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- [00:02]
A
All right.
- [00:03]
B
Good morning, Doug. We're back with more. We have questions from subscribers to Crisis Investing. If you want to ask a question, the best thing to do is go to crisisinvesting.com, join our paid subscription. We can get good stock tips how to invest in this insane world. And you have the opportunity to ask Doug specific questions. But before we get to those, Doug, we gotta talk about some news events. And one of the ones that shocked me and you as well is the announcement of the new $250 bill that they're working really hard to get pushed through. What do you think of this whole thing? Put it on the screen for people who haven't seen it.
- [00:46]
A
I think it's shocking, disgusting, and crazy. I mean, it, it violates all traditions. This is what a third world country does, put the current ruler on your money. And it's never been done in American history. In fact, it was never done in Roman history before the, before the Republic turned into an emperor. It was only after that point that they put the current ruler or the current big man on the coinage. So I'm, I'm, I'm really shocked and disgusted. I think this is, this is proof that Trump is not just an egomaniac, but he's a batshit crazy megalomaniac. I mean, it's, it's shameful.
- [01:37]
B
It is. I do like the idea they're adding a larger increment to the dollar, given the fact that $100 isn't much anymore. You know, 250 is a night is a better increment to have.
- [01:49]
A
Listen, you got to look at the bright side. And that is the bright side, except this is kind of a commemorative thing. I don't think it'll be widely circulated or, or will it be widely accepted? I don't know.
- [02:02]
B
Yeah, I don't know either, but. And it's still some debate. I mean, it was, it was first reported in the Washington Post. There's still some debate about whether or not they're going to be able to get it done, but if they are able to get it done, I mean, it'll be pretty extraordinary. Now, this particular version of it says it's a gold note. Now, I didn't see it on other copies of this, but this says payable to bearer on demand, 250 in gold. I don't know if that's.
- [02:29]
A
No, not possible. That must be some kind of a typo that somebody put in there to amuse themselves.
- [02:35]
B
Yeah. Yeah, I wouldn't think so.
- [02:37]
A
250 in gold at what price of gold to start with. So, no, forget about it. But this is the type of thing that if it actually starts circulating, there are enough people that really hate Trump and for good reasons at this point, I've gone from being somebody that supported Trump because of the lies he told, which I wanted to believe, we all wanted to believe happy lies. Of course it's natural to now seeing him as an active danger and really disliking the man and what he, I, I, I think he's, I think there's something wrong with his mind. I, I think he's demented, frankly. And, and the fact that, the fact that he's plumped to put himself on currently issued passports as part of the interior decoration of a passport, I mean, this is, this is unseemly. This is crazy. It's,
- [03:36]
B
yeah. You know, Americans are becoming less popular around the world. I mean, I think we've had the luxury certainly through my life and I assume through yours too, that being a visitor to a foreign country, default treated well. Treated really well. But certainly the actions of Trump, you know, with the way he handled all the tariffs, certainly the way he bullies around foreign leaders, kidnaps at least one. Well, one so far, you know, is really. And then now with the Strait of Hormuz causing real economic hardship for substantial parts of the world and only going to get worse. It's American passport is a liability. Not an American passport where you add insult to injuries. You're going through a border check. They got to flip through Trump's picture every time they stamp your passport. I don't know if that's kind of passport you want to carry around.
- [04:30]
A
It's going to push a hot button. And a lot of people that they have to look at this and, and of course they're aware that American soldiers and sailors and airmen are all over the world and bases people don't like that. I mean, how much would Americans like it if, if the it turned. If the Chinese had military bases here in the US I don't think they'd take very well to that.
- [04:58]
B
Pretty sure they'd have a big problem with it. And understandably, you know, this is, these are just some of the things that Trump has done, you know, that are you have the Gulf of America. At least we at is not Gulf of Trump. You know, it could have been. But there's also, he does like wild things like this. He posted this on his, you know, personal truth social, I guess. And then, but it was retweeted by the White House labeling Venezuela as a 51st state.
- [05:26]
A
That's crazy. It's actually, it's actually batshit crazy that something like that would happen. What's the matter with these people? Are they thinking. Of course none of his cabinet think at all because they're total sycophants. I think they're afraid to say anything that would disagree with the big man. And of course Tulsi Gabbard, who seemed to me the one stable person, reasonably honest person, basically kind of a, a welfare eyed socialist, but that never came out. But as far as her controlling the agencies that she was in charge of, seemed like a decent human being. And now she's resigned way too late and for the wrong reasons, saying it's because of her husband being sick as opposed to that she's just disgusted with what's going on.
