Prof G Markets: Is Breaking Up Intel The Right Move? + The New Gold Rush

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0:01:56 (upbeat music)
0:02:06 – Welcome to ProfG Markets.
0:02:08 So Scott is still away.
0:02:09 He’s still on the slopes.
0:02:12 We’re beginning to think he’s quiet quitting,
0:02:13 but we’re not too worried about that
0:02:16 because today we have one of our favorite guests
0:02:17 on the show.
0:02:19 You’ve heard him before.
0:02:21 We have in the studio, the one and only
0:02:23 downtown Josh Brown.
0:02:25 (applause)
0:02:27 Josh, thank you so much for joining me.
0:02:29 – I will be doing my best Scott impression.
0:02:31 You’ll tell me after how it went.
0:02:32 – I can’t wait to see it.
0:02:33 Where are you?
0:02:34 You’re not in your usual studio.
0:02:36 – I am in Naples, Florida,
0:02:40 which is Chicago’s version of, I guess,
0:02:41 Southeastern Florida.
0:02:44 So this is Gulf Coast, Western Florida,
0:02:45 and I love it here.
0:02:47 I’ve never been before.
0:02:50 We’re seeing a wealth management clients and colleagues
0:02:54 and we’re doing a live version of our podcast tonight
0:02:55 in town.
0:02:56 So it’s exciting.
0:02:57 – Very exciting.
0:02:59 And we should plug your podcast, The Compound.
0:03:01 I know you don’t like doing a promotion.
0:03:05 Last time I asked you where our fans could go follow you
0:03:07 and you said, “Don’t follow me.”
0:03:09 So I’m just gonna tell the fans straight up,
0:03:11 go check out The Compound.
0:03:14 Let’s just get into the show.
0:03:15 We’ve got a lot to get through.
0:03:18 So let’s start off with the Market Vitals.
0:03:20 (upbeat music)
0:03:27 The S&P 500 hit a record high.
0:03:29 The dollar declined, Bitcoin was flat
0:03:31 and the yield on tenure treasuries fell,
0:03:33 shifting to the headlines.
0:03:35 U.S. housing starts slowed in January
0:03:40 with new residential construction falling at 9.8%.
0:03:42 Builders scaled back construction due to harsh winter weather
0:03:44 while also grappling with challenges
0:03:45 from high mortgage rates, tariffs,
0:03:47 and inventory shortages.
0:03:50 Elon Musk’s X is in talks for a funding round
0:03:53 at a $44 billion valuation.
0:03:56 That’s the same price Musk paid for it over two years ago.
0:03:58 The funds would be used to support new initiatives,
0:03:59 including video products,
0:04:02 and to help pay down some of the company’s debt.
0:04:04 And finally, Michael Saylor’s move
0:04:05 to transform MicroStrategy
0:04:08 into a Bitcoin Treasury company
0:04:10 has inspired a string of copycats.
0:04:13 At least 78 public companies have followed suit,
0:04:17 including a meal delivery service and a coal mining firm.
0:04:20 Also, GameStop shares jumped 20% after revealing
0:04:23 it was considering a Bitcoin investment.
0:04:28 So, Josh, we’ll just start with this housing starts data.
0:04:29 I will say right off the bat,
0:04:32 this is extremely disappointing to me.
0:04:34 Just given all of the conversations we’ve had
0:04:36 around the cost of housing in America,
0:04:41 the median home price today is $420,000 in America.
0:04:45 The median age of a home buyer is 56.
0:04:47 And Scott and I have talked about this before.
0:04:48 Our view is pretty simple.
0:04:51 The way we solve this is we build more homes.
0:04:53 And so I see this data,
0:04:56 housing construction actually going down.
0:04:57 And just as a young person
0:05:01 who at some point would like to buy a home, I hope,
0:05:03 it makes me a little depressed.
0:05:05 So let’s just get your reactions
0:05:07 to this housing starts data.
0:05:09 Perhaps any thoughts on why this is happening?
0:05:12 – I think the obvious answer in this case
0:05:13 is the right answer.
0:05:15 You had freezing temperatures
0:05:18 affecting residential construction.
0:05:20 And if you’ve got companies in that environment
0:05:25 that wanna pause or delay a groundbreaking by a week or two,
0:05:27 I don’t think it’s gonna have a substantial
0:05:29 longer-term impact.
0:05:33 And if you actually seasonally adjust that number,
0:05:35 January was really down 8.4%,
0:05:37 which again is not great,
0:05:40 but not as bad as the nominal headline.
0:05:42 And I’d like to share with you
0:05:46 that home building was actually up 24.9%
0:05:49 in the Western region of America,
0:05:52 which obviously is not being affected by freezes.
0:05:56 And so it’s the headline sounds worse than the reality.
0:06:00 And I think the bigger issue that we have
0:06:05 is the cost of labor to build new homes is high and rising
0:06:10 and not necessarily in step with the disinflation
0:06:12 that we’ve had in other parts of the economy.
0:06:16 And it’s sticky and it’ll be stickier still
0:06:19 as the ice raids and some of the things
0:06:21 that are gonna happen with immigration
0:06:24 become more and more front of mind.
0:06:26 So if you’re worried about anything,
0:06:29 that’s really the thing that you should be most worried about.
0:06:31 And the home building stocks,
0:06:33 just if you’re watching those for SignalEd,
0:06:38 the XHB is up 1% so far this year within the XHB,
0:06:43 which is the ETF that owns all the home building stocks,
0:06:47 17% of those companies are above their 50 day moving average,
0:06:50 23% are above the 200 day moving average.
0:06:55 And about 59% of all companies in the S&P 500
0:07:00 are above the 50, 61% are above the 200.
0:07:02 So those stocks are all well behind
0:07:05 where the overall market is.
0:07:07 And I do think that there’s room
0:07:09 if you’re an investor in the space
0:07:11 for there to be a little bit of a catch up trade,
0:07:13 mortgage rates fall a little bit more
0:07:15 in the second half of the year
0:07:17 and we get a bounce back after the weather,
0:07:20 you could all of a sudden be reading really good headlines,
0:07:21 I guess is what I’m trying to tell you.
0:07:24 – To what extent do you think tariffs
0:07:25 are going to play a role in this?
0:07:27 And it’s good to hear that there’s a positive read on this.
0:07:29 I think Scott and I have a tendency
0:07:30 to just see the negative in everything.
0:07:35 But we’ve got 30% of softwood lumber coming from abroad,
0:07:40 32% of appliances coming from abroad.
0:07:41 There was also this new data
0:07:44 from the National Association of Homebuilders.
0:07:47 And they found that a home builder confidence
0:07:51 had its biggest drop since COVID, it fell 13 points.
0:07:54 And I think a lot of that we could probably assume
0:07:57 is a response to the possibility
0:07:59 that the tariffs are about to be slapped
0:08:01 on all of these materials.
0:08:03 And suddenly the cost of constructing homes
0:08:05 is going to go up.
0:08:08 No, I don’t want to just blast Trump
0:08:09 immediately at the top of the show.
0:08:10 – Yes, you do.
0:08:13 I listen to the show, you forget I listen to the show.
0:08:15 And it’s a really good point.
