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AI Bubble Burst? Bitcoin to Zero? Hedge Funds Wrecked? Sounds Like a Bottom is Near — Transcript

by Jordi Visser · 10,391 words · 1,624 segments · language en · Watch on YouTube

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0:00this week. I think it's a record for
0:01slides. That means I'm going to go fast.
0:04I will, for the subscribers, I will put
0:07the slide deck,
0:09all slides on the site. So, if I go too
0:12fast and you guys want to look cuz
0:14there's a lot of different things.
0:15There's a lot of history. I think we're
0:17at an important time just because we've
0:19seen, in my opinion, one of the largest
0:22deleveraging events of my career.
0:26And believe it or not, that is the way I
0:28see it, especially when you do it
0:29relative to the market. So, let's go
0:31through
0:32what's happening.
0:34You guys have seen the disclosure thing.
0:36You read it for yourself. So,
0:38here is the
0:39>> [sighs]
0:41>> Goldman Sachs VIP hedge, the crowded
0:44long side relative to the S&P.
0:47And this is a 75-day rate of change. And
0:50the reason I did this at 75 days, it's
0:52not a random number. I did try to pick
0:53the point with the largest drawdown, but
0:56it also happens to coincide with
0:59the record performance for the first
1:01half of the year. So, this is really
1:03about since June 30th. And the reason
1:05this is important, hedge funds had a
1:07huge head start to the year. It's very
1:08important for where we are because
1:10there's a big difference between
1:11deleveraging happening when hedge funds
1:13are down than when they were playing
1:15with house money and wanting to protect
1:18it. And I believe that is where we are
1:20right now. I also think, based on
1:22everything I'm going to fly through
1:23here, that from my perspective, the
1:26deleveraging is
1:28either done or in the seventh or eighth
1:30inning, which is a big statement
1:31considering we closed on the lows of the
1:33week. But, this has been about hedge
1:36fund deleveraging. And as I've said
1:37repeatedly, AI is inevitable. It does
1:39not matter to me what's going on because
1:41this will continue to happen. This is
1:43not a bubble. For the subscribers, you
1:44saw that this week in terms of a lot of
1:46videos I did. So, first of all,
1:49intense sell-off as bad as 75 days as
1:51anything other than the Great Financial
1:53Crisis this century.
1:56Hedge fund leverage, I showed you my
1:57head my big head with my John Deere hat
2:00is above it. We went hoodie last week.
2:02We're going back to my blue collar days
2:04and we're going full-blown John Deere
2:06right now.
2:08You were at all-time highs going into
2:09this.
2:10And this was the high and if you go back
2:13and look at the performance the leverage
2:15since chat GPT and I'll give you all the
2:18reasons for that. Hedge funds have gone
2:19to record leverage.
2:21This was the peak.
2:22Now we've gone into a full-blown giving
2:24back. Now again, this is not hedgefund
2:27performance. This is just the VIP and
2:29again, this assumes that Goldman is
2:32updating this. This is not a total
2:34performance, but this is a a big
2:36retracement. You're giving back about
2:38half of the overall move since chat GPT.
2:42So I went through subscriber video this
2:44week for those of you saw it. We covered
2:46this. If you didn't go watch it, go
2:48watch it. There's a lot of stuff in
2:49there that to me is important especially
2:51this importance of of Nvidia as part of
2:54this. It's been a great signal. I also
2:56did this whole AI bubble thing to get
2:59this thing completely out of the picture
3:00for me
3:02that this is not a bubble. In fact, it
3:04is totally distracting to even hear the
3:06word bubble. I go through why the word
3:08bubble doesn't mean anything unless
3:11you're talking about going through a
3:12recession and being one in for a long
3:14period of time which I don't think
3:16will happen, can happen, whatever.
3:20And I go through all the reasons why.
3:22Paper I wrote this week about time.
3:24You're going to hear a lot about time.
3:25This is going to become even bigger
3:27theme. We are at a point now where AI is
3:30going to destroy leverage because of
3:31time. There is no time anymore that you
3:35can be living on arbitraging where
3:38things should change. If your earnings
3:39beat estimates every single quarter for
3:41the next eight quarters, your stock can
3:43still go down. That's the world that
3:45we're living in. If you're dependent on
3:47arbitrage of time meaning things stay
3:49together. If If learned anything right
3:51now, multiples can expand, multiples can
3:52compress.
3:54They're just happening at a much faster
3:55pace in this uh side. And so, the hidden
3:58leverage of the AI cycle, I talk about
4:01that in this paper. I also did the
4:02crypto video for this week. So, I did a
4:04lot of stuff this week for you guys. And
4:06it's all because the world is changing.
4:07I'm trying to teach you. I'm also trying
4:09to give you guys the confidence and the
4:11empowerment to both use AI uh if you get
4:13the chance. Anthony Pompliano did a talk
4:15this week, our usual talk. I talked a
4:18lot about the ways that parents should
4:21be impacting their own children to adopt
4:25AI because of how fast this is changing.
4:28I'm going to go through a lot of videos
4:29this week from some of the best thinkers
4:32in the world on AI
4:35that I think you guys should listen to.
4:36And if for no other reason, just to stay
4:39on top of what their views are. If you
4:41guys haven't subscribed and you want to
4:43learn more about what you can get from
4:45this, and especially how you can help
4:47anyone, your family, friends, whatever,
4:49understand AI and not have to get sucked
4:52into all this as long as we're in these
4:54horrible periods. If you guys have
4:56gotten to know me at this point,
4:58I work a lot. Um I enjoy the markets. I
5:00always have. Uh I get to do more than I
5:03ever have in my career because managing
5:05people is a very time-consuming side.
5:07Now, I get to spend all my time looking
5:09at markets, looking for signals, looking
5:10for things, doing podcasts, talking
5:12about my views. Call Mark Whaling, he's
5:15the person to go through. So, let's go
5:16through
5:17everything I'm going to do for the first
5:19like 10% of this are things to highlight
5:21what last week was about, not this week
5:24that just finished, the week before
5:25ending October 16th. So, this was
5:28Jefferies weekly net flows lower than
5:31the deep seek panic.
5:33Another way to look at unwinds in terms
5:35of the net leverage coming down.
5:38Goldman Sachs, second largest net
5:40selling of global AI stocks in the past
5:42year. Net buying since 2025 fully
5:44reversed. This is why I'm getting much
5:46more comfortable with where we are. You
5:49guys can read the rest of it. Overall
5:50hedge fund net position according to
5:52Goldman Sachs has dropped to levels we
5:53haven't seen outside of liberation day
5:54in the past 5 years. And again, I
5:56repeat, these are all through October
5:5816th. Put volume exploded on October
6:0116th.
6:03During last week, very important to show
6:05how deep the deleveraging was, not just
6:08for long short equity, which is what
6:10most of the data I've shown so far.
6:12Goldman Sachs breaks down stock picker's
6:14quants giant firms. So, think
6:16multi-strats.
6:18They talked about the fact that those
6:20three strategies lost more than 80 basis
6:23points in a single day.
6:25That has only occurred
6:29three times, and they were all this
6:31year. Now, that's since COVID. So, since
6:34the COVID crash through the end of 2025,
6:37this scenario has only happened three
6:38times. Feb. 4, July 28th, which was
6:40basically right at the situational
6:42awareness lows,
6:43and then October 15th,
6:452 weeks ago. We got another one this
6:46week. It was actually bigger. I'll
6:48highlight that. Global equity selling
6:50hits minus three sigmas driven by long
6:53liquidation. That's from Morgan Stanley.
