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- [00:00]
A
Anthony, it's great to see you. I want to start with this report about OpenAI seeking a potential government stake in the company before its ipo. I think on one hand you could say it wants to align itself for national security purposes, which is great, but on the other, you could say it's looking for some sort of government backstop. How are you thinking about this?
- [00:20]
B
It's a really tough one for me because historically people are like, oh, the government's got to stay out of business and have to be a line of like church and state between our capitalism and governmental intervention. But then when you really understand things, lots of stakes have been taken by the government. Chrysler in the 1980s, late 70s got bailed out. Lee Iacocca asked for that bailout. General Motors got bailed out in the 2008 crisis. Obviously, the banks got preferred shares given to the government in exchange for the TARP money. The Federal Reserve actually made money off of that. And of course, you know, I think intel is owned probably right now 9.9% by the federal government. So I am a realist on this stuff. I'm not going to be Mr. Doctrinaire Purist and say government shouldn't be involved. I guess what I'm worried about is the cronyism. And what I'm worried about what's going on in the world right now is we have a funnel of people at the top. You know, the tech oligarchs gave $25 million to Trump and they made 25 billion. It was a great exchange. You know, Trump's attitude is, if you're with me and you're off my back like a Vladimir Putin, I'm going to curry favor for you. And that's the stuff that I'm worried about. I'm worried about the $1.4 billion made in 18 months, the 927 page financial disclosure with all of the embedded corruption in there and several violations of the, of the Stock Act. But if you said to me they're going to get a special sweetheart deal versus Anthropic and some of their competitors having the government own them, I'd be very worried. If you said to me that the government's going to own them and help oversee some of the treachery related with AI and there was a referee and a check and balance, I would be less worried. But the government right now, at least at the federal level, is, is being run by a committee of one, which on our 250th anniversary of America is probably the worst thing and probably the Most un American thing that I've seen in my lifetime, we usually had the country run by a consensus and a check and balance system and a separation of powers and that sort of thing. So I'm not in love with it, but I'm not against it. I think we have to recognize the Chinese have pumped their private sector economy with the help of their federal government.
- [02:45]
A
I think that makes total sense. You know, Anthony, you've been doing a lot of work recently about the negative sentiment around AI. If you take away the market and investor gains for a moment, the public sentiment around AI has not been super positive. How do you think that impacts markets and the investment case for AI? If it's hard to convince everyone, everyday Americans, to get on board with it,
- [03:10]
B
I don't think it's had much of an impact. I think that the market is ruthless and the market is opportunistic and the market sees, in a case like Anthropic and OpenAI, it sees the heavy spend and it sees the near term losses, but it sees the long term very bright, very rosy outlook. The AI companies remind me of Amazon. And so I'll just take you back to the early stages of Amazon. Jeff Bezos came out there, said, hey, for a decade I'm going to lose money every year. I'm going to print a loss of money, I'm going to be borrowing, I'm going to be taking in bonds to buy real estate, infrastructure, trucks, warehouses. And by the way, I'm going to print a loss every year. And then if you're with me, lo and behold, I'm going to turn the switch on and I'm going to print money. And a lot of people were with him. I remember Bill Miller, who's a legendary value investor, bought a big piece of Amazon and said, this guy gets it. Eventually he's going to control Internet retail. Amazon's got 56% of the marketplace, 5% of overall retail in the United States, 56% of the marketplace of Internet retail. And this is AI. So AI is a money loser right now, but it's going to be a long term money winner. I can't tell you how big the bubble's gonna get or how deep the bubble is gonna be. I don't know. But I'm a big investor. I'm expecting a 25 to 35% correction at some point. Big deal. Stay in the stuff. It's a lot like bitcoin. Bitcoin corrected 50%. That's a yawn for me. Let me just open my mouth, see that if you're listening, I'm yawning. Okay, big deal. Okay. If you're gonna be in this business, strap on a set and get ready for the volatility. The retail investor and the sentiment against AI is job security related. And I'm going to take the position on even that, that that's overblown. Because if, let's say AI does everything that we expect, we're going to move to a three or four day work week in our lifetimes and there's going to be a lot more recreation and then there's going to be value placed on human interaction and people are going to migrate into jobs that have human interface and human interaction. And maybe some of those jobs will be recreational. But I think that this is a, this apocalyptic dance is the wrong dance. We've done this before. We said we were running out of oil. Never ran out of oil. Tom Malthus in the 1840s said, we're going to starve ourselves due to population growth. We got big and fat due to food technology. I don't buy the AI drama, but I do love listening to the booze at these commencement speeches. When these geniuses bring up AI, I
- [05:57]
A
mean, the students, younger people definitely do not seem on board with it, generally speaking. Anthony, you mentioned that you don't know how big the bubble is going to be. Do you think we are currently in a bubble? Is that a today moment?
