The Pomp Podcast - 350: Ross Gerber on Tesla and Bitcoin

Episode Date: July 31, 2020

Ross is the Co-Founder, President and CEO of Gerber Kawasaki Wealth and Investment Management. Ross has become one of the most influential investors on social and in traditional media. In this conversation, we discuss the 2008 financial crisis, how he leveraged social media early, what his Tesla thesis entails, what the Tesla bears got wrong, his lack of belief in cash, bitcoin as a global reserve currency, government corruption, and negative yielding bonds. =============================== Crypto.com is the only all-in-one platform that allows you to BUY / SELL / STORE / EARN / LOAN / INVEST crypto all from one place. Join over 1 million users currently using the Crypto.com app. Download and earn $50 USD using my code ‘pomp2020’, or use the link https://platinum.crypto.com/r/pomp2020 when you sign up for one of their metal cards today. =============================== Did you know only 1% of day traders actually turn a profit? So why are so many of us mistaking picking stocks for serious investing? You can’t control the markets, but you can control your risks. So how do billionaire investors control their risk? They invest in blue-chip art. If that sounds unusual to you, you’re not alone. But the ultra-wealthy have been investing in art for centuries. And since 2000, art has outperformed the S&P by an incredible 180%. Just a few years ago, a single work sold for $450 million! Imagine...Being able to invest in the very same paintings as millionaires and billionaires, at a fraction of the cost. Masterworks.io is an exclusive platform that makes it as easy as trading stocks online. And the best part is: you don’t need to know anything about art. Their experts will create a custom portfolio to meet your investment needs. With Masterworks.io you don’t have to choose between big risks and big returns. Sign up today, select PODCAST and you can skip the 70,000 waitlist to get first dibs. Just go to www.masterworks.io and select PODCAST. Hurry, this offer expires =============================== Pomp writes a daily letter to over 50,000 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://www.pompletter.com

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Let's kick this thing off. Ross Gerber is the co-founder, president, and CEO of Gerber Kawasaki Wealth and Investment Management. Ross has become one of the most influential investors on social and in traditional media over the years. In this conversation, we discuss the 2008 financial crisis, how he leveraged social media early, what his Tesla thesis entails, what the Tesla bears got wrong, his lack of belief in cash, Bitcoin as a global reserve currency, government corruption, and negative yielding bonds. I really enjoyed this conversation with Ross, and I hope you do as well.

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I write a daily letter to over 50,000 investors about business technology and finance I break down complex topics into easy to understand language while sharing my personal opinion on various aspects of each industry. You can subscribe at pompletter.com. Again, pompletter.com. All right, that's it for today's advertisements. Let's get into this episode with Ross. I hope you guys enjoy. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular

strategy, but only as an expression of his opinion. This podcast is for informational purposes only. All right, guys. Bang, bang. I've got Ross here. Super excited about this. You may win the award for the most number of questions I've had to send in. So welcome. Thank you for doing this. Most of it was heckling. I'm sure. Well, you, you also cheated just so everyone knows when I asked for the questions, I tagged the person on Twitter where you started answering the questions. I didn't realize, you know, I saw the questions. I get excited. You know, I love it. People are engaged with finance. You know, it's a, it's a, it's a lonely thing in my household. Cause my wife doesn't care at all. She doesn't follow the stock market. She doesn't care what I do.

She cares if I was losing, probably. But it's great to see so many people in the public. That's why I like Twitter. Interested in the stock market. It's what I love. You know, it's fun. Absolutely. So for the couple of people who are watching who don't know who you are, let's start with

just a introduction on yourself and then kind of walk us through your background and how we get to Gerber Kawasaki. Well, I don't want to take the whole podcast up with my life story. but basically you know i i was fortunate i grew up in a household where my mom was an investor and my grandfather was an investor so when i was a kid i would go over to my grandfather's uh condo in marina del rey and they were not rich okay they like were now in hindsight kind of like middle lower class in a way but but my grandfather wanted to be retired so he had this nice little apartment in the marina del rey who'd play golf and he would sail and and i thought it was the

best life in the world compared to my dad, who worked like 12 hours a day, and he's a dentist. And, you know, I was like, Grandpa, how do you do this? It's better than dad, you know. So he would show me, you know, the stocks he would own, which were basically in the 70s and 80s were like utilities and military companies that would like pay high dividends. So he taught me about dividends and buy and hold and all this kind of stuff. But then when I was a kid, my mom would get me to say like I worked as a waiter when I was 16. That was my first job. It was, it was great. I was in Bel Air working at this pizza place for a guy named George Santa Pietro. And if you look him up, boy, there's stories around this guy, right? And I was in the middle of it as a 16 year old,

but I was making money. 80s, you know, and so my mom made me invest and I, she said, give me the cash, we'll buy stocks. And I bought Disney. She taught me to buy Disney. I started following it. Um, so then concurrently I've always played music. So I'm a musician. And so when I got to college, I, I went to university of Pennsylvania and I thought I was going to go to Wharton, be a business major, but I started taking classes there. I really didn't like it. And, um, there was also no girls in the classes. So I was, I was pretty much, I'm not going to do this. So, so I went to communications, which I liked a lot more. And there were females in those classes. and during college i started trading stocks and it was like 92 93 so it was post 91 recession so things were starting to get better and the dow was at 3000 at the time and i remember when the market rallied 30 points i was happy so when i graduated from college i got into the investment industry because the music industry which i had i worked at atlantic records and geffen for a little bit for a couple of months. And then I was like, this is going to collapse because of

technology, because of Napster and all that. And I was like meeting with people and they were like, look, kid, you don't know what you're talking about. So I decided to get into financial services because I was writing newsletters to people, lawyers, friends of my parents about entertainment stocks. And they were like, you just can't do this. You have to get a license. So I ended up getting licensed through an independent investment firm called Sun America Securities, which was here in Los Angeles was run by a guy named Eli Broad, who was a genius. And this other guy, Jay Wintraub ran Sun America, and they were super smart. And they saw the coming retirement wave. And so we sold retirement products. That's how I learned. I sold IRAs, I sold mutual funds.

So when I was 23, I was like selling mutual funds and, you know, basically making phone calls, You know, and so it grew from there, it grew from there. But I learned in the 90s, what I always believe, which is that technology is the best thing we do in America. And if you invest in technology, you have the best opportunity to build wealth. And because I naturally understood technology and I loved consumer technology, I was able to find investments at the time, whether it was Dell or Gateway or AOL. AOL was kind of my first big score. You know, I was really able to figure out that if I could see what was happening and invest in those things, you could make much higher returns. So that worked out obviously very well in the 90s. So to fast forward to the financial crisis. So I was working for the Sun America firm. And by the time I was 28, I was managing 250 employees and 15 offices for Sun America. We were like a regional firm within Sun America. So somehow I was responsible for a lot of people. By the time I was 28, and we were doing pretty well. And then we had .com and .bust. And then fast forward to the financial crisis. So after the financial crisis, me and my partner were like, fuck all this, you know, fuck AIG, fuck, you know, JP Morgan, we're going to start our own firm. because these people they're so greedy they they put us all and our clients all at risk you know and it was a nightmare so i i got i lost pretty much everything in financial crisis

i was i was down to like seventy thousand dollars and and uh and then i had put i bought a house and then at the low my house caught on fire so in december of 08 for real december of 08 my house was on fire. I was down to my last couple bucks. I didn't have debts, thank God. But I had a couple properties I lost to. And I was like, dude, this sucks. This really sucks. So I decided to start a firm. That seems like a horrible idea too. But I figured and my partner figured that if this was the beginning of the rebound, this would be ideal time to start a firm because new firms would be born. And we would hire a whole new set of young advisors and just redo this industry digitally. So that was sort of our innovation was, well, we're small, but we can look big digitally. And so

we built a website. We were the first firm on Facebook. We're the first firm on Yelp. We're the first firm on Instagram. We're the first firm to use all these social media tools. And we used to get, I used to get in a lot of trouble actually. But then one day the SEC was like, well, we want to make rules? Will you help us make rules? So we were in the pilot program for Facebook with the SEC. This was about 10 years ago. And so by leveraging social media, we've been able to build a huge firm and still growing like crazy. And we're still doing it. And so our goal is to democratize financial advice, you know, be able to provide people, no matter what their background is, financial advice from young people who have their first jobs to millennials who are now

buying houses and get married to baby boomers who are trying to figure out how to earn interest in the 0% world. So and we've been very successful being an independent firm fiduciary. We pick stocks, which is also rare. So our philosophy is index plus alpha. So we use indexes, we build around indexes with our with our stock picks. And we only focus on stocks in areas like technology where we're experts. So areas that I'm not an expert like biotechnology, we own the indexes, You know, I can't tell you if Moderna is going to have a better vaccine than Pfizer. You know, I just am not qualified to do that, but I own them all, you know. But I can tell you what I think about Zoom and DocuSign and where Spotify is going and, you know, whether Apple has a great strategy.