6:54UBS notes it mirrors the July
6:57situational awareness, and in
6:59particular, you get the deep This was
7:01mainly outside of the concentrated
7:04positions. Goldman Sachs told the client
7:06stock pickers lost 2.7 in the week.
7:08October and Asia focused funds lost 6.8%
7:10the first This is global.
7:12Global hedge funds hammered by A all
7:14sell-off this week. Asia leads losses.
7:17Here is that Goldman Sachs thing, and
7:18now I'm not doing or this is the the
7:20weekly basis. So, this gets back to what
7:22I showed you on a 75-day basis, which
7:25was down 12% for the week 2 weeks ago.
7:28It was bad. This was another bad week.
7:31To give you an idea, as we now move into
7:33this week, here was one of the days.
7:35This was the horrible day. This was the
7:37October 5th the October 22nd day,
7:41uh was a just a complete bloodletting.
7:44This was Thursday for hedge funds.
7:47Almost everything was green. It just
7:49shows you how the concentration is
7:52what's driving it. Now, this week
7:54started with pure panic. We had Monday
7:56was going to be Black Monday. Over the
7:58weekend, tokenizations finally started
8:01to reach the front pages. Western
8:03Digital, these were all things that
8:04happened. I woke up Sunday morning. I
8:06looked, this is what happened over
8:09Sunday night.
8:11These names all got hammered
8:14violently. Now, if you go look at where
8:16these things closed,
8:18some of them are below, some of them are
8:20above, but it was a leading indicator,
8:22but more importantly, you don't get to
8:24sleep anymore on the weekend. So,
8:26it led to this. All this talk, it was
8:29flying through. I woke up in the
8:30morning, I saw it. I'm going to continue
8:31to say the video I did last week, the AI
8:34bubble didn't pop, hedge fund leverage
8:35did. I fully believe this. You cannot
8:38run a leveraged portfolio where you have
8:41to make money within a month or within a
8:43quarter or within a drawdown level. This
8:46is not going to work in this world of AI
8:48agents being involved, but also,
8:51I've shown this before,
8:53the destruction that will happen, the
8:55hackings, the amount of bad news, the
8:57geopolitical risk, every single thing is
8:59going to be popping up all the time.
9:01This year
9:02is just going to happen. We are never,
9:05and I repeat, never, in a world of AI
9:07going back to a time where the market
9:10would move and not be worried for 6
9:12months. Never going to happen again.
9:14That's why I've done presentations, the
9:16time mismatch. You have to think this
9:18way when exponential innovation is
9:21moving this fast, and I'm eventually
9:23going to go through the severe hackings
9:25that are happening across the globe.
9:27Also going to talk about Chamath and his
9:30Bitcoin's going to zero silliness. But
9:32more importantly, the reason it's silly
9:35is it comes at a time where all banks
9:36are being hacked right now. So, this
9:39reminds me on the equity side of August
9:42of 2007.
9:44So, I just wanted to make sure there was
9:45I went through LTCM last week. This in
9:49many ways with the AI trade is another
9:51version for me of what happened. Now,
9:53the quant unwind, there were no
9:54concentration risk. This is a
9:55concentration risk, but I do want to
9:58bring you guys through it because for
9:59those who are looking for this is the
10:01end of this is the beginning of a
10:02bubble, I want to go through this and
10:05highlight during this video as to if
10:07that's the case, I'll show you what's
10:09going to happen based on August of 2007.
10:12So,
10:13that paper, this paper, which is on
10:15AQR's site was written at its 10-year
10:16anniversary of the quant crisis or the
10:18quant quake.
10:20And it basically goes through two
10:22things. One, it was a factor unwind,
10:26large losses, and then once everything
10:27was taken off, it almost made a full
10:29recovery.
10:30Unlike the situational awareness thing
10:32where we never really got a big bounce
10:33coming out of that, I do think with the
10:35amount of deleveraging that I've seen,
10:38with what I've read from the PBs, I
10:40didn't include the JP Morgan one, we've
10:42had a complete positioning reset.
10:44Complete positioning reset. Are there
10:46some positions left on? Sure, but at
10:48some point, hedge funds are not the
10:50entire volume. They get to a point where
10:52they've taken off the risk, and then
10:54we've got November and December where,
10:56again, once you get to a new month, you
10:59get a new clock.
11:00I hate to say that, but was in the hedge
11:02fund world a long time. There's a big
11:04difference between having a month where
11:05you're up 5% for the year, but you're
11:07down 5% for the month, and then all of a
11:10sudden, you're up 5% for the year, but
11:12you're flat for the month. You start
11:14trading a little differently, even
11:15though you just had a 5% drawdown,
11:17assuming you didn't get fired. So,
11:19again,
11:20this reminds me of it. You guys should
11:22read more about it, but this was from
11:25MSCI, same thing. So, this was a very
11:28big one, but what they called it is the
11:30quant liquidity crunch, and that's I
11:32believe is happening right now. Because
11:35of time and so many hedge funds that
11:38can't handle these types of drawdowns
11:40that are levered, the volatility in the
11:42fund is explosive, which means the prime
11:44brokers are questioning and asking and
11:46constantly there, the clients are
11:48asking. You end up in a situation where
11:51you're reducing risk.
11:52And again, liquidity is a problem cuz
11:55everyone comes to the market. So, when
11:57you come to the market at the same time
11:58to get out of positions, and it's long
12:00short. Trust me, when you have to get
12:02out of part of the market, the AI trade,
12:05no problem with liquidity. But when you
12:06got to buy home builders back in
12:08consumer staples and all this other
12:09stuff, that's why you get that
12:11that uh screen that I showed you that
12:13had so much green on it. So, the 2007
12:16quant quake, liquidity is a time
12:18mismatch. Again, it was not simply a
12:21shortage of buyers, it was a collision
12:23between years of accumulated crowded
12:25alpha exposure and the sudden need to
12:27liquidate in days. The thing I remember
12:29about this, the sharp ratio leading into
12:31this, meaning
12:32the size of the gains, how long it took
12:35to build the positions up,
12:38when it tried to unwind it once. So, if
12:40you take a year and a half, 18 months,
12:42and every hedge fund gradually slowly
12:45gets into that and momentum drives it,
12:47it's both a self-reinforcing play that
12:49everyone pushes up the AI trade, but
12:52then if you try to get out of it within
12:5475 days, everyone tries to get out,
12:57there's not enough liquidity to handle
12:58that. It took 18 months to build it up
13:00in 75 months 75 days to take it down.
13:03That's what I'm using that as the
13:04example, and if you guys want to see
13:06this, largest volume contributors, this
13:09is the the 50. So, what I wanted to go
13:12through is the top 50 versus the bottom
13:1450 performers for October 22nd.
13:18So, this is the dollar volume of the top
13:22five. So, on this day, on October 22nd,
13:25just to give you an idea, So, these
13:27daily returns, these are the biggest
13:29volume on the top 50. This is their
13:32return.
13:33Largest volume contributors in the
13:34bottom 50.
13:37Total sum of both. You can't Basically,
13:41to get out of your longs, which drove
13:43this performance down, plenty of
13:44liquidity, 187 billion traded that day.
13:48The 50,
13:49not the same liquidity. And so, when you
13:51do this over time, you don't have as big
13:53of an impact if you're putting this
13:54trade on over the course of 18 months.
13:57That is the problem. And that is why you
13:59get Today is the widest day for S&P S&P
14:01500 breadth versus price
14:06since 1990.
