Buy-The-Dip Mindset Fuels Historic Quarter For Stock Trading

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Today's number 80. That's a percentage decrease in wine consumption in France since 1945.
Ed True Story, my sponsor from AA, said that I should stop going to the places where I drink the most.

So I've decided to sell my house and car.

That's good.

That's he's back. I love it.

Ed doesn't laugh as much at my jokes now that he realizes he's more powerful than me. Now that he no, I'm fucking Rupert Murdoch.
You're Tucker Carlson, bitch. I will fire your ass if you don't.

That's true. I agree with that part.
But no, I'm just, I'm, I give you an unbiased, honest reaction. I get, you got like a little chuckle there.
I get that from my family. I don't need that from you.

How are you, Ed? I'm doing well. Are you a big wine guy? That just occurred to me with that opening number.
Do you drink wine?

I don't drink wine or buy art because I feel like I'm trying to pretend to be something I'm not. True story.
Interesting.

All my friends, I noticed when my friends started, or some of my friends started making a lot of money, they immediately became total douchebags around wine, ordering expensive wine and buying art.

And I'm like, you're not fooling anyone. You're fucking white trash.
Just lean into the beer. Lean into the, you know, the bad Leroy Nieman art or like, or sports posters.

But yeah, I don't I don't drink wine or buy art. Where does luxury hotels fit on this douchebag spectrum? What is that? That's embracing life.
Okay.

That's embracing life.

Wait, wait. So you're calling bullshit on the 7,000 Euro night hotel to cap room.

But I don't order wine because

I'm part of the people.

Yes, that's right. No, I think I actually am with you.
There is a difference. I think the wine is a sort of made-up snobbiness.
Do you like wine? Enough.

That means yes. So you're, in other words, you're, you're, you're easing right into that douchebaggery.
You're starting to order nice. Do you know what the most, this is a true story?

Do you know what the most ordered bottle of wine is on a menu? I was going to say the cheapest. I'm going to change my answer to the second cheapest.
That's exactly right. You are learning, Sensei.

Because that's what I do. I'm always second cheapest because I don't want to be the cheapskate, but I also want to save some money.
You know what I do love? I love a champagne.

And I think it's because of the

pop and the ceremony makes me feel like, oh, we're celebrating something.

Or the person across to me is about to find me much more charming and attractive.

I heard that you used to have a thing called champagne Fridays at your old company. You come around with a champagne cart and everyone would drink.
That's right.

I was like a flight attendant on Emirates Airlines. I'd come around and,

yeah, I'd give everyone champagne. I love, I absolutely love champagne.
And

I'm trying to think if I've had, do you ever drink alone? No, not really. Yeah, neither do I, except if it's a weekday and I'm feeling bad about myself.

But just to sorry, I just want to go back to Champagne Friday.

What is the management philosophy behind that?

I assume that it's not just you just want to drink. I assume

there's a shareholder value argument behind it. So the hardest thing in a small company, a team with best players wins.

It's all about, and I recognized this early, and I think my superpower, my competence is communications, but my superpower is the ability to attract and retain really talented people.

And you probably see that.

You don't see it. You don't appreciate it.
I just look at myself. Yeah, yeah.
There you look in the mirror. But you don't appreciate it because you haven't worked for other companies.

You're working with 22 really strong professionals. We are very good.

I spent a lot of time thinking about finding great people, reference hiring, and then really thinking a lot about their compensation, both economic and psychological, to keep them because it is so much easier to keep someone great than find someone great.

And I read this, this, I think it was in Psychology Today, saying that the number one source of retention at a company is not compensation, it's not culture, it's not the stock price going crazy, it's whether or not the person has a good friend at work.

That if you walk into your office and or a meeting and there are people you like and you consider your friend, it literally releases a hormone where you basically start hating work less and maybe even liking it.

And so from a very early point, I did this at my first from Profit. I always spent a lot of money on social stuff.

We used to, from day one at Profit, we used to take the entire firm to Cabo San Lucas and there was three rules.

No spouses. The senior management had to leave by 10 or 11 p.m.
So the kids could go crazy. And other than that, there were no rules.