- [06:13]
B
Yeah, I mean, I don't know the answer. We probably are in a bubble. We'll know the answer. You know how bubbles work. We'll know the answer after the bubble bursts. If you asked me In February of 2000, 26 short years ago, are we in a Nasdaq Tech Web1 bubble? I was like, yeah, maybe, I don't know. And then a month later, ba boom, we went down 40, 50 and eventually 60%. And it turned out we were in a big bubble. And what do we know about bubbles? When the bubble bursts, it is absolutely ruthless and it's punishing. And so you have to invest wisely on a distribution setting. You have to invest wisely thinking about a diversification of your portfolio. And momentum drives people crazy. They get FOMO from the momentum. And I would just tell you to relax on that. Just bet the long term trend and bet the wheel. Like we have a number of different bets on the wheel so that you don't get hurt no matter what happens.
- [07:21]
A
So if we had to make a brand new portfolio today, you and I, where are you allocating that capital? Let's say we Got a million bucks to put in different corners of this pie. One do you like most right now.
- [07:34]
B
Is this AI specific or this general
- [07:36]
A
market or this, I mean in the market, I assume you want some Bitcoin.
- [07:40]
B
Okay, so I look, I would have probably 30% in Bitcoin. I would probably have a basket of some of these AI companies that I could own. You know, I'm an owner of Astera Labs, which is publicly traded. It's hard to get into these companies that are not publicly traded. I am a SpaceX investor. People think it's overvalued. I think that that's short term nonsense. I wouldn't read the noise on SpaceX. I own it. I would always own a slug of the S and P. If you notice the Mag 7 has run, but the other 493 are doing well this year. And I would own some real estate in my portfolio and some gold and I would sit tight and I would bet the long term of the United States. You have to think like Buffett. The United States is not going anywhere. Resilient country. We have our ups and downs, we have bad things that happen to us in the United States and we do inflict some self harm. But it's the deepest, most liquid capital market in the world. I don't know your family, Phil Rosen, but I know they're probably nuts because my family is nuts. And most of the families that arrived here from other places in the world are nuts. And what I mean by that is definitionally we're all risk takers and we're all willing to swing for the fences. And what happens when you swing for the fences? You strike out a few times. And this is a culture that accepts people getting their ass kicked. And when you have a culture like that, it's a very neural, flexible, neurally plastic culture. I wouldn't bet against the people that live here in the United States.
- [09:14]
A
I love that. I'm certainly big us.
- [09:18]
B
Am I right about your family, Rosen? They're a little crazy, right?
- [09:20]
A
Of course, of course. There's always someone, of course.
- [09:24]
B
Oh yeah, join the club. I mean, by the way, it's Misery Loves company.
- [09:28]
A
Phil Rosen, of course. Tell me about this Sell America trade. Are you buying that? Do you think it's overblown? I know you're bullish long term America, but the Sell America narrative right now, I feel like it's gaining momentum. What do you think?