- [06:27]
B
It's disappointing there haven't been more resignations actually that have occurred.
- [06:30]
A
Yeah.
- [06:31]
B
From this administration so far. So
- [06:35]
A
listen, I know that you don't deal with poly market for a number of reasons, but I wonder what the odds I can get are that Trump won't finish out his term. I mean we've got to. I don't see market either, but I'm just wondering what the odds are.
- [06:59]
B
Let me see if I can find out. While I'm doing that, maybe you can talk about this story that's come out about this CIA agent who liked gold.
- [07:11]
A
God, there's an agency which is completely out of control. Now how, how is it that a guy that it appears it's coming out was a chronic and pathological liar about everything in his background, what he's done and how he's qualified. So he's risen through the ranks apparently based on a total fabric of lies. And then somehow this guy gets to take 300 kilo bars from the CIA,
- [07:47]
B
which they just have a stockpile, I guess, of gold around.
- [07:49]
A
Well, that's the other thing. What are they doing with the stockpile of gold like that and take personal possession of them? Who, who's supervising this guy? I mean, because they're talking about prosecuting him. But how about, how about his supervisor and the supervisor. Supervisor and I mean this is, this is an agency completely out of control. I'm sure that there are satrapies being run within the CIA where they have, you know, people that basically use their badges to intimidate and kill anybody that they want, certainly in foreign countries and get away with it under the.
- [08:30]
B
Yeah, yeah. For people who haven't, who didn't hear the whole story, apparently what happened is there was a Raid, an FBI raid on a CIA agent, somebody in management apparently, or supervisory level, who they found in his residence a stockpile of 303 kilos of gold, which is worth about 43 million bucks right now. And $20 million in currency as well.
- [08:58]
A
Much of currency. My God, we're talking about a steamer trunk. Several steamer trunks of currency, yes.
- [09:04]
B
And apparently 30 luxury watches also came out of that. So. Yeah, I mean, it's incredible hoard this guy has put together and apparently he was able to get it because he said these things were for. He needed them for, quote, work related expenses, unquote.
- [09:25]
A
So what are the controls within the CIA? I mean, who knows what other CIA agents are doing because they have basically get out of jail free cards by being members of the CIA and national security and all the rest of this type of thing.
- [09:40]
B
Yeah, well, and also, as you kind of mentioned, he was. He applied to the CIA three times, was twice declined working there. On his third time, he embellished his resume, adding that he was a jet pilot, you know, like in the military, which was not true.
- [09:59]
A
Passed the CIA and a captain in the Navy, besides, which is untrue. Right.
- [10:04]
B
So any. And then that he passed somehow there, one would expect really stringent vetting. I mean, I remember, you know, somebody that was growing up, this was many, many, many years ago, who was applying for a security clearance. He was my brother's, my older brother's friend. And the FBI interviewed me about the guy, you know, like a character background so he could get a security clearance. I mean, it was a really intensive process to get him through. But this guy past all of that, apparently, despite his lying on his resume, despite the fact that they had his old copy of his resume that he'd submitted and he had now these additional facts, it got through it all. Guy rises through the ranks, says he needs these work related expenses he needs. You know, it's amazing.
- [10:52]
A
It beggars, it beggars belief. I wouldn't believe it if I read it in a novel, but perhaps this is a, a natural consequence of a bureaucracy becoming as old and large and corrupt as the CIA undoubtedly is. It's completely out of control. I mean, literally out of control.
- [11:11]
B
Yes. Well, this guy proves it. If you had, if we had any doubts before that, which I didn't, but you know, if there were doubts before this, you have to realize that there's something seriously wrong with the CIA at this stage.
- [11:22]
A
Yeah, but these people have their own campus in Langley, Virginia, so they're kind of like a little world of Their own. I mean, how's the FBI even just know better who's going to knock on the door and be admitted and investigate? It's like trying to investigate the Pentagon. How do you do that?
- [11:47]
B
Right? And you got to wonder what this guy did that they, that they actually did the raid on him. Because, you know, you know, in one way it looks like, okay, so justice was done. Someone was paying attention. They caught the guy. It could be that he was a guy that was going to burn them somehow. And so they decided to turn the, you know, the, the turn the government against him. You know what I mean? Maybe the guy had been involved. He'd been a useful asset for a long time, really, taking these things out for legitimate work expenses, you know, but somehow it diverged from the authorized stuff and so they had to go burn them.
