fruitful. It was good. But I think the SEC tries really hard to protect investors. That's their job. Nobody's getting rich at the SEC. That's for sure. What did you say in the tweets? The ones they were concerned about were really three in nature, but really was that we would talk about stocks like Tesla. Okay. And so

I would get on in the morning, Tesla would be up. I'd be like, Tesla stocks up, love it in here. great opportunity for investors. But then what was happening at my firm was I have 26 or 27 advisors and all these thousands of clients, and they don't watch Twitter or anything what I say. And then they're going in and rebalancing portfolios and managing money. We still like Tesla, but if you had 10% of your portfolio in Tesla and it rises to 12 or 13% because it was rallying, we'll trim some back because we managed to an allocation. So when the SEC looked at all the trades at our firm, they were like, well, you had like 800 buys and 600 sells. And Ross was saying this on television, but then the firm doesn't do anything like that. And we're like,

that's exactly correct because nobody at the firm cares what Ross says on television. We manage money for our clients. And each day we look at client accounts and rebalance them based off each portfolio. So there's no correlation. Well, they didn't like that. They're like, well, you say you love the stock, but then five guys sold it and 10 guys bought it and this and that. And I said, listen, there's no correlation. So they go, well, we agree with that, but you can't do that anymore. So if I, like when you run this podcast, we talked about Tesla, then we can't trade Tesla opposite of what we talked about. And individuals at our firm in our own personal accounts can't trade at all. You know, so we basically created blackout period so

that, you know, it's sort of arbitrary, but I don't think I'm moving markets. Like I don't think things I say move stocks. I just don't. And I know for a fact that they don't. Okay. So like, you know, if I go on TV a hundred times and say, buy Tesla, I don't think Tesla stock goes up. I just don't, but it just doesn't matter. So, so we change our policies and that's fine with me. And we just have to like jump through a few more hoops and we have to warn people like I'm going to be on TV or, or this podcast. So if you want to trade Tesla or Nvidia or something, you should do it now you know so that was fine what do you think about nvidia it seems like that's the one of my top holdings yeah it seems like that's the darling uh do you think that it's overvalued now

no not at all i think the opposite i think the exact opposite just added to it personally from in the fund um and people go you added to a 483 and it's like yeah yeah and i'll tell you why um i've been on the nvidia train for a long long time as long as tesla or longer actually um because i'm a gamer and i found nvidia back in the day so our cost basis is nvidia is like you know 10 15 a share too so it's been a huge winner for us it's now our number two stock behind tesla so we got like 100 million in tesla and now we got like 60 80 million in nvidia alone and um so you know nvidia well from crypto right so when crypto was booming everybody's buying

nvidia chips why they're just wonderful for running these computations and then it was like with gaming it was like about like the detail of graphics and like nvidia chips were really driving like the best graphical experiences and then with like servers it was like oh we should be buying nvidia chips for servers and then when tesla and autonomy started nvidia was the company behind the chips for autonomy, and they started with Tesla many years ago. And they are now the chips driving autonomy for everybody but Tesla, because Tesla created their own GPUs, dojo chips, or whatever you want to call them, specific to Tesla. So Tesla went to NVIDIA and said, we'd like you to make chips specific to Tesla. And they were like, no, we're going to make autonomy

chips for everybody. And Tesla's like, we have specific tasks, so we'll make our own. And that's why these companies are so interesting and valuable is because of this technology. Now, NVIDIA kept moving forward with server technology and AI. And then it was like, if we build these, because the H100 is not a chip. It's actually like a big box of chips, thousands of chips. It's like a supercomputer. But it's only like, I think I would say it's like 50 pounds or something. it's like a box of chips. And this thing is like nothing like it. It's like a brain, like no thing has ever seen before. So the basic premise is Google, Apple, Microsoft, Salesforce, Uber, every toast, everybody's been gathering data forever, right? So right now at Amazon Web

Services, there's like so much data, right? And right now at Azure and at Google Cloud, there's just like all this data, but it has to be queried. So what's the purpose of the data? It's like our Salesforce. So our Salesforce, we have all this information about clients, but unless I say, punch up all the clients that need life insurance, and then it'll spit it out to me. There's no like brain involved. So with putting in these AI chips, what they're doing and what chat and generative AI, like language models showed is that now you can basically talk to a computer. That's basically what it is. So instead of me searching for stuff, determining the validity of its information, and then using it, now I just ask it. I literally do this now

every day. I go into chat, I go into bar, and I wish it was more accurate, but it's pretty good. And I'll say, what are the top companies in AI computer chips? And tell me a brief description of why they're good. And it's just like, boom, boom, boom, boom, boom. Okay, that will save me a lot of time. I would add a research list, call a bunch of people, you know, talk, you know, so we're just at the beginning. So for us, we use Salesforce at my firm. And I started thinking about what AI could do for Salesforce. And I'm like, dude, they have so much data. They can literally like tell, like we could say, like find us business in our book and it'll spit out all the clients and all of the things we could do because it knows. Now I trade on Bloomberg's platform.