14:08Okay? Second widest since 1990. Deep
14:10seek was the only other day that saw the
14:13breadth in terms of There were 324 up on
14:16Thursday with the S&P down 1.36%.
14:21Okay.
14:22On that day,
14:26I just want to show you of the
14:27performance for that day for these
14:29names, okay?
14:31These are the 20 best performers of the
14:34S&P.
14:36This is why when you look Oh, Moderna
14:39was down big. It's up 553%
14:43through September. Micron, up to like
14:46when you go through these numbers and
14:47you start realizing what you're deal
14:49you're dealing with, you're dealing with
14:51names that have made a lot of money for
14:52people, and now they're getting out. And
14:55again, this makes sense. But, there's a
14:57lot of reason that these names are up
14:59based on their earnings growth at this
15:00point. Hedge funds pile into shorts as
15:03Goldman uh
15:04flags stocks squeeze risk.
15:08Hedge funds have loaded up on stock
15:10shorts this month, pushing bearish bets
15:12near 5-year high. The reason this is
15:14happening
15:15on stock shorts is because there is no
15:18way to use the S&P 500 as a hedge. So,
15:22everyone starts creating baskets or
15:24doing something on stocks because that's
15:27the only way to hedge the AI risk. They
15:29should have used my index which Morgan
15:31Stanley can trade. You can trade options
15:32on it because it covers pretty much
15:34everything, but this is the problem is
15:37when index hedges like the Nasdaq, like
15:39the S&P don't work and they don't
15:41actually hedge what you want.
15:43You're left having to use shorts. So,
15:45what happens is gross exposure actually
15:47goes up because you're trying to stop
15:49the pain from those names going down and
15:52as opposed to selling them you're trying
15:53to find a hedge.
15:55Again, these are all for that the the
15:57the day on Thursday cuz remember Monday,
15:59Tuesday, Wednesday market was up.
16:01Today's sell-off deepened into the close
16:02more than 2/3 of hedge funds finished
16:05down on the day.
16:07Hedge funds, by this point their net
16:09exposure is the least. So, the S&P was
16:11down, but 2/3 were down. Global
16:13fundamental long shorts over 1%.
16:16And you get to see where we are. Now
16:18down tech exposure and squeeze and
16:19credit short now down 3.8 months still
16:22up 8.8%. This is critical, guys.
16:25They are defending the month, but the
16:27year they still have a chip stack. This
16:28is very important. This is very
16:30different than other years, particularly
16:32like 2022 and other places where you
16:34start getting these. So, as you go
16:36through it global systematic long short
16:37managers down 1.3% on the day, third
16:40worst day since 2023, but still up 19%
16:43year-to-date.
16:45So, again multi-strats down as well.
16:48So, again this day all lost more than 1%
16:51in a single day.
16:53So, again I showed you that this didn't
16:54happen now. It's the first time at all
16:57that all three were down at least 1% on
16:59a day.
17:00Hedge funds exiting trades fueled by
17:02root and this is the importance of this
17:04spreading into multi-strats and this
17:06were when at some point if it's just in
17:08long short equity which was really what
17:10had happened in July with situational
17:12awareness, then you start spreading into
17:14credit. Obviously, we saw that with
17:15converts and with CoreWeave last week,
17:17which I showed.
17:19But, it's really been spreading into
17:20French bonds. So, that story was from
17:22the 2nd. This story is from this week.
17:25Significant losses on leveraged fixed
17:27income strategies, basically carry
17:28trades involving the French bonds. If
17:30you didn't get to see it, these kind of
17:32charts are never good for relative value
17:34strategies cuz very seldom, especially
17:36when you're trading at a level here,
17:38this is the spread differential between
17:40French bond yields at 10 years and
17:42German spread. So, the spread is now 173
17:45basis points. So, French bond yields are
17:47173 basis points as of Thursday's close
17:50higher than German bond yields. And we
17:52were at the top end of the range except
17:54for the EU crisis back then.
17:57So, that created problem. Now, on a
17:58weekly basis through then, it was the
18:01worst week
18:04in the last, you know, in 16 years of
18:06data. The week that was The other one
18:09was
18:10the the end of September and October
18:122nd. So, you've got this unwinding. This
18:15led to European banks breaking below the
18:18200-day moving average, which has not
18:19happened much
18:21since COVID or since uh ChatGPT was
18:24launched. You've had a few days in
18:25between here. So, we'll see if that's
18:27enough. If this spreads further into the
18:30banks, then you're going to have more
18:31waves of unwinds coming from different
18:33places. The European banks relative to
18:36the Euro stocks had the worst week since
18:39SVB. So, this is Silicon Valley Bank.
18:42So, you can see how this is the
18:44contagious spreading into things in
18:45terms of the unwinds.
18:47Uh this was the S&P. I should have
18:50updated this. This was what it was
18:52through Thursday's close in terms of the
18:54percentage for the month, which was up
18:561.38%. Uh actually, that was Yeah, that
18:58was through Wednesday. So, we'll get
19:00through the rest of that as we go
19:01through it and I'll give you the new
19:02numbers. Um to start the week,
19:05Microsoft pulls out of data center.
19:08IPO disaster exposed. Again, this was a
19:11uh
19:12uh a computing specialist at least came
19:14through with their IPO.
19:16Broke down firmus, collapsed, IPO
19:19collapsed. This is in Australia.
19:22Again, this is a neo cloud. And then you
19:25had all of these conversations on the
19:27FT. So, coming into the week between the
19:30massive move that we saw on Sunday in
19:33the stocks tokenization side plus all of
19:35the bad news overall except for
19:37Thursday,
19:39it was an okay week, much much better
19:41than last week, which again says to me
19:43that we're through most of the
19:44deleveraging even though Thursday was a
19:46brutal day.
19:47But, I think a lot of that had to do
19:49with what was going on France. One clear
19:51signal for me,
19:53which is similar to situational
19:55awareness in terms of the Thursday,
19:56Wednesday night we got meta reports. The
19:59stock was up initially, then it was
20:01down, but there was really not a lot of
20:03movement. But, when I came back and look
20:04at the S&P futures at say 7:30, they
20:07were down like 30 handles. And that just
20:09kind of said to me that a hedge fund
20:13globally, and again, this could be in
20:15any part of the world. This is the thing
20:16with hedge funds, it's a deleveraging
20:18scenario, that someone needed to get out
20:20of stuff. So, I just want to separate
20:22and I want you guys to hear this cuz I
20:23know a lot of you are not hedge fund
20:25aficionados.
20:28Hedge fund deleveraging can happen, and
20:30economic deleveraging is what matters
20:32for the market. So, for the AI trade,
20:34the only thing that matters is the
20:36economic deleveraging.
20:38Hedge funds, as I've always said and cuz
20:40I was part of one, they're just leeches
20:41on trends. They jump on the trends,
20:44their earnings trends, estimate
20:45revisions, and they ride them. And
20:47historically, they've had a huge
20:49advantage because they've had the data,
20:50they've had the ability to trade
20:52quicker. That's all gone away. And now
20:54they're competing with AI agents. So,
20:56whether or not you have adapted to that,
20:59hedge funds have a massive massive
21:02disadvantage compared to what they had.
