How Leverage Turned An AI Boom Into A Crash

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So why not you? Try Odo for free at Odo.com, that's OdoO.com. Pouters, pills, plunges, everywhere you look, there seems to be a new wellness trend. We all want to feel good, and if there's a way to feel better, I think wouldn't you want to try it?

I would. What's the cost of being well, and why are we so obsessed with it in the first place? Because this week, I'm explaining to me, find episodes every Sunday, wherever you get your podcasts.

Today's number 21.4 million.

That's how many Americans use marijuana daily in 2025, making it the most frequently used substance above alcohol at 17.2 million. Ed, I do believe if the entire world got high together for a couple hours, it would be a better place, and then we'd have a global food shortage. That number blew me away, I mean granted, I'm 90% of that, but still, what are these young

people doing? It's kind of interesting to me. I feel like none of my friends are smoking weed or eating weed or however they're consuming weed. None of them are really doing it in my friend group.

I'm not doing it either, I'm kind of surprised to see it, but I guess it's just the decline of alcohol. Are they drinking? Are they doing mushroom chocolate? So they're just trying to pay off their student loans from Princeton.

A lot less substance use at this age. I would say like a few years ago, there was a kind of uptick in the mushroom chalk plates and the psychedelics and all of that stuff, but it does seem like everyone's trying to kind of getting to that stage where they're getting that shit together, and it's like, okay, do I really want to piss away, not just tonight, but the several days after, with a hangover,

certainly, Catamine was a thing back in the day.

Catamine back in the day, wow, God, I feel old, I never, I miss that.

Yeah, well, I'm saying back in the day, it means 18 months ago. Last summer at a party in McEnough, from the age of, when I got out of UCLA, we spent, we spent a lot of pot and college, but from like 22 to 30. I don't think I did much of anything, it was so, it was just, you know, working all the time and I don't know, just didn't really drink or smoke or that is my criticism of myself

right now.

“I think I need to be having more fun than I'm currently having.”

I've got much better criticisms than that. I can help out there. I can make that seem like one of your better qualities. Yeah, there's, there's, I had that kid Jack Rains on the property office hours talking about.

His whole thing is, you know, make sure you have some fun in your 20s. You don't want to give up your 20s, but my sense is, my sense is young people will

always find time in a way to have fun.

I'm not worried about that. Are you still a marijuana user? I do edibles probably once or twice a week when I'm having trouble sleeping, but I don't smoke. I don't really do, I'm taking down my drinking substantially because I do realize a 51-year-old

liver cannot process the way I did it 21. Is the edible when you take the edible? Is it just to go to sleep or you having fun watching TV, messing around, like, or is it literally

“just, I'm going to take the edible and then I'm going to go to bed at full site?”

For me, quite frankly, it just quietes the mind. My mind kind of starts firing at about 11pm, and so if I want to, if I feel especially not anxious, but just a wake, I'll take a small, like, 5 milligrams of an edible and this brand I like, called Wild Time, that I get at the expense rate, and I spend pair of flavor. And it just kind of quietes my mind and makes it easier for me to sleep.

I just abuse drugs home alone as I'm playing video games.

It's a good way to do it.

“Now, but I, I mean, in a case that I'll, you know, I'll watch some stuff on, you know,”

I'll stream something. I'll watch something on TV. But mostly I just hang out with the dogs and wait till I feel tired enough to get into bed, because I find if you get into bed and you're not tired, I just sit there and stare at the ceiling for two or three hours.

But I don't. You know, when we were younger, we would do things like, like, I'm going to see the Odyssey today. If when I was a younger man, I'd do it on a Sunday and take an edible and go with a bunch

of friends and then watch the Odyssey and well, dude, that scene was amazing and then we'd

all go to ending our burger. But now it's mostly just a sleep aid for me. It's interesting. You say that I actually have the opposite experience with marijuana where my mind starts racing and I feel like I'm having all of these thoughts, all of these ideas, I'm having

a lot of fun, but it's not a sedated state, maybe it's just a type. I guess there's different variations. But yeah, it's, it would not work as a sleeping aid for me, I don't think.

“But on a side note, I'm very excited for you to see the Odyssey, as I think I've mentioned”

to you, one of the best movies I've seen in a long time.

It is number two on my Nolan list behind Interstellar, but it beats a lot of his films and

it's the best adaptation of that story I've ever seen. So I'm very excited for you. Yeah, I'm excited to see it, but more importantly, let's talk about the South Korean stock market. Let's do it.

Lots to get into in the markets this week. There's been an enormous amount of volatility in the South Korean stock market. Just last week, the cost be index fell 22%, and then days later it rose 15%, one of the biggest culprits appears to be a new wave of leveraged ETFs. In late May, the country launched single stock leveraged ETFs tracking two of its biggest

chipmakers, SK Heinrichs and Samsung.

“These funds use borrowed money to multiply the daily return of their target by two, three,”

or even five times. That means that the gains are amplified when the stocks rise, but so are the losses when they fall. The products quickly became popular with retail investors looking to capitalize on the AI boom.

But last week when AI sentiment briefly soured, the pressure quickly spread to South Korea's chipmakers, SK Heinrichs reported weaker than expected earnings adding even more pressure, or told Samsung plummeted 32%, and SK Heinrichs crashed 40%, and the cost be index fell into a bear market. So Scott, this is really just a fascinating story here.

What happened, the South Korean stock market's down 44%, two trillion dollars in market value has been wiped out practically overnight, and the two main reasons for that are, as I said, Samsung and SK Heinrichs, these two chip companies, which now make up roughly half of the entire South Korean stock market. And those two have tapped in the past month, this stock market crash in South Korea right

now, this is the worst they've ever seen since the financial crisis in 2008. So, you know, why is it down so much? The AI trade, as we've been talking about throughout the week, appears to be unwinding. It's not just Samsung and SK Heinrichs, there's a lot of the other semiconductor names like micron and AMD and TSMC, chip stocks lost about $1 trillion in value in the past week, not

because of anything that happened with their earnings reports, which were generally pretty good, but the euphoria is beginning to lose steam because there are these concerns that we have discussed at length, like the extreme debt issuance, like the circular financing, like the SPV, Mania, and everyone's asking where's the ROI, but in South Korea specifically, there is this other killer ingredient that is crushing their market, and that is the leveraged

ETF specifically, the single stock leveraged ETF, which has become the most popular financial instrument in South Korea by a mile. So that was great when things were good, now things are bad, and it is total chaos. Scott, your reactions. It reminds me of the Charlie Margaris statement where he said the way smart people go broke is our ladies liquor and leverage, which by the way are awesome. I had dinner with the podcaster, and he was saying that he's been shorting the market or

thinking about shorting the market. And so you're under the impression that you can tie in the market, and as a hedge, I get it. And if you're worried about the market's going down,

ideas. The more boring way, if you think the markets are volatile or you want to lock in gains, is one diversification, but also lowering your leverage. And to a certain extent lowering a leverage cost something on the upside, but you don't, I don't know if you saw this hedge fund that was all the rage, situational awareness is basically shutting down because of leverage. And just buying AI stocks at five to one leverage, that's not a strategy or that's just

strategy until it isn't. I think of leverage like divorce in the sense that if you get divorce,

“the only thing you know about it is it'll happen at exactly the wrong time to sell assets.”

