← The Pomp Podcast
Loading summary
Transcript48 lines
- [00:00]
Uber Eats Advertiser
You know those tiny back to school emergencies that somehow become your problem. That's why I love Uber Eats. You can order school supplies, snacks and lunchbox essentials for $5 or less. So when your kid casually drops I don't like peanut butter anymore or I need five green highlighters for a project due tomorrow, Uber Eats has you covered. Get everything you need for back to school today from your favorite brands like Aldi and Staples on Uber Eats. Order now ends 97. $5 or less before taxes and fees. Select items only. Availability varies. See app for details.
- [00:30]
Jordy Visser
I'm a believer right now that all it's going to take to get the bitcoin crowd fired up is a technical breaking point. I think this is the beginning and I think we're going to look back at the last two weeks as being an indication that.
- [00:43]
Podcast Host
All right, ladies and gentlemen, we have
- [00:45]
Podcast Sponsor Announcer
a great conversation with Jordy Visser this week. Jordy gets into why he thinks the
- [00:48]
Podcast Host
last two weeks are really big for bitcoin. He thinks we're going to look back and actually think they were two of the most important weeks in bitcoin's history.
- [00:54]
Podcast Sponsor Announcer
We also talk about what's going on
- [00:55]
Podcast Host
in the AI trade. Why did the AI stocks bounce so hard? Was that the bottom or does he think that it's got further to fall? Then we get into physical AI. What's going on with Tesla and SpaceX
- [01:04]
Podcast Sponsor Announcer
building ter fab and how exactly is
- [01:07]
Podcast Host
that going to impact the valuations of those companies? And then I get deep into the details with Jordy.
- [01:11]
Podcast Sponsor Announcer
I ask him some pretty hard questions
- [01:13]
Podcast Host
like how does he evaluating Google right now with so much talent leaving, is
- [01:16]
Podcast Sponsor Announcer
he going to buy SpaceX?
- [01:17]
Podcast Host
What does he think about the current valuation? How does he think about how the stock's trading? That and much, much more in this conversation with Jordy Visser.
- [01:24]
Podcast Sponsor Announcer
All right Jordy, you have a hot
- [01:26]
Podcast Host
take that the last two weeks or so may be the single most important two weeks for bitcoin in a very time. Talk about what you think's going on here.
- [01:33]
Jordy Visser
Yeah, I, I'm, I'm finishing up a paper la last week reminded me a lot of my time in Brazil in 1998 and I, I, this, this will take a little bit. You can ask some follow up questions since you don't know where I'm going with this. But so when you get into a situation where on number one you have situational awareness which was the headline story and you have a month where we basically watched a historic rise in volatility with Inside the Equity market where the AI names are trading at volatility well above even, I would say the highest level that Bitcoin has traded at in the last decade. We have most of these names that are very large companies moving in the 80-120-vol area and the losses that happen kind of showed that even in a trade that is fundamentally sound, where the earnings are growing rapidly, where it seems like an easy thing, these things all fell violently on the back of a fund. So that's the one side think of LTCM in 1998. The second thing was Warsh had his kind of his first test. We went into this meeting with close to a 50% chance, you know, about 40% chance that, that he would raise, raise rates. And everyone left there. Basically the criticism started to rise. He talked about the fact that long term yields were doing the work for him and we talked about that last week where he literally said, well just look what the market's doing. I'm following the market, okay, so long term yields were going higher. But then on Friday after the market closed, the most important thing that I don't think has gotten enough attention occurred where the US for the first time since 1998, that same year with LTCM coordinated with the BOJ to intervene in the yen. And this has all the hallmarks of desperation. And when you read through it, sometimes things happen like okay, we're going to bail out someone, we're going to cut rates, we're going to create a facility for Silicon Valley Bank. They're very clear, you don't have to read between the lines. It's meant to stop panic. In this case, why would the US intervene with Japan on dollar yen which has been weaker now for a while. And the BOJ has been intervening and everyone has gotten back to the fact that oh, what also happened last week we made 20 plus year highs in 30 year yields in the U.S. the bond market has for the last two years been the line in the sand with the administration. This happened during each of the three dose or the dislocations we've seen, particularly Liberation Day where saying we don't care about the equity market, everyone's just panicked for a little bit. But once rates start moving higher, we have an issue. And remember this all has to do with the fact that we still have a huge deficit and you can't have rates go higher. So on the one side he's been arguing for short term rates to move down. Well, now he's got war. And on the back end we have 30 year rates moving higher. And who's a large holder of 30 year rates? Japan. So you put all those together and then I look for the market reaction. So Monday morning opens up, I'm buying silver again and I want to see how this stuff trades for the week. I want to see if my intuition is right, which is, well, if you're not going to let bonds fall, you're basically going to be doing some form of printing. Then we get the refunding