21:04Now, the bigger places still have a
21:05tremendous advantage right now in risk
21:08management, but that's why we've seen a
21:09consolidation of funds. I was at a
21:11multi-strat that was forced to close
21:13down and we were trying to compete with
21:15them, but we didn't have the budget or a
21:16lot of different reasons to keep up for
21:18to keep the talent to go through it. So,
21:20now at this point the hedge fund
21:22deleveraging to me has more to do with
21:24what's happening with AI and it's
21:27changing everything. So, I'm going to
21:28take you through what economic
21:30deleveraging fits in, but what I want
21:31you to see is
21:33typical hedge fund deleveraging,
21:35earnings are still good, profit margins
21:36are still good, hiring is still good,
21:38asset prices going to have a fast
21:40decline. That's what we've seen in the
21:41AI trade. When you get into economic
21:43deleveraging, earnings start going down,
21:46it's led by profit margins, hiring come
21:48next.
21:50Asset prices usually are going down
21:53after profit margins. Profit margins
21:55tend to lead and I'm going to show that.
21:58Here is 2007. So, the quant quake I
22:00showed, I got a recession signal in
22:03September of '07.
22:05My model involved five components. I'm
22:08just going to take you through at least
22:10four of them and I'll talk about the
22:11other one, but one of them is jobless
22:14claims. Now, clearly we haven't had any
22:15rise in jobless claims. Now, we didn't
22:17have any rise in jobless claims back
22:19then either.
22:20There's also stronger jobless claims
22:23right now than where we were a year ago
22:25at this right now. Back then, we were on
22:28a trend where it was starting to move
22:30higher. This is the four-week jobless
22:32claims. What I was using before was
22:34continuing claims. Continuing claims is
22:37different than weekly claims because
22:39once you do a weekly claim, you move on
22:41to continuing claims if you're still not
22:43getting a job. Continuing claims were
22:45giving me a recession signal. Right now,
22:47we're not getting any recession signal
22:49in claims. Junk spreads actually
22:51bottomed, made their lows effectively
22:54before the quant quake. The quant quake
22:55started in here and this is when it
22:57really got bad. So, it actually
22:59coincided and if you look at spreads
23:01now, junk spreads actually look a lot
23:03like this right now. Um we made all-time
23:05tights, but we're starting to widen. So,
23:07I could say right now junk spreads are
23:09starting to show the risk of an economic
23:12deleveraging.
23:13The S&P is not. So, the S&P was one of
23:15the signals. Year-over-year is what I
23:17cared about. We have a massive positive
23:20year-over-year still. Uh a year ago
23:22today we were here, we're now up here.
23:24So, that is nowhere near, but that can
23:26change obviously with the big fall like
23:28we had 1987 and then, you know, then you
23:30change everything. So, as of right now
23:32nothing there.
23:34I wanted to show you that on this
23:36particular one we closed above the
23:3720-week moving average. Since COVID, you
23:40can see we very seldom get below the
23:4220-week, which is about the same as
23:43100-day moving average. I wanted to show
23:46just how strong this has been and again,
23:48what's been happening since there's no
23:49more recessions. Recessions would happen
23:52and one of the ways to measure it was
23:54how many times or what percentage of the
23:56times we'd be in structurally bull
23:58market. This is the weeks, the
24:00percentage of weeks during these time
24:01periods that we closed above
24:04the 20-week moving average. And what you
24:06can see is since ChatGPT came out, since
24:08profit margins basically started to go
24:11parabolic, 85% of the weeks, far higher
24:14than any period by far and over the
24:17course of the entire period, we're
24:18dealing with somewhere closer to 72 to
24:2073, 85% of the weeks. So, in these
24:24periods here, it's been getting better
24:25as exponential innovation has impacted
24:28our lives. So, we had the dot-com
24:29bubble.
24:30Then we had the great financial crisis
24:32as part of this and then since then,
24:34it's been getting better, but it's
24:35really had a step up function
24:38in here. This is the best leading
24:40indicator I can give you for when a
24:41recession
24:43is approaching or when an economic
24:44deleveraging like an AI bubble is
24:46showing up.
24:47Year-over-year corporate profits, guys,
24:49plain and simple.
24:51If you have profit margins growing, it's
24:53like what I said about the hedge funds.
24:54You have huge
24:56window in here, Huge window. So,
24:59corporate profits right now up 20%
25:02before
25:03the recession but the sell signal and
25:06this was one of the signals. So, again,
25:07this is one of my signals for recession.
25:09This happened in March-June of '07.
25:13Profit margins and corporate profits
25:15started to go down. You get profit
25:16margins to go down and then you get the
25:18recession. This bar is here is when the
25:19recession started. The dot-com bubble
25:22March of 2000 went down. Here you go. In
25:251990 before the recession negative
25:27before.
25:29Negative before 1980. This was a weird
25:32period because you had Volcker fighting
25:33inflation but you still went negative.
25:35This one didn't break down until later.
25:37The main point about this one is it's
25:39still going straight up, guys.
25:41We have nothing here. All right. And on
25:44that earnings front, SpaceX reported.
25:46Probably the most important earnings
25:47report I've seen in the last
25:49I want to say
25:52except for Nvidia.
25:54And this just confirmed that. If you
25:55didn't get a chance to read the quotes
25:57and go through it, it is unbelievable
25:59what Elon said. So, compute demand is
26:02substantially greater than supply. We
26:04could rent out our compute several times
26:05over if we said yes to everyone. This is
26:07critical because he's also talking about
26:10being able to build an incremental 10
26:12gigawatts. The revenue on that is
26:14somewhere between 30 to 50 billion. He's
26:17saying in year one. He's doing that
26:18based on what he's already gotten from
26:20Anthropic but what they're willing to
26:22pay now. Let's assume it's lower than
26:23that. It's 20. You're still talking
26:26about 200 billion of revenue if he's
26:28able to do. I'm fairly confident of
26:31being able to bring an incremental 10
26:32gigawatts of compute online 2027.
26:35He very seldom lives up to what he says
26:37in this. So, let's assume it's five.
26:39You're still talking about a hundred
26:40billion dollars but more importantly, he
26:42is literally CoreWeave on steroids in
26:45terms of seeing where the demand side
26:47is.
26:48I think in three to five years there's
26:49probably a demand for a thousand times
26:52more.
26:54Just make sure you see this bandwidth
26:56than there is currently.
26:58So again, the agents are what he's
27:00talking about in here in terms of how
27:01fast they're going. Capital expenditure
27:04is expanding, not slowing.
27:07JPMorgan doubles SpaceX price target. So
27:10the street goes from 240 to 500
27:14and now forecast a quarter of a trillion
27:16dollars in 2027 revenue.
27:19I mean guys
27:23JPMorgan also put out a memory thing
27:25basically questioning how is this even
27:27happening? And again, I'm going to say
27:28this over and over again.
27:31Regardless of where Micron is today, if
27:32we didn't learn anything from the first
27:34quarter, and you guys should remember
27:35this, things move fast. There is no
27:38doubt in my mind that by the time we get
27:40to the end of February
27:42Micron could be at 1500. Absolutely no
27:44doubt in my mind. So for everyone who's
27:46bearish, who's now beating their chest
27:48because
27:49the semis are having what is a normal
27:51correction for them uh and continuing
27:53from what happened back in June through
27:55here and they're still up 30 plus
27:57percent year-to-date. Be very careful
27:59with the amount of deleveraging that's
28:01happening and how little's actually gone
28:03on. Supermicro computer
28:05pre-announced.