- [12:23]
A
Who knows are excellent. We'll never know the truth. As with so many other things, like we were talking earlier before we got on about the, about the pilot that was shot down over Iran and on a broken leg climbed a mountain and was rescued. What the hell is this all about? We don't know the answers are. But the news cycle's driven on, so.
- [12:46]
B
And what's his name? And why isn't he, you know, getting a medal at the White House, you know?
- [12:50]
A
Right, exactly. Yeah. So many, so many things. All the aircraft that have apparently, but who knows for sure, been lost in and around Iran.
- [13:02]
B
According to congressional testimony of 42 so far, 42 aircraft have been lost in this conflict with Iran, some of them
- [13:12]
A
being 100 million or 150 million dollar aircraft.
- [13:18]
B
That's right. Yep. It's pretty shocking. It's pretty shocking. And the truth is, you know, we can't really know what's really going on, but we can know certain facts about what has occurred because there are independent sources of information. Luckily, we don't rely in a world where every piece of information we get is from Trump or from, you know, the official from Washington Post or from, you know, other official mouthpieces of the administration in any way, which is, which is good. And these, these additional data sources though, do create a different version of reality than what we're being told. And with this, for instance, again, this, I just can't get over this straight of Hormuz things. I think it's such a big deal. But if you are on Twitter, you see constantly that we're just about to get a deal with Iranians, you know, some sort of a settlement of some kind. And it's really clear though, because this is like the 40 some time where we were basically right at the cusp of a solution to the problem emerging. That the statements, especially the ones that come from Trump, are designed to manage public perception and maybe the markets, but don't have anything really to do with reality. You know, and the first question about that, I mean, you see the pattern over and over and over again. I mean, you think everyone would figure it out by now that you should ignore him? I don't think people have figured that out, unfortunately. But one question I'd have is, if you're going to have a serious negotiation, would you really have it in public over Twitter? I mean, was this the way you would negotiate something serious like this?
- [14:59]
A
No. And by this time, the Iranians have got to have be asking themselves, who is this man that we're dealing with? He's clearly a chronic pathological and enthusiastic and delusional liar.
- [15:16]
B
Right. There's twice we've been in negotiations with them and bombed them while in negotiation. So I don't think there's any illusions that they have about us as a credible partner to make a deal with. I think they need a lot of assurances before they move forward with any deal, especially given that they currently have a pretty strong hand in what's going on. I mean, if the US was actually winning the conflict in Iran, there's no way we would have agreed to a ceasefire. We would have put our boot on their throat, you know, and demanded, you know, the concessions that we wanted out of them. We wouldn't have backed off the way we did.
- [15:56]
A
Well, the Iranians aren't going to back off. They have no reason to back off. In fact, I'm just surprised that the Iranians haven't added full reparations for the damage that was done and the unprovoked attack on them. Just because they're not likable people, at least we're told to believe they're unlikable. I don't think they're very likable. I mean, they're. I mean, apparently billions of dollars of damage have been done to Iran. Shouldn't they get compensation for that?
- [16:31]
B
Well, that was originally one thing that they were asking for. They seem to have backed off that asking for reparations and instead have shifted to this toll idea, you know, that they could get the recovery that they might, that they need by charging a toll on the straight. And honestly, that's a lot more likely to occur than for the US to write a check for reparations. I mean, that just seems like a no chance we'd ever do it.
- [16:56]
A
But then Besant is has announced that there are sanctions on countries or entities that pay the toll.