They have a trading platform now and I use Bloomberg terminal. And when Bloomberg gets real AI, okay. Cause they're, they have antiquated data. It's like the oldest system in the world. Bloomberg is like super annoying. Cause it's like, it reminds me of the eighties and like, but it works, you know? So everybody uses it, but they have all the data on the stock market. They have it all.

And now they've been seeing my trading each week. Now you throw in AI and it learns. So now on Monday, when I come in, instead of me on a piece of paper, this is how I do it, really. Like, I'm going to add to this. I'm going to do this. And, you know, it could just suggest all those things based off watching my history and, like, the things, the metrics that I care about. And, like, it'll suggest trades for me and such like that. It can analyze news and say, you know, these stocks are moving and you like these stocks and they fit your metrics and you should really consider this because there's, like, a thought process now in the computing.

So this is the beginning of turning untold amount of data into value. Just the beginning. Is there an opportunity to take the ETF structure and basically use one of these large language models and just have the model make all the investment decisions? Yeah, you know, I think they have some doing this already. And so here's the problem with it. This is the problem with full self-driving. And it's the problem with all computers. and it's called like anticipation, okay?

Like the other day I was on full self-driving and I'm driving down the street and this lady pulls up to a stop sign and I could just tell she was gonna blow it. You know, like you look at the lady and you look at her car and in my head, I'm like, she's gonna blow this stop sign. I'm gonna have to stop.

Even though like the car didn't see this at all. And sure enough, she blows the stop sign. I stopped because I knew it, okay? Now the full self-driving car would have seen her start moving and then stop. There's a difference there of maybe a split second. But because I've been driving forever in LA, I have an intuition that a computer can't have. It just can't have it. They can't see what it can't see. But humans have tremendous levels of intuition, actually. Like danger. You ever walk down a

street? You're in New York, right? And you're like, maybe I'll go down that street. it's just like you didn't see anything it was not but you just felt like it was too quiet you know it was like too quiet so that's the part that's really hard for computers so stock picking a lot of owning investments it's philosophical and it's like forward thinking so like we're talking about ai so like if you put in a valuation model and then you put in like earnings estimates and then you put in like all the stuff on bloomberg and like you have that already like essentially the computer could create more limitations to your viewpoints than help. And so like the way I see NVIDIA in my mind is definitely not the way the computer sees it because it is putting in numbers

that people assign to it for earnings, for example, and then it creates valuation models based off assumptions that are always wrong. You know, one thing that I'm sure of is that analysts never get earnings right. Okay. Now think about 25 highly educated people work on Tesla's earnings every quarter. And every quarter Tesla sends me the mean, you know, they send me this thing of here's all the analysts, here's every number. They lose every number. You know what I mean? These guys literally, that's your whole job all day is to just come up with how many cars they sold and what margins and this and that. And they're wrong every quarter. This episode is brought to you by Accenture.

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You know, like crypto right now, or cannabis right now might be just epic, great investments. And they're ones that I'm really looking hard at again to reenter, especially crypto, because the halvings next year, and now with the Grayscale victory, and now with my friends at Fidelity, and not my friends at BlackRock, but the other firms are now circling to start their ETFs. When I met with the New York Stock Exchange, when I started my ETF, I asked them personally, what's going on with Bitcoin? And they told me until Citadel's trading them, until Fidelity and Virtu, all the people who trade my ETF. See, the weirdest thing about the ETF is there's no correlation to being like volume on the etf and like people buying it and when people buy it

actually like market makers buy the etf okay or sell the etf and it never makes any sense to me when they buy and sell like you know we've had approximately the same amount of shares but like just the other day they sold at the end of the month like some market maker and merrill lynch and then they picked up the same shares two days later and i was like was what was the point of that like i don't understand so it's the same idea with bitcoin if you start a bitcoin etf you have to have these market makers so you have pricing end of the day pricing and and these guys want to make money off all this stuff they make so much money off my etf you know what i mean like i don't make any money because we're not big enough yet we're kind of like break even

but it's like but it's super efficient you know so like it's great but like to make money on an ETF after your costs, let's say a couple hundred grand in costs, and then your market makers are making two, three, four cents a trade versus one cent a trade on a stock. Why do you think there's so many ETFs? You think we need all these ETFs? They're like, oh, I got five new ETFs coming out. The top five stocks, ETF, the 10 best tech stocks, 17 new AI ETFs, four new Bitcoin ETFs. You know, it's like, how many people have filed for Bitcoin ETF? There's one Bitcoin.