28:08Texas Instruments, I think this is all
28:10well and good, but the main point is
28:12that you humanoid robots are being
28:14brought into the equation. Uh humanoid
28:16robots, uh drug discovery next year,
28:19health care, all of these things are
28:21going to be part of next year's bull
28:22market. And again, bull market with
28:24many, many corrections. John Gray
28:28huge uh part of the AI uh
28:32When you think about a bubble, you think
28:33about building capacity and then hoping
28:34demand comes. With AI, you're building
28:37capacity and you're hoping you can keep
28:38up with the demand. We can't keep up
28:39with customer demand. Demand is almost
28:41parabolic. Completely agree and this is
28:42seen around the globe. This is not just
28:44a US thing. The interesting thing is to
28:46show the hedge fund unwinds. Blackstone,
28:49which was trading near 52-week lows,
28:51even though they're part of the AI
28:52trade,
28:54they were up 8% on Thursday, which just
28:56shows they reported earnings, they
28:57opened down significantly on the day. I
28:59want to say they were trading down 4%
29:01pre-market, finished up 8% on the day to
29:04have their second biggest day in the
29:06last 3 years.
29:09Here, so far, out of my 100 names in the
29:11portfolio, and the reason that it's
29:13important to pay attention to my
29:15portfolio,
29:17here is what they've said in the
29:19earnings quarter so far over the last 2
29:21months. So, during the deleveraging, you
29:23guys can go through all of it. I'm
29:25waiting to see a company that says, "You
29:27know what? Demand's slowing. We actually
29:29think it's going down." Instead, the
29:30numbers are just massive in terms of
29:33like even with
29:35they pre-announced, and they're taking
29:37their numbers up significantly. When you
29:38just go through every single number,
29:40these numbers are staggering, and the
29:42guidance is still staggering.
29:45The chips are still staggering. And I
29:47wanted to show this because, again, you
29:49hear about how GPU prices, this is where
29:53they're supposed to be.
29:55This is where they are based on the
29:57years. So, this is each year with the
30:00residual value right now. These are
30:02supposed to be worthless already. These
30:04are supposed to be down at the, you
30:06know, down here. They're up here. So,
30:08again,
30:11you can find anything. These are the
30:13same guys that put out the token data,
30:15which is still so funny because they
30:17tell people it's not what you think, but
30:19people still go over it. Andreas put
30:22this out, again, as a leading indicator
30:25as to what happens. Exports from Taiwan
30:28and Korea, which are a major part of
30:30everything related to technology, their
30:33exports, with the latest data, are still
30:36going higher. The earnings for the S&P,
30:39for MSCI US forward EPS,
30:42um Duet was released, so we're getting
30:44another agent. You got Meta Muse, you've
30:46got Dots, you've got GrokBot, you've got
30:48Instinct. They're all coming.
30:51And Jensen highlights that personalized
30:53agents will push token usage through the
30:55roof.
30:56For the week, S&P down 47 basis points.
30:59Yes, I say with all of the panic, all of
31:02the news I said of deleveraging the last
31:042 weeks of just insane amounts, the July
31:08period looks extremely similar.
31:10Up that This looks extremely similar.
31:16Here it is for the month.
31:17Down 36 basis points, very similar
31:21to July. Again, not much has gone on.
31:23The S&P is up since hedge funds peaked.
31:26That is part of the economic
31:28deleveraging. There isn't any happening.
31:30Qs for the week, only down 76 bips.
31:33Uh for the month, down 4.78%.
31:36Again,
31:37not outside of the norm, and they had a
31:4016%. You probably don't even remember
31:42this cuz when this is going on, the
31:44media makes it sound like the world is
31:46ending.
31:47Uh
31:49IWM small caps up 2% this week.
31:51Part of the unwind, the deleveraging. Uh
31:54my thematic portfolio down 3.8%.
31:59Here is the SMH, guys.
32:01This is the drawdown from the peak. I
32:03want to re-emphasize
32:05where we are is down 22% from the peak.
32:08That's how much of a bear market it is,
32:09and guess what? This happens almost
32:11every single year.
32:14But especially when you're up as much as
32:15they are year-to-date. Okay, this is
32:18where my portfolio finished up. 20% of
32:21the names, so we are more oversold
32:24than we Oh, no, we're at the same point
32:26we were in here, which is right around
32:27about. So, I think we're in this part in
32:29terms of this, unless this turns into
32:31earnings starting to miss, which I don't
32:32think is going to happen. On the 50-day
32:34side, we're much more oversold, which is
32:37important because that means we've got
32:39more people out. On the 200-day,
32:42absolutely, down to 38%. We were still
32:44up in the 70s. What has not changed is
32:47the 200-day slope,
32:4985% of the names are still pointed
32:51upwards. We finally saw a little bit of
32:53volatility. We are nowhere near the peak
32:55in here, but
32:57we're still higher.
32:59Uh Bitcoin,
33:00up 50 bips for the week. For those of
33:02you looking for an asset that just
33:04continues to ignore what's going on,
33:06which is obviously part of the AI trade
33:08from the agentic side,
33:11still hanging in. All right. First thing
33:12to listen to, the All-In pod. They did a
33:14great job this week going through the
33:16CoreWeave crash. Uh I'm not going to
33:18spend a lot of time on this one, but I
33:20think you guys should listen to it. I
33:22think they did a good job of
33:24taking the difference, and especially
33:26Ben Horowitz, who kind of um
33:30started the the the Neocloud business
33:32back in the late '90s. He talked about
33:34that. So, I think he's a very, very
33:36important person to listen to, far more
33:38important than the permabears in X that
33:40you may listen to and get involved with.
33:43Um
33:43and he just talks about they don't
33:44invest in it, but it's not because he
33:46doesn't believe
33:47in their business. He just realized the
33:49mistake they made getting into the
33:50business, and that's basically a real
33:52estate business.
33:53So, again, I showed in the subscriber
33:55video this week, go look at the
33:56commercial real estate market and look
33:58how it's paid off for people that got
33:59bearish at this point of 70 cents on the
34:01dollar. Um they go through the different
34:04ways, I and I think between David Sacks
34:06and Ben Horowitz, these are the people
34:08to listen to on this. They were not
34:10arguing that CoreWeave has no financial
34:11risk. They were arguing that credit
34:13market stress does not automatically
34:14translate into corporate bankruptcy. And
34:16I think it was very important of what to
34:18look at. I would go listen to it. Again,
34:21I'm not going to spend a lot of time.
34:22For the subscribers, you guys can get
34:24the slides, but also, I will give you
34:25the details from each of these, so you
34:28can either read the summary, or you can
34:29just go to it and download it yourself.
34:32Um that's the whole point of giving you
34:33guys this stuff. Uh Uh, David Sacks, I
34:35think this is the one thing I will read
34:37you guys.
34:39It It's about whenever you're
34:41underwriting to multi-trillion-dollar
34:43outcomes in the future based on very
34:45rapid rates of growth, exponential rates
34:47of growth, the market's going to be
34:48super sensitive to any data points we
34:50have in the present. This is why
34:53the AI bubble is going to be here. I've
34:55said this before and I said it in the
34:56subscriber video. We are barely into the
34:58credit side, barely.
35:00I hate to say that to people because
35:02they seem to believe we're at the
35:03massive stage of it. When you see $10
35:05trillion of capital needed, and then you
35:08start associating that with we've taken
35:10out $10 trillion, no. We barely have
35:12started this because the reason free
35:13cash flow is negative is because they
35:15used the free cash flow.
35:17We had Google raise equity. So, yes, are
35:19they coming to the market for debt? Yes,
35:21but we are in the very early stages. Is
35:23capital becoming challenging? There is
35:25no doubt that when you come to the
35:26market, just like the liquidity for
35:28hedge funds, when you come to the market
35:31in a short amount of time for massive
35:33amounts of capital, you need to build
35:34the risk premiums in, plain and simple.