We used to do this in March of every year. And I knew, because the problem is after you pay people their bonus, a lot of times that's when your most vulnerable people will leave.

And I thought, all right, we'll, we'll extend, we'll announce the Cabo trip for March after we pay bonuses. And I'm not exaggerating, no one would leave until the trip.

So I think have creating a social atmosphere where people, and we don't do it as much because I'm not as social now and Catherine and I are both old and just want to be at home.

We don't want to hang out with you guys. But

I think it's fun. I think it makes for a great culture when you within reason and all that.
People, HR gets worried about people people being disrespectful or getting too drunk.

And I generally find unless you hire fucking idiots, people know how to handle themselves. I don't think I've ever seen you drunk, Ed.
Have I seen you drunk? You've seen me drunk plenty of times.

You just don't see it.

I maintain the facade. You're a good drunk.
Of competence. You keep it together.
Yeah. I will say this: after a few drinks, you are an excellent kisser.

That's good. That's good.

Even Claire's laughing there. Even Claire couldn't resist that.
Okay, shall we get into today's episode? We're talking about inflation and we're talking about trading and what else? SpaceX.

Should we get into it? Let's light this candle.

Now is the time to buy.

I hope you'll have plenty of the wear at all.

Last week's inflation data offered a mixed picture and some early clues on how tariffs might be impacting the economy.

The consumer price index showed that prices rose in June, especially on tariff-sensitive items.

However, the producer price index, which was released later in the week, that showed that prices were flat from the month before.

So, Scott, there's been a lot of debate online and in the media as to what is going on in terms of inflation.

We saw the CPI, the consumer price index rose, and we covered that in one of the daily episodes.

And as I pointed out, what we're seeing is that, yes, yes, it wasn't a gigantic rise, but the things that are rising are the things that you would think are most impacted by tariffs, the imported items, the tariff sensitive items, things like toys and furniture and home appliances, et cetera.

Then we got this producer price index, which showed that prices were flat.

And a lot of people were looking at that and saying, okay, well, look, the PPI is flat. So tariffs aren't impacting prices.
Inflation isn't here.

And before we get into this, I just want to highlight one crucial detail that is missing from this conversation.

And I think this sort of gets at what people don't really realize about the PPI, about this producer price index, which is it is a measure of the price at which American producers sell their goods and services.

So this is looking at domestic production. It's stuff that is produced within the US,

which means that we're not looking at imports here. We're not looking at stuff that we ship in from abroad.
We're only looking at domestic goods and services.

So I think the first thing I would say, because there are a lot of people who are saying, look at the PPI,

the tariff isn't impacting prices. The idea that that disproves the tariff impact

is just not true.

It's nonsense. Having said that, we've got a slightly mixed picture in terms of we don't see massive price increases anywhere.

You know, this is all kind of soft data that we're digging into, and it's creating this big debate about tariffs.

But I just want to get that first point on the table because I want to show people where I stand on this. My belief is tariffs are impacting prices.
We're only seeing a little bit.

The PPI doesn't negate that, but it's only a little bit and this is probably just the beginning. I think this is sort of a,

it's like modern art. You see it at what you want to see in it.

And that is there's something for everyone here because catastrophists like me have been wrong i thought that the economy and the markets were going to register more impact from what i feel are just um irrational

uh low iq economic policies this trade war um pressure on the fed i mean it just none of this a tax cut that just transfers wealth from the bottom 90 to the top 10.

I think all of this at some point comes back to bite us in the ass. Having said that, economy grinds on.
Markets are hitting all-time highs.

And I do worry that we study to the wrong test, that the markets are basically become a wealth index of the top 10%, and we don't track

teen self-harm or happiness or obesity or anxiety or divorce rates. I think we're studying to the wrong test.

But be that as it may, I think people such as myself have been not wrong, but mostly wrong about the cadence of the impact.

And you said all along that you thought these tariffs weren't going to show up until it kind of snaked through the supply chain, and that would be sometime in the fall.

There is some evidence that the more tariff-sensitive categories have ticked up and ticked up substantially. But at the same time, inflation up 2.7%, I think the target is 2%.