And that's where we focus in the stock picking side. So that's the lifestyle. Got it. And so when you went to start the firm, I think that, like you said, there was pretty much nobody on social media, even in 2008, 2009, 2010. like social media was kind of just even starting it was starting yeah right and so kind of why focus on the digital platforms and then when you talk about you would get in trouble in the beginning like what were you guys doing and kind of how did the regulators look at this and all of that so so part of it was like we came from sun america which was big and then they were bought

by aig and we used to be like we're with aig they were triple a rated a dow stock how safe could you be, right? So when that all falls apart, you're like, why don't we just start a new firm? Because nobody cares about Merrill Lynch or AIG anymore. I don't think anybody invests with Merrill Lynch thinking like this is some big solid company, because they've gone out of business already once, you know, they were safe. Let's make of America really, right? So we were like, how do we look big? And how do we get to lots of people when we don't have an ad budget? And, you know, you know, I started the company with like my own money. Like we didn't, we don't have private equity. We don't have VCs. We don't have Hightower or, you know, some backer, you know, we're,

we're Gerber Kawasaki. And so like, I came up with my own dough. We started the company. I wasn't making any money. You know, I was getting paid from my other company to leave basically. And, and so that helped me survive through the first two years where I basically didn't make any money Because we went from commissions to advisory. That was the other innovation that, not innovation, but strategic change we made was we sold products and earned commissions through a broker dealer. And then in 2003, I started doing advisory and I was like, this is a better way. It's up, you make a lot less money, you know, on the short term. And so when we started GK, I knew it would take five years just to make it worth it to switch from advisory, from commissions to advisory. But I knew over time that would pay off. And boy, has it. You know, boy, I don't know how people survive selling products now, you know. um so going back to social media how could we get big so we sat in a room when facebook was pretty new and back then if you shared a post your friends actually saw it remember and like it was actually all your friends on facebook so facebook started it was really cool like

what they've turned this into is a disaster but like when it started it was really cool so like the first day we all sat in in our room and we shared it and and i didn't really have any fans because I was older. So you know, like any friends on Facebook, I was like, my friends are like figuring this out, too. But in the first day, we got 1000 fans. And I was like, wow, you know, like, this works, like, we just shared it, and people followed our firm. And so we started posting. But our compliance department, not the regulators stopped us immediately. They're like, what are you doing? Well, it took them a little bit time to figure out what we were doing. And I said, well, what's the difference between this and you know, I don't know, sending out a letter, or, you know,

or doing a seminar, you know, they said, well, because you got to pre approve everything and whatever. So we started doing that we would pre approve our posts in advance for like a week. So I write posts for a week, send it to compliance, they would say yes or no. And then we would post and, and ironically, when the financial crisis, this was pre GK, actually, but when the financial crisis happened, they fired the entire compliance department at Sun America. So I was like, yes, you know like nobody's going to chat for years you know and that was true actually so so ironically like nobody checked us for like two years okay that we were just able to function on social media without compliance and then AIG got all these like people that started running AIG for the government

and I was like okay the gig is up now you know and this lady calls me from head of compliance for AIG And she said, I see what you're doing. And I was like, all right, the gig's up. And she's like, no, we want to use you in the pilot program with FINRA and the SEC because you're the only one doing this. And actually, you know, this is going to happen. And they were actually really smart people. The people the government brought into AIG to save it did a great job, you know. And so they were like, just keep doing this and let's make up rules.

And so we did that with the SEC and at this time AIG, and we helped create the standards that they use today. But that being said, we were able to reach our target market, which was younger, upwardly mobile people, better on social media than traditional media. I use traditional media too. So, you know, I'm big in traditional media and I've used that. But what I've found in my career is almost nobody watches financial television. But millions of people are on Twitter, Facebook, Instagram, and they do consume financial content that way. And it's very effective. And so we continue to do it. And we continue to innovate with this with live streams and other things now. And now we can't even see our clients. So from Zoom webinars to we've moved our business completely virtual, and we were already prepared to do it. But we've had like the most seamless transition to virtual, like I could have dreamed of, because we were already so far. But now we're back in the office and stuff, but we're continuing to use all the digital tools. So I guess you could call us almost like a hybrid digital firm now, but it's been working. People like working with people.

I don't think these digital solutions are the panacea that everybody wants. So yeah, it's been super good. And it feels like when you were early on social media, it really was kind of the outbound communication, fill the top of the funnel with people who could potentially be clients. And that was kind of how you guys did it rather than direct mail or any sort of other type of outreach that other firms would do? or were you also doing kind of the more traditional outreach along with social? No, no. So like the whole idea of our firm, like a hundred percent is digital. Like they're like,

where's your brochure? It's our website. Like we had an argument the other day, cause they, these guys wanted to make a brochure for ultra high net worth clients, blah, blah, blah. I go, you think they're going to read a piece of paper? You know, even these old people look at websites, you know, and, and, and our printers hated us, you know, cause we used to print tons of stuff and I go sorry buddy you know and and I just had a bunch of young guys ask me for business cards I was like you guys want business cards like you can't even see people let alone like give a business card out you know um so so the idea of our firm and where we make margin was leveraging social media is a lot cheaper than traditional advertising it just is

And then, you know, using PR and getting TV spots is a lot cheaper than TV commercials, which we're actually running TV commercials now, because I do want to run stuff on the Lakers. So we have some nice commercials that we made for the for Lakers. So God willing, we'll have some sports, you know. um but i think that's the genius of social media you've done this too you built your whole uh podcast and you have a huge following on twitter and and and it's like wow you have this power in the media that traditionally you would have never had in the old days and and that democratization of information is a genius thing because now the media has moved into garbage land and people rely on us for information now instead of the media. And so it's an interesting shift what's happened in reliability of information, you know. And so we've become more and more popular because we're the source. And so the media uses us for our source daily, but

same with individuals, they can go directly to us. Yeah, it's very smart. You started out with, I think, kind of early on tens of millions of dollars in assets. I think I saw somewhere online of 50 million and over a billion dollars in assets so uh just you know kind of objectively it's working and and kind of have grown and i talk a little bit about how the clientele that you guys service um how that's evolved over the over the years as you've gotten bigger and then also um we can then dig into a little bit to the strategy of kind of this index plus alpha yeah Yeah. So the client base is basically the same because our firm is built around helping people build wealth and then helping people manage wealth, but we do not actually focus on ultra

high net worth. So every other firm, so this was also an innovation, right? So if 1% of people have a million dollars and 100% of brokers want those 1% of people, then you're in a really competitive business. But if they completely ignore everybody else, okay, then there's no competition for the other 99%. Now, what we found in society is about 50% of people save and invest money, about 50% of people spend all their money and go into debt. And there's actually very little correlation to income. You know, a lot of people have this assumption that poor people can't save or people don't make a lot of income can't save. And there's no correlation. We have a lot of clients that don't make a lot of income and they save their invest their money we have clients that

make not clients we have prospects that make a million dollars don't save anything you know especially out here in la so i mean it's easy to spend a million dollars in la on education alone um so our client base was really focused around the millennial the upperly mobile um we kind of serve the client a lot of clients of the stocks we own even you know snapchat is next door Activision is next door. So we're in Santa Monica, California. So our business model is focused around younger people that have good careers, invest, getting them when they're young, investing their money, helping them build wealth. But then these companies like over time, see, we're long-term thinkers. Like when I started GK, I wasn't like, oh, I'm going to get rich quick.

I'm going to be a billionaire tomorrow. That was not the goal. The goal was in 10 years, like where we are today to get to a billion dollars and blah, blah, blah. We knew it was a 10 year goal, because so many of our clients didn't have much money at the beginning. But now it's like, amazing, because they went from 25 and 30 year olds working at, you know, Yahoo's gone now. But Yahoo is down the street, it used to be. And now they've moved to being an executive at Snapchat with options and all this kind of stuff. I can't tell you how many questions we get about options and things like that. So we serve a lot of these tech companies. And it's been, it's amazing how many young people are actually doing very well. And then we serve baby boomers.

So a lot of people know that the wire houses are scams and now they can't, there's no confusion anymore. You know, so when you are a client at Merrill Lynch or UBS, you're being sold products and clients understand that now. And they started to understand the difference between a fiduciary and a broker. And the performance of the brokers have been horrendous. I mean, the products are garbage. The results have been garbage. We see these statements. We take them over every week and it's garbage. Like if you're at UBS or Merrill Lynch, you could be doing way better, but the brokers don't try. They just don't even try. I mean, it's just a joke how they make decisions of what stocks to buy and sell. So those people have now been coming to us in droves

because they're saying, look, I want somebody who's really going to manage my money. Not just charge me two fees, advisory fee, money management fee, put it in a bunch of, you know, products, basically, and go play golf. And when your advisor is a better golfer than the client, that is a warning sign. Just a warning sign. Like I could be a great golfer, like I'm good at golf, but I play like rarely, because I'm busy, you know, and I have a family. And it sucks. I, you know, I lose games, I should win. But I, but I work too much. So, so if your advisor is wearing a golf shirt and like showing up to the conference and shorts, you know, come on.