- [17:06]
B
That's right. That's right. So here's three, three facts about things I think are worth knowing. Like there's a story out there that we want the straight open. Okay, so I have three. There's three facts that basically stand in opposition to that. Number one, it was known, gamed out well in advance, that if we attacked Iran, what they would do is they would close the Strait of Hormuz. So that was like well known, well understood, well discussed fact for years and years and years that that was the great risk. When it happened, you know, the administration claimed. Well, we were surprised that they did that. But anyway, so that was the US actions that caused the closure of the strait. Then when the ceasefire was declared, things in the strait started to open up right away. Ships started flowing out. Now they were going through Iran's toll system, but they were moving, they were coming out like it was reopening. Then Trump comes out and says that they were initiating a blockade on Iran. So effectively clamping down again on the shipment through the Strait of Hormuz. Now what I haven't seen anyone talk about is that over the last two weeks, there's been a steadily increase in the number of ships that have been allowed to pass through the strait through Iran's tolling system. Maybe Oman in on it too, but a tolling system. So they're going out so that, you know, there were went from where there was one, two, three or four ships a day, which is still, which is, you know, way down from well over 100 ships transiting a day. But still, you know, there were a couple just trickling out to where they got it, to a point where 28 vessels were, you know, transiting that area in a single day. And that kept escalating and escalating. Now it seemed like it was in Iran's best interest, you know, because they want the tolls, you know, to open the Strait and like, and, you know, not be blamed by the world for causing these, this economic cataclysm that's coming everyone's way. So it was increasing then these weird kinetic actions which I don't really understand and I don't think anyone really knows exactly what was going on, but where certain ships are attacked or missiles are fired over the last several days, there that started to occur. Started. Then that's cut down on it. But anyway, today, as of right now, today, the number of ships transiting the Gulf. The seven day average of it anyway is 22.9. So like 23 ships a day it was up there. It seems to me that Besant didn't like that. I mean, the blockade was targeting Iranian ships, it was targeting Iranian ships, but it wasn't targeting ships of South Korea or others who wanted to get things through the Gulf. So what they did is they instituted sanctions. And these sanctions, he made clear secondary sanctions apply. So not only are the, you know, the, the country, anyone relating to them in any way gets sanctioned. So if you're the ship owner and you pay the toll because you want to get your ship out, they guarantee safe passage, you pay them some fee, cost of doing business and you want to move out, well now you and your country of origin can be sanctioned for it. So it's, it basically is going to clamp down as much as possible. Again, it's as if they do not want the straight open, even though these negotiations are supposedly designed to open the strait. So there's three factors. Three times the US is engaged in specific action to clamp down on the straits. So until I see evidence that they really want it open, I haven't seen any yet other than words, then I think they want it closed.
- [20:51]
A
And in the meantime, as you pointed out earlier, there are what, 15 to 1700 is the estimate, ships that are sitting in the Gulf and can't get out.
- [21:03]
B
That's right. Stuck there. And, and that has consequences for the deliveries of what's on those ships and as consequences for the entire super complicated supply chain system around the world, where a cargo vessel that was scheduled to leave there at a certain time was supposed to arrive somewhere else to pick up other stuff and make all these trips that take months to do. So everything is in shambles because of, because of this clampdown at this point,
- [21:32]
A
including the ships themselves, because just sitting there in very salty water for months, those ships degrade and degenerate.
- [21:44]
B
So it's a disaster. And I'm not sure what the exact motive of it is, but you know, I've heard Trump say, of course, that they want the straight open of also. He's also said things like, we don't care if the straight is open. The straight being closed is good for America because we sell more oil and, you know, refined products. He said things like, we don't want it open, we don't care if it's open. But the basic consensus narrative is that he does want it open, perhaps, but I'm waiting until I see an action that actually supports that first.
- [22:17]
A
I'm sure we'll know more. We'll know the truth. With some ridiculous tweet he sends out at 2:00 in the morning,
- [22:26]
B
we'll know something. I'm not sure if we'll know anything closer to the truth.
- [22:30]
A
No, we'll know that we're dealing with a very psychologically unstable person who's out of control.
- [22:39]
B
Yeah, no doubt about that. Okay, so we've got some questions. We have a limited time, but let's see how many questions we can get through. Doug. So the first one is the sky says, I live in B.C. canada, and due to the Iran conflict we've experienced increased gas prices increased. He says it's almost $2 a liter at the pump now and recently are seeing an increased cost of virtually all products either because they are made from oil or gas or fuel surcharges is other than that, life is normal. He's, and he just wonders, you know, what's the cost of living in public sentiment situation in Uruguay or in Argentina right now? Are people there feeling the energy crunch and rising prices the way we are in Canada and Japan?
- [23:21]
A
As I recall, gas is about the equivalent of $4 a gallon in Argentina. I don't know what it is in Uruguay. What is it?
- [23:33]
B
It's, it's closer to eight here. It's close about $8 a gallons.
- [23:36]
A
But yeah, well, in Canada, based on what he just said, that would be. That would Translate to about $6 US a gallon, $2 Canadian a liter is roughly $6 a gallon US yeah, that's getting up there.
- [23:52]
B
And I think here in Uruguay, the way they handle it, it's, it's a, it's a controlled state monopoly that basically handles all the fuel. Here they can only change prices. They used to set prices for fuel. It's standard across everybody, but it's set, was set bi. Monthly, every other month. They changed the policy when this occurred. So that price increases occur now every month. Last month it went up 7% and we're kind of waiting for the announcement of what prices are going to jump to on June 1st here. So it'll be interesting to see. Yeah.