If that you're going to have to typically, you have to sell a home, you have to sell some stocks, you know, you start dividing shit. And inevitably it happens at the worst time. The way you go broke and just have huge hits to your financial well-being is if you put it yourself in a position, what you need to ask yourself is the following. At what point do I or the investments, what is the likelihood at some point we might become forced sellers? Because the

market senses you're a force seller and gives you a shitty price. And I mean, the worst call in history was when Jim Kramer probably thinking he was doing his viewers of favor said in the teeth of the crisis, if you can't send the volatility you should think about selling your stocks. That was the worst piece of financial advice given in this millennium. Because basically the

“NASDAQ recovered within, I think something like 14 or 17 months. But if you're a lever, you had to sell.”

If you weren't levered, you just didn't look at your phone and you know, soon rather than later, the stocks recovered. Leverage on the way up is a ton of fun. It's ugly on the way down. And my understanding is talking about gambling economy. 92% of investors in these products were retail. And so there were two brokerage accounts for every citizen in South Korea.

So it was never institutional risk. It was household risk. And the Goldman estimates that 3.4%

of South Korea's adult population has received a margin call. I mean, that's insane when you think about it. So the human cost here is so real that South Korea has rolled out a debt counseling hotline as part of its suicide prevention plan. And that's a sentence that should give us all pause. And so the lesson here isn't new. It's just very expensive for, you know, for every generation to relearn this. And that is leverage doesn't create risk. It removes your margin for being wrong.

“And I think this is, you know, you miss them upside. It does cost you. But I think once you get to any sort”

of asset base, one means of protecting yourself. We keep talking about diversification. But it's a good idea to game theory out and then you can use AI for this. Put in all your assets, what your mortgage is on them, what you have, what you have pledged against them or if they can money out on margin, whatever it is, whatever it qualifies this leverage, what are the scenarios where you might be a foreseller? And you want to give up some upside such that if and when the market

draws down as it always does through cycles, you can ride it out. Your thoughts on?

Well, the Leopold, Austin, Brennan, this situational awareness thing is really interesting, because for those that don't know, this is this hedge fund that was started by this former open AI employee who wrote this paper called situational awareness that was all about how the AI revolutions are going to change the world and all of these things that we should be thinking about it went super viral and like many up and coming asset managers today, it happened because he

went viral and then he kind of launched his hedge fund career off of that. And the fund performed unbelievably well. I mean, just looking at this year, it was from June, it was up 439 percent on the year. And basically, all he was doing was investing in AI stocks and chip stocks, all of the names that have just gone absolutely crazy over the past few months. By the way, side note, his wife is the chief of staff at Anthropic. So a lot of people have been saying, oh my god,

this guy's a genius. How does he know when to buy all these stocks? How does he know when things

change? And the answer is probably like he's literally married to one of the most inside insiders

in Silicon Valley. But last week, we learn a truth bomb, which is that it turns out he was 5x levered up. He was then margin called and then he decided, well, not decided. He was forced to

And it is remarkable because if you've been online, if you've been on Twitter and you're kind of plugged into the investing community, this guy was considered AI Jesus. He was like the savant of our time. He could predict the future. He knew everything that was going to happen. And literally overnight, the whole thing has collapsed. And what is it? It's a story of leverage once again. He was levering up into the hottest stocks into the hottest momentum trades in the world, looked really

smart until suddenly he didn't. And it is just so fascinating because we have seen this story over and over again. We saw it with Michael Sala and the microstrategy player. We saw it with Kathy Wood and Ark Invest. Yoloing and levering up into Tesla. We saw it with Bill Whang. We saw it

with long-term capital management. And it's just hilarious to me how we always kind of fall prey to the

same game. We see these gigantic namens and then we assume these people. The genius is in reality they're just taking on a lot of leverage. By the way, interesting side note, he sold his entire position all of his lungs like SK Hanex, by the way, all of his shorts as well like Adobe. He sold them all

“to a single buyer. Do you have any guesses who that buyer was? I think I read it was Citadel,”

Ken Griffin, no? That's right. Ken Griffin. Yeah, I'm by the way, Ken's going to make a lot of money to be. If you could find a fund that said, "We're buyers on nothing but assets from four sellers." Those are, I think the greatest investment traders in Bill Lackman, there was a family that owned all of these malls. I think it was called GCC. Anyways, they general growth properties, GGP. And they got caught in a down cycle. I think it was O8. And basically, they could make their

depaments. He came in and basically squeezed them and bumped them into bankruptcy. If they'd been able to hold on for literally like three months longer, they would have been fine. And he got something

like a 35,000 percent return on it. It just insane a return. And that's again, it's really easy

and good times to mistake leverage for IQ. I was just with my tax advisor and she said, "We should put some leverage on your real estate." I'm at my age. I've had my eyebrows burned off and my fingers like not burned but chopped off a couple times in the market. So I don't like any leverage at all. And she convinced me that a little bit of leverage is actually health and strategic. So again, it's like, you know, it's like, I don't know what the term is, prescription drugs as taken

as prescribed can be very good for you. Too much of anything. It's going to kill you. You know,

“so I think leverage is something you need to understand. You need to understand, I'm thinking that”

like, what could we do at the University of California? I counted at curriculum needs to need to change and I was going back into high school, how does it change? And I think of course on a Dalton that spent a decent amount of time talking about leverage, whether it's the mortgage on your house, what margin is, credit cards are essentially leverage on your on your lifestyle or taking leverage out, but understanding the concept and what is the healthy zone of leverage?