I love it. I absolutely love it. We go to these conferences and half the guys are wearing like golf outfits. Oh yeah. Of course. You have been all over tech stocks in terms of what you like, what you don't like. One that you have probably been more outspoken than others is Tesla. Talk to us a little bit about kind of your relationship with Tesla in terms of when did you first get interested, kind of what's the thesis there, and then kind of how do

you evaluate where it is today? Tesla, the love story. Muddy Waters was mad at me because I said that I was going to hold Tesla forever. And they're like, you can't marry a stock. My dad taught me never marry a stock. I go, I married Apple a long time ago, babe. I live in a nice house. I thank Steve Jobs and Tim Cook, and I'm not selling my stock. And I'm not even happy with Apple. So um tesla it was never meant to be this way you know it was just a stock you know so ipo'd um i think eight ten years ago and when it ipo you know they were based in santa monica the the first tesla thing so you know once again when you're in southern california and you're connected in the tech community you have access to information that people in new york just don't

have it's just it's just you see what's happening around you talk to your friends and new york you guys have different sets of information that you have an advantage on, you know? And there's a lot of good stuff in New York too. And I have lots of sources in New York too. But LA is about tech and it's about social media. That's what we're good at in entertainment. And that's what I'm good at. And so I have an edge in these industries and markets. I grew up, I have friends in all the companies. I know the CEOs, CFOs, whatever, and everybody talks and so on. So Tesla came out with this great little roadster car. It was kind of a piece of crap and I never owned it.

And we watched it and I always, I never really thought much of electric cars. I always liked cars. But when it IPO'd, I think it IPO'd at 17 bucks, they had no product and I said, we're not gonna buy it until they have a product. So everyone's like, oh, it's so innovative, blah, blah, blah. I go, listen, you know, it's kind of like Nikola.

Until they have a product that they can sell something, how far can the stock go? So I waited two years watching Tesla. And then the Model S came out. And when the Model S came out, my partner, I went down to Tesla and looked at it and drove it. And, and I'm a car guy. I love cars. I'm not a technical car guy, but I like driving. I like driving fast. I like race cars. You know, I just like cars. I don't know. And, and, and I like ice cars, actually, you know, it's, it's not like I'm like, Oh, you know, I only like EVs. No, I mean, fuck, I love the land. I love McLarens, And I've been trying not to buy an expensive car again, because people give me shit. And I've been driving this Tesla Model 3, which I like. But I want the Roadster. So I looked at the car and I said, look, if this car is this good, and they can make these, and it's electric, there's no way they lose.

And at the time, Mercedes was actually the biggest investor in Tesla. And I had talked to some Mercedes people and they were like, look, we're going to buy Tesla. And I was like, that would make sense, right? And so, you know, I figured Tesla would get to a point in their technology and a big OEM would buy them. End of story. Like, why would you not do that? And Tesla had bad financials and they were borrowing money from the government. so you know i was like so i so my mom and dad my stepfather is a very connected person in the government and in education and they were doing some work with spacex and nasa and they had dinner with elon and my mom came back and said you got to pay attention to this guy he's a genius and you know i don't say this much but this guy is off the chart so between that and the in the positive you know review of Elon's abilities and my mom's not wrong um you know I was like let's buy the stock so we bought the stock and we kind of piled into it you know like right at around 30 35 bucks I think it was um and I think it was because we were just betting on the launch of the S doing

well and so right off the bat the stock rallied from like 30 and I think that one day it went up like it doubled or something like a day. I think it was like right after the S came out and idiot me, of course I sold some, you know, I'm like it doubled in a day. Like I'm no idiot. Right. And I was on my way to a vacation or something. And I think I originally had 3,500 shares. So I've had about a hundred thousand dollars in Tesla and options at 30. Fuck. I wish I kept that, you know, I, you know, sometimes I'm too smart for my own good, but you know, when it got to 150, i had to sell some and then it kind of plateaued in there for a while um and we and i kept you know i kept my tesla we kept adding to it tesla came out with the model x it was a disaster it

was one of the worst launches i've ever seen the wing doors didn't work i'm like elon's fucking smart but he's an idiot and uh he wanted to make the best doors ever we got through that then he bought solar city i didn't like that you know it was like it's like a love-hate relationship but like he kept doing awesome stuff so we just kept kept investing and but then when the model three started as a mass-produced vehicle I was like if they can make this car like it will sell forever but they have to make it and it turned out that was not so easy this has been a really painful stock for me actually no no and I'm glad I've made a lot of money from it now because no part of that was easy. No part of it. So anybody who thinks that this was just some sort of like

walk in the park game, it was not. And last year was even more horrendous. So it was basically this horrendous love-hate relationship between these amazing products, this amazing inventor who constantly screwed everything up because he was overly ambitious and overly aggressive. Oh boy, right? So what happened was when they launched the Model 3, the stock rallied because they sold all the expensive cars right off the bat and made margin remember and that was like the end of 18 so we actually survived 18 pretty good i thought 19 was going to be pretty good because they were scaling but it didn't turn out that way scaling wasn't that easy so you know everybody started shorting tesla hard and uh and a lot of big time players and it's not like i

ignore these people you know i'm like geez what am i missing so whenever i think i'm missing something i just work harder you know i'm like i gotta study what they're saying and then i gotta to go figure out if it's true. And then I got to go figure out what's really going on. So I heard a lot of what the Tesla Q people were saying. And most of it was like personal stuff. Like they just didn't like Elon. And I realized that was a big flaw. They actually called me, you know, like, it was like Chanos and these guys, Charlie and Chanos. And they wanted me to go out to dinner with them in New York. And I was like, well, you guys are going to knock me off. I'm not that dumb, you know and uh but you know i thought it was interesting they really were concerned about my

my thesis you know so then it was like einhorn and then the worst was when steve eisman from the big short came out short tesla and and tesla starting a crater and i go home to my wife and i said you know honey i think i'm screwed even the big short guy is betting against me so So, so, you know, I don't invest based off what other people say. I invest off my own research. So I called Tesla and I said, listen, I want to see everything. I want to, I want to meet everybody. And I want to know what I'm doing. I'm coming up to Fremont. And if you can't accommodate me, I'm selling all my stock. Fuck you. You know, it's like, sorry. So this guy, Martin, who's head of IR said, I'll take care of you. So I fly up to Fremont. He meets me. I bring my wife because I want to make sure some rational non-stock operator watch this, you know, because she doesn't care. And so we go to this factory, me and my wife and Martin, and I didn't want just a regular tour. I literally went through every freaking inch of it all day

long i walked the entire model 3 assembly line in the tent every position i looked at the car talked about them i looked at the machines i talked to the random employees i you know and i walked out of there i go these fucking guys are wrong this place is amazing they're gonna kill it they're gonna kill i've never seen a place like this like the motivation level the work ethic, the vision, the automation. I mean, the factory itself was this hybrid of amazing technology and then like old school manufacturing. And then I met Jerome Gillian. And when I met Jerome Gillian, I realized the shorts were screwed. Because Jerome Gillian is the genius behind Tesla's success. It's really as much as Elon is the genius with the vision, the actual

person that saved Tesla was Jerome. So I had this meeting with Jerome. And in five minutes, I realized he was a genius, like off the charts. He was super motivated, like Elon. He was relentless cost cutter, a relentless efficiency driver. And he was a truck guy. But he wasn't from the tech side. He was from the manufacturing side. So I knew if anybody was going to save Tesla was Jerome. And he's really the guy who deserves a lot of credit. And he put up the tent. He got Model 3 up in 17 days. And he's now a legend at Tesla. And now he's running this Austin plant. He helped get the China plant going. He is the secret behind this. But when I saw that, I was like, I'm going to keep betting on Tesla. So Tesla goes from 260 to 200. Now I'm getting

calls that I'm an idiot. Relatives are seeing if I'm okay. And it was like the big short. I was in my office by myself. And then Eli started the pedo stuff. And people in my firm were like, Ross, we're out. Fuck this guy. And I was like, guys, he's crazy. I get that. But you can't invest with crazy people who are geniuses and expect normalcy. But I was getting pissed. So I fly back up to Tesla. And Martin sets up, I go to autonomy day. And it's me, Gene Munster and Gally and Tricia.