- [09:44]
B
You mean this is the Scott Galloway narrative where you, you, you end subscriptions. What do you mean by Sell America?
- [09:51]
A
The idea that because of the political environment and leadership in the White House with President Trump. Foreign investors may not want to put their capital here as much as that's happening. Okay, tell me more.
- [10:04]
B
If you look at the data on the margin, there's been less incremental flows from international capital allocators into America because the President's squeezing on America's checks and balance system. He's putting pressure on the judiciary. No matter who was in the White House prior to Trump, there was some level of impartiality to the way legal decisions were rendered. Presidents may or may not have liked those decisions, but they said, hey, that's the way the cookie crumbles here in the United States. I think that on the margin slows things down. But Trump's got two and a half years to go. After the midterms, he's a lame duck. He'll try to make probably 5 or 10 billion dollars for himself while he's doing this. He's an exhausting human being and he'll burn most of us out. But one thing that Trump is right about is there's a callous indifference and a callous cynicism to what he is doing. But I think the Americans will have had enough of him. Even the people that are quote, unquote supporters of his will look at that and say, wow, that's really not fair. That's a corrupt system. He's creating a two rule system where he can pilfer money for himself and his family. But then the nurse that's working at the local hospital, if she's tight on money and has to take some money out of her 401k, she gets hit with a 50 million, sorry, a $50 service charge, or if she misses a tax payment, they audit her. The President gave himself audit immunity, which is a ridiculous thing in a country like ours. We should be a rules based society and everybody should be subordinate to the law. So when you hear this stuff on the margin, there is a sell America sentiment. I get that. I would ask people to see through that basically and try to ignore that.
- [11:52]
A
I think the one plus billion in crypto profits that came out recently about President Trump that surprised a lot of people, probably didn't surprise a lot of people as well. When you think about the midterms coming up, do you see a best case scenario from a market and investor perspective? Like, what would you be looking for?
- [12:15]
B
You know, first of all, that whole thing is revolting. Okay. I don't know anybody that, oh, Trump should be ripping. I mean, you had $700 million of losses while he was making $630 million on his meme coin. You probably have a lot of Trump supporters on this call that are listening to your podcast. But guys, get over it, man. That's a disgusting behavior. And then you'll say, oh well, Hunter Biden did it. That's the what about ism. Okay, you know what? Hunter Biden is also a loser, but Trump took it to an nth degree. I understand that there's levels of corruption in Washington, but this is ridiculous. Anybody that wants to apologize for Trump or give him an alibi on this, you're part of a culture. So try to get yourself deprogrammed out of a cult. That would be my message to these people. And the other thing that he's done, when you're growing up like I did in the 70s and the 80s, you had belief. You know, I was alive at the bicentennial, okay. I went into New York harbor and saw the sailboats with my dad. And you had a belief in the country. And I'm sure there was corruption in Washington and Richard Nixon just got kicked out of the White House and all those different things happened, but it wasn't this. When you got corruption like this, you make people think that there is a concrete ceiling over their heads, that there's a two tiered system and there's a concrete ceiling over their heads and them and their families are never going to get ahead. And I find that revolting.
- [13:47]
A
I think you're certainly not alone in that belief. The around conflict. I think some of the wheeling and dealing happening out of Washington has put a lot of people with a bad taste in their mouth, certainly. Anthony, I have to ask you about bitcoin.
- [14:04]
B
Yep.
- [14:05]
A
We're down almost 50% from our highs. You've been a long term bitcoin bull. What do you make of this drop off, especially with the quote, pro crypto president who, who was supposed to be one of the biggest catalysts for a bitcoin bull run here?