Very few people can buy a home for cash. I'm in a position of privilege. So what is a healthy amount of leverage? Yeah. And I think the South Korean stock market story is the perfect example of leverage gone wrong. And I think it's a good warning against the downsides because it looks like, I mean, a lot of people in South Korea, a lot of retail investors probably convinced themselves that they were geniuses. They probably convinced themselves that they were the new Leopold Ashton

Brenner. And we saw the inflows into those leveraged ETFs, these single stock leveraged ETFs, which is basically just a leveled up version of SK Heinrichs and Samsung. And that's basically it because those two stocks are the only stocks that mattered in the market. The assets under

“management of those ETFs tripled in one month in South Korea. And I think as you mentioned,”

92% of the investors in those ETFs were retail investors. Now we look at the damage.

Those retail investors in South Korea have lost $39 billion so far. You mentioned the craziest

stock, I think, which is that more than 3% of the adult population has now received a margin call in South Korea. But I think probably most astounding is some of the imagery that we're seeing

right now, and you go on the sidewalk, you will find a pile of funeral reads on the street with a

“sign that says abolish the single stock leveraged ETF. Because suddenly, everyone is realizing”

that this stuff is extremely dangerous. There are literally thousands of people who have lost their life savings because they convinced themselves that this was the way to do it. This is how they were going to get rich. I mean, if you look at the amount of people in South Korea that are in the red on those two names on Eskehainix and on Samsung, it comes out to around 70% that is according to the Korean stock market regulators. The response from from regulation, from the people in charge of

South Korea's version of the SEC is, they're going to just stop allowing these new listings

of the single stock leveraged ETF. They realized, wow, this was probably a bad idea. And you

listen to some of the quotes that are coming out of South Korea right now. One of their parliament members said that the country has turned into a casino. Another said that the launch of the leveraged ETF was a "man-made disaster", the chief of the FSS, which is one of their securities regulators said, quote, "I should have laid down to protest the launch of the leveraged ETF by any means necessary." So they're suddenly realizing, oh my God, why did we allow

“this to happen? Why did we encourage this? Why didn't we put out more protections, put out more regulations?”

All of the things that I think you and I have been advocating for in America, but which we kind of

get a lot of shit for because everyone's like, you know, you're patronizing investors, like,

let people do whatever they want to do. We're now seeing the downside. We're now seeing that people are taking to the streets and saying, "Why didn't you ban this? Why didn't you stop me from myself?" And it's a really good warning story for, for America, where we're seeing trends brewing in the same direction. And South Korea is an example of where it went wrong. Yeah, it's, and I'm curious of you agree with this, but there's a balance between infantilizing people and also protecting them,

right? A government has a paternal or a maternal feel to it. We don't, you know, we make it illegal

“for people to take, you know, you can kill yourself by eating ice cream or going to Oregon for”

assisted suicide, but we put a lot of regulation and friction in between those things saying, "Okay, on certain levels, we do know better than you." And this to me feels like an example where we know what's going to happen here. We get, we get regulated backwards. We wait for retail investors to absorb the downside of financial engineering, which likely had really juicy fees for the middle wear. We then apologize and then we regulate it. And the apology should come before these products

launch, priced into the approval process with friction that says, "Okay, retail investors, and this isn't fantasizing them, should probably not be a have access to products with five extra leverage." That that just presents an existential risk and our population probably doesn't have the maturity, the experience or the knowledge to realize you're putting nuclear weapons in our hands that are seem to be endorsed by ads on CMBC South Korea. So it feels to me like this

probably is, there probably is regulation that's required here that says, "Okay, at some point, when you're putting in place products that are subject to a cyclical downturn, which is, you know, happens in cycles that would wipe out the household wealth. Potentially, millions of households, we're not going to let them do it. Just as we wouldn't allow certain products, the availability of certain products that are dangerous. I mean, these products are dangerous.

And at a minimum, you know, I don't think warning labels are enough here. If you're selling on the Cosby and by major brokerages with that have ad campaigns of five to one lever product, it's not if it's going to blow up. It's when it's going to blow up. So good regulation is prophylactic. So anyway, I'm curious to get your take because at the same time what you're doing is saying institutional investors have access to more products and more leverage and retail investors.

But at the same time, you know, there is a need for protection, if you will. Do you think it's from your generations viewpoint? Do you think it's buyer, but where don't fantasize me? I'm comfortable taking my own risk. You just want to request or greater returns to yourself with

Or do you think the government has a role here in kind of being more paternal and saying,

“"No, we're not going to give you access to this products." I think it's a balance. I think that you need”

to, there are things that you can do to protect investors from themselves. You can limit the amount of leverage that they can actually take on. You can increase the minimum deposit requirements. There are things that you can do, which we used to do in America, but increasingly seem to not be interested in doing because we've swung so far into this infantillization argument, which I think has gone way out of control, but also the education, as you say, the warning label, we don't have nearly enough of that.

And part of the problem is that there is a coordinated campaign by people who make money selling

these products and executing the trades on these products to blur the lines as to what is leverage and what is gambling and what is risky and what isn't. I think what we're seeing is a proliferation of a lot of these financial instruments that are kind of just taking these weird side routes around the

“law and around regulations. The perfect example would be these perpetual futures, which has become”

the most popular form of trading cryptocurrencies today. They made up 70% of all Bitcoin trading volume last year. And it's basically a way to level up by like 100 times, or even in some cases, 1,000 times on crypto with no actual expiration date. It's basically just a bet on whether the price is going to go off or down tomorrow. And it's wiped out a lot of investors. Again, these are the

stories that you don't hear because everyone brags when they're up 1,000%, they never brag when

they're down and they lose all of their investments. But it's things like that. It's like the perpetual futures is the single stock levity TF. It's the defy, yield farming. It's all of these products that we are presenting to young people as if they are a legitimate financial product that is very complex and sophisticated. And if you can figure out how to do it, then that means that you're smart. And a lot of people get lured into this stuff. And so I think we could be doing a way better job of

describing to people what it really is. Another example would be by now pay later. It's a little different. But what we had when that industry exploded was you had these companies going around and

saying, hey, this isn't credit. We know that you guys don't like credit cards. We know that you guys

don't like debt. This is a new thing where you buy it now and then you just separate the payment up into little increments and you pay it later. And this was the story that they told us. They said that we were the debit generation. We don't like credit. So we'd prefer to do buy now pay later, which is literally the definition of credit. And eventually our regulators kind of stepped up.