I think her name, what's her name? Tricia something at ARC. And Elon's there. Now I'm not scared of Elon and I don't really care whether he likes me or not. I have millions invested in this company and he's fucking me you know so i was gonna talk to him i was a little scared he might just be like blow me off and be like screw this guy but i was like how do i approach it right you know

and i was pissed off about twitter so i approached him with gene and and they needed to raise money back then and i was like gene we got to get him to stop doing this you know because i love gene munster i think he's one of the smartest guys out there and we did apple together for a long time and then when i went to tesla he went to tesla too so i was super happy and gene is just so smart and so and he writes everything better than me so i just use gene stuff um so we cornered elon and i i i didn't let him have it but i was like look elon you're making it real hard for us and i'm i can only do so much to help you in the media and this and that but you tweeting all this garbage i'm like listen i'm big on twitter too and i've gotten hammered for really dumb shit i've

said, you know, especially attacking Trump and stuff. And you got to understand, like, what's the purpose of this? Didn't you say the mission is to, you know, sustainable transport? Well, you're hurting the mission. You know, like, if this is the mission, this Twitter shit isn't the mission, you know, and you need to raise money, because you have 2 billion left. And if anything goes wrong, you're going to run out of money. And I'm telling you, they're not going to give you money if you have to get it you know what i mean next day he keeps tweeting next day they raise money they do the second they do that uh convertible uh deal and i was like the fucking guy's a genius he knew the whole time when we were grilling him he was going to raise money the next day you know

and uh and so we bought that convertible it was like two percent convertible converted at 300 a share so i got two percent so we bought the hell out of that thing i got a lot of these bonds because i i figured you know at least i'd get the gigafactory if you went bankrupt you know and um and we figured the gigafactory was worth 10 billion and uh um and and so we we loaded up a tesla fortunately in the you know under 300 range and and and if you would have told me a year ago that it'd be at 1500 i would have been like there's zero chance you know um and it's i don't think it's worth 1500. Um, nor do I care. Um, but I think Tesla now from what I'm seeing is about to break through into just a whole new level of, of success, you know, um, in,

in especially full self-driving. Um, so I'm a super bull still on Tesla. I'm a seller here. I'm not a buyer. I I've taken profits. I have to, it's just prudent money management, especially for older clients that we have who had bigger positions in tesla because they had more money for our young clients we're keeping it because they have long-term time horizons um but like for myself you know i had a ton of it it's like you know i can't have 30 of my net worth in stock you know i just don't do that you know i sleep at night you know i i i'm not a billionaire i'm not trying to be a billionaire i don't care you know i i'm fine is that how big the tesla position got for you was 30 i mean it's still like 20 you know i i mean it wasn't meant to

be that way i had options and and i had you know i had the debt i had the equity and i had options so you know it's yeah it's gotten real big and and and and you know now it's so volatile i just don't like i've made money there so you know i have to take profits i i i see i believe your only profit is what you report on your tax return unlike trump right so like for me if i'm reporting losses that means i lost money so i'm okay paying taxes on gains if i make money you know but i also try not to have more than 10 percent of my net worth in any one position that's kind of like i try to do that and uh and so that's what i'm trying to continue and so talk to me a little bit when you say 1500 as a position again you know to be super super quick this is not financial

advice go to your right right please don't most traditional please see a financial advisor yes um but in terms of just talk through from the process you guys have run and the research you've done um you know the 1500 stock price being too high is that something where you're just saying hey, look, we think it's going to come back down. And then kind of over a long period of time, it'll continue to appreciate. It doesn't sound like you're arguing like the Tesla story is over. No, no, the Tesla story isn't over at all. In fact, the Tesla story has just begun. Really, what it is for me is, I still believe a company is actually a company. I run one. So when I open my Wells Fargo account, for example, like there's cash that comes in and cash that goes out.

And that is a real thing. So when we look at a company, like I pretend like I'm buying the whole thing. And it's like, is this a good business? Like I'm still a businessman. I'm more a businessman in a lot of ways. I'm not really a, I'm a stock trader because I'm sort of born to be that. But like, but I'm a businessman. So like, when I buy, like, that's why we sold Zoom and DocuSign too, and Slack, which I like all the businesses. But at 500 times earnings, I'd be like, it's like somebody coming to GK right now and offering me, let's say 150 million for my firm. You know, it's way more than what it's worth. And I would have to take it, you know, like, it's just, you know, that's economics, I guess you could say, you know. And so like, you have to sell if somebody is going to give you a ridiculous premium for your company, you know. So maybe you don't sell all of it. But like, but that's just like smart, right? So if you owned a house, and you paid a million dollars, and Madonna knocks on your door and says, I'll give you 6 million for it. You know, like, I love the house. And my wife would be furious. But I would be like, honey, we're moving. Okay? Like, we'll get over this fight. but we'll have 5 million extra dollars you know um so with tesla the way i value tesla is based off revenue even though they're reporting a profit like they're not trying to make a profit and i think that's a mistake i made and missed a lot of amazon's gain personally was because i i invested in amazon late i would say and so i've made a lot of money on amazon um but i missed amazon like and part of it was i was like when are they going to make money when are they going to make money

They never make money. What kind of firm has a 0% profit margin, blah, blah, blah. And I didn't get Bezos's vision. And I didn't like selling crap. I was just like, they sell crap. He makes no margin. I didn't see it. But there was a point to that because he was in hyper growth. He was building a way bigger company. And that's exactly what Elon is doing. He's building a way bigger company than it is today with that vision already five years out. He's building gigafactories everywhere. He's offering Volkswagen batteries, he doesn't even have, you know, I'm like, when are you going to get an extra battery, Elon, you just said on the call, you don't have enough batteries, you know. And so, so, so I wasn't going to make that mistake with Tesla. And if you remember,

Amazon was overpriced for most of its history. And same with Apple and same with NVIDIA, actually, I think a few of the best stocks I've ever bought were extremely expensive when I bought them. and people thought it was a bad idea at my firm and i did too but i also didn't want to be out and they've turned into like shopify i was late in shopify and i made a fortune and i i kick myself daily i didn't buy more because i knew how good they were but it was too expensive i mean that was a hundred dollars a share it's a thousand dollars and it's still too expensive So I sold more, you know? So Tesla, you know, maybe they do 35 billion.

I used to do it at three times rev. I thought three times rev for them was generous, you know? I'm now up to five times rev just so I don't seem like a bear, you know? So that gets you to like, what? $170 billion, $1,000 a share. I think Jonas just put out $1,000 a share because Jonas put out $10 a year ago.

um so anything i'll buy tesla under a thousand yeah i know jonas ten dollars a year ago two thousand today um buy high buy high with morgan stanley i like jonas he he he tries so hard and he's just wrong constantly um he's like now we figured out tesla actually is really good at autonomy um i'm like dude i was in my car on pch trying full like the the autopilot on pch which i think is the most challenging drive you could possibly want. During summer, people run, you know, it did pretty good yesterday. It's got visualization now. Boy, in a year, don't count this out. So people are paying premiums for baseball cards, as you mentioned, and people are paying for ridiculous speculation and penny stocks. They're buying Kodak today. I mean, think

about how dumb that is. Like Kodak is going to make some sort of drug. Like why doesn't JCPenney you get into the vaccine business too, you know? 2020, they may. We may see JCPenney start a pharmacy. I would do that right now. I would just shut whatever they were doing and say, we're going to make masks and vaccines. The government will give me 500 million stock rallies.

You know, you got Portnoy or somebody will pump it and you're good to go. I love Dave. The penny stock operators are like so happy. It's like, it's never been so good for them. So you obviously, you know who the short sellers are or were. You've spent time with them. You've heard their arguments. What do you think is the thing that they missed on Tesla? So here's one of my theories that many people on Wall Street don't

like. So I do think valuations matter. They matter a ton, but they also don't matter. Okay. Perception of success or future success of a company can create ridiculous valuations. So a lot of people bet against companies purely based on valuation. And I think that's a bad idea. It's just a bad idea. You know, I can tell you a hundred stocks I think are overvalued. I don't bet against them. I just don't bet against stuff very often because the market's rigged to go up. And if you don't, I think Dave says that too, stocks always go up. They don't always go up. I wish that was true, but it is rigged to go up theoretically. So in my mind, where the short sellers were wrong on Tesla, I think mostly they weren't wrong. The financials were garbage.