0:08:19 Like the home builders are people too,
0:08:21 and they are susceptible to the media
0:08:25 and they’re hearing about nonstop tariff stuff.
0:08:28 A lot of the things that we think might be tariff won’t.
0:08:32 We know that this is part of the negotiating tactic
0:08:33 of the administration.
0:08:35 We know it because number one,
0:08:37 we had a full term of this.
0:08:40 And then number two, we already,
0:08:43 we have people in the administration winking at us,
0:08:44 just talking about this stuff.
0:08:47 Like, yeah, it’s a tariff, but so,
0:08:49 like that’ll run its course.
0:08:52 And the reality is that if you’re in the business
0:08:56 of home building, your job is to make money
0:08:57 on the homes that you build.
0:09:01 It’s not to race in and try to fill the void of,
0:09:05 oh my God, we’re 1.5 million homes short,
0:09:08 what we need to be for the millennials and blah, blah.
0:09:09 They don’t care about that.
0:09:13 They’re in business and business finds a way.
0:09:15 So they have to replace foreign suppliers
0:09:19 with US suppliers and US suppliers are there to meet
0:09:22 the demand at a reasonable price.
0:09:23 That’s what’s gonna happen.
0:09:25 In the end, they wanna build homes
0:09:26 and make a profit on the homes.
0:09:27 That’s what they’re really here for.
0:09:30 So I think you have to have some faith
0:09:35 that commerce and American-style capitalism will find a way
0:09:38 regardless of what roadblocks get thrown up
0:09:41 by international trade wars or whatever.
0:09:43 And one of the things I wanna say to you
0:09:45 and to your listeners and viewers,
0:09:49 it’s really easy to buy into worst case scenarios.
0:09:52 Train yourself to think about what could go right.
0:09:54 And sometimes it doesn’t work out.
0:09:58 But if you look at these things and you say,
0:10:00 okay, but what could go right?
0:10:03 You’re immediately one step ahead
0:10:05 from most first level thinkers
0:10:08 who read a negative article, process it as negative,
0:10:12 and then embed that negative expectation in their minds.
0:10:15 Like, okay, but what could go right?
0:10:17 So here’s an example, what could go right?
0:10:21 Now you have confidence really low amongst home builders
0:10:22 because they think there are gonna be
0:10:24 all these monkey wrenches.
0:10:25 Let’s say those monkey wrenches
0:10:27 are not thrown into the works.
0:10:30 All of a sudden, that confidence returns.
0:10:34 And we see a pattern of this happening all the time.
0:10:37 Trump or no Trump, this is a mindset shift
0:10:39 that I think investors need to make.
0:10:42 – Yes, let’s move on to the X valuation,
0:10:45 this funding round that’s going to value X
0:10:49 at $44 billion, the same amount Elon paid for Twitter.
0:10:51 – How many shares can I put you down for?
0:10:53 (laughing)
0:10:55 – It’s gonna be none for me.
0:10:57 How about you, would you invest in this?
0:11:00 – No, well, so here’s the thing.
0:11:02 It’s an advertising business.
0:11:04 Are there any shortages of ways
0:11:09 for public market investors to bet on advertising?
0:11:13 Not really, if you really wanna be invested in ads,
0:11:16 you can be invested in ads in a myriad amount of ways,
0:11:20 none of which involve all of the volatility
0:11:23 and potential risk and the mercuriousness
0:11:25 of the CEO of this project.
0:11:27 Like you can skip all of that and just invest
0:11:31 in ad-based businesses and there are plenty to choose from.
0:11:34 So from my dollar, the answer is no.
0:11:35 – The other big question here is like,
0:11:39 how did they land on this number as evaluation?
0:11:41 We basically have no signal
0:11:42 into what this thing is actually worth.
0:11:44 And this is the big question that we’ve been asking.
0:11:46 And it’s very hard to know
0:11:49 because we don’t see the financials anymore
0:11:51 ever since it went private.
0:11:54 But the best signal that we got was from Fidelity,
0:11:56 which owns a stake in X
0:12:00 and they valued the company at $10 billion.
0:12:02 And that was just in December.
0:12:04 So I guess the thing that I can’t really wrap my head around
0:12:09 is how could these new investors, whoever they may be,
0:12:13 justify a new valuation of $44 billion
0:12:14 when just a few months ago,
0:12:17 it was valued at less than a quarter of that.
0:12:21 I wonder if this might be due to Elon’s association
0:12:24 with Trump, maybe having that connection
0:12:26 makes people more excited and more bullish on the company.
0:12:29 Maybe it also has to do with XAI,
0:12:30 Elon’s new AI startup,
0:12:34 which is reportedly raising in a $75 billion valuation.
0:12:37 Maybe they think that X, the social media platform
0:12:41 can capture some of the value of the AI company.
0:12:44 Or maybe they’ve just quadrupled their revenues overnight,
0:12:45 but I highly doubt that.
0:12:47 So what do you think, Josh?
0:12:48 What do you think these investors
0:12:51 in this potential round for X are seeing
0:12:56 that the guys over at Fidelity two months ago didn’t see?
0:12:59 – I think it’s the halo effect of Elon Musk.
0:13:00 He has a ton of momentum
0:13:03 in terms of the zeitgeist of the country
0:13:06 moving in the direction of what he’s done
0:13:08 with free speech on the platform.
0:13:10 And you could absolutely hate the stuff
0:13:12 that you come across on the platform and that’s fine.
0:13:15 But a lot of people just like the fact that it exists.
0:13:20 And they see meta kind of following Elon into this,
0:13:23 which is what was the last time meta or Facebook
0:13:26 ever followed Twitter into anything.
0:13:31 So they kind of see that the vibe shift in the country,
0:13:33 especially amongst young people,
0:13:37 but really in places that surprised people
0:13:39 among African American voters,
0:13:42 among voters living in border towns in Texas,
0:13:45 like none of these people were supposed to have
0:13:49 had heard that rhetoric from Trump and Elon Musk
0:13:52 and had that resonate with them and yet they did.
0:13:55 And so I think advertisers feel a little bit more emboldened
0:14:00 about being willing to place ads on the X platform
0:14:03 where six months ago they would not have.
0:14:06 I think some of that is being reflected in the valuation.
0:14:09 I also think the valuation is made up to begin with.
0:14:11 The 44 billion is what he paid for it.
0:14:14 So this is him saying, “Hey, I didn’t destroy any value here.
0:14:15 Things are better than ever.”
0:14:17 So there’s some of that.
0:14:20 I also think there are people willing to buy a stake in this
0:14:24 just because it gets them in the room.
0:14:27 It’s like, yeah, I invested in your X platform.
0:14:28 Now allow me to talk to you
0:14:30 about this other aspect of my business.
0:14:35 And so a really cheap way for a big investor to buy in,
0:14:40 so to speak, is to buy some equity at X
0:14:43 and rub elbows with the people
0:14:45 that are perceived to have a lot of momentum.
0:14:46 – Yeah, absolutely.
0:14:50 I mean, we certainly saw all of these blue chip advertisers
0:14:51 fleeing the platform.
0:14:54 And it feels like what might be happening now
0:14:56 is they’re starting to come back,
0:14:58 especially after the election.
0:15:01 Do you think we might see that swing back?