35:36And that's effectively what it is. Eric
35:39Schmidt, not the best-looking photo, but
35:41I like Eric, so. He was uh interviewed
35:43on the Nordea Bank uh with Nikolai.
35:46And it was good. I mean, Eric is a good
35:49person to go listen to. I think he did a
35:50good job. Uh, AI is bigger than every
35:53previous technology revolution. He
35:54rejects the bubble narrative,
35:56uh and he goes through the reasons why.
35:59He talks about all the different things,
36:01but he gets into biology, and I
36:03completely agree. And if you haven't
36:05thought about this with Eli Lilly making
36:07new all-time highs and me out there
36:08writing about it and talking about it,
36:10and more in this video on it,
36:13I think you need to go through it. He
36:15talks about the fact
36:16that
36:17you don't want to be viewed in history
36:19as not participating and not being a
36:20major leader in something that will be
36:22looked on for thousands of years. It is
36:24a brilliant statement. This gets into
36:27whether you agree or not on the way
36:29these guys are spending their money.
36:31The mega hyperscalers have the money to
36:33spend. They are not going to finish in
36:35second or third place and not be a part
36:38of history. It is not going to happen
36:40and that is the trend. So everyone
36:41looking for, oh, they're going to cancel
36:43their CapEx spending.
36:45You got to go listen to Eric Schmidt.
36:46It's just something that's not going to
36:48happen. The rise of intelligence is the
36:50biggest revolution in history.
36:53Why AI is not a bubble. There's real
36:54growth there. It's not fake. It's real
36:56money. He's talking specifically about
36:58Anthropic. Anthropic plus OpenAI are
37:01going from about 28 29 trillion dollars
37:05a year ago to 175 no matter how you get
37:08there. Maybe it's 165.
37:10You were talking about massive dollars
37:12as I've shown you. And for people going
37:14through the nuance of trying to be like,
37:16well, this is 150. This is 170. It's
37:18slowing down. You're wasting my time and
37:20everyone else's time with your
37:22ridiculous views on something that a
37:24year ago you said wouldn't even be 50 at
37:26this point. So now when it's not 175,
37:29we're going to look and say, "Well, look
37:30at this. It's slowed down." When every
37:32quarter a company reports
37:34that doesn't even make nearly the money
37:36they do. Of course, there's going to be
37:37quarters that go down or don't grow as
37:39fast. But that doesn't mean it's
37:41stopping. You're talking about the
37:42fastest growing companies in history.
37:44But more importantly, Meta's taking some
37:45of that. Rockbot's taking some of that.
37:47Gemini's taking some of that. All of
37:48them are taking it and they all count
37:50even if those guys aren't getting all of
37:51it. Um business will be flatter,
37:53smarter, more intense. You have to
37:55listen to this. The faster the learning
37:57loops, the smarter it gets.
37:59I have friends who think in the next 15
38:01years we can cure all disease. Every
38:03single thing in here is important to
38:04listen to.
38:06Oh, I just want to bring up specialized
38:08superintelligence is coming. Many people
38:10believe in the next few years we're
38:11going to build superintelligence in key
38:13categories.
38:15Why this aligns with Eli Lilly's Tune
38:17Lab, which I will get into, but the Tune
38:20Lab thing I want to make sure you guys
38:22remember. The big
38:24technology podcast, Alan Cantorwitz,
38:26always does a great job. Had Sundar
38:27Pichai on. Again, not going to take you
38:30through the whole thing, but uh he
38:32basically says the frontier models will
38:35be needed. They will always be needed.
38:38They will always be the best models.
38:41They will not be for everything. And he
38:43goes through in a very intelligent way,
38:45again, how much open source will be
38:47doing a lot of the work. And this is
38:49important, but you will always need the
38:51frontier models. So, again, as he goes
38:55through this, there's going to be lanes
38:56for them, and we're starting to get into
38:58that world where some of them are open,
39:01some of them are closed. You should go
39:02listen to Sundar as why. Um
39:06technology will adapt to humans rather
39:08than the reverse. And he gets to a lot
39:11of things that I think are important in
39:13terms of that, but he also brings up he
39:15sees major gains ahead in healthcare,
39:16materials, discovering, and bending cost
39:18curves.
39:20There's Eli Lilly. It was down on
39:21Friday. I did this through Thursday, but
39:24it made new all-time highs this week. As
39:26a reminder, I did this paper in June
39:30where I said it's becoming the most
39:31important AI company in the world.
39:34Eli Lilly tune lab, the Manhattan
39:36project for AI-driven discovery.
39:38Read this on your own. I just want to
39:41tell you this type of thing
39:44where
39:45you've got one model that's being
39:47trained on all now 135 different biotech
39:50companies, their wins, their failures,
39:52all of their work in an anonymous basis.
39:56This is how you get major breakthroughs.
39:58This is how you have collaboration. This
40:00is how the specialized world will
40:02accelerate things, and that's what's
40:04going on. So,
40:06it's not just simply an app to help
40:08discovery. It's building a specialized
40:09bio All of this stuff is what's going to
40:12lead to massive changes. And as I went
40:15through in the subscriber video, which
40:16you guys should now go watch,
40:18I went through the size of healthcare
40:21and the importance from a barbell
40:22perspective. What is happening in
40:24pharma, life sciences, and biotech is
40:27beginning a massive bull market. We had
40:29one very similar to it in 2000 during
40:32the great during the dot-com bubble. We
40:34had one during the
40:36uh
40:36the great financial crisis. Healthcare
40:39does better in lower volatility points,
40:41but remember,
40:42spending in this country, that chart I
40:45showed, where healthcare is now the
40:46biggest spending in the country,
40:49it is going to re-rate to more of a
40:50growth area, and you've started to see
40:53that. You saw the move with Moderna.
40:54Forget how much it fell and closed
40:56around 200. Look at the move that we've
40:58had over the course of this and how far
41:00it's gone. You're going to be having
41:01these moonshot things coming all the
41:03time. And if you need something to
41:04compare Tune Lab to,
41:06go read about Harvey legal AI. Very
41:09similar, just different ways of going
41:10through it. This is the whole um
41:12importance, and Harvey raises half a
41:15trillion dollars at a 15 and a half
41:16billion valuation, meaning Tune Lab has
41:18an enormous amount of value.
41:21Um on the negative side and something to
41:24keep in track of, particularly when I
41:25get into the Chamath garbage uh
41:27regarding Bitcoin going to zero because
41:30quantum will destroy Bitcoin, uh AI
41:33agents are in your bank accounts, guys.
41:35If you haven't read the story and you
41:36didn't see this week, they're in there.
41:39Uh if you didn't read this,
41:42this is a problem, too. Um this happened
41:44this week as well. 70% of websites that
41:47use PHP
41:50uh
41:50had a break-in.
41:52If you haven't seen reverse engineer
41:54anything,
41:55this was something that was talked about
41:57on an a16z podcast that I listened to
41:59today. I've seen it on X a bunch of
42:01times. You have to go read about this,
42:03too. This is another reason to realize
42:05that nothing in the world is safe from
42:07competition,
42:09and if you believe that hacking is
42:11something quantum hacking in 6, 7, maybe
42:1420 years is something to talk about as
42:17Chamath did. The hacking of companies is
42:20reverse engineering. The hacking of
42:22banks, the hacking of websites is all
42:24happening in our face with agent swarms.
42:26That is today's business because it's
42:28all based on software. This is
42:31re-engineer re-engineering hardware.
42:34Very scary. I did my crypto video this
42:36week
42:37and I really focused a lot to go from
42:40here to here. This is happening, guys.