They were losing money like crazy. Elon had invested so aggressively, he literally put no margin for error. In fact, the short sellers had a very good argument, a very, very good argument. And not only did they have everything in their favor, then Elon was even helping them, okay, with Peddo and the SEC. You know, the other day, he posted something that, you know, whatever. And I was like, dangerous, you know? And he was like, yes. And I'm like, Elon, please. so I email you know IR and I'm like take his phone run run dive in front of his phone you know like I tell Martin no really there's a lot of behind the scenes you know like I'm like run to his office dive in front of his fingers you know like stop him you can always tell what kind of

mood Elon's in if you really follow his tweets you know and if he's tweeting a lot before earnings be careful he's happy so that was pretty obvious he was going to blow out numbers this time So I don't think the short sellers were wrong. I'll tell you where they were wrong is they didn't go to the factory. They didn't see where Elon slept on the floor. They didn't see the people that were working there who will die working there. They care so much. They did not see the work ethic. Like I came back from a factory, super motivated. I was like, I'm weak. I'm, I am soft. No, seriously. And I push, you know, like, but we have millennials here, you know, God, if I, you know, trust me, like the way I would be doing things the way I used to, they would all quit. They would all quit. You know, now we have like snack bars and stuff. you know we have like like quiet time we have like sing-alongs we have to we have to you know

the millennials need it but they're doing great they're doing good i have had to adjust i've had to adapt i'm gen x and i come from the bang the phones close the business generation you know um but now it's the biggest thing that you've had to do that you could have never imagined you would have to do having millennials work there like what's the point every day i'm not yelling at people how about that I mean people cry like you know if you like so so my my I think one of my greatest qualities and one of my biggest flaws are the same thing so I see the best in people like I see what I you know I I train people like I manage people and I love people and I see the best in people but I also see something a lot of times they don't see you know and and so then

then it's like, I push them to be what they can be. But that process is painful for some people. It's kind of like the military, you know, like I trained a little bit like the military. I studied the military extensively. My dad's been in the military his whole life and on and off and my grandfather and, and, and I studied military history and I, and, and I very much studied like the Marines, like how do the Marines train somebody, you know, and I train a lot of young people. And repetition and all these kinds of things are really important, but they toughen you up. They toughen you up. And so that process is a little bit different now. The toughening up process is a little kinder, a little gentler, but we do have very much a training program to

take the socialist millennials that we get and turn them into fierce capitalists. and we do this over time um so we really have a very we might write a book about this you know like i've been i started a millennial management book and i and i stopped because i just didn't have time but you know but we have ridiculous things we do here to keep people motivated and they totally work what's the craziest thing what we're doing right now every year we have the gk cup and the gk cup is was based off the world cup so one year the world cup was happening and nobody fucking works during the World Cup. And it's super frustrating because I have a lot of immigrants here. So there is nothing, soccer is soccer. So I was like, how do I get these people

to work during the World Cup? I'll create my own World Cup. So I bought this enormous cup, you know, like a huge award, like the Stanley Cup. And we engrave their names in the cup if they win the contest. It's a summer contest. So in summer, it's so hard to get people to work in LA. it's like perfect out right now so we had a contest and they go head to head like they have the groups and they go head to head we set all these random criterias you know a performance related thing metrics and then they compete all summer long to win really just getting their name on the cup but they care so much about getting their name on the cup now the best part is is that there's a tie we do real penalty kicks with a real ball in a real goal okay now please

I can't tell you now we're doing this socially distant with masks on but I cannot tell you how much fun this is it is so much fun and and and women in our firm win like there's a there was this sort of complaint like oh well the women aren't as good as soccer I go that's ridiculous and that's sexist and then they go and they beat the guys in the kickoffs and and so we have you know women are more i think we have more women winners of the cup at our firm than men even though we have you know kicking the soccer ball um but it's super fun and everybody gets into it and our production just goes through the roof like if i just said i'm gonna give a thousand dollars to the guy who's the best you know they just they don't care they don't care about money

speaking of money uh bitcoin you were converted a while ago by brock pierce and roger ver kind of what your uh what has your journey been with bitcoin kind of what your thoughts now i love bitcoin you know so bitcoin's really disappointing to me right now because i feel like the developers who are very very smart who promised a lot of things to people have not done their jobs. I think they made too much money. And they just were like, it's easier just to print the money and make the money than to actually make it useful like they promised. And that's my gripe right now. So there's two gripes I have with Bitcoin because I've been hacked and attacked for my Bitcoin before. And it's a nightmare. I had a 2FA attack, by the way,

lock your SIM card, everybody. Boy, nightmare if they get your phone, and they can get your phone easily. So lock your SIM card. But like, first of all, exchanges offer no protection. So Coinbase, major firm, how am I going to put a million dollars in Bitcoin when it can just disappear and I have no protection? The exchanges certainly don't help you. You can't recover anything. There's no SIPC. So I've been arguing for a long time, Bitcoin needs an SIPC. It just needs an insurance. Like I would pay in a certain amount per transaction to just know my money at Coinbase and Binance and Bittrex and all these places is safe. But it's like somebody can just hack in and take your money and there's literally nothing you can do. How is Bitcoin going to grow into this

enormous thing with institutions investing if you have no security? So like if you read, there's this great book about the Winklevoss twins, Ben Mizrach, who I love, wrote this book, billionaire, Bitcoin billionaires, highly recommend it. And they go through this part about how they secured all their Bitcoin, and the process they had to go through to make it secure. And it's absurd. It's absurd. So if you're going to have a million dollars in Bitcoin, I can't even tell you how much effort it is just to keep that safe. Where you can just give me a million dollars, nothing can happen to it. So I think the exchanges have to solve that problem. Insurance, protection. um secondly use i i can't believe i like if i want to buy something i can apple pay with two

clicks why can't i just play with bitcoin i still can't do it i can't do it through paypal i can't do it through anybody you can't do it through coinbase i can't do it through square cash like why can't square cash can i just use bitcoin to pay for things i want to use my bitcoin to pay for things. And I still can't. I still can't. So I think this needs to be solved. If these two things are solved, Bitcoin goes up forever. What is your thought process in terms of maybe not price prediction, but in terms of, is Bitcoin eventually the next global reserve currency? It already is. Explain. Well, so the genius of Bitcoin, right? So the genius of Bitcoin was like gold, it has a finite

amount of Bitcoin. And so the mine, the longer you mine the coins, we just had a having, you know, the harder it is to get more coins. So now there's half as many coins printed per day than there was a year ago. This process is very much like gold. So what makes gold valuable is less per se the gold is more per se the fact it's so hard to get new gold and the amount of gold actually stays the same. So it works real well if we all collect the same rock and we just don't find new rocks but if you actually study the history of silver the reason why silver isn't a reserve currency is because they found a lot of it and they were like this isn't that hard you know not worth that much then um so bitcoin has the ability just like gold to go up forever

because so my my whole theory about money actually i was going to write about this because now the government's printing money so fast that i don't even believe in the dollar anymore like i just don't even believe in cash anymore. So there's no value to holding cash because it's being printed so fast that between inflation and the cost of living and everything going up because of this, that holding dollars is the easiest way to lose all your money. So over 100 years, if you had $100, you will end up with a dollar of equivalent value. But if I take that $100 and convert it to Bitcoin or gold, in 100 years, it will go up with inflation. So I don't see why Bitcoin acts any differently than gold. And in fact, if Bitcoin was able to deal with larger institutional investors,

it would be worth $50,000. But until I can, like, I have clients who want to buy Bitcoin, and I say, I can't do it for you. A, I can't. B, like, you want to buy 50,000? You know, i do trades at like 50 000 100 000 i can't do that with bitcoin it's just too hard just trying to buy a hundred thousand in bitcoin you know it's like a penny stock well and i think part of probably the biggest obstacle for you is uh just the fiduciary duty of buying bitcoin and kind of regulations and things like that that's a whole nother issue but yeah yeah but the the institutional stuff now i think is getting a little bit better right you see people like fidelity and others company and the vinkel losses yep yeah look cameron and tyler have done a great job with

gemini um yeah i think that the you know the coinbase is they just bought uh to go me which is a basically a prime brokerage type business right right i think a lot of this is kind of coming together but to your point uh until it is as dead simple as what somebody's used to doing in the legacy world like there will be obstacles maybe yeah like i'm not selling my bitcoin you know i mean i haven't been a buyer in a while because after the hack i was really turned off you know it sucks it's it's still i'm still trying to get control of some of my accounts it's like just security is a nightmare and but like right so i just don't feel comfortable having that much money in bitcoin because it's like so hard to deal with it how do you think about uh it in your

portfolio is it something that you're like look it's like a one to two percent type allocation like you know uh an inflation hedge or something bigger like how do you put it together exactly that it's maybe a one to two percent of your portfolio it's an inflation hedge it works the same as gold it's digital gold um in my mind you know so i'm not a big believer in governments so i have some pretty radical beliefs that i don't talk about much because people well let's talk about them right now yeah so one of them is i think that most governments of the world are the most corrupt mess of disgraceful attempts at governing that i've ever seen i don't think there's ever been a time in history except maybe in the 30s when we had hitler stalin and

you know the whole thing in japan you know imperialism or whatever you want to call it it's really disgraceful how governments haven't served not only the people um but from rich to and the theft. I mean, just in LA, every day you read an article about politicians who've stolen from developers and from people and the corruption probes up and down to the president of the United States. So I think that governments in general have lost its utility in a lot of ways. And so So things like Bitcoin make a lot of sense to me because why do I have to live in a world where the US, I have to use their money

when their money is worthless and they just print it like crazy and give it to people, you know? But I could own this Bitcoin and go anywhere in the world and use it, okay? So to me, Bitcoin makes so much sense in this world. It could be hugely successful if they do this right. But I still think all the major players that should be doing it got too rich, and they're just not trying that hard anymore. And I think they need to try harder. And I think it'll work. And I think there's never been a time between the euro, the, you know, in the EU, they're going to issue a trillion dollars of debt, backed by the EU for the first time, not backed by a country, not backed by any individual, not backed by anything, just the EU.