0:15:04 – Yeah, because it’s not just happening on X.
0:15:09 Google is pulling out all these Black History Month
0:15:10 and Women’s History Month.
0:15:13 They’re pulling all that stuff off the calendars.
0:15:16 You are not gonna see the Pride Month displays
0:15:20 at Target and elsewhere that you’ve seen in previous years.
0:15:23 All that stuff’s gonna be downplayed.
0:15:27 Corporate America is recognizing that they were pushed
0:15:30 to go way further in one direction
0:15:34 than the average person in this country
0:15:35 really wanted to follow.
0:15:38 And so now they’re tacking all the way back
0:15:39 in the other direction.
0:15:42 And maybe, of course, that’ll go too far too.
0:15:44 But X is uniquely positioned
0:15:47 to get back to the original question.
0:15:51 If you wanna demonstrate that you’re about profits
0:15:55 and making money and satisfying the customer,
0:15:59 a really easy way to do that is to be back in business
0:16:01 with Elon and with X.
0:16:03 And just to say like, look,
0:16:06 here’s where our customers are.
0:16:08 This is where they are emotionally and spiritually
0:16:09 and we’re there too.
0:16:13 It’s a really easy signal flare to fire in the air.
0:16:16 And you’re gonna see, I think,
0:16:17 you’re gonna see advertisers back.
0:16:21 – Let’s move on to MicroStrategy.
0:16:23 Multiple companies now copying the playbook
0:16:28 where you just basically buy up a bunch of Bitcoin.
0:16:31 I look at these companies and the common thread
0:16:34 I see among all of them is that they’re all
0:16:35 shitty companies is what I would say.
0:16:39 And I think back to what Michael Saylor said
0:16:42 on this podcast, which is that before he got
0:16:46 into Bitcoin, MicroStrategy was struggling too.
0:16:48 So I’m seeing this Bitcoin strategy,
0:16:52 it kind of looks like the get out of jail free card
0:16:55 for shitty struggling businesses.
0:16:57 Do I have that wrong or do you think
0:16:59 that’s sort of what’s happening here?
0:17:00 – Nah, you nailed it.
0:17:05 And we’ve seen versions of this before in 2017.
0:17:08 There was a wave of small and micro cap companies
0:17:12 adding the word blockchain to their official corporate name.
0:17:15 Like literally changing the corporate name
0:17:17 to something blockchain
0:17:19 and immediately getting a boost in their valuation
0:17:24 because Bitcoin rallied up to 18,000 that year
0:17:28 from like 9,000 and it just became the zeitgeist
0:17:30 and dead ends companies that didn’t have much going on.
0:17:33 It was like an overnight way to add market cap.
0:17:36 Of course, it failed spectacularly in 2018
0:17:38 when the price of Bitcoin crashed.
0:17:39 So none of this is surprising.
0:17:43 And I think the interesting thing that happens here
0:17:47 in the short term, it actually bolsters strategy
0:17:49 because you have a lot more entities
0:17:51 that are buying up Bitcoin.
0:17:55 And as the scarcity of Bitcoin becomes more
0:17:59 of a widespread idea, obviously companies
0:18:01 that own a lot of Bitcoin will benefit.
0:18:02 Over the longer term though,
0:18:06 or the intermediate term if this continues and grows,
0:18:11 I think you’ll lose the premium that strategy has
0:18:14 to its value of Bitcoin.
0:18:16 So right now it trades at a premium
0:18:18 to the amount of Bitcoin it owns
0:18:21 because people believe in not just the value of the Bitcoins
0:18:24 but the strategy of accumulating more.
0:18:26 So it’s selling at a premium to,
0:18:27 if this were a closed end fund,
0:18:32 we would say a premium to NAV or net asset value.
0:18:35 The premium will shrink if there are five of these companies.
0:18:38 If there are 10 of them that attain any kind of size.
0:18:40 So that’s one interesting thing that could happen
0:18:43 where all of a sudden the company strategy
0:18:48 starts to trade at closer to just the value of its Bitcoin
0:18:51 ’cause it loses that scarcity premium
0:18:53 because there are so many imitators out there in the market.
0:18:55 – I’d love to get your thoughts
0:18:58 on Michael Saylor’s strategy in general.
0:19:01 I look at what he’s doing, I’m very skeptical of it.
0:19:05 You know, you describe the premium to NAV there
0:19:06 and a lot of why that’s happening
0:19:11 is because he’s basically securitizing the value of Bitcoin
0:19:14 to issue bonds and then using the bond proceeds
0:19:15 to buy even more Bitcoin
0:19:17 and just levering and levering and levering.
0:19:20 And to me, at a certain point it starts to look
0:19:23 more like a Ponzi scheme than anything else.
0:19:26 The whole thing feels extremely unstable,
0:19:29 especially when you bring up those historical comparisons
0:19:31 of adding blockchain to these companies.
0:19:33 It feels very similar to that.
0:19:35 And then add on top of that the fact
0:19:40 that the NASDAQ has now decided to include this company
0:19:42 in the NASDAQ 100.
0:19:46 This adds a whole new dimension of concern for me
0:19:49 because now you have millions of people in pension funds
0:19:52 and people’s retirement accounts holding this thing
0:19:55 that arguably doesn’t have much value
0:19:59 or at least that isn’t generating real cash flows
0:20:03 in a normal, regular way that another company would.
0:20:04 Perhaps I’m being too negative.
0:20:06 Does this make sense to you?
0:20:07 – It works and it makes sense
0:20:09 so long as the price of Bitcoin goes higher.
0:20:11 (laughing)
0:20:14 I’m sorry, but that’s the reality.
0:20:15 – You’re not comforting me.
0:20:20 – He owns 2.28% of all of the 21 million Bitcoin
0:20:23 that will be available.
0:20:26 So available now and available in the future.
0:20:28 That’s impressive.
0:20:31 If you think that Bitcoin is going substantially higher,
0:20:34 he’s got a $31,000 cost basis on that Bitcoin.
0:20:38 That cost basis will rise as he continues to buy,
0:20:43 but the bet is the demands for all of the other Bitcoin
0:20:48 available will grow more quickly than the new supply
0:20:51 coming on net of whatever he’s buying.
0:20:54 And these other companies that are aping the strategy
0:20:55 are way more ridiculous.
0:20:59 So here are a couple, similar scientific.
0:21:03 This is a quote unquote chronic disease detection company.
0:21:05 You could see why they’d wanna buy digital assets.
0:21:07 Makes perfect sense.
0:21:11 They bought 871 Bitcoin for $88.5 million.
0:21:15 They used a convertible bond that they issued in January.
0:21:20 Its stock price is up 120% since buying this crypto
0:21:24 and they’re calling it their primary treasury asset.
0:21:28 Here’s another one, meta-planet based in Japan.
0:21:32 They’re calling themselves Asia’s strategy.
0:21:35 Last year they switched from developing hotels
0:21:38 into becoming a Bitcoin treasury company.
0:21:41 The stock price has gained more than 2000%.
0:21:43 – My God.
0:21:46 – So I guess what I’m trying to tell you is
0:21:48 don’t get mad at strategy.
0:21:52 If you really wanna hate something,
0:21:55 hate the Japanese hotel company, meta-planet.