42:42We are in the tokenization world. You
42:44have to start to get ready for it.
42:46Tokenization is absolutely going to
42:49disrupt hedge funds as much as what
42:51we're seeing so far.
42:53Deleveraging is over, which means the
42:54concentration and the risk to AI, in my
42:56opinion, has reached a more neutral
42:58stance,
42:59which means for people who are looking
43:01for an entry point, the only way from
43:03here, over the course of the next 3
43:04months, I see this as a bad entry point,
43:07is if we're going to go through an
43:08economic recession. I don't think that's
43:10going to happen. We have cleansed the
43:12system with the losses that have gone on
43:14and the forced liquidations. Doesn't
43:16mean we're going to start rallying ahead
43:17of the midterms. It doesn't mean we're
43:18going to start rallying ahead of
43:19whatever you want to think about, but
43:21that's why I say, I think at this point,
43:23from a swing basis, you have to start
43:25thinking differently. Crypto, I covered
43:28an important part uh in this week's
43:30video of
43:33tokenization.
43:35Uh here is the 126, 6-month wall of the
43:39thematic portfolio for AI, now trading
43:42close to 40.
43:44Here's Bitcoin.
43:46That volatile asset that people are
43:48worried about trading at 30 on the same
43:50time period.
43:54Tokenized index.
43:56The index itself is down 10% for the
43:58month, still up 50% since August. This
44:01is the one I want you to realize.
44:03Year-to-date up 35%.
44:05It's now up more than the AI traders.
44:09That's right. Bitcoin's down seven.
44:11The index is there. And like I said,
44:13working very hard, have another meeting
44:14next week on getting this to be able to
44:16be traded. I'm going to put money into
44:18it.
44:19Uh I'm using or trying to use a group
44:22that is going to help me with it. Here's
44:24where we stand. Again, bull market stuff
44:26down here in terms of this, oversold on
44:27a short-term basis. Here's the chart of
44:29it. This is the tokenized index of which
44:31Bitcoin is one of the 46 names. So, you
44:34would think that crypto
44:37the 46 names, 42 tokens for
44:41uh public companies
44:44outperforming the AI trade now.
44:46A16Z, very important. For those of you
44:48who don't believe in crypto
44:50this is what
44:51A16Z did. They announced they're
44:54now setting up a fund with Chris Dixon,
44:57who has always been their crypto guy,
44:59the third partner, I believe, behind Ben
45:00Horowitz and and Marc Andreessen. Uh so,
45:03one of the original ones. They're now
45:04calling it AI front A16 uh frontier.
45:08When we started investing in crypto, it
45:09was a world of its own, but as
45:10blockchains have become more widely
45:12used, the lines have blurred and the
45:13infrastructure has gradually receded
45:14into the background. Wall Street and
45:16fintech companies now regularly launch
45:18products built on blockchains. Does that
45:20make them crypto companies? The label
45:21matters less now. It makes more sense to
45:23define companies by what they do rather
45:25than by the technologies they use.
45:27If you still don't believe in looking at
45:30crypto, I will continue to say it. You
45:33will be doing it 9 months from now
45:35because this is the beginning of a
45:37large, sustainable bull market of
45:40tokenization, agentic commerce,
45:43stablecoins. Do your homework.
45:45Listen to this to start. The frontier I
45:48uh frontier IDs.
45:51IDs. Uh you got Dixon. You've got Ben
45:54Horowitz. You've got Marc Andreessen.
45:57All in one podcast talking about AI and
46:00crypto.
46:03I was the one who brought AI crypto to
46:05you guys beginning 2 years ago. Here we
46:08are now and it's merging for everyone.
46:11The lines have kind of blurred, which
46:13you know, we find ourselves asking, I've
46:16been writing about this for a while, is
46:17Stripe a crypto company?
46:20Whereas years ago it was sort of on its
46:21own world with its own companies and its
46:23own investors, the lines of the lines
46:24have blurred and it's become
46:26kind of more part of the tech landscape.
46:28Crypto is no longer a separate industry,
46:30it is becoming infrastructure.
46:33I have talked about the crypto
46:34guardrails.
46:37I've talked about the ghost rails.
46:40We are now getting what was made for,
46:42which was the agentic side. For people
46:45who don't agree or don't believe that AI
46:47is connected directly to crypto and that
46:50eventually people will realize and
46:51they'll come to the same deep
46:54philosophical viewpoint I've come to
46:55that Bitcoin is the purest AI trade once
46:59you get into what Chamath is wrong about
47:01in my opinion. Where our difference is
47:02is to me what people should be worried
47:05about is not quantum hacking Bitcoin,
47:07they should be worried about AI hacking
47:10capitalism. That is what's happening and
47:12that means all companies built, all
47:15incumbents are being disrupted. Mark
47:18talks about that extensively in this
47:20interview. AI is compressing decades of
47:23technological development into years,
47:24fundamentally changing what small teams
47:26can accomplish. This is my tokenized
47:28world. This is the world of tokenized
47:31small businesses competing with
47:33incumbents. At the same time crypto is
47:35becoming part of mainstream financial
47:36infrastructure and autonomous AI agents
47:38could reshape the internet's economic
47:40model.
47:41This is it, guys.
47:43So, here he is.
47:45Uh
47:46So, all I'm going to say is
47:48this is stupid
47:50and it's not to say that he is stupid,
47:52it's to say the statement, whether it
47:53was meant to get a lot of clicks,
47:55whether it was meant for whatever, or
47:57whether he's got some PTSD from getting
47:59out of it too early.
48:01Everything that he said, he has no basis
48:04to, okay? So, for people who reached out
48:06saying Chamath is whatever he is. Does
48:09he get lots of listeners and tons of
48:12followers? Sure.
48:14Adam Back
48:16is a PhD in computer science. He
48:18invented Hashcash. He is cited and was
48:21part of the original Bitcoin white
48:22paper, and he has 30 years of experience
48:24over cryptography and computer
48:27security. No established professional
48:29specialization quantum cryptography or
48:31Bitcoin protocol development.
48:33He's a podcaster
48:35who, yes, worked at Facebook as an
48:37electrical engineering. No offense to
48:40Chamath, but when you make a statement,
48:41then if I disagree, I will tell you who
48:44I listen to over this. I would never
48:47listen to a podcast where he talked
48:48about Bitcoin. I've listened to Adam
48:50Back before I put money into this. So,
48:52I'm talking my book. Obviously, I
48:54believe in it cuz I talk about it. But,
48:56for those of you that are worried, then
48:58follow Adam Back.
49:00Quantum threat potentially 20 to 40
49:02years away.
49:04This is what he's saying, okay? Existing
49:06quantum computers cannot break Bitcoin.
49:08Bitcoin can upgrade to a quantum
49:10resistant cryptography. He's saying the
49:13Bitcoin upgrade process may be too slow.
49:15And that is a fair statement. But, then
49:18to say it's going to go to zero because
49:19it's not going to happen, well, that's
49:21not a fact. That's a story.
49:24Prepare carefully, avoid rushing. Here's
49:26the most important thing. Why Back
49:27believes Bitcoin can survive. Hardware
49:30versus theory. Quantum algorithms exist,
49:32but sufficiently powerful fault tolerant
49:35machines do not.
49:38This is where you get into software
49:40versus hardware, and that's the whole
49:42point that he's saying.
49:44Quantum threat to Bitcoin is primarily a
49:46hardware problem. We've learned, if for
49:48no other reason, hardware takes time.
49:51It's based on physics. Can we get there?