Now, we all know that the EU is a farcical thing that everybody wants to leave, right? It's a failed experiment, basically, that they're still trying to keep going. So what rate are they offering on that trillion dollars? It's minus 0.1. Now, I went around all day saying I will borrow indefinite amount of money at minus 0.1. Just give me all the money in the world at minus 0.1. Who's going to give money at minus 0.1? Obviously, somebody does.

So this is proof that the entire system has failed. It's failed. Like, we're failed. I go on to buy bonds right now. I'll leave this podcast. I go on. I say, I want a one-year bond from Apple. It's a negative yield.

Nobody's reporting this. This isn't in the news. Oh, every bond that's a year or less that's not going to default has a negative yield. like i have to run like a really long screen to get a bond with a yield that's a failure of an entire system our entire system has failed so the entire financial system is backwards now so what what happens like i don't know it doesn't work so so in my mind none of this works so how do we get out of it i don't know i don't know once you have negative yields we i mean i went to school you went to school you're a really smart guy like you know what's

gonna happen like if you print a trillion dollars every two months and and and you only have to pay 0.5 on it see i think it works as long as the idiots give you the money okay so so somebody's giving them the money at negative yields it's not me my computer won't even let me buy it it's like reject, negative yield. I was like, boy, at least my computers won't let me do stupid shit. But somebody's computer is letting them do this. So explain to me what's going to happen to all these short-term bond funds and money market funds with negative yields, and they're still paying 0.1. I think Marcus is paying 1%. I think Betterment or Wealthfront's paying 1%. So how are they paying 1% but they're buying bonds that yield negative? How long does that work?

So how do banks work with negative yields? So all of a sudden, you start to realize that we've created a nightmare, a financial nightmare box that I can't figure out a way out of. Now we have 20% of America unemployed. I drive down the streets to empty buildings. So next door is Activision, empty. Snapchat, empty. My building, empty, except for us.

we're like why aren't people working in their offices what's wrong you know like you wear a mask and you go to work you know it's like we have people farther apart we have a big office fortunately and not everybody comes in all the time but you know nobody coming in just so what happens to real estate what's going to happen all this debt who's paying i wouldn't be paying my rent for a office building i'm not using who owns that activision building you know as an activision shareholder i'm not stoked that they're paying rent on a building they're not using who owns all this debt where does this all go so i have 50 of my money in cash what would you put the probability at right now that the existing

system actually fails in the united states and it has to be replaced by another one is that like a one percent possibility i think the problem is what's the other one um so remember in the financial crisis there's this moral hazard thing like if we bail everybody out there was a long discussion about it see i always say this in my office and to my wife you know i don't like aging very much i'm not a fan of it and the only advantage is experience you know that's the only edge i have over these kids you know and i work out real hard just to stay as fast and strong as them. But, but boy, you know, experience is really valuable. So moral hazard was a really debated issue with Bernanke and Geithner and Obama at the time, like, if we

bail out all these banks and just give them money, what's going to happen the next time? And I have to say, Dodd-Frank has worked. So, so to the upside, Dodd-Frank has worked. And so because of that, we don't have a banking crisis right now. That's huge. Because if we had a banking crisis right now, what you're saying, I think would be probably a 50% chance our system wouldn't make it. So if we were if the banks, oh, yeah, for sure. I mean, the banks control, there's five big four banks control the entire, they're too big to fail. Like, we didn't solve any of that. They're bigger. So JP Morgan goes down, like what happens? Right? Like America shuts down, basically. So fortunately, Dodd-Frank has worked.

So I think that prevents a worse thing. Secondly, I'm a big believer in innovation and technology. Remember, a lot of innovation is happening right now. A lot of things, a lot of companies are adapting. A lot of companies are doing well. I'm shocked. And that's what's confusing to me. Like I go to one place and they're like out of business.

And then you go to the next place, like the nursery, you know, like is packed. Everybody's buying plants, you know, Home Depot doing amazing, you know, but then the restaurants it's just like, it's like, it is, it's like a Holocaust for restaurants right now. And, and it's sad. It's just a sad death that there's no way around, you know. So unemployment, I think, is going to stay high for a long time. And we're going to have social unrest for a long time. We're going to have social cost to this, suicides, drug abuse, crime. I don't think the they call it a recession i don't think the recession's really started yet it started but like the pain hasn't started because they just keep printing money and and there's been no no

issue but now the 600 ends on friday and it's gonna suck so i keep calling like bridge the gap stimulus which the whole idea was hey there's gonna be this market downturn mainly because we have to shut down the economy so let's just print some money give us a shot in the arm and by the time this program runs out at the end of july or the end of september depending on the program like the economy will have recovered and no one will be any worse off you know and we kind of bridge the gap the problem is that like we didn't build a long enough bridge right because right like oh shit we're halfway through building the bridge and we're like no it's not that we didn't build a long enough bridge we underestimated our stupidity so so in fact what you know i

god i hate this i've spent more time studying this fucking disease you know and i have some clients who are virologists and some of the top people in these areas who are very smart. So I've forced myself to listen to this and read all this stuff. Coronavirus isn't complicated. We've made it way worse than it needs to be. It's an airborne disease. You know, it's easily stopped if you know it's an airborne disease. So you have to take, you know, the appropriate, you know, things because it's so contagious. You know, the real challenge of coronavirus is a lot of people don't get sick. So they're not sick and they're contagious. And, you know, it's just real hard to stop something you can't find or see. So the simple solution is what they're doing at the NBA. And what we've done at my firm is you create a bubble and you test everybody. And then you hopefully people don't act stupid. Okay. don't act stupid so where i am in la santa monica people are germphobic super healthy

people yell at each other if you're not wearing masks okay like somebody yelled at my wife she was jogging and i'm like where's your mask and my wife's like what the fuck you know i'm jogging you know my wife pulled a karen on a white guy the other day it was pretty funny and uh yeah yeah i mean this guy's like hassling her my wife isn't going to deal with that so um and she runs a lot um but then we went to orange county so we go down to orange county we go to laguna beach her family's from laguna beach and we go to the beach down there because it's like hawaii it's so nice and um and i and i walk down there and there's like 150 people partying hanging out the kids are playing the families are all eating and drinking together and we go over to

our little corner or our beach. And I go, Jill, holy shit, we're fucked. We are screwed. Do these people know that there's a pandemic? See, a lot of people don't know what a pandemic is. They don't understand that pandemics don't care about what they think. Somebody said this, that you might not care about the virus, but the virus still cares about you. And that's what we're seeing right now in Orange County, just explosion of cases. We've had a governor and our mayor who's allowed construction and essential workers. The Latino community is completely sick with this thing because they've allowed these people to work during the quarantine so that their developer friends and their big business friends wouldn't lose money. But now they've infected the entire

Latino community here in Los Angeles. And that's who really is getting it. Look at Florida, California, Arizona, Texas. You think this is just a coincidence? So you have this stupid behaviors And then you have this Latino community that's been working this whole time that have basically just been sacrificed by our business leaders with no protective gear and no safety protocols. I mean, there's a downtown factory that had 400 cases and four people die and nobody said anything. And I'm just like, what the hell? What the hell is going on? And then in Mexico, the president of Mexico was like, we don't even believe in coronavirus. And it's a nightmare in Mexico right now.

And the Mexican community goes back and forth a lot between Mexico and the United States. They're very close-knit families. They're very dense communities. And this is a nightmare. It's a nightmare. So this is not going away anytime soon. And that's the premise we're working on now. And so, you know.

I tend to think that the data is suggesting that. I asked a bunch of people for questions. I'm going to fire them at you, rapid fire, hear your thoughts. Let's start with day trading versus holding and the recent rise of the day traders. Well, I've been around long enough. These day traders, if they were so good, they'd all be rich, right? So 99 to 1. 1% of people have a million dollars, 99% don't.

They day traded in the 90s. They flipped houses in the 2000s. They are back to day trading again. It just, oh, it was Bitcoin. Remember the Bitcoin stuff? my uber driver trading ethereum from his car i mean so it's sad to me the get rich quick american ideology that people buy into whether it's betting on sports or day trading or there's no get rich quick man you know i wish i you know i wish i could tell you

you know like it's luck like there are some people who are very lucky and and it's just not something that's repeatable. So you save and invest your money over the long term, you'll be a millionaire for sure, for sure over 20 to 30 years, if you invest in the S&P even. So that's discipline, it's not as fun. So my whole thing is if I buy a business, how much money can that business make me in one day? I buy McDonald's. Did something happen at McDonald's yesterday that was so good that it deserves to be 10% higher? You know, it's like, so when you own a business, whether it's Tesla or McDonald's or Apple, you have earnings per share. Those are real dollars that flow into it. And then those CEOs have to make a decision whether to buy back stock or pay dividends or

buy a business or grow. I believe in all that. So if I'm buying a business to hopefully sell that business later in the day for profit, I think that's a stupid thing to do. Mostly because the best day trades I've made really are over a couple of weeks, you know, like to really get a stock ramping. So if you're just like buying and selling. So I learned this lesson when I was 28. It was 1999. And I was lucky enough to spend the day on the floor of the New York Stock Exchange. I got to go with a floor brokers, this Irish guy. And they set me up with this guy. I was a kid. It was the coolest thing ever. It was the top of the market back before digital had taken over. Yelling, the phones, Wall Street, the movie. I was finally there. I was stoked. You know,

Like as a kid, I was like, this is cool, you know? So I'm on the floor now at the exchange. All guys, Irish guys, Italian New York guys, toughest guys you'll meet, best traders in the world. Guy look, no, I'm this kid, wide-eyed, like, wow. So moral of the story is he says, you see everybody here? We're all millionaires.