“But honestly, it was a little bit too late. And they said, you need to be clear with people about”

what your product actually is. It is credit. It is debt. It is leverage. It is not a form of debit. It is not just taking it out of your checking account. So it's issues like that. I think we need to be a lot more serious about making sure that people know exactly what they are buying, what the risks actually are. We could actually put these warning labels. Another example would be events contracts in the prediction markets. Are we going to step up and start explaining to people what these

instruments actually are? But we've decided, no, we don't want to do that. Or at least this SEC has decided they don't want to do that. So I think there's a lot of work that is to be done. I have another angle on this self-careous story, which I think is very interesting. But before I do that, I'll just get your response. I agree with everything you've said. Don't tease us. Don't be Rachel madowing me. Well, when you think about why has this happened, why are all these young

people flinging that money into these leveraged ETFs and then praying that the stock goes to the moon and then being upset when it crashes to the ground? If you look at South Korea on a demographic basis, there are few nations in the world that are experiencing a loneliness crisis more severe than South Korea. You look at their marriage rates, which have declined 40% in the past decade. You look at the fertility rate, which hit 0.8 last year. It's the only OECD nation with a fertility rate

below one. You look at what the local governments are doing where they're actually paying people to get married now. I don't think it's a coincidence that they're suffering the same loneliness crisis that we're starting to see in America and also seeing the same sense of financial nihilism that is becoming pervasive among young people such that they are levering up on these

I think the two are definitely linked. I think South Korea is ground zero for the problems that

“we're about to see in America. I think that's really insightful and I can record those dots and”

it seems pretty obvious the way you lay it out that that's got something to do with it because 3% of Americans I don't know what is in South Korea but 3% Americans have a gambling problem. It's 10% of young men and one of the most beneficial things for a young man if not the most beneficial thing is a relationship and one of the most beneficial things for a young man in a relationship is quite frankly guardrails and that is what the fuck are you doing? I thought we were saving for a house

right or no you know don't take these kinds of risks with our money and sometimes it's the opposite right not as often but people check each other when they're in groups there's not only a wisdom of groups there's a wisdom of relationships where you check each other and the fact that fewer and fewer young people are connecting and it sounds like the trends are also if you're expecting a child you're your your your your your risk profile goes down you think well maybe I

shouldn't be in this five to one lever levered fun because I've got to you know I've got to

I've got to I've got to get a brand of place with a second bedroom so there's definitely something

also relationships are hard but they give you a lot of dope but they give you a lot of upside they keep you busy and when you're lonely and looking for a dope a hit I mean and I'm addicted to this when I used to buy options or sell calls it's fun and you know the more time you have than the you know or the less time you're spending on kids or just focusing on work and so what do you have fewer guardrails a greater risk profile fewer people to keep you in check and quite frankly

“you're probably just bored and looking for some entertainment value but I think that's a really”

insightful comment I can't connect with those thoughts yeah and hoping that this is the way that you're gonna get rich and then maybe if you get rich then that will mean you get a relationship I mean if we just look at the relationship inequality in South Korea specifically only 8% of the man in the bottom death style of earners in South Korea or in a relationship currently and in the top death style it's around four times higher so there is clearly a connection in South Korea and probably

just in the world between financial success and romantic success and I think that a lot of young people in South Korea similar to what we're seeing in America they think I'm not going to be able to afford a home I'm not going to be able to afford a life I can't get to where I want to be by just continuing to work the current job I'm in and continuing to do the the wage treadmill and so I need to figure out a way to get two thousand three thousand four thousand percent

returns and this is my ticket to doing it and for maybe like a handful of people at works and then for the rest of them we're seeing this in the statistics for the majority of the people who

“take that risk it ends up being literally ruinous and I think nothing tells that story more than”

the funeral reads that we're seeing outside the national assembly building in Seoul just one final point this is rising in America you look at the US leveraged ETFs they've jumped from $120

billion in AUM and April to more than $200 billion today it's up nearly 70% in just a few months

the number of US leverage ETFs is more than doubled since 2025 and more than half of them are single stock ETFs was the exact same thing that got South Korea into trouble so it'll be really interesting to see how this plays out in the US I think the same trend is happening but it's almost like when maybe a couple of months behind South Korea or at least were less concentrated then South Korea is because of how dependent their stock market is on those two names in particular

but the same trends all the beginning to happen and I think I think it can only end bad it leverages risk it's not a strategy and I agree with you that did I mean what you basically said the crossway of connecting with a doctor on cost bay is a lot of young men think that leverage is going to get them laid and that is their a story as old of time only 40% of men throughout history have reproduced 80% of women and men don't have the right to reproduce and women are

obligated to service men but the reality is a minority of men have had the opportunity to find a mate

and to reproduce the greatest innovation in history which is not GPS or AI but the American little class give a lot more men agency to build a home and quite frankly attract mates

to reproduce and when men feel as if they don't have the idea and unfortunately because our

“societies become so much about the idolatry of money and we've created a system with weaker social”

safety nets you're kind of unviable in the eyes of a potential mate I mean essentially relationships have become a luxury item and there's where we're addressing to the law of the jungle where the world is basically Porsche polygamy we're a small number of men through luck or hard work or inheritance get all of the mating opportunities and from 45 to present in the west we gave a lot more people the opportunity to have mating opportunities by reinvesting in the middle class

and when we have this sort of income inequality in the general public decides we'd rather have a super class of billionaires and giving more people an opportunity to be millionaires you end up with returning to the way the world has been through the majority of history and that is a small

number of men have all of the mating opportunities but the problem is those types of societies collapse

“on themselves because those men get very angry and upset and a strong man takes advantage of that”

anger and immense wars or starts blaming people or saying the enemy is within so this is I like this framing but this is a story as old as time and again we don't I I don't think we fully appreciate that the middle class is this incredible innovation that requires investment it is not a self-accurring or it's not a self-healing organism that's a natural part of history a middle class and and the majority of people having the opportunity to find someone to love and have children with that's the anomaly

that's the exception to history and by the way it's fucking wonderful in a huge achievement on our society and it's worth investing in we'll be right back off to the break and if you're enjoying the show so fall send it to a friend and please follow us on youtube and Spotify and wherever you get your podcast support for the show comes from framer if your team wants a website that looks and feels handcrafted but is still fast to ship framer is built for that design on a visual canvas with response

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The only way to get 20% off is to go to joindeleteme.com/probthee and enter code property a checkout that's joineddeleteme.com/probthee code property. We're back with property markets. Big tech reported earnings last week. We got earnings from Microsoft, Amazon, Meta and Apple. The winners were Microsoft and Amazon. The losers were Apple and Meta shares plunged 8% after earnings. Apple shares plunged 7% mean one Microsoft. The Amazon

were up 16% and 14% respectively. Scott, I'm going to jump right into these earnings because there is so much to get into here. And I think we should probably start with the winners. Headline numbers on Microsoft revenue really strong up 18% net income up 31%. They beat on earnings per share. That's good. But I think the numbers that actually matter are the AI numbers because

“in this market, AI is the only thing people care about. So their cloud revenue was up 43% which is”

really strong. That's the money that they're making selling compute. Their productivity and business processes market and that houses their office 365 product and also Microsoft co-pilot. This is the segment that was supposed to get crushed by AI. That is up 14%. So some strong growth there.