announcement where there's no change, which basically says game on to me, meaning there's nothing we can do. Then you get a labor report today. And I just want to tell people because I'm sick of listening to economists talk about the labor market like it's strong and us sitting there. Wages have been falling continuously. Today's report was weak across the board. Not only was it weak when you take the aggregate payroll, which takes into account the hours worked, the wages and the number of people hired or fired, and you look at it over the last six months, so. So not three months, not four months, six months. We are at the weakest level since 2012 on a six month rolling basis, except for during COVID So what that tells me is we're running out of policy options to deal with this. But the one thing I'm certain of is if you're not going to let rates fall and you're trying to, from the treasury perspective, say to the Fed that we want you to use the repo facility for Japan, this FEMA side, and we want you to get rid of the cap. Even though I'm sure this is him trying to enable Japan to be able to buy Treasuries. I think what everyone should realize is we are at a critical point where the labor market is obviously on the weaker side. I've talked about the inflation swaps being way below tenure rates. So you've got wages declining still. And today's hourly earnings now puts year over year at 3.2%, easily the weakest of this trend. I think we're at a problem because the AI agents are coming. So so far this has been a hiring issue. I don't think we're going to see massive layoffs, but I think what we've reached a point as is there's still more than one tightening built into the market before the end of this year. And amazingly enough, as we come on here, there's still a 44% chance of a hike in the September meeting. Now, a lot of that has to do with the inflation data which is going to come out next week. But my, my body is responding to one thing, which is gold is breaking out, platinum's breaking out, silver's breaking out. Bitcoin hasn't broken out yet, but that's because the Clarity act has been this overhang on it. But one thing bitcoin has done is in the face of bad news, the Clarity act going from 50, well, let's say from 40% all the way down to 17 for the, for this year. And at the same point, that strategy has sold bitcoin and not only has it kind of hung here, it's getting close to making new kind of short term highs. So I'm, I'm a believer right now that all it's going to take to get the bitcoin crowd fired up is a technical breaking point. And I've talked about the fact that for me, when Dogecoin breaks above the, the, the 20 day moving average, the 50 day moving average, when we see soaring breaks in the retail side, I think this is the beginning and I think we're going to look back at the last two weeks as being an indication that we're running this AI trade hot. We're spending lots of money, except we're not creating the jobs that we need. And the yen intervention is a representation that we have no more tools left. So we're running hot into a scarcity of tools for the Fed.
- [08:48]
Podcast Host
What do you think the Fed should do?
- [08:50]
Jordy Visser
I think they have no choice in the matter as far as I'm concerned. You know, I'm going to run with the, you got to keep this train running. There's no way to stop this train. The whole Lyn Alden, you know, viewpoint on this, when you still have a fiscal deficit of 5 to 6%, you've done as much as you've had, you've had all of this growth in equities and all this stuff happen. We're not creating jobs. I don't know how to say it. We haven't talked about this before, but the labor participation rate is falling and it's falling sharply. People need to stop listening to economists who are saying we have to raise rates. We have to do this, we have to go through it. We, we are on the beginning of AI agents. And if there's one thing every single person, including myself, maybe not you, because you're not an optimist, you're like an uber optimist. Has underestimated is how much impact AI has quickly. Like when it starts to have an impact, it goes quickly. And I think the job situation now is starting to become a bigger thing where it's not going to replace jobs. But I just don't think that when you have labor participation, the supply of labor going down and wages are not going higher, I think they need to, they need to be on hold, but they need to be able to control the back end. And that's a very difficult thing to do when nominal GDP is strong.
- [10:12]
Podcast Host
One of the aspects that I continue to pontificate in my brain is the rise of these kind of socialist policies, the rise of larger governments at the local and state level. If they continue to blow holes in their balance sheet and continue to drive really large deficits. Their playbook historically has been turn to the federal government and ask for them to cover it. And you know, if you look at a microcosm, you saw New York City basically turn to the state and go to Albany and say, hey, we need, I think it was like $4 billion or something. Now they claim that, hey, we, you know, we balance the budget or whatever the nonsense was. But it was basically like the smaller government turns to the medium sized government and says, give me some money to help, you know, cover up this, this gap. Well, then the state gets to a gap and then they turn around, they go to the federal government. And so like, in a weird way, it's not just federal spending. It's also like the federal government serving as a safety net for all of the mismanagement at the state and local level, which only accelerates this national debt and this big issue. Right?