49:54Yes.
49:57Software
49:58happening today.
50:00AI lowers the cost of cyber attacks,
50:02identities theft, and exploiting
50:04vulnerabilities.
50:06A cybersecurity crisis
50:08I'm going to say will.
50:10So, where he put it's going to zero, I'm
50:12going to say that this story here
50:14becomes the most important story over
50:16the next 3 years for the market.
50:18We're going to have severe, massive
50:20cyber attacks that are going to do
50:23something which is front-page news more
50:25than hugging face, more than what I
50:26showed you from Axios on two stories
50:28this week.
50:30This, in my opinion, will drive more
50:32people towards cryptography
50:34and force the banks to be focused on
50:38getting everything onto the blockchain.
50:40So, if anything, I believe agent swarms
50:43and hackings in the software world are
50:46going to speed up things to go to the
50:48safety
50:49while we're waiting for a hardware
50:51issue.
50:52Chris Perkins, someone who I've gotten
50:54to know over the years, respect him
50:55tremendously, he wrote this paper. Very
50:57similar different though, quantum won't
51:00kill crypto, but it could accelerate
51:01Wall Street's adoption of blockchain.
51:03So, he's saying that they're going to
51:05move to the blockchain because of fears
51:07from quantum.
51:08I think it's going to happen now.
51:11Again, unvetted AI agents are accessing
51:13US bank accounts.
51:15Go read the story.
51:18How How many passwords do you guys have?
51:21Okay? If you use crypto and you have one
51:24identity, one identity, which is an
51:27anonymous identity that's on the
51:29blockchain, very difficult all of a
51:31sudden, you don't have to deal with all
51:33this garbage. I think everything should
51:34move to the blockchain, and then the
51:36banks, the governments, and everyone
51:38else who's now getting involved in
51:40Bitcoin and advising their clients to do
51:42it. So, if Chamath is saying it's going
51:43to zero, while Jamie Dimon and everyone
51:46is saying we're advising you to put
51:48money into Bitcoin. JP Morgan just said
51:50they think Bitcoin will be the best
51:51asset over the next decade. Sorry, not
51:54going to listen to Chamath. Uh Japan
51:56declares cybersecurity emergency. That's
51:58already going on.
51:59Again, PHP hacked.
52:02Why did a spark scramble?
52:05Stocks are getting hammered.
52:06Tokenization, this is my tokenization
52:08moment in terms of the next stage for
52:10stocks going on. And as a reminder,
52:13we have the quarterly refunding
52:14announcement. I mentioned it before.
52:16This could be a catalyst to really get
52:17crypto going again.
52:20Uh token 49, I for those people looking
52:23to listen to someone on why it's a bull
52:25market in crypto, Tom Lee does a good
52:27job of going through a bunch of
52:28different things in terms of things I've
52:30talked about a couple different. Uh he
52:33doesn't really talk about the agentic
52:34side, but then he also talks about
52:36tokenization. Oh, he does talk about
52:37agentic commerce. Um but he talks about
52:40the generational wealth transfer.
52:41Definitely worth listening to,
52:42particularly when you get past the
52:45Bitcoin's going to zero and think,
52:47"Well, if it is going to zero, it's not
52:48going to happen for another 6 years."
52:51And by then, can we solve something?
52:53Well, he's saying they won't get it the
52:55community won't get around. What if the
52:57community owns JP Morgan in the United
52:58States and Japan and South Korea and
53:00everyone else? I think they might have a
53:01chance to do it. Uh tokenized AI stocks
53:04slide over the weekend ahead of the
53:05reopen. Again, I'm just showing this
53:06because this is what's going on.
53:08Switzerland approves its first Bitcoin
53:09ETF.
53:10JP Morgan predicts Bitcoin will
53:12outperform US stocks, gold, and real
53:13estate over the next 10 years.
53:16BlackRock Bitcoin ETF IBIT pulled in 664
53:19million. If you want to get a sense,
53:22we are at the all-time highs in the
53:24outstanding shares of Bitcoin. This
53:25happened during a bear market. What do
53:27you think will happen to this line in a
53:29bull market?
53:31As I talked about, the silent IPO. I
53:33wrote that in here.
53:37Um to me, I believe
53:40we are at a
53:43This was a
53:45buy the rumor, sell the news event.
53:49It should have been a sell the news
53:50event here here
53:52when Donald Trump became president.
53:55Instead, we've consolidated now for 2
53:57years. Once we get back above this level
53:59here, okay, which in Bitcoin terms is
54:02basically going to be
54:04100,000.
54:06Uh I think this line is going to go up a
54:07significant amount, particularly now
54:09with the volatility that people have
54:10been exhausted in an AI and the fact
54:12that you're going to have hackings and
54:13everything else going on consistently.
54:15J.P. Morgan is now three tokenized
54:17products live on Ethereum.
54:19Tokenized stocks are expanding across
54:21DeFi. I mean, this is just happening,
54:23guys.
54:25Banks and institutions are on chain. The
54:26old guard isn't fighting tokenization.
54:28It's slowly but surely moving in. These
54:30are all of the companies that are on
54:32chain now.
54:35Yuval, I spoke to him.
54:37Canton,
54:39very very interesting guy,
54:42and just has done an amazing thing of
54:44getting Canton up to this. You should go
54:46read about it again.
54:48Very The more I I start meeting these
54:50guys and talking to them, and I keep
54:51telling you, they're all incredibly
54:54smart, and they could easily be doing
54:55big things in other markets, but they
54:57believe in this.
54:58And DTC, uh they're Canton is connected
55:02to DTCC. So, this is a very important
55:04thing with tokenization. Um and so,
55:06speaking to him, I can just tell you
55:08things are moving ahead. Tokenization is
55:11accelerating. There are now over 360 on
55:14chain tokenized equity products up 200%
55:16year-to-date. This is the kind of stuff
55:17you want to invest in, guys.
55:19Stripe and Agoric Commerce revs up.
55:22John Collison
55:25said in an interview with Mark
55:28Zuckerberg
55:29and Alexander Wang, Agoric Commerce went
55:32vertical
55:33last week. Uh Uh, Brian Huang,
55:37who I spoke to and met with last week,
55:40who's with Glider introducing au-
55:43automated token portfolios. This is what
55:45I'm hoping we can do with mine. Very
55:49interesting way to approach this. Very
55:51cool.
55:52Amazing as someone who's been in Wall
55:54Street a long time.
55:56Uh, that's it for this week, guys. I
55:57tried to keep it close to an hour. I
55:59think I did that. I went fast. As a
56:01reminder, call Mark Wailing if you want
56:03more information, especially to navigate
56:05this stuff. Uh, I did three This is the
56:08fourth video I've done this week. So,
56:10when times get tough,
56:12I stand in front of the computer and I
56:13try to bring you guys things to at least
56:15calm you down and give you some of the
56:16facts and organize things, but at the
56:17same time,
56:19I think this is going to be the life
56:20that we're in for a long time. So, I'm
56:22trying to give you the places. A gentle
56:23compute, for sure.
56:25Healthcare needs to be part of your
56:27portfolio as well, and it needs to be
56:29the pharma side, the biotech side, and
56:30life sciences. I showed an I showed a
56:33combination of a portfolio that I think
56:35people should be involved in. That
56:38that presentation, the entire slides,
56:40you can watch the video, but the slides
56:41are also up there as well.
56:43Um,
56:44and if nothing else,
56:46uh, I'll see you guys next week. We'll
56:48see if there's another tokenized wipeout
56:49over the weekend.

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