0:21:57 Like there are way worse versions of this.
0:22:02 If Bitcoin craters to $50,000,
0:22:06 strategy share price will implode.
0:22:07 Of course it will.
0:22:09 The way you made money in Bitcoin,
0:22:12 and I made some, I should have made more.
0:22:14 The way that you made money in Bitcoin
0:22:17 was to ask yourself the following question.
0:22:19 And I heard this put by Bill Miller,
0:22:22 who’s one of the greatest stock market mutual fund
0:22:23 managers of all time.
0:22:25 He had an unsurpassed record.
0:22:28 He beat the market 15 consecutive years.
0:22:30 Nobody else has ever done that.
0:22:33 He got very heavily interested in Bitcoin way early.
0:22:37 And the question that he posed and then answered
0:22:41 is the supply of Bitcoin is only gonna grow 2% a year.
0:22:43 Supply.
0:22:48 Ask yourself this, will demand grow faster or slower?
0:22:50 If you answered the question faster,
0:22:54 then de facto you had to be bullish on Bitcoin.
0:22:57 To answer it slower, were you wrong?
0:22:59 ‘Cause the demand outstripped the supply,
0:23:03 which is why the price has gone from $50 of Bitcoin
0:23:07 to $80,000, to $90,000, to $110,000.
0:23:11 Like that was the right way to answer that question.
0:23:12 So if you believe that the demand
0:23:15 will continue to rise faster than the supply,
0:23:17 then you’ll probably bullish on strategy
0:23:18 and you’ll probably own it
0:23:22 in addition to regular Bitcoin that you also hold.
0:23:26 It’s easy to be skeptical that the demand will stay.
0:23:28 But so far, that’s been the case.
0:23:31 And people who have shorted this thing
0:23:33 have trained tracks across their backs to prove it.
0:23:37 We’ll be right back after the break with a look at Intel.
0:23:38 If you’re enjoying the show so far,
0:23:40 be sure to give ProfGMarkets a follow
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0:27:10 (gentle music)
0:27:16 We’re back with ProfG Markets.
0:27:18 Intel could be headed for a breakup
0:27:21 with the help of TSMC and Broadcom.
0:27:25 TSMC is exploring taking control of Intel’s US factories
0:27:28 while Broadcom is in talks to acquire Intel’s chip design
0:27:30 and marketing business.
0:27:33 Intel’s stock surged 16% on that news
0:27:37 marking its biggest rally since 2020.
0:27:42 So, Josh, this feels quite important symbolically.
0:27:45 I mean, just going back through history.
0:27:48 In the year 2000, Intel was the sixth largest company
0:27:50 by market cap in the world.
0:27:55 It hit a peak of half a trillion dollars in market value.
0:27:59 And since then, it’s shed almost 80%.
0:28:01 We’ve seen this AI explosion.
0:28:04 Its competitors have exploded in value.
0:28:08 Chipmakers like TSMC, AMD, Broadcom and Vidya.
0:28:09 And now Intel is not even among
0:28:13 the top 10 most valuable chipmakers in the world.
0:28:17 And it appears as though it’s going to be split up into two
0:28:19 and acquired by the two companies
0:28:21 it was specifically trying to compete with,
0:28:23 which are Broadcom and TSMC.
0:28:26 What went wrong for Intel?
0:28:27 – DEI.
0:28:30 – Isn’t that what we’re doing now?
0:28:31 – That’s the problem.
0:28:34 It’s actually, it’s not that far off.
0:28:37 MeToo is sort of what I wouldn’t blame
0:28:39 the MeToo movement for this,
0:28:42 but that’s where Intel’s problems started.
0:28:46 In 2018, they had a CEO who had to step down.
0:28:47 I don’t have all the details,
0:28:48 but he had a relationship with somebody
0:28:51 who was working at Intel.
0:28:54 It came to light and the board asked for his resignation,
0:28:56 which of course, that’s how that ends.
0:29:01 So please, if you’re running a publicly traded company,
0:29:03 try to control yourself around your employees.
0:29:04 – Keep it in your pants.
0:29:08 – Anyway, that’s 2018 and what comes out of that
0:29:13 is a succession of bad leadership/bad decision making.
0:29:17 Intel decides in that moment of succession,
0:29:19 they have a new incoming CEO
0:29:23 and they decide what they’re gonna do
0:29:28 is they’re gonna go full bore into the foundry business.
0:29:30 They have this manufacturing advantage.
0:29:33 They’re one of the highest throughput manufacturers
0:29:36 of chips in the world and they’re better at it
0:29:37 than other American chip companies
0:29:41 and they look at the success of Taiwan Semi,
0:29:45 which has effectively become like the outsourced manufacturer
0:29:47 to all of the chip design companies all over the world.
0:29:49 And Intel says we could do that too
0:29:52 and that’s gonna be a big part of the future of our business.
0:29:57 And that was a horrible in hindsight, strategic decision.
0:29:59 I think Wall Street hated it in real time
0:30:02 and keep in mind this is during a time the rise of NVIDIA
0:30:06 but it’s pre-AI, it’s 2018, 2019.
0:30:09 At that time NVIDIA, it’s very well known
0:30:12 that NVIDIA is going to be a big player
0:30:16 in next generation technologies like AR, augmented reality,
0:30:21 VR, virtual reality, machine learning, AGI.
0:30:24 What NVIDIA is doing is parallel processing.
0:30:26 They’re taking this technology
0:30:30 that they initially developed for video game development
0:30:32 and they’re pivoting it to these other technologies
0:30:37 where linear processing is not the right answer.
0:30:42 So Intel is the linear processing king, the CPU king.
0:30:45 Linear processing, it’s we do this operation,
0:30:47 then we do that one, then we do that one.
0:30:49 Parallel processing is multiple things at once
0:30:52 and if you’re gonna do autonomous driving, for example,
0:30:57 you can’t wait for a progression of linear compute.
0:30:59 It’s gotta be parallel.
0:31:03 So NVIDIA is kind of in pole position for the GPU era
0:31:05 and Intel’s not even there at all.
0:31:09 And as a result, they go into Foundry
0:31:12 and Foundry is just a terrible smokestack,
0:31:14 industrial kind of business
0:31:16 and you’re never gonna get the same stock multiple
0:31:20 that you’ll get as if you’re a chip designer, asset light,
0:31:23 we create the front end of this
0:31:25 and we pay somebody else to do the dirty work.
0:31:27 And so they’ve been stumbling.
0:31:29 This is going on for a long time.
0:31:34 It well predates the launch of ChatGPT and the AI era,
0:31:36 but of course that only made the disparity
0:31:38 between Intel and NVIDIA even worse.
0:31:41 Companies like ASML overseas
0:31:43 and other chip companies, ARM Holdings,
0:31:46 they all got the memo and Intel didn’t.
0:31:49 And as a result, this is why this company
0:31:50 is now a shell of its former self.
0:31:53 It’s a $100 billion market cap
0:31:56 in a land of trillion dollar companies
0:31:59 like Broadcom and NVIDIA.
0:32:00 In the last eight quarters or two years,
0:32:03 Intel has been profitable on an operating basis
0:32:06 in only three of those quarters.