- [11:10]
Jordy Visser
Yeah. I mean, what you're, what you're describing. And again, let me go back to now using Japan in the US on this, because there's a relationship here. When I was In Japan in 1998, Japan was the only debt game in town. Everyone tried to short JGBs. It was called the widowmaker. That's the whole point of this. Well, now here we are, fast forward 30, you know, 30ish years. The US is in the exact same situation as Japan. The debt to GDP name may not be the same level, but now we have a situation where Japan has inflation, the US has inflation. Is it runaway inflation? Absolutely not. Is it inflation? Yeah, it's higher than this 2% target or whatever people want to get involved in. So to your point and to everyone listening, the reason that bitcoin matters now, the catalyst that has happened is the fact that the United States government intervened by selling euros to buy yen. And you have to go through all of the reasons that they did this. The stabilization fund, they can't do anymore. We're running out of tools. And when you run out of tools and the refunding announcement comes out, you're actually at a point where we have to reflate our way out of this. So use gold as a trigger point. And the way that I like to look at markets are we what happened last week? Well, the market on the macro side is saying we got to buy gold, we got to buy silver, we. Well, bitcoin is going to fit into this. It's going to take a little bit of time. But I keep going back to the same, same theme over and over again. AI agents are the theme of this year. The theme of next year is consumer agents, which means transactions and volumes using stablecoin. That is going to happen regardless of the Clarity Act. And I actually think the Clarity act officially being quote unquote done for this year. We've heard that the SEC and the CFTC is immediately going to come out with ways to basically supplement that. Maybe that's the catalyst that gets this thing going and it just starts going at that point.
- [13:08]
Podcast Sponsor Announcer
Today's episode is brought to you by Galaxy One. A lot of people have their money working for them, but now the question is, how hard is it working? And Galaxy One, they got a different approach. Everyone earns 3.5% APY with Galaxy One cash. And if you make over 200 grand a year, that means you're rich. You make over 200 grand a year, you probably qualify as an accredited Investor, which unlocks 8% yield guaranteed by Galaxy Digital. Now the best part though is that you can set that interest to automatically reinvest straight into your favorite stocks, ETFs or crypto. You don't have to think about it. Every month right now, this second Galaxy one's running a crazy promo. You can get a $3,000 cash bonus when you deposit $10,000 dollars or more in cash or crypto. If your cash isn't working as hard as you, it's time to make a move, sign up and start earning today at Galaxy App Pomp to be eligible for the three thousand dollar bonus again, Galaxy App slash Pomp. Go check them out today.
- [14:09]
Podcast Host
Now we saw AI stocks. Obviously it sold off pretty hard. Two weeks into our last conversation and situational awareness, they kind of, you know, look for Ken Griffin to swoop in, take a pretty bad situation off their hands. That happens. We've gotten word that situational awareness is still alive. They still got some money. There's a rumor that they just invested $400 million in another private company. Whether that's true or not, you know, we'll kind of see how that position plays out. What has happened as soon as that Citadel news hit the wire though was AI stocks bounced really hard. I have a friend of mine who is heavily allocated to all of the power names, the data centers, the you know, hyperscaler kind of HPC type companies. And he literally sent me screenshot of kind of like his stock tracker. Things were up 20, 30% in a single day. Right. I mean it just bounced really hard. Is this a head fake or is this kind of the next leg up now that we should expect in these AI names?
- [15:06]
Jordy Visser
No, and I mean I, I talked, we talked about it briefly last week on my video. I basically put was that the bottom in AI question mark? I think that was it. I mean again, you never know if there's more deleveraging to happen. But, but the way these things have responded this week and more importantly, you know, I use a lot of different metrics to kind of measure whether things were, you know, at a panic point. We clearly had a significant amount of deleveraging because the volatility is so high for these names. I don't expect it to be back at all time highs overnight. But at the same point I have a lot of these names on and yeah, they were not only up 10, 20% in a day in some cases, but the follow through even continuing this morning is there. You're starting to see good stocks respond well to good news. The area that I'm probably most focused on at this point is the optical names. And the reason the optical names are such a focus is because Vera Rubin is coming. I have a good sized position in Nvidia because I think Nvidia has not only traded well, it's cheap, but Vera Rubin is coming now and I think people are looking for something new. The memory names are going to be fine. I still, you know, I, I said to you, I bought Micron, its position there, I'm not really adding to it because I've got the optical names which I like more. Marvell I still like more things like that because I think they're going to see an earnings catalyst show up. But I do think for people that were able to navigate this, that have some cash sitting on the sidelines, I would be a buyer of any dip in these things at this point because I do think the earnings fundamentals are going to take them higher. And I think in general, despite Michael Hartnett putting out a report saying bull bear indicator is at the biggest sell Indicator. I want people to look at that chart. Since February of this year, we did get a minor pullback and then we went higher. I'm going to say right now that not only are the lows in for the AI names, by the end of the year, we'll be at new all time highs for many of them.