- [24:28]
A
One thing that did surprise me in Argentina is that there were so many cars on the road in Buenos Aires, including on the way to the airport. As I drove there, it was really, really heavy traffic. What a contrast from what it was back in. Was it 2001 when I was there and it looked like a neutron bomb had gone off over the city? There was no traffic at all. I thought Everybody had moved out and gone somewhere. So things changed. But things are okay in Argentina at the moment.
- [25:06]
B
But I think you'd say both in Argentina and Uruguay the cost of living is going up. You know, certainly it's been kind of, kind of radical recently in the last year and a half in Argentina where it went from super cheap to no longer super cheap. But here in Uruguay, I mean, we often wonder how people, how your average Uruguayan can afford to live because it is expensive.
- [25:28]
A
Yeah, well, I guess we're going to find out over the next year. So who knows? There are some things that we just cannot know.
- [25:38]
B
I think we would you say that you know that prices are going to go up from here though. Are you confident in that?
- [25:44]
A
I'm very confident of it. Because the US government is running a 2 trillion dollar plus deficit and it could only be financed by selling that deficit to the Federal Reserve which prints up money, deposits it at the commercial banks and US government's accounts and then once that money is created, the banks themselves can loan it out
- [26:12]
B
and create
- [26:13]
A
more and create more. So yeah, prices are going up. Unless we have an all out credit collapse where some big institution can't pay its debts and then everybody else can't pay because the first guy can't pay. Well, the Federal Reserve would stop that. Too big to fail. So they bail them out. But maybe they'll flub it or decide not to. Who the hell knows? So we're caught between the Skilla and Charybdis. An all out credit collapse, deflationary or just continue printing money and prices go up. Take your choice.
- [26:52]
B
If you had to bet on one over the next 12 months, which would it be?
- [26:56]
A
Higher prices. That they'll keep bailing things out and prices are going higher.
- [27:01]
B
Okay, yeah, that's my thought too. All right, so someone's asking a question about polymarket, you mentioned that earlier, and he's saying, you know, he says like from a philosophical point of view, what's the difference between investing in the stock market and poly market? And he suggests that, he said, where do we draw the line between betting and investing? If the poly market concept could be done in an ethical way, how would it differ from crisis investing?
- [27:33]
A
Well, look, the reason the stock market started is to raise capital for productive businesses. That's how it started. And trading stocks in the aftermarket is kind of an afterthought. It should be all about capital that goes into productive businesses. That's why the stock market exists. That's not what poly market's about. Or, or for that Matter what buying and selling stocks in the aftermarket's all about. These are just guesses. Most so called. Investing in the market today isn't about financing productive enterprises. It's about gambling, where computers are doing the guessing based on trends and so forth. So yeah, it's an understandable question. What's the difference between Poly Market and the stock market? There's a lot of, there's, there should be a huge amount of difference, but increasingly less and less. And Poly Market is short, short term bets. And that's what most of the Robin Hood players are just placing short term bets. They're not investing for the growth of the business or anything like that. They don't. So. Well, the systems become corrupt, the whole system.
- [28:56]
B
This is just one. This is the tip of the iceberg of the corrupt system.
- [28:59]
A
Yeah. Yes, it is.
- [29:01]
B
Okay, let's see. Does the physical oil market work like the physical bullion market where you lock a price above spot pay, then await delivery? Is physical oil priced above spot and paid for before the tanker is loaded in sales?
- [29:21]
A
Yeah. Well, you got to remember that whether you're looking at West Texas Intermediate, which is what's traded here, that's the indication here in the US Or Brent, which is the indication in Europe, that's for delivery at a specific place and time. But if, if you wanted oil someplace else, those are just indications. But if you want cash oil now, you pay a different price and you got to remember that the futures prices are actually just indications. Unless you're going to take delivery of an actual contract in Cushing, Oklahoma, I think it is. Or. Yeah, or Brent, that's. Those prices are real. If you want the contract now or a month from now, or whatever it is. But otherwise, other places in the world, if you want oil now, it's a local price and those are just indications.
- [30:19]
B
And I assume that's true with oil as well. That the amount of, you know, paper trading that that goes on, the buying and selling in just that doesn't take physical delivery, vastly outweighs the amount of those contracts that do take delivery.
- [30:40]
A
Is that true? I think that's, I think that's the case. So the commodity market is to some degree a gambling casino, just like the stock market is. I mean, I, look, I own a contract of cotton. I have absolutely no desire to take.
- [30:58]
B
I would love to see you take
- [30:59]
A
possession of that cotton.
- [31:03]
B
What is, what's, like how much cotton is in one contract?
- [31:07]
A
Jesus. £30,000. I'll have to look.