0:32:09 On a net income basis, Intel has lost money four quarters
0:32:12 in a row through the last quarterly report.
0:32:16 It’s just an absolutely horrendous fall from grace.
0:32:21 And maybe the right answer is to put a nail in the coffin,
0:32:26 separate out the chip design from the foundry business,
0:32:29 have somebody else take those things over,
0:32:31 and say goodbye to Intel.
0:32:34 And maybe that might be the better outcome
0:32:38 for current shareholders than trying to continue
0:32:43 to slog it out, given the market realities of today
0:32:45 where Intel is in no man’s land.
0:32:48 Just going back to the decision to get into foundry
0:32:50 and just to clarify for us as foundry
0:32:53 is basically getting into the actual manufacturing
0:32:54 of these chips.
0:32:57 Most of the big companies we’re talking about NVIDIA,
0:32:59 NVIDIA is probably the best example of Broadcom,
0:33:02 they’re designing chips, which is just a better business
0:33:05 and then they pay someone else to produce it for them.
0:33:07 And Intel decided they wanted to try to get into the business
0:33:10 of actually producing these chips
0:33:11 for other companies like Qualcomm.
0:33:14 This is the business that TSMC is in.
0:33:17 And so they made that decision to go into foundry
0:33:21 and I think everyone would agree with you
0:33:23 that was a bad decision.
0:33:25 They got caught completely flat footed,
0:33:28 this AI boom took off and then suddenly everyone
0:33:31 has these GPUs and Intel’s operating
0:33:33 with a kind of shitty CPU business
0:33:37 and then also they’re investing huge amounts of capital
0:33:39 into building out this foundry business.
0:33:44 I guess from sort of like a management perspective,
0:33:46 what could they have done differently?
0:33:50 Should they just not have invested in foundry to begin with?
0:33:53 Should they have invested more maybe in R&D
0:33:54 trying to predict AI?
0:33:56 I mean, I feel it feels very easy to say,
0:33:58 oh, what a terrible decision.
0:34:00 – It’s the wrong people running the company.
0:34:02 In this day and age,
0:34:06 if you’re going to be at the helm of a chip giant,
0:34:09 you have to have a visionary streak
0:34:13 that enables you to see around corners and predict,
0:34:16 you cannot be a bean counter.
0:34:20 You cannot be just like an operations guru,
0:34:25 but not have a vision of where the tech is going.
0:34:28 I mean, you can get away with that for a few years,
0:34:29 but ultimately it catches up to you.
0:34:34 It’s not a surprise that Broadcom got to a trillion dollar
0:34:41 valuation, it’s run by Hock Tan, who is a visionary.
0:34:45 He’s like a 40 year veteran of the chip industry.
0:34:49 And he’s been there at the birth of so many milestones
0:34:52 in the tech landscape.
0:34:56 Jensen Wang, Lisa Su who runs AMD,
0:34:59 these people are running circles
0:35:01 around Pat Gelsinger at Intel,
0:35:03 who I think has already stepped down.
0:35:08 It’s a management, it’s not just one decision.
0:35:12 This is this cumulative decision making process
0:35:14 and you either get it or you don’t.
0:35:18 And if you don’t, you miss where the market’s heading.
0:35:19 That’s one.
0:35:22 Two, a friend of mine, Jason Xu,
0:35:25 who’s a radiant global advisors.
0:35:26 He had been at research affiliates.
0:35:30 He’s a Chinese born investment manager
0:35:33 here in the United States, brilliant guy.
0:35:36 And Jason, I asked him last year,
0:35:41 shortly after the CHIPS Act, I had a conversation with him
0:35:44 and there was this whole push to start the on-shoring.
0:35:48 And the semiconductor shortages of COVID for the automobiles
0:35:49 and we can’t let that happen again.
0:35:52 And Intel is gonna spearhead this effort
0:35:54 to start building chips here in the United States
0:35:57 in Arizona and elsewhere.
0:35:59 And then we’re gonna build our own fabs
0:36:02 and the government is gonna underwrite it.
0:36:03 And it’s gonna be great.
0:36:07 And Jason kind of said, not so fast.
0:36:10 What you have to understand is,
0:36:15 if you are a highly technically skilled person in Taiwan,
0:36:21 you dream of being in an underground white room
0:36:26 for Taiwan Semi working in a laboratory all day
0:36:27 in a hazmat suit.
0:36:28 That’s like, that’s your dream.
0:36:33 Your counterpart in America does not have that same dream,
0:36:37 does not wanna work in a clean room 11 hours a day
0:36:39 for Intel in Arizona.
0:36:43 It’s just not, so our most talented,
0:36:46 most brilliant scientists
0:36:49 and technically savvy engineers in America
0:36:52 do not want what that same person would want
0:36:54 growing up in Taiwan.
0:36:58 And so Jason said, the idea of us having our best
0:37:01 and our brightest living in Glendale.
0:37:04 What’s wrong with Glendale?
0:37:05 It’s not gonna go that way.
0:37:09 There’s a reason for Taiwan’s ascension
0:37:10 to the top of the heap in terms
0:37:13 of chip manufacturing around the world.
0:37:17 There’s a reason it’s there and it’s not in Connecticut.
0:37:18 Yeah, exactly.
0:37:19 Just looking ahead now.
0:37:21 So we’ve got Broadcom,
0:37:24 which is eyeing the chip design business.
0:37:27 And then TSMC is looking at purchasing the foundry business.
0:37:29 There are a lot of questions
0:37:32 over how viable any of this really is.
0:37:34 I’ve seen some analysts notes pointing out
0:37:39 that TSMC has very different equipment to Intel,
0:37:41 so maybe you won’t have those synergies
0:37:42 that people were expecting.
0:37:44 Maybe it doesn’t actually make sense for them.
0:37:46 I think the biggest question mark, though,
0:37:48 is the regulatory approval for this.
0:37:51 Because if this deal were to go through,
0:37:54 at least for TSMC,
0:37:57 you will need sign off from the US government.
0:38:01 So just from a regulatory perspective,
0:38:02 how do you think this goes down, Josh?
0:38:05 Do you think Trump and the government
0:38:06 would ever let this go through?
0:38:08 I would just comment.
0:38:11 If Taiwan Semi really wants it,
0:38:13 if Broadcom really wants it,
0:38:16 I would just say gentlemen, prepare to golf.
0:38:19 You are going to be spending a lot of time at Mar-a-Lago.
0:38:24 Prepare to tweet positive things about Trump
0:38:26 and prepare to golf,
0:38:29 because this ain’t going to go through the courts.
0:38:32 This is 2025.
0:38:33 If you want this deal done,
0:38:35 it’s got to look like a win for Trump.
0:38:40 If the headline is Trump successfully sells Intel
0:38:43 to two of the most successful companies in the world
0:38:48 to create new jobs for American workers in red states,
0:38:50 you got a shot.
0:38:53 If the headlines are going to look more like
0:38:56 American failure while Trump was in office,
0:38:58 this ain’t going to fly.
0:39:01 This is going to be looked at from an optic standpoint,
0:39:04 more so than a strategic standpoint.