- [17:13]
Podcast Host
Yeah, look, I do think that there's this very interesting investing strategy of you could have bought early on and just held. Take Micron as an example, right? You were very early to that name, you bought it, it went up a lot, you then sold it. I think there's a lot of people who are like, why would you sell it? Well, now you're re entering and so you're basically looking at, hey, it can get overextended, it'll pull back. You then put on the position again and you, you know, I would put you in the category of being a sophisticated investor when it comes to some of this stuff. The other strategy though, that I think folks from the crypto world have learned is you start to put on a position and as these things go up, you actually are gaining more confidence and you begin allocating more and more to them. Now you got to be careful because if it's a bubble, then basically a lot of your capital goes in kind of near the top of this. But this AI trade, I continue to look at the data and the fundamentals continue to get stronger. And so it just feels like the dollar cost averaging into these assets over time, regardless of you're doing it when they're drawn down or they have appreciated that so far up until now has been a fantastic strategy over the last two or three years. I don't see that really changing for the next, you know, two or three years. Unless there's some sort of existential, you know, situation that occurs.
- [18:28]
Jordy Visser
All right, there's a big, I hate to redirect everything right now back to crypto, but there's an important inflection point here. So I really do want people to realize that. In the first part of this year, one of the themes that we talked about was effectively the AI treat was so easy, meaning companies are beating numbers, earnings are going higher, all the news is good, and these stocks are racing higher. It's sucking all the capital out of bitcoin. So we talked about that. So bitcoin doesn't become something we talk about at the beginning of the show. We talk about the things that most traders are interested in and they're actually moving. How do you talk about something that basically stays in a 10% range while everything else is going higher. Well, now that's changed and I've said it before, I'll say it again, that part of AI is over. Now here's the interesting part. If everyone paid attention, the thing, the biggest negative for crypto that keeps hedge funds uninvolved in it is that they're all momentum, not just in price, but in fundamentals. And the problem with crypto is there aren't, there haven't been any fundamentals to lean on. So what is going to change now is that you're going to have a transition. The AI trade, the fundamentals behind it are 100% continuing for the next 10 years. They're not going to stop. I don't buy into the bubble thing. I don't buy into the debt problem. I don't care about the cds, I don't care about any of that stuff. These companies, the hyperscalers are going to make money. It'll probably be sooner than what people think. I wrote a paper on that this week and, and I think we both listened to the Gavin Baker interview on Invest like the best. He said it perfectly. He said he went out to Silicon Valley. He's like, let me go see if any company, one company gives me any negative news on anything. And if you listen to that, our interview, he basically said the fundamental data is even better than what he expected going out there. So here's what crypto is going to have as AI agents come. And once we start valuing these things based on the revenues that are happening because of the transactions with inside the network effects of crypto, I'm just telling you the argument will be huge for what people saying. I remember when Circle went public and people started telling me that it was going to replace Bitcoin and that this would be. Why is this not worth a trillion dollars? Like I started hearing this stuff and I knew we were in trouble with Inside the Space when I heard equity people kind of going through the math. But the reason it's important is once the math is attached to crypto in the ecosystem, hedge funds will start to invest there and everyone will be looking for something based on Sharpe ratio. AI trade has high risk in it. So when things move up 20%, guess what? They can move down 20%. When you're running a portfolio at a hedge fund and you have a name that's moving 20% a day, there's only so much you can have it in your portfolio or you're going to hit some kind of risk limit that goes on So I think this is really, really good again for crypto. And I think the inflection point will always be that July of this year was the point that we put pressure on the Fed AI agents, put pressure on the labor market. We had to see how we would deal with the deficit problem. We have a new Fed chair. It was put on him. Are you going to be hawkish? Are you going to be dovish? And everything that we're learning is even if they wanted to be hawkish, they couldn't be. And now with the labor market giving them the reprieve, and so far we have a negative inflation print, we'll see if this one gives them the ammo to do it. And if not, I think people are going to look back and be very angry at themselves. Just like Micron when it was under 100.
- [22:10]
Podcast Host
Let's talk about physical AI and the re industrialization of America. There was two big announcements this past week that I think really can open people's eyes. The first was Hadrian. They are kind of a factory as a service or a factory of the future. They have been automating a factory and they have three different locations, about 3 million square feet. And their entire focus is how do they use robotics and physical AI to re industrialize the country. And they're starting with things that you would expect. They're building, you know, munitions and other types of very complex kind of industrial type hardware. But they raised $1.3 billion at like almost $8 billion valuation. And to me the most interesting part was who participated. You have JP Morgan's kind of Strategic Defense Initiative. You have Apollo making its very first ever venture capital investment. Right. I mean, these are really large organizations that are very, very sophisticated. They are not playing the like lottery ticket venture game where it's spray and pray and hope something goes up. They're almost looking at this type of, you know, venture funded, industrial focused company as a private equity. You know, it's like the new private equity. And so I think that was like one data point. The second data point is Elon basically like pulled back the curtain on Terrafab and was like, this is what we're building. And he has come out and said, It's 100 million square feet or more. He believes that it will be the most valuable building in the world ever constructed. And the imagery, the dimensions of this thing, you just look at it and you're like, if he even comes close to pulling this off, obviously this is going to be really valuable. So how do you look at the like Physical AI for the industrial manufacturing sector and maybe playing it back into, like, the jobs, you know, they are creating jobs. I think Terraform is going to create 3,000 jobs, but with 100 million square feet, like, there's way more robots than humans that are going to go into that facility. Right?