If you didn't know that Trump was out declaring economic warfare on our allies, if you didn't know that this thing, this bill had been passed, which quite frankly, obviously we don't feel the impact of that yet, you would look at the economy and you would say, okay, I'll take that.

It's clear that Trump and maybe even the administration's policies aren't as important as we thought.

And that is the economy sort of grinds on regardless of what the president is tweeting about or thinking about.

Now, around the inflation number, the only thing I want to add to this is that Trump, in a never-ending attempt to crowd out the news cycle with anything but Epstein, decided to wave a letter around saying that he was going to fire Chairman Powell, which he cannot do.

And then the next day said, I'm only kidding, and managed to push the term Epstein out of the news cycle for another 24 hours if he wasn't threatening to revoke the citizenship of people he doesn't like or 85% tariffs on Canada.

But what I remind people when they think about inflation is that after the supply chain shocks of COVID and Russia's invasion of Ukraine, inflation spiked to 9%.

And he managed within, I think, two years to take inflation from 9% into the twos without a recession. I taught micro and macroeconomics in graduate school.

I can guarantee you that we are going to be teaching or talking about how this guy managed to get inflation down 700 basis points without pushing us into a recession.

That is literally sticking the landing.

When economists were surveyed and said that there was a 100% chance of recession in the next 12 months, when everyone said that a soft landing was not possible at all, and somehow it happened while everyone was shouting at him, saying, you know, you're being too, too aggressive

with holding these rates up. So

I'm completely with you. Like

we have to call balls and strikes. And

the reality is what Jerome Powell did in order to get inflation under control is pretty remarkable. We can have other conversations about how inflation got there in the first place.

A lot of people blame Powell. I don't, because we saw inflation rise.
It skyrocketed all around the world. It wasn't just America.

This was a global supply chain problem that happened as a result of COVID. But the reality is he led the charge in getting inflation down when everyone said there was no way it was possible.

It's so hard to make decisions and kind of have a code and do the right thing. And I find there's certain tells that inform your decision making.

And one of them is if you're really thinking about something too long, you can't make a decision, then the chances are the best decision is no.

So if I get invited to an event or I'm struggling around something, whether to do it or not do it, if I struggle with it too long, I generally find that means the answer should be no, because there's something haunting you from saying yes.

We're going to need to unpack that later because I've been struggling with this in my life. Really? And that is very interesting.
Yeah, totally. Put a ring on it, dick.

She's not going to be around forever. I'm not referring to that.
I don't even know her. And I know she's higher quality and higher character and hotter than you.
And I haven't even met her.

You keep, you do not introduce me to your girlfriend. That is not what I'm referring to.
I will not take it. I will not take it personally.

But the second thing is, is that whenever the far left and the far right agree to meet on anything, it's a really bad fucking idea. Negative 40, I call it the negative 40 test.

Negative 40 is where Celsius and Fahrenheit meet. And that is

minus 40 Fahrenheit is minus 40 Celsius. That is an inhospitable environment where nothing good happens, right? Nothing grows.
nothing survives in that environment.

When people, senators on the far left and on the far right at the same moment, and people don't remember this, were all calling for Chairman Powell to lower interest rates for different reasons.

The far right was saying, oh, we need to spur the economy. And the far left was saying this is taking a toll on people because they have higher student loan payments, mortgage payments.

Whenever the far left and the far right agree on something, watch the fuck out. It's a really,

really bad idea, bringing this back to what we're talking about.

Chairman Powell was getting shit from all sides about what was a historic increase of, I think, 500 bips in the Fed funds rate in about 15 months. And he did it.

He ignored everybody, which goes back to this other notion. It's really important that the Fed maintain independence from the from the presidency.
And we can talk more about that. But

whenever you hear the far left left or the far right agree on anything, that means go the other way.

Just going back to your point there about how we sort of we read in this data what we want to see and that you can look at this data and depending on what you believe and depending on basically what your political

opinions are, that will sort of determine your reaction and what you draw from the data.