0:39:09 I will say, Taiwan Semi is a foreign company,
0:39:13 but if they’re going to commit to making a go
0:39:17 of this kind of semi-manufacturing on American soil,
0:39:20 and we say that that’s not a bad outcome,
0:39:24 that’s a good thing, then maybe it could happen.
0:39:27 But I don’t have any edge on whether or not
0:39:28 they’ll approve it.
0:39:29 – You’ve been working on your swing, Josh?
0:39:30 – Not nearly enough.
0:39:32 Thank God I’m not trying to buy Intel.
0:39:35 – All right, we’ll be right back after the break
0:39:37 with a look at the new Gold Rush.
0:39:39 If you’re enjoying the show so far,
0:39:42 hit follow and leave us a review on Proffy Markets.
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0:41:27 – We’re back with Prof. G Markets.
0:41:29 Gold is hitting record highs
0:41:31 up more than 10% year to date
0:41:34 as investors seek out safe havens
0:41:36 amid geopolitical uncertainty.
0:41:38 President Trump’s tariff threats,
0:41:40 paired with fears of resurgent inflation
0:41:42 and higher for longer interest rates,
0:41:43 have pushed the price of the commodity
0:41:47 to nearly $3,000 per troy ounce.
0:41:52 Josh, this asset has had its best month in 13 years.
0:41:55 I never really understand gold, right?
0:41:57 I really struggle with gold as an asset.
0:42:01 What is going on with gold right now, from your view,
0:42:04 and why are investors so obsessed with it in this moment?
0:42:07 The best way to understand gold is just take
0:42:09 whatever the price is doing
0:42:12 and then take whatever the headlines are
0:42:16 and concoct a story that enables you to say
0:42:19 A plus B equals C, like truthfully.
0:42:24 If gold goes up concurrent to there being inflation,
0:42:25 oh, it’s very simple.
0:42:26 People are buying gold
0:42:28 because they’re worried about inflation.
0:42:31 If the inflation is rising, but gold is not rising,
0:42:35 oh, it’s very simple, gold already rallied,
0:42:37 and now the inflation is happening.
0:42:39 Therefore, the people that bought gold
0:42:43 before the rally anticipated the inflation.
0:42:45 It’s honestly, it’s a fucking joke,
0:42:46 and nobody knows why.
0:42:48 Nobody knows why anything does anything,
0:42:51 but they definitely can’t explain a gold rally
0:42:54 other than ex post facto.
0:42:57 So here, I will tell you why gold is rallying.
0:43:01 Gold started to rally in the winter of 2022
0:43:03 when Russia invaded Ukraine,
0:43:06 and that is, to this day,
0:43:09 the predominant reason for why gold is rising.
0:43:11 Central banks looked at the way Russia
0:43:14 was kicked out of the swift banking system.
0:43:17 They looked at the way Russia was sort of de-platformed
0:43:22 from the global economy, and they said to themselves,
0:43:26 maybe we need to diversify away from the dollar,
0:43:29 because if we get kicked out of the global banking system,
0:43:31 we’re gonna have to have a way to transact,
0:43:34 and we’re gonna have to diversify our currency reserves.
0:43:36 So once you reach that conclusion,
0:43:40 you realize there aren’t really that many other assets
0:43:42 that make a lot of sense.
0:43:45 Gold is, as a result, being bought
0:43:47 by central banks around the world,
0:43:51 especially in countries where they might be concerned about
0:43:55 this sort of thing, like China, like Iran, like Russia.
0:43:59 And so the demand for gold is truly
0:44:01 a geopolitical phenomenon.
0:44:05 So fine, we’ll say the reason for gold’s rise is geopolitics.
0:44:08 Okay, I can point to historical examples
0:44:11 where gold’s sold off during geopolitical,
0:44:13 tensions flaring, but fine.
0:44:16 That seems to be the story that most people have accepted.
0:44:19 But then the other thing that happens, that is,
0:44:22 the trading mentality shifts,
0:44:25 and all of a sudden, that story becomes so popular
0:44:28 that people in their investment accounts
0:44:30 start to accumulate gold on the theory
0:44:34 that that sort of thing will continue.
0:44:36 And so people start to extrapolate the recent past,
0:44:38 and that’s where you get the momentum.
0:44:43 So now gold is up 9% annualized over the past 15 years,
0:44:47 nominal terms, 8.8% annualized over the past 10 years,
0:44:51 but over the last three years, it’s been rising faster.
0:44:55 15% annualized return over the last three years.
0:44:59 Over the last one year, it’s up 45%
0:45:02 and it’s up 12% since the year started.
0:45:06 So if you think about gold over the long term,
0:45:08 does not do better than stocks,
0:45:12 but I can show you these five and 10 year periods of time
0:45:14 where it far outperforms the stock market.
0:45:16 And so people are looking at the momentum there
0:45:19 and they’re saying, okay, this is a gold bull market.
0:45:21 I don’t know when it ends, but I need to be there for it.
0:45:24 So that kind of feeds on itself.
0:45:26 And I think that’s where we find ourselves today.
0:45:28 – I’d love to get your view on gold
0:45:30 as an investment in general.
0:45:33 I mean, you as a wealth manager,
0:45:37 do you think that this is a worthwhile investment?
0:45:38 And I’ll just put it out there.
0:45:41 I don’t really see the value of gold
0:45:44 when you can invest in companies that pay dividends
0:45:48 and generate cash flows and provide actual value
0:45:49 into the world.
0:45:52 And then meanwhile, just gold just sort of sits there
0:45:53 and does nothing.
0:45:55 – Here’s a long-term reality.
0:45:56 Go back to 1928.
0:46:00 So we have 86 years worth of data.
0:46:02 Stocks have done 11.8%.
0:46:05 This is nominal, not adjusted for inflation.
0:46:08 Stocks have done 11.8% over the last 100 years.
0:46:10 Gold has done 6.6.
0:46:14 High quality bonds, US treasuries have done 4.8.
0:46:16 Real estate 4.4.
0:46:18 Cash 3.4.
0:46:22 So gold has done well, has not done well as well as stocks.
0:46:27 And I have to tell you the chasm between 11.8 and 6.6
0:46:30 is absolutely massive when you remind yourself
0:46:34 that we’re talking about compound annual returns.
0:46:37 We’re not just talking about one year.
0:46:41 We’re saying like a 30-year investment time horizon,
0:46:43 it’s not just 50% better.
0:46:47 It’s substantially better, the returns of stocks.
0:46:50 And I think that will probably be always be the case
0:46:52 over really long periods of time.
0:46:55 But there are periods of time where gold beat stocks
0:46:57 and there are specific years
0:46:59 and three year and five year and 10 year periods.
0:47:02 So some people use it as a diverse fire
0:47:04 and portfolios, some people don’t.
0:47:05 We do not.
0:47:08 There’s no reason to own commodities at all individually.
0:47:10 And if there is a commodity boom,
0:47:11 it’ll show up in the stock market.
0:47:14 And if you own stocks, you’ll get the benefit of that.
0:47:16 So we own oil equities.
0:47:18 We don’t buy barrels of oil.
0:47:22 If you have an S&P 500 exposure, you have gold equities.
0:47:25 And if there’s a huge boom in gold,
0:47:27 those gold equities in market cap terms
0:47:29 will become larger proportionally
0:47:31 to the rest of the stock market.