- [24:07]
Jordy Visser
Yeah. So here, here's. Here's the way. I'll just say this when I say there's insatiable demand for compute and that we will never have enough compute for what. You're the only way what these people are investing in at these numbers that seem relatively small. Let's leave Atlanta aside. We need to have more AI, and for more AI, we need more compute. So if you combine what Gavin Baker said, which is, he's like, whether it's open source or whether it's a frontier model, you still need the same amount of compute. It doesn't matter. So compute is compute. If there were. If we thought of compute the same way we thought of copper, we'd be very, very interested in buying as much compute. Well, the compute, you need a tariff. Basically, what Elon Musk is saying is there isn't enough compute for my humanoids. So if I want to have billions of humanoids, if I want to get to Mars, we don't have enough intelligence for that. I need intelligence in every machine, in every car, and every single thing. So this gets back to the point of what's first? Well, first is we have chat agents, we have coding agents. We have chatbots, coding agents after coding agents. Well, then we get into the beauty of consumer agents, and all of us having Jarvis in our pocket. Once we get to that, then we have embodied agents. We actually have humanoids that are running around, but they all need intelligence. The cars need intelligence. Everything needs intelligence. So on all of those conversations, the investment side, when people start jumping ahead, like with Space X, and I made the comment, like, I don't even know what the space for TAM means. Like, what is that? This, the TAM space? I don't like. I don't. I don't even know if we'll have anything back then from an investment standpoint. I want to focus on the next two to three years. The next two to three years are about compute, compute, compute. We need more intelligence. We need more compute. And that's why the semiconductors, the industrial public companies that are building out the infrastructure, they're going to win ahead of time over these private businesses. But these private ones are the signals of what's coming in three years and in four years and in 10 years. Everyone should just pay attention to this because this train doesn't stop because we need more compute for the intelligence.
- [26:28]
Podcast Host
What are the things? If you kind of follow this through. So I'm an investor. I'm listening to Jordy. Jordy is the wizard of Oz in my opinion. And I hear him saying that we don't have enough compute. I hear the physical AI, I see what's happening with the frontier models. How do I think about tying that trend and that belief to my portfolio? Is it just go and buy hyperscalers? Is it go and try to pinpoint things like the memory shortage and others or just like walk through how you think an independent individual investor can approach this? Not necessarily recommend individual stocks, but just like how do I think about allocating my portfolio given what you're talking about?
- [27:06]
Jordy Visser
Well, I know that we have viewers and listeners that we can probably bucket into two camps on this question. One is investors and another is traders. So in my video this weekend, I'm going to put out kind of a learning lesson as to what happened this year for everyone who when I say there's an AI mid cycle slowdown coming and I explain that this is about the fact that now people are too over their skis. We need to have a point where people start questioning the growth. And that's exactly what we saw now during that time. Equities lose steam and they fall. And that's what we saw if people are investors. The reason I created 100 name index, which happens to include not just the things we've talked about, but it also includes bitcoin, it also includes silver, it also includes Palantir, things that weren't working. These are the things that I think and I talked about the fact I'm getting out of Micron and I'm rotating money into silver and into Bitcoin. That may not have worked perfectly, but I'll tell you what, in July it did. Because in July those were all up and the AI trade was down, I had reduced that. So from a trader perspective, when I say AI slowdown, what I mean is we had made a lot of money on the trade, reduced the positions, have more cash, sit out for a little while and then when you see the sign of panic, which was absolutely situational awareness, be in a position where you can add more. So that's for traders, that's for people of how to go through it, the easiest way to measure when things get crazy. And this is what I'm going to show in the video, the 50 day rate of change, how far an index has moved at the peak in or at the point that I was reducing micron, it's because my thematic portfolio with 100 names was up 50% over a 50 day period. So I reduced it. Now I show that over the prior five years it kind of peaked around 20 and then it would reset back down just below zero or around minus 10%. Guess where we got after this 50%? We ended up at minus 10 on a rolling 50 day basis. So that's the first thing is for the traders you have to start using rate of change. The beauty of rate of change is it's a time plus price mechanism. And that means that when you're doing things with inside the AI world where they're moving faster, you're getting these parabolas and, and bubbles on one side and then you're getting speed crashes to reset the sentiment. And now you can enter at a much more clearing point for investors. I don't, I wouldn't worry about it. Here's what Elon Musk said on the SpaceX earnings call and this is all in regards to why tarafab he said memory demand is growing by 200% a year. Memory capacity is growing by 20% a year. This is what I talk about about the reason the memory needs are going so high is because the demand is coming from agents. The more that we allow digital agents to work, the more that we need more memory because we need more compute. That is a digital thing. My son who is in an internship and he's a junior and entering his junior year of college, he literally sent me a text that I sent you this week that basically said my AI Chief of staff is spitting out sub agents every day for the job that he's at. So he's using more compute every single day and that's why the memory demand is going up. The feed 20% capacity that Elon Musk is talking about, Terrafab is going to take a while to build any capacity takes a while because it's about physics and human beings and regulatory and everything like that. AI agents are not held back by regulatory. So I just want to make sure people realize that is the story that is happening here and why supply and demand are out of, out of whack completely. And that's the way I would navigate this. Don't worry about it as an investor. Stay in the trade, sit there, be happy that you'll get an extra 15% over the S and P for traders. Be very, very wary of getting too over your skis when the rate of change gets too high.