They also reached over 30 million paid seats on Microsoft. Co-pilot. There are some nuance

there that we could get into. But free cash flow is down. Not negative, but down. It fell 23%. It's pretty good compared to Google's free cash flow, which of course turned negative and also compared to Amazon, which we'll get into, which also turned negative. But the market was really excited about this. And the stock has been rewarded pretty, pretty massively. Your

“reactions to Microsoft starting Scott. Like it was nothing short of staggering. And I think I”

got to think that reaction to the markets around Microsoft and Amazon make them make for each of them some of their best single-day gains in history. And they're both sort of proved the thesis

that if you can point to actual revenue from AI, co-pilot's 30 million paid seats, AWS

ranked 37%. It's fast as clip in five years. The market rewards you up 16 and 14%. And that assort is the opposite. And that is if you spend billions on AI with no clear monetization story and Wall Street stops giving you the benefit of the doubt, the market is starting to stop giving you the benefit of the doubt, the way I would put it. Meta's free cash flow fell 91% down to 784 million with zero explanation or visibility into what they expect to pay off to be.

“It's more, it's beginning to feel people are starting to say, okay, is this investment or is it”

faith-based spending? And the real thing, the tell buried in the Amazon numbers that I don't think the market is digested yet, is that 53 billion of their 63 billion in net income came from their anthropic stake. And if you strip that out, the beat is mostly marked to market gain on a private investment, not operating performance. And also a similar story at Alphabet, 87% of the combined Amazon alphabet net income trace back to anthropic and spacer gains. So it's really weird, these

companies are beginning to trade, like less on earnings and more, the people are starting to try and price their VC portfolio marks. Apple earnings were really interesting, the problem isn't demand, iPhone sales were up 22%, I just think that's staggering, I wouldn't guess that's that thought the latest iteration was just sort of, and that's a June quarter record, right? So record increase in iPhone sales, the issue they're having is supply, the clinical, Tim Cook's hundred-year

flood line on memory pricing is Apple for the first time in a decade, not fully controlling

its own cost structure. You know, supply chain has always been in my view, they're competitive

advantage. And that's sort of new territory for a company whose supply chain command gave them gave, gave people the sense that they were the controlling feature in the supply chain and they aren't able to control the memory prices. And then, where I'll wrap up here, the real story under the story here where you'll see articles next week is that markets able to absorb these numbers is, is CapEx. Alphabet's spending up to 205 billion Amazon, 220 Meta, 145 billion

is that everyone else is betting the company on AI infrastructure and Apple's betting the company on not needing to, which I actually think is the right bet. And we'll find out in 18 months who was right, but I was sort of blown away by, I wasn't surprised on there, you know, some of the numbers here. I was surprised, I was blown away by the markets response, especially to Amazon

“and Microsoft. What are your thoughts at? I think the CapEx story is definitely one of those”

stories underneath the stories. And I think that's something to keep track of, in the case of Microsoft, that CapEx was unchanged for calendar year 2026, which I think the markets were pretty happy about. And then, as it relates to the next 12 months, they basically just said that the CapEx would go up. And that's all they said, they didn't really give a dollar amount, which is Giluria said, when he came on the show, last week was kind of them sort of playing it safe.

They're saying, yes, the AI thing was still investing in it, but we're not investing in it like crazy. And I think that was something that the market responded to quite well. I would just say on the AI ROI question, because this is the big question, like how are you going to monetize your

“AI investments? It's clear that Microsoft is doing it through their cloud business, selling the”

compute to AI companies. It's clear that Amazon is doing that too. The trouble is how much of

that is going to two companies, specifically, open AI and anthropic. And the answer is, we don't

know because they won't tell us what they have told us, what Microsoft told us is that they told us something about their remaining performance obligations, which is their future revenue coming down the pipeline. In January, they told us that half of those remaining performance applications were tied to open AI. This quarter, they told us that the 82% growth they were registering in their remaining performance obligations would have been 25% if it weren't for open AI. So they're telling

us in so many words that they are pretty dependent on open AI, but we're still not getting a clear

“sense of exactly how dependent they are. And I think if we really wanted to understand these businesses,”

then the big tech companies would tell us, this is how much of our revenue in this quarter was derived from two companies, specifically open AI and anthropic, maybe we throw SpaceX in there too.

And the reality is that Microsoft is the one that's been given us the most disclosure

on this front. Amazon has told us nothing about it, Google has told us basically nothing as well. We really don't know how much they are reliant on these these two companies, or these three companies, which as we have said before, those are companies that are losing tons of money and it's not really clear how sustainable this business model actually is. Which brings me to something you mentioned, which I think is the realist story of the stories, which is the fact that

in the case of Amazon specifically 85% of their net income was derived from their stake in private companies, specifically anthropic and now open AI. And in the case of Google, that number was 87% but for anthropic and SpaceX. And so the paper gains that these companies are registering in their private AI investments and who knows how their value in these companies are now being

funneled into the bottom line of their earnings. And the real problem is when you look at the

price to earnings multiples of these companies, because you look at Amazon, which is on a tear right now, the stocks up 20% year to date. Google is up around 11% year to date and yet their multiples have come crashing down. So Amazon's PE multiple right now is 19 times earnings, lost your it was 32. And so you look at that valuation multiple and you think, oh my gosh, Amazon is really cheap right now. And I'm sure that a lot of investors have looked at their multiple and gone, wow,

now's a great time to buy Amazon. Look how cheap the valuation is. Look at the S&P, which is on average trading around 25 times earnings. Amazon is at 19. What that number isn't telling you is the extent to which the private investment in anthropic is juicing the net income, which literally like triples, lost quarter, because of that investment in anthropic. And the same goes for Google as well. So this is the new problem that we're really starting to see based on these

that reflects the real multiple of these companies. We now need to create like a PE that

subtracts out their private investments in anthropic and open AI and SpaceX, because those private investments are distorting the most fundamental valuation metric that exists in markets and that likely many investors are basing their portfolio strategies around. So we're getting some very murky territory here. By the way, we did the analysis. If you took out those investments, Amazon's real PE would be 30 times earnings and Google would be 31 times earnings. So they're actually

a lot more expensive right now than the valuations would imply or the multiples would imply. But this gets to what we've been talking about with the SPVs and the trouble with the four earnings where open AI just comes out with these contracts. And so this is how much we're going to make and spend over the next several years. Point being, traditional metrics have been compromised by AI, and it is becoming increasingly difficult to get an actual understanding of what these companies are worth.