0:47:33 So you will see some of the benefit of that.
0:47:36 But we don’t own commodities outright individually.
0:47:41 We own stocks and we will get the reflection
0:47:45 of those booms and busts via our exposure to the stock market.
0:47:46 – In the reporting on this,
0:47:50 you know, we hear a lot about the spot price of gold
0:47:53 and then we hear a lot about the futures price,
0:47:54 gold futures price.
0:47:56 Could you just break down for us briefly
0:48:00 what that difference actually is
0:48:05 and why that difference matters if it does it all?
0:48:10 – It doesn’t really matter unless you’re in the jewelry business.
0:48:13 The spot price of gold is literally what you’re taking.
0:48:17 When you’re taking physical delivery of gold bullion,
0:48:20 that’s what that price is about.
0:48:22 And of course, most people who are trading,
0:48:24 they’re taking delivery of nothing.
0:48:26 They’re in ETFs.
0:48:28 They held GLD.
0:48:31 The futures market is what producers
0:48:34 and what they call commercials
0:48:39 use to hedge the volatility of future prices.
0:48:42 So as a, for instance,
0:48:44 if you’re in the business of buying a certain amount of gold
0:48:46 over the course of the year
0:48:49 as a commercial player in the market,
0:48:53 let’s say you’re a jewelry manufacturer, okay?
0:48:57 The big risk for you is that the gold
0:48:59 that you have to buy six months from now
0:49:02 will rise significantly in price.
0:49:04 So you would use the gold futures market
0:49:05 as a way to hedge that risk.
0:49:08 You would put on certain trades or collars
0:49:12 or whatever your strategy is to try to mitigate
0:49:16 the disastrous impact of the price of gold rising 30%,
0:49:19 which could wreck the economics of the business
0:49:20 that you’re engaged in.
0:49:23 And vice versa, if you’re a gold miner
0:49:26 and you know that you need to sell
0:49:29 a certain amount of tons of gold a year from now
0:49:31 and you’re worried the price might be lower,
0:49:35 you could lock in using the futures market.
0:49:36 You could lock in the price
0:49:37 that you’ll be selling gold at.
0:49:41 So think of the spot market as being more relevant
0:49:44 to companies that are physically engaged
0:49:46 in the gold market buying and selling
0:49:51 or banks that are stockpiling gold central banks.
0:49:53 And think of the futures market as more of a tool
0:49:56 to either hedge or speculate on the price
0:49:59 three months from now, nine months from now.
0:50:00 – I bring it up ’cause we’re just seeing
0:50:03 this very interesting dynamic, but in that difference
0:50:06 where right now you have gold futures trading
0:50:08 at record highs in New York,
0:50:13 but over in London, the spot price is significantly lower.
0:50:15 And that’s where the Bank of England
0:50:18 holds all of that physical gold that you’re talking about.
0:50:20 And because of that spread,
0:50:24 it’s just a very interesting story that we’re seeing.
0:50:28 You have JPMorgan and HSBC and all these other banks
0:50:31 who as we speak are literally flying gold
0:50:36 across the ocean from London to New York.
0:50:39 And what we’ve seen is that they have these concerns
0:50:40 over these tariffs.
0:50:42 And so they need to get gold out of London
0:50:47 and into America as quickly as possible.
0:50:50 I’m not sure how important it is in global markets,
0:50:52 but it’s certainly an interesting visual.
0:50:56 Could you just explain how this strategy is playing out
0:50:59 and why it is important that the banks do this?
0:51:04 – Yeah, it’s chaotic and it won’t last a long time.
0:51:08 That’s that type of frenzy, that type of activity.
0:51:10 There are historical examples of that.
0:51:13 One of the causes of huge market dislocations
0:51:16 throughout history has historically been the movement
0:51:19 of gold from one country to another
0:51:23 or from the rest of the country back to New York.
0:51:28 Like we’ve had instances where they closed
0:51:32 the New York Stock Exchange heading into World War I.
0:51:34 And one of the main concerns is
0:51:36 all of the gold was about to be sucked out
0:51:40 of the banks in New York and sent to England
0:51:45 to finance the prosecution of that war against Germany.
0:51:49 And they wanted to preempt the chaos
0:51:52 that that kind of thing had historically caused.
0:51:56 And you have these situations that have arisen in the past
0:52:00 where just the seasonal pattern in the springtime,
0:52:03 America 100 years ago is very agrarian economy.
0:52:05 Everything was about agriculture and farming.
0:52:07 So you’d have all the gold leave the banks
0:52:09 in Boston, New York, Philadelphia,
0:52:11 and it would head to the Midwest
0:52:13 and it would be dispersed amongst the farmers
0:52:17 who had to, it would show up in the banks in rural America.
0:52:22 The farmers would then be able to fund the costs of seed
0:52:24 and equipment and hiring farmhands
0:52:27 and people who would help them plant.
0:52:29 And then the summer would go by,
0:52:32 there would be specula, the gold would return back
0:52:34 to New York, all that gold would lead to,
0:52:36 there being excess capital,
0:52:39 that excess capital would lead to these huge booms
0:52:42 in the stock market and people speculating
0:52:44 with the money while it was there.
0:52:47 And then all of a sudden the banks in rural America
0:52:48 would call that gold back
0:52:50 because it was time to bring in the harvest.
0:52:53 And you would have the seasonal pattern that resulted
0:52:56 in us saying things like sell in May, go away,
0:52:59 or you would see like October being this month
0:53:02 where all of a sudden all hell would break loose
0:53:05 on Wall Street because the gold would leave
0:53:08 these financial centers where all this trading
0:53:11 and you would have this literal dearth of liquidity.
0:53:15 And you would have this drop off in money and in capital
0:53:19 and it kind of became ingrained in the patterns
0:53:22 of stock markets and business and commerce.
0:53:25 We’ve been able to neutralize that over time
0:53:27 as society has become less agrarian
0:53:29 and we don’t really have that every October
0:53:33 the market crashes because the farmers need their gold back.
0:53:35 Like that’s not the way the economy runs now.
0:53:38 So it is interesting when you see something like this,
0:53:41 all of a sudden people are flying their gold
0:53:44 across the Atlantic to get it from one country to another.
0:53:47 It’s chaotic activity, it’s kind of a throwback
0:53:49 to the way the economy used to function
0:53:53 when everything was on a gold standard and it’s weird.
0:53:57 And I guess I would tell you not as an investor
0:53:59 to react to that type of thing
0:54:03 because it’s not likely to be a long lived phenomenon.
0:54:06 – Yeah, it certainly feels very apocalyptic
0:54:10 and it’s very interesting that gold has this association
0:54:15 with geopolitics and inflation but really just panic.
0:54:18 It’s like when the world starts to look like it’s crumbling
0:54:20 suddenly people start to be interested in gold.
0:54:22 – Emotional volatility.
0:54:26 – Exactly and I would just like to get your final reaction
0:54:29 to this ’cause we had Ray Dalio on the podcast
0:54:34 and it was very interesting because he was very concerned
0:54:38 about the world from a geopolitical perspective.
0:54:40 And I think a lot of people are very concerned
0:54:41 about the world geopolitically.