- [31:11]
B
Oh, I'd love to see you take possession of £30,000 of cotton be the beginning of your problems, I think. Let's see. All right, if, if your core worldview proves completely wrong in five years, what's the most likely way you will have been fooled?
- [31:34]
A
Yeah, yeah. Are there any false premises that we're betting on? What could go, what could go wrong with the overall belt and showing that we have
- [31:52]
B
some new technology that makes gold not finite in the way that it is today?
- [31:59]
A
Yes, it's possible and eventually it'll happen. Where? I mean, it's been determined to be a fact. Some asteroids are full of heavy metals and that would have an effect on the gold market. Or technology allows it to be retrieved via seaweed capture from the oceans, or fusion becomes so cheap that metals can be transmuted, which they can be. So those are just three things that could change everything for gold that could happen.
- [32:40]
B
So, so there's, there's, there's gold. Then on the, the other side is that if there were somehow a way for the US to grow its way out of the debt, you know, so that the GDP was increasing faster than the debt was and it's, you know, in control of it. So if, if AI could actually be deployed in a way that would be substantially additive to the economy without being so. Because we're talking about short time frame. So without, without the, also the consequences of being so destructive to labor for labor force, tax receipts, et cetera. So like, you know, but if you, if you had robots that could really do work that, you know, people can't do or won't do or don't have enough people to do, so product productivity productively like that could change the dynamics.
- [33:36]
A
Well, you know, for, for many years I've said maybe there's a, there's a non zero chance that friendly aliens will land on the roof of the White House and protect and present us with a magic technology, free energy cornucopia. Well, non zero chance it could, it could happen.
- [33:57]
B
But so we've got aliens, AI being a force for good and gold transmutation.
- [34:05]
A
Well, and also maybe Elon Musk is right about robots and hundreds of millions of robots are created that do absolutely everything for us competently. I mean, I think that's going to happen eventually.
- [34:21]
B
I think it will too. So my point with that, with AI and AI and robots go together in my mind was just that it has to happen in a way that is a, a clear positive for the economy, avoiding the destructive nature of it. Because there would be a creative, you know, creative destruction cycle, a massive one that comes from it, like in the Industrial revolution, since so, and if we're only dealing with a five year time frame, you know, these robots would have to appear, adding something that we can't, you know, that wouldn't also cause tax receipts to collapse and unemployment to soar, right?
- [34:57]
A
Well, of course I'd like to see tax receipts collapse to zero because that would mean the government would dry up and blow away, which would be extremely positive and favorable and they wouldn't be able to have a guaranteed annual income, which they'd have to extract from somebody else that creates the wealth that allows it to be due. But that's a dream world, frankly.
- [35:21]
B
But, but that's the other thing that could, could happen. You have to say if somebody came in, if Doge were real and somebody did come in and truly did radically cut the costs of government, I mean, radically cut them so that we're not just, we're not in a budget deficit, we're in a budget surplus, you know, like that could change it.
- [35:43]
A
That could happen. Well, the best shot of that ever happening was in Argentina. And it ain't working out that way in Argentina. And it's much easier to change things in Argentina than it is in the US and as much as I like many, many elements of melee, it ain't working. So there is such a thing as the deep state and people are innately conservative, conserving whatever they find themselves with while they're looking for a free lunch simultaneously. I come back to a pessimistic conclusion. Over the short run, although over the long run, you know, Bernowski was right and the ascent of man will continue. So short run, long run, pessimist, optimist.
- [36:34]
B
The downside is basically the short run is our lifetimes. So that's what we have to be concerned about.
- [36:40]
A
Well, that's the other thing, which is of course why all the tech heroes are spending a lot of money and attention on Life extension at this point. Now you got a billion dollars, you want to live long enough to spend it in good health.
- [36:56]
B
And just in case they have bunkers.
- [36:58]
A
Just in case, yeah, who needs a billion dollars? I mean, frankly, I mean, once you get to a certain level, you can buy everything, do everything, go anywhere that you want, and it takes a lot less than a billion dollars. How much money does it take to be able to say that? I'd say in today's world you can probably 30 million will make it. And in today's world, that's not as much money as it, as it sounds like, but at the same time the average guy can't even get together $500 cash. If so, what are we talking about here? I mean it's like, it's like humanity's bifurcating probably into the Eloy and the Eloy and the Morlocks. That's, that's the way it'll work out.
- [37:54]
B
Right. Unfortunately. Okay, so, so I think those, we still manned our basic point of view because those are some good ideas that could happen. Unlikely, but that would change our view.
- [38:05]
A
Yeah, yeah. Well let's be entertained by it as the situation evolves.