You see what I'm saying? Like, there's eight guys trying to do the Bitcoin ETF. There's one Bitcoin. So they're all the same. So once all these traders adopt a structure to trade Bitcoin and have custodial abilities, which isn't that hard, and they're doing this right now, and Fidelity is the leader, it's going to happen. And it's going to happen next year.

and what's going to happen is that all the institutional players are now putting their foot down in this business and and all the weak players have been destroyed just gone so if you want to trade bitcoin in america what you got coinbase paypal but those aren't real platforms like paypal and square are kind of just accumulation platforms compared to like coinbase and coinbase is a nice platform but i've never liked them But I like Bittrex and they shut it down. You know, I'm like, that was a fine platform. You know, it's like all the platforms are gone.

So traditional institutions will take it over. They'll start doing ETFs and Bitcoin will rise again and everybody will get excited again. But to try to argue that we don't need a digital currency that's global, that isn't controlled by a government, it's like it's more necessary than ever. Big bull. I have one last question for you, and then I'll let you go. You can't choose Tesla. You can't choose NVIDIA. What's a stock you own today that doesn't get enough attention that you think people should be paying attention to? That I love, that I love. And it's my number two holding. So I've got Tesla, NVIDIA, and MGM Resorts, okay? People don't get the gambling business right now.

Vegas was destroyed in COVID, and same with Macau, okay? And it wasn't until January that China even let Chinese people out of jail to go out and go back to Macau and go start living their lives. What we've seen in Vegas the last two years has just been massive growth of visitors. And now the businesses are back. And MGM has positioned themselves as a leader in Vegas and also sports, okay? And they've aligned themselves with the Raiders and the Golden Knights. And now the A's look to be coming.

and now we've got the sphere opening up in vegas which will be amazing uh it's opening with you too and uh and then we've got formula one coming to vegas i think in november and you should see the way this thing is set up it's going to be super amazing event followed by the super bowl for the first time in history in the gambling mecca now imagine room rates for the super bowl in vegas imagine the dollars in the clubs without you know like it's huge money the next six months of vegas is amazing and now you've got macau is full again okay so even though the chinese economy is garbage that's like the overall economy china's a massive country so the people who have money are all going to vegas which is macau and macau's numbers are back and that is not reflected in the numbers yet

because it just really started. So June was a huge month. July was even bigger. August was huge. They did have a storm that knocked a few days out, but they're back to normal. So this is great news and we have online gambling. So now with the demise of the Barstool app, you got one less competitor. So ESPN's now and Penn has got to get their mojo going. And you basically have DraftKings and FanDuel and BetMGM. And BetMGM is the only one of the three that's connected to a casino. So you get perks and all this kind of stuff.

And so it has a nice advantage to using them because you get all the perks. And so MGM has never made a dollar on online gambling. And the next six months is when they're supposed to become cashflow positive. So if you put all those things together and you got a stock trading at $44, that's supposed to do 250 to $3 a share, okay?

they're going to reinstate a dividend at some point soon. And their asset light now because they sold off all their real estate and the profits are just starting to flow through to shareholders now. I think the stock is worth 30 to 40% higher than it's trading at today. I keep adding to it down here under 50. Anytime it's under 50, I'm adding to it. People want to travel and they want to have fun. And I don't think that's going away. I think leisure, travel, entertainment. Gaming is just a booming business and we're just getting started in the post-COVID era. So that's the stock that I love tremendously and see tremendous upside and is a solid company. It's not a speculative company. I love the conviction. Where can we send people to find

you on the internet? Google, you know, just Google my name and you'll see all kinds of garbage. You should know, yeah, GerberKawasaki.com is my website. You can follow me on Twitter, X, at Gerber Kawasaki or on Instagram, you know, threads. YouTube, you can follow Gerber Kawasaki on YouTube, which is great. I love YouTube. We do a lot of stuff there. And, you know, send us an email, info at Gerber Kawasaki. We do financial planning and investment advice.

So, you know, you need advice. That's actually one of the most important things you do is build a financial plan. And at the same respect, maybe you do it yourself. You want to invest in our ideas, climate change, technology, AI, and consumer businesses. And our ETF, GK, is a great opportunity to add some alpha. So you buy the S&P, you buy some of these concentrated ETFs like mine, and I think you've got a great portfolio. I appreciate it, as always. We'll definitely do it again in the future. Yeah, thanks for having me. Thanks for watching!