I'm going to read you some headlines here that we collected about these CPI and these PPI reports that we saw last week. So this is from

Breitbart. Quote, producer prices crush tariff inflation doommongers.

This is from the Daily Wire. Economists wrong again.
Wholesale inflation remained unchanged in June.

This is from the White House. Inflation remains right on target under President Trump.

Then you compare it to something like the Washington Post, where they say the tariff-driven inflation that economists feared begins to emerge. HuffPost, U.S.

consumer prices increases as expected in June. I've got to say, these

sort of paint

the right-leaning outlets as a bit more sensationalist and cartoonish than the left.

But the point being,

you're seeing two very different sides depending on what you believe.

If we are to believe that HuffPost and the Washington Post are generally left-leaning,

then perhaps that is sort of coloring what they're trying to find. And it brings up this

strange dynamic here where

we're all looking at this economic data, and it's almost becoming distracting what the point of this data is, because we're all so busy trying to prove our political points.

And I find that to be a struggle in my own work too, where I'm burying myself in these PPI numbers and these CPI numbers. I am trying desperately to figure out did the tariffs have an impact?

And why am I doing that? Yes, because it's important to know what impact the tariffs are having, but I'm mostly doing it because I'm like, I said this and

I want to show everyone that I'm right.

And it's very difficult to not get caught in that cycle, because if you were to take a completely unbiased perspective, or at least if you were to zoom out, what you would say is

prices rose a little bit, but not that much. And hopefully that things stay that way versus diving so far into it and trying to show this is why Trump's wrong.

You're zeroing in on one of the biggest issues facing our society, and that is how consumers interact with and shape information.

And also the economic incentives now are not to have a balanced critical viewpoint.

It's to be an extremist and tickle people's sensors, both get, you know, have them agree with you violently because you're validating their own gut or anger, or B,

inflame them such that they weigh in and get angry at you and provide more comments and more.

You know, the social media algorithms love RFK Jr.

They just love the guy because some people are very much on board with him and other people who maybe, I don't know, graduated from high school or ever took the first three weeks of biology class are horrified by the guy.

But the algorithms love that. They love polarization.
And also, it is very difficult because these entities have become so polarized.

I mean, the reality is there's never going to be a hit TV show called preventive medicine. There's ER, right? There's, I want to see, I want to see a disaster.
I don't want to see

the hydrologist at the San Antonio Weather Service putting in place the requisite infrastructure. I want to see disaster and anger and fights.

And the news used to be boring because critical thinking, balanced reporting is boring. And then they did point counterpoint.
Then that turned into CNN. It turned into Fox.

The news became entertainment. Yes.

And because we now expect we kind of know what they're going to say based on the logo, I find in our society now, the media outlet, the person, the identity of the person

shape your view more. than what is actually being said.

We've just moved into this massive area of identity politics or shaping, and we aren't teaching our kids to think critically, to say, all right,

be intellectually honest. Not every viewpoint from either political party is going to be right.
You have an obligation to go issue by issue and

acquit yourself of your own opinions.

And instead, we all digress to like, oh, everything Republicans or Democrats, whatever my team say is correct, or this person is this identity, which must mean that they're right right on this these issues and wrong on these i like what you said about it's a point counterpoint society like no piece of data no economic indicator even from as neutral a source as the government and today that sounds like i'm being sarcastic but you know it should be that the cpi and the ppi is just a neutral statement about this is what is happening in the economy but instead it is actually becoming part of that point counterpoint system.

And, you know, I could just explain why it's important to me that we prove why tariffs are being passed through in inflation and why I'm so obsessed with those CPI numbers.

It's because I want to provide a counterpoint to the lie that I was told by the administration that tariffs aren't raising inflation.

And I keep on being told that lie, whether it's from Donald Trump or from Scott Besant, who said that actually, you know, tariffs are moderating inflation. That's what he said after the April report.

And it angers me. And so I want to come in and say, no, you're wrong.
And here's the counterpoint.

But it is so interesting how it does seep into

everything.

And even something as specific as the difference between the CPI and the PPI, who would have been talking about this five, six, seven years ago?

But suddenly this is a giant debate on Twitter, and we're all going crazy about this.