- [38:10]
B
Yeah, let's see. Where's the real investable edge in AI and robotics over the next few years? Like actual deployments. Not hype. Tesla, Asian startups or somewhere else?
- [38:22]
A
That's a good question. I'm of the opinion that all these data centers which are being built, mega data centers, I mean we're talking not just tens but hundreds of billions of dollars, maybe trillions. I don't think it'll get that far, but I think it's going to turn out to be a gigantic misallocation of capital, especially as the technology itself evolves. You build this huge capital investment, I mean it'll become obsolescent almost as I think it's all going to blow up. I think this is the final financial bubble with AI. Just, just a thought but. Yes, but the robots, Robots are what's going to do it. I think.
- [39:07]
B
Robots, you're right. I agree with that 100%. Like the, the, the obvious productivity improvements, the, the possibilities of what you can do. What could be done with robots is, is like, is is where the big upside is. And that is going to come from China. It's not going to come from the US because of the, because of the manufacturing power that China has. I mean in these robots you need magnets. These are rare earths which you know, the US government has cornered the non Chinese supply on those, you know, to, for their own weapon systems and still doesn't have enough. And BYD announced the other day that their next thing and their cars are great. I've got one that. And they're, you know, they, they're producing millions of cars, but their next thing is robots and they'll be able to do it at a scale that'll shock people.
- [40:01]
A
Well and what I have read, and it seemed like it was accurate, reasonable anyway, that There are about 200 companies in China that are working on developing robots.
- [40:15]
B
That's right. And, and I mean I wouldn't be surprised if whoever comes up with the best one, BYD just simply buys them and they can just scale the manufacturing up beyond belief. I mean they, they're, they're building a factory that is the size of San Francisco. Almost done. Yeah, the footprint is the size of San Francisco. It's, it's incredible. And basically you have raw materials that come in one end and cars that come out of the other.
- [40:40]
A
Yeah, well that's not going to happen in the US for all kinds of reasons. What you named about the raw materials being cut off, but also you're not going to be able to get by all of the, the log jam of laws and union rules and everything else in the US and, and, and lawsuits that everybody would file for God knows how many reasons. It ain't going to happen here, but it will happen there.
- [41:09]
B
Oh, I have another thought in Steel Manning our argument, another possibility. If somehow the US fell under benevolent dictatorship, then that might change things.
- [41:24]
A
Yeah, it might change things, but.
- [41:28]
B
Yeah, in, in bad ways too. But like benevolent, benevolent dictatorship.
- [41:34]
A
Yeah. Well, if you or I were the dictator, it would be benevolent, but I don't know about the other millions of people.
- [41:46]
B
Yeah, I know, I wouldn't trust it. But I'm just saying like if that happened, you know, that that would change things. Okay, so next question is, does the UAE leaving OPEC point to OPEC losing pricing control, meaning more long term supply at lower oil prices?
- [42:05]
A
Well, I don't think that OPEC really controls the price of oil. I mean it's, yeah, sure, they can cut off the amount of oil that's produced and raise the price and that's, that's what they've been all about. But I think OPEC is going to fall apart in today's world. Well, just like NATO is going to fall apart and the EU is going to fall apart. I mean once something gets to be old enough and concrete bound enough, it starts disintegrating. And that's true of a lot of these organizations in the world, including the United Nations. That's an outstanding example.
- [42:53]
B
So you don't think that UAE leaving is going to leave, lead to more supply and lower oil prices?
- [43:07]
A
Well, I think it's favorable that the UAE is leaving. Yeah, I guess, I, I guess it would because they'll be able to produce more.
- [43:18]
B
Yeah. If they're not, if they're not destroyed by Iran or in the strait opens.
- [43:22]
A
Yeah, but it's, but it's, but it's basically technology and the market and what consumers can afford that controls prices, not the political dictates of some corrupt Organization.
- [43:37]
B
Yeah. Okay. Doug, what do you think of the SpaceX IPO, which I think is currently set at 1.8 trillion dollar valuation?
- [43:47]
A
Well, I think it's one of many bells ringing at the top of the market, so I absolutely wouldn't buy it. It's not to say that it might not go up to start with because one interesting consequence of this is that SpaceX is so big. And the same is going to be true of OpenAI and Anthropic, which are the other $2 trillion IPOs that are forthcoming. Is that all of the ETFs and market, you know, the indexes, index funds are going to have to buy it so that things are going to become even more lopsidedly tech weighted after this happens and when they come public, well, where's the money going to come from to buy this? People are going to have to sell other stocks in order to buy this. And the way things are today, they'll probably sell non tech stocks in order to buy this. So yeah,
- [45:01]
B
like you say, the bell ringing. The bell ringing.