0:54:44 I mean, I think back to what Jamie Dimon said
0:54:46 in the most recent earnings call where he said
0:54:50 that we are in the most unstable geopolitical time
0:54:52 since World War II.
0:54:54 And Ray Dalio basically told us,
0:54:58 if I would put my money into anything, it would be gold.
0:55:01 And my reaction, I think is similar to yours,
0:55:04 which is, is this really worth the panic?
0:55:08 And if we are to panic to the extent
0:55:10 that these people say we should,
0:55:13 what is buying gold gonna do for us?
0:55:16 Is that really gonna solve our problems?
0:55:19 So I guess I’d be interested to get your view on gold
0:55:22 from a geopolitical perspective.
0:55:23 Does Ray Dalio’s view make sense to you?
0:55:26 – I think gold probably can get to 5,000,
0:55:27 just purely on momentum alone
0:55:29 because a lot of people are worried
0:55:30 and there are a lot of reasons to be worried.
0:55:33 It’s not completely invalid.
0:55:36 I think during the course of the Trump administration,
0:55:38 if you told me this all ends
0:55:42 with some major geopolitical conflagration
0:55:44 and gold runs up to 5,000,
0:55:48 I would say that’s completely within the realm of things
0:55:50 that could be expected.
0:55:54 So I don’t disagree with Ray Dalio,
0:55:57 except in the utility of it.
0:56:00 So World War III, we’re gonna fight China over Taiwan
0:56:03 and Russia over Western Europe simultaneously.
0:56:06 The fuck are you gonna do with your gold ETF?
0:56:08 – I’d rather own a farm and food, yeah.
0:56:12 – Bullets, motherfucker, what are you gonna do?
0:56:17 Oh, but look, I’m long gold miners, don’t shoot.
0:56:21 The only currency in these worst-case scenarios
0:56:24 will be like the backbreaking labor
0:56:27 that you have the muscle tone to accomplish
0:56:29 on behalf of whomever is enslaving you.
0:56:30 – And it won’t be Bitcoin?
0:56:31 – You want me to spare you?
0:56:34 Don’t tell me about what’s in your Roth IRA.
0:56:36 Remember what I told you at the start of this.
0:56:38 Think about what could go right.
0:56:41 And worst-case scenarios very rarely play out.
0:56:43 And if they do, in this case,
0:56:46 think about the things that we’re talking about.
0:56:50 Talking about multiple nuclear powers
0:56:54 potentially being goaded into a conflict here.
0:56:58 Nothing you do in your portfolio is gonna help you, okay?
0:57:03 So even if you bet on the worst-case scenario,
0:57:07 if it comes to pass, who are you gonna collect from?
0:57:08 Who’s paying out on that bet
0:57:12 if we’re all squatting around a fire eating a squirrel?
0:57:17 So I view my role in this is to understand the risks
0:57:21 and try to help people process them
0:57:23 and try to give people the context
0:57:28 that risk is omnipresent, ever-present.
0:57:30 It’s always a thing that exists.
0:57:34 We feel it more acutely in some moments than in others.
0:57:36 But honestly, it’s usually in those moments
0:57:37 where everything feels great,
0:57:42 that the big risks are really about to arrive.
0:57:44 And it’s really the thing that we’re all worried about
0:57:46 that actually ends up going wrong.
0:57:48 – Let’s take a look at the week ahead.
0:57:51 We’ll see data on the personal consumption expenditures
0:57:52 index for January.
0:57:55 We’ll also see earnings from Salesforce,
0:57:58 Dell, Berkshire Hathaway, and Nvidia,
0:58:00 which will be a huge one.
0:58:02 Josh, this is a part of the show
0:58:05 where I ask Scott for a prediction.
0:58:09 No pressure, but do you have any predictions
0:58:11 or is there anything that you’re thinking about
0:58:12 in the next couple of months or so
0:58:15 that you think that our listeners
0:58:16 might want to keep an eye on in the markets?
0:58:19 – I think Nvidia reports and hits a new all-time high.
0:58:21 Yeah, there’s a lot of skepticism
0:58:23 going into this earnings report.
0:58:25 There has been for a while on Nvidia.
0:58:28 The stock doesn’t always rally after the report earnings.
0:58:30 Sometimes it rallies into the earnings.
0:58:33 In this case, it’s kind of been stagnant for a while.
0:58:35 I think the conversation is starting to pivot
0:58:37 from large language models
0:58:40 and it’s starting to go more toward physical AI,
0:58:43 automation and robots.
0:58:47 And I think Nvidia’s got the most compelling case
0:58:51 for why they will be at the forefront of all of these things
0:58:54 than any other company in existence.
0:58:56 And I think that’ll come through
0:58:58 in the remarks Jensen Wang makes.
0:59:01 I’m a long-term shareholder here in Nvidia.
0:59:03 I’ve owned the stock since 2015.
0:59:05 So of course, I’m biased.
0:59:08 I would also point out everyone owns Nvidia at this point.
0:59:12 It’s the number one or two largest waiting in the S&P 500.
0:59:15 If you have a pension, if you have a 401k, if you–
0:59:16 – 2015 is early.
0:59:18 – I was extremely early to the story
0:59:23 and very publicly so talking about the stock on television
0:59:25 every week for 10 years.
0:59:28 It has been a once in a lifetime stock.
0:59:31 It’s up 10,000% in that period of time.
0:59:33 If I lived another 100 years,
0:59:35 I’d probably never see anything like it again.
0:59:38 And I don’t think it can continue to rise
0:59:40 at the rate that it has.
0:59:43 But the reality is it’s just not that expensive of a stock
0:59:45 because as much as the share price has gone up,
0:59:49 the earnings have gone up as much, if not more.
0:59:53 So I think it’ll be a good conference call.
0:59:56 I’m hoping to get a positive reaction after.
0:59:57 My prediction is that we will,
0:59:59 but who knows, anything can happen.
1:00:01 – Josh Brown is the co-founder and CEO
1:00:03 of Ritholt’s Wealth Management,
1:00:05 a New York City-based investment advisory firm
1:00:07 managing more than $5 billion in assets
1:00:11 for individuals, corporate retirement plans and foundations.
1:00:14 Josh, just an absolute pleasure as always.
1:00:15 Thank you so much for coming on.
1:00:17 – Thank you so much for having me, Ed.
1:00:18 Appreciate it.
1:00:21 – This episode was produced by Claire Miller
1:00:23 and engineered by Benjamin Spencer.
1:00:24 Our associate producer is Alison Weiss.
1:00:26 Mia Silverio is our research lead.
1:00:28 Isabella Kinsel is our research associate.
1:00:30 Drew Burroughs is our technical director
1:00:32 and Catherine Dillon is our executive producer.
1:00:34 Thank you for listening to “ProfG Markets”
1:00:36 from the Vox Media Podcast Network.
1:00:40 Join us on Thursday for our conversation with Mike Moffat,
1:00:41 only on “ProfG Markets.”
1:00:47 ♪ Lifetimes ♪
1:00:55 ♪ You help me ♪
1:01:00 ♪ In kind reunion ♪
1:01:07 ♪ As the world turns ♪
1:01:12 ♪ And the dark lights ♪
1:01:15 ♪ And love, love, love, love ♪
1:01:18 (upbeat music)