“Yeah, you're just saying I think that analysts have an obligation and get an onslaught”

to do this to have a kind of venture-adjusted earnings. Right? Yes. And those earnings do, that money does flow back to shareholders, but it's a sugar high. It's not anything structural about the business. Maybe they would argue, well, actually, given our position in the marketplace, we're going to future opportunities to make these types of investments. But that is kind of empty calories from a street standpoint, because it's great for the time being, but we can't count on that

money. The lessons I take away from this are the following. So I have an investment in an AI adoption company called Section. And Section works with big corporations on how to upscale their employees for AI competent, so to speak. And one of the things one of the learnings from them is that Microsoft's co-pilot, their AI offering, is not considered one of the front tier models. It's not considered

one of the better models. At the same time, Microsoft 365 co-pilot has over 30 million paid

seats, meaning that Microsoft has one of the largest revenue producing AI products in all of

“tech. And that is, I think the business lesson here is, okay, having the front tier model, the best”

model is important. What's profound is your ability to get mass adoption. And I just see the narrative right now from Microsoft salespeople in the field. Well, we're already in the enterprise. You've already checked us for bugs and security risks from AI. Yeah, maybe we're not quite as good, but you know us. You love us. We've got billing set up. It integrates into the rest of your Microsoft workflow. This is just plugged. And by the way, we're Microsoft. We're scared. We're a public company.

We're the least likely ones to have a hugging bear like whatever it was. AI jailbreak within your company from RAI. Do you really want to trust all these little AI companies that might have better a better product, but we're Microsoft. And it's, I mean, it's just, these companies have such an advantage with their installed base. Microsoft probably has the most consistent recurring revenue business in the world. So I'm like 97% of the global 10,000 corporations have a monthly recurring revenue

relationship with Microsoft. And then the other takeaway for me was the technology will outlast these

“valuations. You know, the internet outlasted outlasted the crash of 2000. And I think that AI”

will outlast what I think is going to be a crash in these valuations. The place I think valuations will will actually increase as it relates to AI or two places. Autonomous. I'm an LA. I've been taking way most. I'm just fascinated. I think we're hitting a tipping point where autonomous autonomous vehicles or autonomous ride hailing is about to go parabolic and and alphabet has 5,000 operational autonomous vehicles. I think Tesla has 24 and the amount of data they're collecting to trust. AI

relates to autonomous as a big winner. And then the second place is AI as it relates to industrialized

robots. And that's where I think Amazon is going to really, really register incredible benefits.

And then the other what I'll call AI bet that's going to pay off is not betting. And that is I think Apple's taking the same approach to AI. They took the search. And that is they're saying, OK, you guys fight it out and enter into this capital war. And we're just going to wait in the background and figure out a way to charge one of you in enormous licensing fee for access to our

big tech stock pick for 25 ad? Google. There's alphabet. And I think it was up 68% and it was the

best reformer in big tech. What was our big tech stock pick for 26? Amazon. So let's just review year to date stock movement. Matt is off 15% Microsoft's down 5% alphabet's up 12 apples up 12 man. Survey says Amazon year to date is up 15%. It's the number one performer out of this morning in big tech. This is all. I find it all super interesting. And then the final takeaway is the following. For all of the shit posting, not you, but I do about big tech in its harms.

These companies are so incredibly well run. Their ability to balance what to let flow to the bottom line and return to shareholders and the former earnings are stocked by backs with what is the right level of forward leaning investment based on the ecosystem and the market and what what what what the what the markets will register not register these companies are just so

“incredibly well run. But I think that I think the concern is that that's not true anymore.”

I mean Google's free cash flow is negative. Amazon's free cash flow. This quarter is negative. Matter is spending tens of billions of dollars on data set infrastructure and mean you look at why did the stock plum it? It's because Mark Zuckerberg did not have an answer as to how he's going to generate a return on those investments. We saw the reporting about how he's going to build a cloud business and he was asked point blank. He didn't discuss the cloud

business. He didn't address the reports about how meta was in talks to sellers compute to anthropic. He simply avoided the question and that's exactly why the stock tanked. Now I think that there's an open question as to whether these guys are geniuses when it comes to catpacks and they are geniuses when it comes to managing the balance sheet. But that's certainly not a given at this point and it's certainly the thing that markets are trying to digest and trying to ascertain.

Zuckerberg has a okay track record. He's a clearly a great founder and a great business person,

but he did have the metaverse. I did lose $80 billion on that thing and he did change the name of the

entire company on a pipe stream and a vision of the future which did not come to pass whatsoever. I think this is an open question for a lot of these companies. I think for me I do think we are getting to a place where you do want to see more responsible spending. You don't want to see free cash flows turning negative. Considering the amount of money that these companies are generating to begin with, the idea that you would spend all of that and then as we're now seeing issue debt

to finance these plans, that to me does seem irresponsible and I think the only company out of the list here for whom I feel probably better about in terms of how they are managing their AI risk would probably be Microsoft whose free cash flows coming down, but it's still positive and it's still they're still in a better position. I thought you were going to say Apple apples mostly on the sidelines, so Apple I'm actually not even putting into this list because it's just a

completely different company now. They are firmly not in the AI race. They have been rewarded for

“not getting into the AI race and that's what investors are excited about. I have a slightly different”

view on Apple which we can get to. I'm not so bullish on the company at the current price at least, but as it relates to the AI companies, this is an open question for sure. So I would argue, as if I were on the board of these companies, like use the word irresponsible. These companies what they're doing is the following, but on it, Apple decided, all right, Zuckerberg's going really big into headsets into a consumer device. He's probably wrong. All the data shows he's wrong,

but let's take one or two billion dollars, throw it out of headsets, get Tim Cook on the cover of

Vanity Fair, and if he's right in this whole new world of spatial computing is the next thing, we need to be letter D when we need to find that out, not letter A and B flatfooted. I think this can be on a much on an exponential level of said, AI might maybe the next thing, and the level of

“spend that warrants is up for debate, and that's what you're saying, that the level of spend is out”

over at ski is relative to be fair. If they're good, lost yet, now I'm like, what are we doing?

Having said that, I think they're level of cat backs, and the, whatever you want to call the

efficient frontier of investment, these companies are such cashfall cano's ad that if AI ended up being a giant head fake or, or the cat backs is not justified, the short immediate term return, they're fine. I mean, anthropic and open AI go out of business or go down 90% in the get bought by one of these companies. But these companies have to play aggressively in this field and quite frankly, they could, they could see all of their cat backs, all of these companies that

we're talking about here, because we're not talking about anthropic or open AI. All of these companies can see their cat backs good as zero. It would impair their stocks for 12, maybe 24 months,

“and that's it. So now, are they spending too much? Okay, I think there's a solid argument that”

they may be. They have to put a lot of chips down on this AI number. They cannot get caught flatfooted.