- [45:05]
A
God, I can't, I can't imagine what's going to happen if the market stock starts going down in earnest and interest rates start going up in earnest. They already are, of course. And people's IRAs and HR10s and pension funds go down. That we're in a financial bubble. So what's going to happen when people find out that they're not as rich as they think they are? Right.
- [45:40]
B
You know, especially all three of these biggie IPOs you mentioned. They're all money losers that's in, you know, they all lose an enormous amount of money.
- [45:48]
A
That's right. They're earning money. Yep.
- [45:52]
B
So, okay, let's see. Is it a good time to buy oil distribution companies? One old Cypress oil distribute distribution holding is down while the rest of the portfolio is up. Is it worth adding?
- [46:07]
A
Well look, I think it's a good idea to own anything to do with oil today because I'll, I'll just draw attention to the fact that at the top, this is a long time ago. This is like ancient history. In 1980, oil stocks, oil related stocks were 30% of the S&P. Today they're 4%. So oil is no longer as important as it used to be in the stock market, but it's more important than ever in the real world.
- [46:49]
B
So, and you had these, this, the same exact statement you said before this incident with the Strait of Hormuz occurred. So you've been saying this before, before we even had this Huge event that occurred that this oil. Oil stocks were underpriced.
- [47:07]
A
Exactly. And the oil stocks that I own and that we've talked about and recommended in crisis investing have done really well. And some of these oil stocks, well, most of these oil stocks, they not only paid dividends, but they pay pretty big dividends, frankly. And it's nice to collect a dividend. I see dividends as. To use a theological. Some theological verbiage. Dividends are like an outward sign of inward grace. It means that the company's really got free cash flow and is earning money. Tech stocks, most of them.
- [47:48]
B
It's a throwback to the original envisioning of the stock market. Where do you provide the capital to the companies? You have a real ownership stake in it and they reward you as an owner.
- [47:58]
A
And, and the company produces something that's of real value. In the case of oil something, it's real, tangible. You can see it's not just a computer blip which can vanish if for all kinds of reasons.
- [48:14]
B
Just one more question for you, Doug, because I know you gotta go. With new cars increasingly loaded with cameras and kill switches and other surveillance tech, I prefer 2008 vehicles. What are Doug's favorite vehicles and brands?
- [48:31]
A
I can tell you what I own, but they're not necessarily favorites. In Uruguay, I own a Mercedes 550 SL. And here in Virginia, I own a Mercedes 550 SL. Totally impractical cars. Each of them are approximately 20 years old. Pristine, perfect condition, low mileage, but I'm not controlled. And nobody can cut off my engine from afar. But listen, if you can treat cars as transportation, what you ought to do is buy a. Buy it. Buy a Toyota or something like that, but not a new one, you know, I mean, really, I'd prefer to buy something that's. That. Look, back in the old days before the computer revolution, you had to change your spark plugs, you had to set the gap on your distributor. Oh, you could, but you could change your own oil. But today, if you need any work done on your car, you've got to take it to a mechanic with a diagnostic machine. So it's a double edged sword.
- [49:55]
B
I mean, the cars are way more reliable. They're infinitely more reliable than they used to be.
- [50:00]
A
Yep.
- [50:01]
B
But you can't touch it, you can't
- [50:02]
A
do anything with it. Yeah. So what's the ideal compromise? Is there any year where you kind of get the best of both worlds?
- [50:13]
B
I like the. I like the early 2000s, honestly, like, you know, I like. I like early 2000s.
- [50:20]
A
Yeah. I think so, too, because my two fit my two SLs. I think one is a. One is a 2003, and the other is a 2007. And the problem with them is that they're Mercedes. And Mercedes cars like BMWs, are very problematical. When something goes wrong, you just open up your bank account to the dealer
- [50:42]
B
because, yeah, it's expensive. It's expensive to fix, but it's also. They're also very reliable cars, too, though. That's.
- [50:49]
A
Yeah. Until they. And something goes wrong. So I don't know what the answer to the question is. Maybe your BYD is the way of the future.
- [50:58]
B
Oh, but it's a total surveillance car, though. No doubt about that. It has all the things the guy's worried about. I totally agree.
- [51:06]
A
That's right. Yeah.
- [51:09]
B
All right, well, we got to leave it there, Doug. I know you got to jump on another call, but thank you very much. And we'll be back next week with more.
- [51:14]
A
I can't wait. Thanks, Matt.