- [31:17]
Podcast Sponsor Announcer
Today's episode is brought to you by Arch Public. Arch Public has just expanded its agentic trading platform beyond crypto. So pay attention, this is a big one now. They are automating strategies across stocks, commodities and ETFs and I think that this is going to be huge. You can now automatically take profits when one market hits new all time highs and rotate that capital into other markets showing more opportunity. Whether you're rotating capital into AI stocks Gold, if you're investing in the S&P 500 or you're accumulating Bitcoin, Arch Public brings real discipline and automation to your investment strategy. Additionally, they've launched a powerful new tax loss harvesting tool. With crypto being so volatile and its exemption from the wash sale rule, Arch Public can offset gains with losses without compromising your long term positions. It's exactly what, what every serious investor does. Institutional grade automation that works across every major asset class. There's no more emotional trading, no more missing tax opportunities, just smarter hands free execution of your preferred strategies. Go to archpublic.com right now, connect with their team, set up a time, bring your accountant if you'd like. Then you can learn what automated trading
- [32:19]
Podcast Host
can do for you. Archpublic.com so a couple thoughts. First is you know how to become a long term investor. Start off as a trader and have the position go against you. Then you just become the bag holder, right?
- [32:32]
Podcast Sponsor Announcer
So, so we do have two groups
- [32:34]
Podcast Host
sometimes some of them are going back and forth between the two. The second thing is I, I for something else this week I had to look up, I remember that Elon had built the Colossus data center pretty quickly but I couldn't remember how quickly. And so I went, I looked it up and it said that Elon built it in 19 days. Usually it takes four years. So again, how are you counting that? Maybe it took a couple of months, right? Not actually 19 days but he compressed four years into a couple of months. Pretty impressive. I bring that up because the Terrafab like it should take, I don't know if anyone else was building it. It'd take 20 years in America, right? Like who knows how long this thing would take. If he gets this thing built in two years, it would be probably one of the greatest engineering building feats of our lifetime. And so it's going to be fascinating.
- [33:25]
Podcast Sponsor Announcer
I don't know, maybe it takes five years, right? Maybe it takes one year.
- [33:28]
Podcast Host
I have no clue how long it's going to take but I do think that we're kind of putting like our, we're putting our Michael Jordan on the field and we're saying like, hey, you
- [33:36]
Podcast Sponsor Announcer
know, have at it.
- [33:37]
Podcast Host
Let's, let's see how quick you can do this thing. Which is pretty cool. And I saw somebody talking online and they were like, so let me get this straight. Basically our whole national strategy is one guy versus China's entire country's capabilities. Like that's, that's our, that's our bet. It's like this one guy's gonna pull it off, but maybe we'll see. One other thing that I want to talk about is every once in a while, given what I do on a day to day basis, I get a feeling that I got to kind of peek into the future. And when I peek into the future, I get to come back and tell people like, hey, I've seen something and this is worth paying attention to. And the thing that over the last two weeks that I have seen that I can't unsee at this point is I think that people are overestimating the capabilities and the pervasiveness of the frontier models in terms of their usage. And they are underestimating how much proprietary technology, specialization, specialized workflows, all this kind of stuff is actually going to end up being used in production across different industries. I know that you've got some thoughts as to maybe like the role of the frontier model and where they will sit in this whole thing. So walk us through how you're thinking about frontier models where historically like they were just the only game in town, everyone used them for everything. You now, I think kind of have evolved to, hey, the frontier models are going to have a very specific but very important role going forward.