- [14:22]
B
Well, he hurt the crypto space more than people want to admit because these meme coins soured people. He also slowed down the regulation because if he wasn't doing this sort of corrupt nonsense, his adversaries who were moving from crypto negative to crypto neutral would have probably voted in the Clarity Act. We may still get it done, but I think I feel like it's very unlikely given the stuff that's going on and given the level of corruption. Because what happens is when you're that corrupt, people get pissed off and they're like, hey man, I'm not voting for anything that this guy's supporting. So he's hurt crypto in a lot of ways. Second point that I'll make is that you're in a four year cycle. People can think otherwise. But Bitcoin's only 17 years old. There's been four four year cycles. Every time you get to the halfway point in the halving boom, this thing drops about 40 to 50%. It has to do with the economics around the mining and it has to do with the pressure that the miners have to immediately sell their crypto into the market to stay in existence. As said differently, it probably costs about 78 to 80 thousand dollars of electricity to make one bitcoin. And you're able to buy bitcoin in the open marketplace right now at 61,000. So this puts an enormous pressure on miners. Some of the miners have turned their rigs off and they switched them over to AI compute and AI data centers. And that's going to make the hash rate a lot easier. And bitcoin will make its difficulty adjustment and start doing well again. But this is all cyclical. So you either. I'm long bitcoin and I'm willing and I'm committed to at least two or three four year cycles. And if you're committed to that and you step back, it's the best performing asset in the history of the world. If you're not committed to that, you can pick any low point. You can say, okay, this asset sucks. But you know, Tom Lee said to me something last week on a podcast that I did that people should really listen to. If you're out of the market, the crypto market, the Bitcoin market, 10 of the best days, well, you got no return, okay? So you have to stay in and you have to be fully invested and you have to ignore the noise. If you believe that this is an operating layer for the future of money, which I do, and if you believe that this is a digital store of value because it checks off all the technical components that we've all looked at throughout history to make something a store value, which I do, then you got to sit in bitcoin and you got to hold it. And if it trades to half of the market capitalization of gold, it'll be one of the best investments of your lifetime.
- [17:12]
A
I'm very long bitcoin, as you know. I'm with you on it being a super long term asset. The cycles will come and go, but bitcoin will stick around for a long Time. Is there any of the bear cases that you've read about, heard about that, you think, okay, this is actually making a lot of sense here.
- [17:35]
B
So I mean, I think the question is what would make me negative on it? Right. Because I'm trying to look at the bear case. Yeah. So, you know, if you told me that the quantum threat was real, which I don't believe it is, I'm happy to explain why. But if you told me that was real, I said, okay, that's an issue. If you told me that Satoshi sprung to life, he was going to dump a million coins on the marketplace tonight, I'd say, okay, that's going to be an issue. If you said to me that we were going to shut off the electricity in the world and then there'd be no more electricity on planet Earth, I said, well, that's obviously bitcoin's finished. I mean, there are scenarios where that could happen. I'm not saying that there isn't, but I'm a, I'm a betting person. I think we understand the quantum thing pretty well and I think we have a opportunity to create quantum resistance for bitcoin and for the wallets, even the gray wallets, the ones that are dormant like the satoshi wallet. I think we're going to figure that one out as well. So I don't have the bear case in my head, but I will say this to you, Phil. I have been humbled by life. I have been humbled by markets. And I could be wrong about bitcoin. And I always caution people, I say, listen, this is what I think a high conviction name. For me, it's a high conviction idea. Over 40 years of my investment career. But I have been wrong. And I have been wrong more than once. And when I'm wrong, unfortunately I'm wrong in a colossal way. So I would just tell you that, I would just say, listen, size yourself appropriately. Sounds like you are because you're a prudent investor. But I believe in this long term and I want my clients to get the exposure.
- [19:20]
A
I think that's sage wisdom there, Anthony. If you look back on your investing career, you've made a lot of different investments over the years. What does it usually take for you to change your mind on something that you were high conviction on?