Every single one here. You know why? Because we trade every day and we have better information. were on the floor of the exchange i said that's a good point then he showed me this guy and he was typing like this he was typing trades in like this because this was they still had computers then obviously but it was like only the market specialists had these computers and they were filling the small orders and the and the guys on the outside were yelling for the 10 000 shares and above so this guy's typing like this and i go what's he doing he goes oh he's filling all the

small words i go i've never seen the guy type like so fast you know it's like crazy and he was basically, the business mistake you can make is trade against us. We're the specialists on the floor of the exchange. We have better information. We're faster. We're quicker. And we do this for a living. Don't trade against us. And I was like, I was done day trading. I was done day trading. And so what I realized is that why would I trade against Virtu? Why would I trade against, you know, Ken Griffin and Citadel? You're trading against people with better information, faster computers. So why do you think you're going to win when 99% of people don't? You're not. You're not the special one. So I don't believe in that. What I do believe in, if you

want to speculate in a stock and you want to buy an option and try to speculate in a stock, fine. But accept what it is. If you take a small portion of your money, you want to bet on stuff, fine. But it's not investing. Some of my clients, they just keep their little $50,000 account and they want to bet on stuff and then they they go and then they own all the same stocks i own and i go why don't you're just buying the stuff i'm tweeting about anyways like you know really um so i i just think people should understand that why are you competing it's like playing football against you know like i was going to say the the patriots but it's really you know the tampa bay now i guess right um so so why play football against the patriots and bill belichick you

You know, it's just, why not just be on their team? And you can buy mutual funds or ETFs where you're on their team. You can invest with professionals that will help you, even if you wanna buy a stock or at least have some help, you know? But the real money trading is made by owning positions over, you know, some period of time,

maybe even a few months or a few weeks. So you can really get that gain, you know? But today I buy a stock and hopefully sell it by the end of the day. You're wasting a lot of time. You're paying a lot of taxes and you're giving, you know, i think ken griffith's new apartment in new york i think it costs 240 million and he's divorced so he paid a divorce and still has money and he runs the biggest market maker in the world

think about it you uh you've gotten in multiple uh online conversations we'll call them with uh with dave portnoy oh yeah dave and some barstool uh what's kind of the idea there i think i saw you today tweet and say he's got a nice comedy show it is a comedy show that's not serious right no i mean look dave's a smart guy right he he built bar bar stool it's a you know he's a marketing guy i i use some of the same techniques that dave uses i don't dislike him i i actually think he's kind of funny um and you know why he thinks i'm a suit whatever you know um you know I'm actually the anti-Wall Street guy, so I kind of found that funny because he's just, you know, he's a ranter. But, you know, I like guys like Dave. You know, Dave helps us a lot because the

people who listen to Dave lose their money and then they call financial advisors when they realize they can't do it. So these people help us, you know, and they popularize investing. And since investing is so hard. You know, this investing is so hard. And it's so humbling. You know, if you do it for any, you know, look, I mean, I'm on a roll right now. So I'm feeling pretty good. But trust me, I've lost money, you know, like, it's humbling, dude, it's brutal. It's just brutal. It's a brutal job. I actually don't recommend this to people at all. I think trading is really hard. And, and now I'm responsible for a billion dollars. And, and if I'm wrong, I might lose millions. Now that I take that responsibility seriously. So, so, so my thing

with Dave Portnoy is number one, I think he's funny. I do. Number two, he, he clearly discloses that he's not serious. It says it like, don't follow what I'm saying. It's a comedy show. It is and and so i think it's it's it's funny now i don't watch it very often just because you know it's like watching a train wreck and we're all waiting for him to lose all his money you know because it'll be funny when he does and i hope he quits soon you know like i think he's smart so what he's going to do is he's going to quit while he's ahead declare victory and go back to sports because sports is starting back up um and so you know with the nba starting tomorrow he actually has a tough job because he's working for Penn. And Penn is very leveraged right now

with a lot of casinos. And if Corona gets bad, and Penn has to shut their casinos again, you know, boy, they don't own their casinos, they rent them. And then secondly, Barstool is an ad rev business and ad rev is down huge. So they're getting hurt right now. And there's no sports and their app isn't even out yet so you know dave's got a lot of work to do you know his life isn't so easy i i you know so i like it i i i love see what what twitter does is it creates engagement and there's good engagement there's bad engagement someone could say it's bad engagement he's talking shit about you and i was pretty annoyed the first time and i and my friends were like you should just fucking hammer this guy and i go i'm not

I'm not going there. You know what I mean? Like, it's like, I'm not on that level. You know what I mean? I, I manage money for real. And I don't have time to start, you know, playing games with this guy. But I enjoy it. I honestly I do. Are you a buyer of Penn stock? No, I'm an owner of MGM. So I'm a competitor. I we have a big position in MGM that we're building. I do believe in online gambling. I think MGM is in a better position. I think it's a better company. It's trading at below book value. I've known these companies since I was a kid. I've been an investor in Mirage and MGM back in the day. So I know Vegas really well, really, really well. And I know what a piece of shit Penn is, you know. So Penn owns like the worst casinos

you can imagine. They literally serve the lowest income economic group. And so I just don't see that is a great business you know like especially in a recession and and all these problems and and and every casino they had is in a coronavirus hot spot right now um and i don't think barstool has an edge on on sports betting i think draft kings does i like draft kings actually and i like patty power which is really owns fan duel and so we love online gambling and it's going to be a setback for gambling because i'm actually bearish on sports until next year like mid next year so i actually because i'm in the music industry so you know we're fucked in the music industry and i deal with golden boys you know through one of my companies and and and we produce music and

it's so grim dude it's so grim so live events casinos um sports it's not looking good the uh two more questions for you and then we'll do uh the final let's wrap up uh the tech antitrust hearings well of course they're monopolies and if we cared about monopolies we would have done something a long time ago goal in america is to build a monopoly microsoft taught everybody that and uh i think there's two things one do they abuse their position of power of course. Of course. If you were Amazon, why wouldn't you run your products in front of others? It's your website. Is it anti-competitive? Of course. Of course it is. I mean, if I'm trying to start an app and I have to put it on the app store, it's cost me 30%. I have no negotiating

power at all. And if I'm not on Apple, I can't sell anything. So a lot of companies are now just trying to get people to sign up on the website and then they can have the app and so on and so forth i that's what we're doing with my music company so we're doing live shows and like if we build an app they're going to take 30 of my my ticket price and we can barely fucking survive like i can't run live live streams of music with 30 going to apple so the way we're doing is you have to sign up on on your phone or on your web and then you get a code and you just put it into the app but it sucks 30 is outrageous so the issue going back to what i was saying before i don't believe the politicians care at all. I think it is just Trump trying to beat up his enemies before

the election. I think that they have no power. They're not smart enough. Their lawyers can't beat the private sector lawyers. Any attempt to hurt these companies will only hurt America. It'll hurt jobs. It'll hurt us in competition against the Chinese. Like, where's the win? So all these guys care about is the election and what's going to happen. Trump wants to beat up on these guys so they don't put so many bad articles about him that's all he cares about the uh the most asked question I don't know what you can say what you can't is about the PPP stuff yeah what uh just rant away in terms of I saw nine million different tweets about it I know you know people are really concerned about like trying to run a business during a pandemic and

you know I did I you know I did say the PPP was a scam but that was taken out of context see what happened was, when the PPP went down, the market was down 35%. And it was like a fucking nightmare, you know, now I'm used to these nightmares, because I'm old enough. So I go into battle mode, you know. So I actually perform decently under nightmares, because I've had to deal with many of them, not because I like it. So, you know, nightmare happens, we're getting, you know, we have 7000 clients markets down, we get paid 100% based off of how much assets we have. our 100% of our income, and we're a growing company. So I had hired, you know, obviously, based off having a great year, and we're expanding and growing. And I had all these staff members

that, you know, like, we're growing, and we do events, and marketing and all these divisions we have, right. So when all this went down, we applied for the loan, because we just like we don't have private equity. It's not like I got $5 million sitting here, you know, I wish that be great um so i didn't want to have to fire anybody and what happened was when we applied we got you know the first round just like came and went and i was like this fucking sucks and then like the lakers got it and like like the catholic church got a billion and a half and i was like this is fucking bullshit and there were three percent commissions to the banks which still nobody's talking about so the bank made it through so they were pushing us to get the loan