And the amazing thing about being a monopoly in your respective field, whether it's social,

or e-commerce, or search, or enterprise software, is that they can afford to take these types of bets. And if it doesn't work out, it's going to be a bummer for several quarters. But the bigger bummer, it's sort of like when Janet Yellen said, they overdid the stimulus in America around COVID. And she said, the risks of overdoing it were much less than the risk of underdoing it. And I would argue that the CFO and the CFOs of these companies say, Apple's taking a different

strategy per your comments. But the rest of them are saying, the risks of underdoing AI and being the company that got displaced because we didn't bet in the future versus the risks of having to take

“huge right downs over the next six, eight quarters. And then we're back to the fucking cashflow”

canos we've always been. That's a good risk. What the efficient frontier or the right place on that

line is, I agree with you that is now people are starting to say that curve is too steep right now. Right. But these guys, it's good to be king. They can make these kinds of bets. And if they don't work, they're still fine. We'll be right back and for even more markets content, please sign up for our newsletter at propertymarkits.com.

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This is a paid sponsorship. We're back with the property markets. All of that anxiety that I am expressing about overdoing it, overinvesting, that's all being reflected in current prices.

“And I think a decent argument to make is to think, okay, let's imagine the AI just disappears.”

The AI thing doesn't work at all. Open AI goes out of business if that's the case. And throughout it goes out of business if that's the case. A lot of the names that have become very popular during the AI boom, maybe won't go out of business, but certainly their businesses will be really, really harm, perhaps ruined. For big tech, that's not the case because big tech was still king before AI. So I think an interesting question to consider is, how did the market

price these big tech companies before the AI boom? And the answer is, we went back and looked,

the multiples were higher. So you look at meta at the beginning of 2023, just a few months after Chachi B.T. was launched, meta was trading at 31 times earnings. It's currently trading at 20 times earnings. So it has been the market. It is not an AI winner based on the multiple. The market has decided that this is a real problem and they are certainly pricing in the risk when it comes to meta. Microsoft is down from its multiple at the beginning of 2023.

Technically Amazon and Google are also down, but again, we need to make those adjustments because of the weirdness because of their net income. But if you look at Amazon, if we find the real PE, it's 31 today, it was 79 other beginning of 2023. Google is up a little bit. So Google, you could argue is priced a little bit expensive. But the outlier is Apple. It's trading at 38 times earnings today. January 2023, it traded at 21 times earnings. So the market has attached a

premium to Apple simply for not engaging in the AI race. And the question is, do you think that makes sense? I would argue, it doesn't. I would argue, sure, maybe they've not gotten involved in this big debt contest of who can build the most amount of data centers. Maybe that's good.

But what I would like to see from a company like Apple is, here's what we're investing in instead.

We're going to take this other route and it's not going to be AI. And instead what they've done is they have literally done nothing. And for some reason the market is communicating to us that they believe that there are huge growth opportunities for Apple. But to me, I don't know what those growth opportunities are actually. I don't think it's growing their sharing the smartphone market,

“because the only way they can do that is to reduce prices. They already have a fifth of the global”

market. And they can't do that right now because memory prices are growing out. You could say, oh, they'll build the headset, but the headset was a giant flop. I don't think that's going to work. They're not building a car anymore. Like, I don't actually know how they're going to grow into the multiple that they are currently commanding, which is why I think that actually apples the most overvalued of all of them. And you could argue they made the right call maybe

by not getting into AI, but it's like, well, what are you getting into? Are you just going to rest on your laurels and sit around? Well, resting on their laurels has been the right. Tim Cook, people in the Chicago posting Tim Cook for decades around not getting another products. And get into the car and they decided, now it's not working and they pulled the plug on it. I think they're disciplined around basically saying the iPhone is the most profitable product and

history and continues to be the ultimate signal of wealth and utility, not of wealth,

aspirational value, the billion most important people in the world have one thing in common. And that is the

“use iOS. And so your point and I think it's a valid one is that apple trades in terms of a”

P and multiple is if it's a growth stock and it's a mature company. But what they would say is the following, mature, bitch. Our revenue is up 16%. We've managed to increase revenue on one of the largest top line tech companies in history, 16%. We are a growth company and deserve a growth multiple. The other thing that is different about Apple. Do you think that sustains? I agree. It's phenomenal. Like the fact that they've been able to grow the iPhone revenue the way they have

double digits pretty consistently. Like it's it's really impressive. But do you think that that

of wealth and creativity. And what you have globally with demographics and productivity is that income inequality is infecting every nation. And that is the top 10% of every nation even now in China is starting to aggregate more and more of the spoils. And it used to be once you go into the middle class, you buy a car, you get air conditioning and you start buying beef. Once

“you get into the top 10% you buy an iPhone. And I think there are going to be millions,”

tens of millions of people in India and Indonesia and other growth markets. South East Asia,

that the first thing they do is they buy an iPhone. Also, it is a little more resilient, much more

resilient to the vagaries and unknown wild west of software specifically AI. Because of all these companies, look at all of the things they offer. Maybe with the exception Microsoft office, you would say the most enduring thing and the hardest thing for any of them to replicate is hardware. And that is none of these companies have been able to produce anything that doesn't get, I mean, what is it? The Microsoft tablet, the Amazon Firephone, the what was it called, Facebook's portrait computer,

hardware, Apple and the iPhone in my view have the biggest modes. China is flooding the market with

open-weight LLMs that pose a real threat to the AI components of these companies. You know, a lot of

people were saying, I'd last see and posed a real threat to Microsoft. Did it or did it not? What's the

“competitor to Apple's hardware? Right. Do I think Apple's probably overvalued right now? Probably.”