- [19:35]
B
Well, I had super high conviction in the private credit and the mortgage backed space. I got the daylights beaten out of me in March of 2020. I had the worst year of my career, Phil, in a two week period during COVID March of 2020. I didn't know what hit us. I think we were down 25% in minutes. And I looked at that and I said, hmm, this is not right. This is not working. And I shifted a lot of assets away from it. And I had to accept that, you know, and so, again, that could happen in bitcoin. I'm certainly not there yet. I have high conviction. I'm willing also to accept the volatility with bitcoin. But here's something I would say, and I want you to think about this for a second. I was right about the private credit. Look at what's going on in private credit right now. Look at all the redemptions going on in private credit. Look at the dislocation. We don't get things right all the time. I'm not saying that, but I think you have to be neurally plastic. I think you have to look at the world and say, okay, I'm probably wrong this morning. I'm in cash. Here's a white piece of paper. Given everything I know about the world, what would my asset allocation look like today? And that's when you force yourself out of some of your heartfelt beliefs. Remember, we got a brain that gets anchored to emotion. And so I always look at bitcoin and say, am I overly anchored to my emotion? Am I? And if I am, then I gotta get cautious. I probably have to lighten up. If I'm not, then I want to own more. You know, I heard Saylor talking the other day at an event. Combination of him, Tom Lee, this guy Jordan, Jordi Vischer was talking to Mike Anthony Popliano. I was like, hmm, I don't own enough bitcoin. Then I looked at my balance sheet. I said, my wife's going to kill me. I bought a better stay right where I am, you know, so, you know, that's where I am right now on bitcoin.
- [21:32]
A
That all checks out. You're naming off some pretty smart people who also like bitcoin. If you had to look back in the last year or so, is there anything you can point to that you think you were wrong on, that you've changed your mind about?
- [21:44]
B
Well, you know, look at. You're measured in our business by quarters. You're measured in this business by your year to date performance. So might be year to day performance because Bitcoin's down 50%, hasn't been great. And so obviously, definitionally, I'm wrong, but I'm measuring this over multiple year units of time. And so I guess what I would say to people is change your time horizon. And I think you'll be well served from doing that. Remember, the king of all investing, Elon Musk, is the king of all wealth, no question. He built two colossal companies. He deserves all of his riches. I think he had a swing of Warren Buffett's net worth in the first couple of days trading on the ipo, God bless him. But the king of all investing to me is Warren Buffett. And what did he do? He bet a generational trend in America for growth and opportunity and innovation. And he looked around, he said, if I just manage this compound table appropriately, I'm going to do very well. And that's something he has done, and. And that's something I appreciate. And I try to adhere to that to the best of my capability.
- [22:55]
A
That is also great guidance. Anthony, the last thing I wanted to ask you, this is not about the market necessarily. I talk to a lot of college kids trying to get a job these days, and whether they're in finance or elsewhere, and a lot of them are nervous and trying to figure out the things they should do that best sets them up for a job. So if you're talking to a young person right now trying to get a job, where do you point them?
- [23:20]
B
Well, I mean, listen, you know, nepotism lives. If your parents know people, okay? That's number one. Number two, you know, think about what Ben Franklin once said. If you want a friend, ask them for a favor. Don't be bashful. You know, call people, email them. Can I come see you if you don't have a job? Do you know five people I can meet with that might have a job if they don't have jobs? Do you think those five people could introduce me to 10 people that may have a job? You know, you gotta knock on the door. You know, you gotta be. I tell my kids, you gotta be one part woodpecker, where you gotta get on somebody's brain and you gotta peck at them until the skull cracks open. And then you gotta be one part parakeet, where you're saying the same thing over and over and over again with great diligence and great enthusiasm. Those are the things that I'm telling people to do. And by the way, you can smell on somebody who's hungry, you can smell on somebody that's passionate. And people like me always like to hire people like that.
- [24:24]
A
I think that is great guidance at any stage in someone's career, frankly. Anthony Scaramucci, thank you so much for your time. Always a pleasure to see you and Happy Fourth. Happy Fourth.
- [24:36]
B
Thank you. You're a good man. Thank you for having me.