- [35:02]
Jordy Visser
Okay, I'm going to reference this to start with. People can go read the substack that I posted this week which is effectively on intelligence abundance and the impact that it has on, let's say, what we invest in as investors. So the reason I bring that up is as, as the question you asked. I want people to think about this from two separate places. One is an AI, an AI native startup business. A company that has no bureaucracy. It's an entrepreneur. We have massively growing amounts of million dollar revenue companies that have one individual behind them. My company fits that mold. You're able to grow a business rapidly, you're able to expand it, you're able to do things for people. It's unprecedented. The lack of need of both capital, but also human beings. So any business there is going to go the route that you're describing. They don't need Claude, they don't need Chat GPT, they don't need the big picture. The problem is when you get into the bigger companies and these are the ones that everyone listening is is investing in. Public companies are just gigantic bureaucracies and I was driven away from one at the peak of my career like you guys. Everyone watching has gotten to know me. I was in my early 30s, my best friend and the best man of my wedding died in 911 and I literally had the question why I worked in a place where my job at the level I was at 33 was going to be firing people and occasionally hiring people. That was going to be my job. I'd moved up to the management level at a very early age. My everything had gone quickly and I didn't want to be involved in that. Those companies, when they make decisions, everything is slow, needs to be checked by 100 people. So are they going to allow some open source model to be used in there? No, they want to have indemnification of hey, this thing caused an error. We're going to blame anthropic, we're going to blame ChatGPT within the documents. Those guys are taking the risk if the model screws up, if there's a hallucination, if something gets sent out improperly. There is no way that they are going to use open source models quickly in big enterprises. So on the one side you're right, I think smaller businesses are going to thrive because of this. On the other side, right now big businesses are getting productivity, they're getting profit margins and I think that's going to continue for a period of time. But I do think you're going to have an issue here eventually down the road where public companies are going to suffer both from the competition of the AI native businesses that are growing rapidly with better margins able to compete against all businesses, including the hyperscalers. I just think anthropic and OpenAI for the next, let's say year to year and a half we're going to continue to see the revenues grow. Most of that's going to come from the enterprises and the research part of the world because I do think that they're going to be more aligned with the government for solving cancer, for doing things like that. And I think to leave it on this, you saw what happened at Google this week. Jeff Dean is gone and at the same point Demis Hassabis is moving into another role. And I can't say this loud enough. Think about AGI as the AI native world where Jeff Dean and Demis Hassabas care a lot about and think about Google the company as needing to make revenues in their consumer products to deal with the capex they're spending. Even with inside a big company, you're starting to get a break on the talent, wanting to be focused on things that create a legacy for them personally rather than raising revenues for a business. And that means that the talent is gradually going to leave these places. It's all bad for public equities with inside the next five years from a growth rate perspective, it's very, very good for entreprene and small businesses.
- [39:12]
Podcast Host
Are you worried about Google like did obviously some key people left? I could make two arguments. I think that the one argument is like, oh, Google is changing. Jeff Dean, who's been there for 27 years, you know, he's gone. The Demis Hasabis, I mean all this change is happening. That's a negative. Why, why are your best people, you know, leaving, evolving, stepping back, etc. I can make another argument that's like, hey, I've been here for 27 years, we crushed it. You know, I don't think anyone's questioning my skills. I want to go see if I can do it on my own and I'm going to bring three of my buddies who also are super accomplished, successful people and there's like this gold rush of AI and if there was ever a time to leave ever a technology to go and try to, you know, build something of our own, this would be it. And so it's like, are they running away from something or are they running to something? We probably never know the answer. But how do you think about it as an investor who would be evaluating Google?
- [40:05]
Jordy Visser
You just said it perfectly. That's uncertainty. So in the same way we talked about the fact that terminal value, you can't value a company three years from now. Google's no different. That's the whole point. If you ask most people in Silicon Valley what the key is to success, it's going to be talent. In a technology company, you're always having to innovate and come up with something new and go through it. I think for the last 10 years, maybe 14 years, because of the moats around Google and Apple and Amazon, we kind of maybe evolved into this false sense of security and their multiples on their, their stocks went up high. So we've now taken out tons of debt. I mean, Google did another $25 billion issuance this week. So on all the things you said, I Completely agree. We don't know. Well, if you don't know, shouldn't the multiple compress on the company? Especially if it's in the business where it has lots of debt and you don't know. And I think that's what's happening. That's why I've said I want to belong that are getting the cash from these companies that are not exposed to abundance, meaning code. They are actually winning from the side of the physical constraints that are in the world. That game won't last forever because all the investments that are going into Humanoids and robotics will eventually get to the point that those businesses will be disrupted. But for the time being, for the next 18 months. And I'm always going to say 18 months because when I start seeing signs that less than 18 months from now we're going too fast on the physical side, I'll be raising the red flag or at least saying, hey, this doesn't act well right now. What I'm saying is like Gavin Baker, the fundamental data supports that we are still in the early ages of consumer agents and we have to get through those before we can actually have humanoids that actually are worth disruption.