so like they sent me this thing and i was like i'm gonna apply everybody's applying and if i my rev goes down 20 or 30 i'm gonna have to fire people for sure for sure now look i did financial crisis i fired i think it was 50 to 60 people i had to shut five offices i had 15 offices i shot a third of the i basically shot a third of the company right off the bat and that to help save us. I'm not, you know, unfortunately I'm a business person, so I will do what I have to do to survive. And, um, and you know, but everybody who works here is kind of like my family, you know, it's, it's, it's brutal. So, so we got the month. So the second round came and we got the money. Um, and I'm really grateful for it, to be honest. Um, we kept everybody on staff and,

and, and certainly at the time I had no idea that we'd be making money right now. Boy, i didn't think that at all in fact we were thinking the market should be down like 40 or 50 you know because with the financial crisis we were down 50 so i figured we'll go down 50 this time you know and i still think we could go down 50 so by no means do i think i'm out of the woods i'm still in combat mode um we have a little bit of a cushion now thanks to ppp the markets come back so our revenues come back and we've actually used it to hire more people so you know what we're trying to do is help out by adding people. So a lot of people in financial services have been laid off and we've been able to get some really good people recently. So, you know, I'm stretched

again and taking risk having so many people, but we have this cushion and we're trying to do our thing. I get people criticizing because the perception is that I'm wealthy and I shouldn't get government money. And I am wealthy, but that's not the way business works. Okay. I have a company. I have shareholders. I have employees. And I'm going to have to do what's best for my company and my shareholders at the expense of employees. And I care about those people. So I'm very grateful that I haven't had to lay anybody off. And now we've used this opportunity to try to help out by growing. I'm willing to take the criticism. I get it. You know, I'm going to do what I have to do to survive. So I'm here in 10 years. And if people don't like that, then they've

never been responsible for 31 people you know and it's like we have single parents with kids like i play with their kids like you try firing a single mom okay with a kid right now what other job is she gonna get so people don't think about that they can tweet all their shit they want okay but i go to work every day and see these people and their kids and their families i don't want to fire anybody i haven't fired anybody so it's great it's great so so i am grateful i do want to say I'm grateful for it. I haven't had to go beg some bank for money. I haven't had to, you know, sell, you know, we did raise money internally too. I did put money in personally, you know, fairly substantial amount of money into the company too. And many of our employees so that

we have this cushion. But fortunately, you know, revenue hasn't gone down now. So we only lost one quarter, you know, where it was down and, and now we're up. So, you know, but I still think the market's going to go down 15% or more. I still think we're going to be dealing with this for a year. I think anybody who thinks that it's a fun experience running a company right now has no idea what we go through every day. You have no idea what I go through every day just to keep everybody safe. Irrelevant of the cost, just the process, you know. But when you're responsible, you know, and I have a second company too. So my music company, I have six other employees and that company's not doing as well. And I'm going to have to make tough decisions there. So I've got 40

people who rely on me and I take that very, very seriously. And that's the answer, you know, and if people don't understand, that's their right. And they can criticize me all they want. But in the end, I'm going to keep my people here and I'm going to keep my business going. And we're going to make money ultimately in the end and, and serve our clients and, and, you know, life will go on and the government gave out money to everybody. So I'm sure they got theirs too. I feel like that's a pretty thorough answer. So anyone who's got any-

Listen, you know, I get it. I get it. Criticize me all you want. You're not in my position, you know? But when you look at your team and it's a big team and you have to decide which six or eight are going to go, dude, it's a nightmare, dude. It's a nightmare.

I don't know if you've ever had a lot of employees or whatever. you know i care very much for the people i work with every day yeah i ask the same two questions to end each podcast the first is what is the most important book that you've ever read important oh boy important has a lot of different meanings you know do you want to talk about finance you want to talk about life you know because whatever book you want because finance books are not the most important books that i've ever read um books that have influenced me like the most number one is jack harwack jack harwack was my favorite writer as a child i read every book top to bottom read them twice um not just on the road you know like dharma bums you know the whole those

books changed so i was a so it started so the beat generation changed my life you know like i i uh For some reason, at that age, when I started into that, it opened up my whole world of individualism, freedom. I'm basically a hippie. And then The Dalai Lama, I would say number two. Art of Happiness is a great book. We all deal with mental issues, and I have too. when I was younger, you know, I had many internal debate about life and we all do this. I don't think anybody is. And I think in some ways, you know, my mind has certain complexities that are

good and bad. And so I was trying to figure it out and I found Buddhism in general and spiritual things like meditation. And it started, so I met the Dalai Lama. I was lucky enough to meet the and he said like five sentences and they all were amazing and it was like you could just sit and think about this stuff for all day and it kind of changed my life and i and i and now spiritualism is really popular and people aren't as much into religion um but i think being able to find a mental place in this crazy world is the biggest challenge um and so for me that's been an important thing in sanity and maintaining sanity in a crazy world, you know, and maintaining sanity in a tough job with lots of volatility and lots of people. So I highly recommend that. I highly

recommend anything Dalai Lama or Buddhism. And I highly recommend, you know, beat generation and existentialism. No one has recommended either one. So those are great recommendations. Second one's more fun. And then you're going to get to ask me one question to finish up. uh aliens believer or non-believer i mean it depends what how you define an alien you know i think there's a lot of aliens on earth um i lived in venice you know so you know when you live in venice for 10 years or whatever i did boy you have to try to be different you know you got to try real hard there's like people talk about diversity right um i don't believe in uh aliens from like another universe um i think our solar system is kind of a fluke like our universe is a

fluke like the sun and and like the big bang and this whole universe that we know of and and so i kind of believe in god like in life is god like so so i i don't know i think we're i think we have a really we overestimate our value a lot we're just a bunch of fucking animals you know and we're all gonna die and it's ugly and it's horrible and we're a little bit better than monkeys and stuff and and we just over exaggerate our importance okay we're not that important we're just little creatures who die very easily as it turns out and a little pandemic can throw our whole civilization for a loop so i think we overestimate our value substantially i don't think there's other people running around if anything they wouldn't they certainly wouldn't show up here right like they'd

be like i'm not going to that universe because it's all fucked up there so you know i just don't see that man i i love that we're all just animals we are we are we just we think too much we we give ourselves a lot of credit all right you could ask me one question to finish up what do you got for me i you know i was curious you know i started uh obviously reading up about you a little bit um you know what what inspires you to do uh these podcasts um you know i i guess this is how you make money um what what inspires you to do this yeah well it all started um we've got a whole asset management business right so you have like an asset management business yep yeah asset management business that is private or public equities uh all private all venture capital

private okay some crypto stuff um and basically the whole idea was just i had access to a lot of really smart people and i enjoy talking to them and learning and i started to record the conversations and other people you're in new york right now new york yeah so is that where you always worked uh no i was out in san francisco for a while okay cool in the new york um but i think that you know it's one of these weird things where it's like probably the most selfish thing i do is where i get to talk to really smart people they basically educate me on their view of the world on a whole bunch of different topics that i'm interested in they're interested in and then i record it and you know tens of thousands of other people will listen and they'll get to learn

alongside right you've built you build a a really big following you know i mean it's it's impressive you know because i think you know before you know twitter and fin twit i didn't think anybody cared about this stuff you know it's like when i would go that's why i love new york i would go to new york and hang out with my new york friends and you know the cnbc people or whatever and it was like great to just like find anybody to talk stocks with you know like in my circle like they don't want to talk about what i do it wasn't until dave portnoy then they wanted to talk to me but like my friends didn't care like at all at all you know and actually that's why i like dave because for the first time like my group of friends actually like saw something i was in

even though it was him talking shit but they were really entertained because they all talk shit to me too so um so like you know it was pretty funny so you know that's why i love what you're doing And, you know, and that's why I do these things too, and support a lot of different people who are bringing finance. And I think interesting viewpoints out there, you know, you've, you've interviewed some really interesting people. I watched a few of them and, and, and I think it's very valuable, you know, podcasting is becoming a big thing now, you know. Absolutely. Well, look, we, we appreciate you coming on. Where can people find you on the internet or find out more about Gerber Kawasaki?

Well, you know, GerberKawasaki.com, of course, you can just put my name in search. There's plenty. But I'm at Gerber Kawasaki. And we're on Instagram and follow us on Instagram or Twitter. And if you have financial questions or need advice, that's what we do at Gerber Kawasaki. We work with anybody. We don't have minimums. Send me an email. Ross at GerberKawasaki.com. Happy to help you out. So, and, you know, I, once again, I appreciate your time and, and the thoughtfulness of your interview. And, and, you know, I appreciate the audience for listening to me ramble. I talk a lot, so hopefully I didn't talk too much, but it's an hour and a half of me rambling. But people are excited to hear this one. So thanks so much for doing it. We'll do it again in the future.

Yeah. Thank you. Thank you. Take care.