I'm not selling any stock though because if there's one company in 10 years that I think will still be producing a product that has gigantic margins and be the ultimate, the best bet, the biggest mode in all of these businesses right now are probably Amazon's warehouses. A great number two and number one would be would be the iPhone. I just think that's going to continue to gush your money for a long time. I totally agree with that, but to me that is an argument as to why

their current business and their current market share is protected. To me it's not an argument as to why it's going to grow and I look at that multiple I think what the market is saying is that it's going to grow dramatically over the next several years. I agree. By the way, they have accomplished all of the things that you have described. They have 20% market share of this global smartphone market. All of those rich people like they've already got them. To me, if you want

to grow that business, now you have to actually go not to the rich people. You have to go down the income stream. To me, I don't think that they should do that because I think they should protect their positioning as the premium luxury product in hardware. I could see that becoming a potential route that they want to take and it could look like it looked like for Nike, where Nike decided OK, let's know prices to expand on market and it had a bad impact on the brand and that was a

problem. I agree with you that the things that you've described, they have crushed and no one's

“coming close. I just don't know how they grow and I think the only way that they do it at least”

commensurate with the multiple that they are currently commanding is if in the next couple of years,

they come out with the new iPhone of the next generation. Like a hardware product, so incredible

that it extends into an entirely new market. I think that's what they thought that the Apple Vision Pro would be and maybe it's what they thought the car would be at one point and agree props to them for just sunsetting that and recognizing this isn't our ballgame. We're not going to play in this. I think one potentially good thing for the Apple balls would be the new CEO John Ternis is a hardware guy. So maybe the plan is like he's going to come up with something incredible, but I just don't

see it right now. And I think you're praying on John Ternis to be a genius for this to walk out. Yeah, I would describe this as less praying and more rational and I want to acknowledge the PE maybe ahead of itself and also on Amazon, the PE even even stripping out the returns on its investments at a PE of 30, it's historically traded in an average of 55. I mean, based because of the progress in the Netherlands. So it actually, I don't say it looks cheap, but it looks like it's the best

value it's been in a while. Again, they're saying that the staff to just absolutely, I find staggering.

higher because see above AI and industrial robots. You compared Apple to Nike, I don't think that's an apt analogy. Look at the substitutes for Nike. I wear on running. My sons love Adidas. There's Hoka. My sons just went and spent a ridiculous amount of money to buy shoes that look like they've

been worn for a year from this company called Golden Doots that I had never heard of.

There are a ton of really outstanding. I used to wear Puma for a while. There are a ton of outstanding

“substitutes, really viable substitutes for Nike. What is the really viable substitute for an iPhone?”

Yeah, no, it's true. And you said, you said, it has to produce new products. No. The global economy has to produce new middle class and upper middle class consumers because the 100 or 200 million new middle class consumers in India is going to produce in the next 36 or 48 months. What do they do when they go into the middle class? Do they get a paid LLM? Maybe, maybe not. They all buy a fucking iPhone. So as long as we believe the global economy is going to push more people into

the middle and upper middle class, Apple is good as gold. There's no substitute. We want to buy a nice car. Oh my god, you get rich. Well, okay, there's BMW Mercedes and Porsche and Audi. No, there's not. Have you seen what the Chinese market is doing to luxury automobiles? There's

so many amazing options right now. I want to send my kid to an elite college. Well, he needs to

go to Chicago. Okay. He could also go to Washington, MIT brand name a premium brand with this type of aspirational value. These types of margins, these types of self-expressive emotional benefits that doesn't have a ton of competitors. It all roads lead to one place, Apple. I don't know. I, I don't know if they, I mean, we'll see. This is an interesting one. I just don't you're a doubt. They're already at 20% small phone, global small phone market share. If we're

saying that they're going to do it by selling more iPhones, I think that's going to be getting a leading head. 20% of hardware sales. What is their, what is their revenue generation? They sit on top of in terms of app and e-commerce. What percentage of dollar volume flows through the iOS operating system? I don't have that number in front of me. But I don't know the number. I just know it's the majority of it. No, the majority of the revenues I find.

It's selling the iPhones. They also, but the majority of purchases done on in the e-commerce ecosystem, the majority of money that flows through for any app, any paid app, is flowing through iOS. It has a 20% market share, but that's misleading because quite frankly, the 20% of the world that owns like the iPhone are the people who matter. The 20% of people have iOS, have 110% of the influence around the world. That 20% numbers misleading.

I'm just looking at the services revenue. They did $54 billion in iPhone revenue,

“$30 billion in services revenue, which by the way missed. And I think that's why the market was”

upset about this, because I think they wanted to see what you're saying, which is like the services revenue, is how they grow. And it's up to 12%. It's not, it's pretty good. But I'm skeptical, but this is what the market saw. We have different opinions. It's a way, I'm saying, we'll say, I hear you. I understand an empathetic. I'm listening. I'm listening. Okay, let's take a look at the week ahead. We will see earnings from Palantir, AMD, Pfizer,

Eli Lilly, Spotify, Disney, Uber, Snap, and SpaceX, which I cannot wait for. We will also see the US employment report for July. Do you have any predictions? In the month of August, we're going to see a half a dozen four sales events based on the downward, the downward trajectory of AI stocks in the leverage. And it's not to say that the party's over. It's to say that, if you don't get, leverage puts you flying at Mach 3 at 50 feet of altitude. Meaning if you hit a

“bumper and air pocket, you should have my die. And I think there's a lot of people skimming along”

the surface at Mach 2 right now with leverage. And this downward trajectory, I just got to think all over the world. There are margin calls and people scrambling, who trying to hold on to their assets that aren't going to be able to. This bump is going to, you know, Buffett says, you know,

200 miles an hour and they're hitting their first speed bump. And we're going to see who has air backs.

So the prediction is an August, a half a dozen, quote unquote, fairly significant headline

“force selling events from companies that we missed a leverage for IQ. I like that. I think that's a”

good prediction. My prediction, the first part is a quick victory lap on Microsoft because as I

set on this podcast, I bought after the SaaS Park Lips at 400. I bought again after the second

SaaS Park Lips at 3/18 stocks up to 4/60 after those earnings. So I'm not more than 20% on that trade. But the people, the thing that people will say is, well, what about meta, which you also bought, and it just got crushed after earnings? Yes, it did. The good news is that I bought at the low. So

I'm down like 1% on meta. But my prediction is that this is the bottom for meta.

“I think that there are some very real concerns about the company, about how they're building AI,”

about the debt that they're taking on. But all of that is being reflected in the price right now at 20 times earnings. I don't see how meta goes much lower than this. So I think this is the bottom for meta. This episode was produced by Claire Miller and Alison Weiss and engineered by Benjamin Spencer. Our video editor is Jorge Carty. Our research team is down to Lawn, Chris Noodon, Hugh and me as Vario. Jake McPherson is our social producer. Drew Borrow's is our technical director

and Catherine Dylan is our executive producer. Thank you for listening to Prof. Markets from Prof. Media. If you liked what you heard, give us a follow and tune in tomorrow for a fresh take on the markets. ♪ And come for you, yeah ♪ ♪ As a long time ♪ Support for the show comes from Odo. Running a business is hard enough.

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