- [41:52]
Podcast Host
The month of August. I think there's a lot of people in corporate America who are like, oh, the slowdown, everything slows down. The month of August also tends to be lighter on returns for the stock market. Do you do anything different based on seasonality?
- [42:09]
Jordy Visser
You know what I, because I believe in the fact that AI speeds things up to where it's 10 times what it used to be. The worst year ever for momentum ever was not as bad as what happened in July. So we're getting price moves. So I believe that if you think of July as a year for the AI trade, it was a horrible year. It was the worst year for momentum. So what I'm looking at is combing through the rubble. As I posted last week on, on a, on a prompt for people. I just think there's a good opportunity and I'm not paying attention to calendar seasonality the way that let's say we used to. I've thrown out all the old models. I just think things are moving way too far fast. And so whether it's a bull bear indicator, whether it's anything, I think if you're trying to use old models that have a back test back 40 years, I think the AI world is disrupting all of them.
- [43:14]
Podcast Host
Last question I have for you is SpaceX obviously went from 135 bucks to like 200 and something. And Then it dropped all the way back down to almost 100. I think I saw 108. 106 was like the. The lowest that I saw is back 127, 128 now. So it's obviously very volatile. They had the big share unlock. There's a lot of news around Terafab, et cetera. You've got a portfolio. Are you putting SpaceX in the portfolio or how do you evaluate a business like that that's got a lot of very high ambitions in different markets. It's got, you know, great entrepreneur behind it. But also I think there's some questions about is it overvalued?
- [43:53]
Jordy Visser
I honestly don't. It's. Their compute business is incredibly valuable. Let's just get back to the basics of like Elon built Colossus in not only a record amount of time, but he also did something which was have the largest clusters ever of GPUs. Now he's going to be doing stuff with Vera Rubin. I think what Dwarkesh talked about two weeks ago in his post, what Gavin Baker echoed last week or this week in his interview is starting to become something that people realize, which is the advantage is going to be to the companies that spent the money building the compute because it's worth a lot more money than it was before because they all they nobody anticipated that the amount of adoption would speed up as fast as it has. And I think that's the problem is that we're racing too fast. So rather than focus on SpaceX, here's the way I would say it is. Value the business on the compute and then you get the space for free. And what that says to me is any time that it gets back towards $100 because of the compute and the ability of him to build this stuff out, there's a value there that makes it more of a boring business. But you get the call option for free on the space.
- [45:13]
Podcast Host
That's a great way to look at it. What are you going to cover in your video this week?
- [45:16]
Jordy Visser
I mean I'm going to go in depth to a lot of the things we talked about, the Gavin Baker interview, a lot of the details with Inside the AI trade, meaning why this absolutely looks like a low. So last week it was why it looks like a panic low. Now it looks like a bounce I covered last week, follow through day, meaning once you've had a big bounce, you kind of measure the strength of it as to whether that was the end based on days four through 10. Well, we're kind of in the middle of that now, and so far it still looks really, really good. And I like the fact that as of now, the memory names are lagging, some of the opticals and things like that, and they're bouncing, but not as much. And then most importantly again, I'm going to talk about bitcoin. I've talked about it and, you know, this is coming. But I'm adding a crypto part to what I'm doing in AI and that'll start in late September into early October. And just so people understand, the reason I'm adding this to the paywall of what I do is because I think it's coinciding with when the traditional finance individuals, the people that you went to go visit a decade ago that laughed you out of the room, they're going to be number one forced into the space, and number two, they're going to be intrigued into the space because of the AI agent side. So for everyone who has followed crypto and has followed the traditional finance world, hopefully the one thing you've learned from me is I constantly write about in subtext and think about the relationship between these two. I believe the last 10 trading days, meaning from Monday of last week until Friday of this week, all of the events we talked about at the very beginning, we will look back as a major inflection point where we realize the debt of the world is too big. The central banks do not have a choice. They have to find the literally tools to make sure that this thing can keep going and that the AI trade showed that it's not going to be easy money. And that means the money and the capital is going to be distributed into other places. And I think this is where crypto starts to ascend. So I'll cover all that in on the video this weekend.
- [47:22]
Podcast Host
Amazing. For all of you amazing, beautiful men and women out there who really appreciated watching this video, we've got two asks for you today. The first is you got to go follow Jordy. Go to YouTube, type in Jordy Visser. Hit the subscribe button button, digital handshake, tell him thank you or go to 22vResearch Jordy Visser. You just Google it, ask your local LLM and it'll direct you to the right place. Go and subscribe there. And then if you want to use the latest, greatest AI products to better manage your finances, go check out cfosilvia.com you can sign up for free on that. Our friend Jordy. We will talk again next weekend.
- [48:00]
Jordy Visser
See you next week, buddy.