And I think it does get back to probably your point at the beginning, which is these conversations feel a lot more important than perhaps they actually are.

And there are bigger things to fight about.

But I think it is indicative of where we're headed. And the point counterpoint society, I think, is

very true. Well, these numbers embody that saying.

And this is what we're all guilty of and increasingly guilty of, is we use every point or data point like a drunk uses a lamppost for support, not illumination, right?

And that is, I'm going to backfill my narrative with everything I can and find evidence of whatever it is my narrative already is.

And just to try and drill it down to a learning, what I advise young people to do is something I couldn't do when I was young.

I would make an assessment of the situation, a snap judgment, put forward my opinion, and then I was all in on my opinion. And it was die on that hill.

It was more important to me, and this is one of my many failures as a manager.

It was more important to me to convince everyone that I was right and for them to sign up for my strategy or viewpoint than it was to actually be right.

And the only way you get towards the truth is, or

the best strategy, is that when the data changes or you hear someone who's smarter than you on this specific domain, is to be open to changing your mind.

And I find as a good practice, and I did this last week on my Prop G Conversations pod with Professor Heather Cox Richardson, who I just think is a genius.

We were talking about America and I'm kind of a catastrophist about it.

And she went through and she talked about how there are several points in history, the Gilded Age and everything, where the threats to democracy actually strengthened our democracy and we came out of them stronger.

And she had disagreed with my viewpoint. And I'm trying to make actively the practice of saying, you're right, I'm wrong.
After listening to you, I think your view is better.

And it's sort of liberating to every once in a while admit that, wait, I'm a thoughtful person. And

when presented with better evidence and change data, that I am capable of learning and acknowledging your point. And unfortunately, the media doesn't reward you for that.

The media rewards you and voters reward you for just doubling down, just saying something so fucking stupid and then leaning into it and doubling down.

We'll be right back after the break with a record run for traders in 2025.

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We're back with profit markets. Retail investors traded a record $6.6 trillion worth of stocks in the first half of 2025.

Massive volatility from tariffs and geopolitical conflict fueled a buy-the-dip mentality.

Back in April, individuals bought a record $4.7 billion in stocks in one day alone as the initial tariff announcement sent markets plummeting.

But second quarter earnings from the banks show institutional investors got in on the action as well. And it was a record-breaking quarter.

JP Morgan stock traders posted their best Q2 ever, and Goldman Sachs delivered a historic trading revenue haul.

So, Scott, let's just sort of start with,

I think, the bank earnings here, which we were previewing in our episode last week.

Most of the banks beat on expectations. And the strong point, as we thought it would be, was that the trading revenue exploded.
And this is the money that the banks make when they

execute the stock trades of their clients.

So the numbers here, Goldman Sachs had its best ever quarter for stock trading, $4.3 billion in equity trading revenue, exceeding estimates by $600 $600 million.

Morgan Stanley also had their best ever quarter. Trading revenue up 23% year-over-year.

Every major bank reported double-digit year-over-year gains in trading revenue in total. You put JP Morgan, Bank of America, Citi, Morgan Stanley, and Goldman Sachs.

You put the trading revenue together. It was a cumulative $34 billion

from executing these trades. And then you zoom out.
You look at trading revenue worldwide. Global trading volume hit an all-time high of $165 trillion,

a daily average turnover of 2.6 trillion, up 32% year over year.

So I think the first point that I'd like to get your reaction to is just the explosion in trading that we saw, not just in Q1, but in Q2 as well. And why was that happening?

Because of the volatility that was being initiated

by Trump and by the administration.

And so I think it is quite remarkable how much of a boon that is for brokerages and for these Wall Street banks who make money every time someone makes a trade, every time someone buys or sells a stock.

Any reactions to what we saw here?

I think the way you become a billionaire or the way you create a massive amount of shareholder value is you invent a product that exploits a flaw in our instincts, or specifically the fact that our instincts have not cut up to institutional production of items or technology.

And the flaw in the species here that's emerging is that people, smart people who pay, who want to believe that they deserve better money management, pay a bunch of smart people to try and find signal from the noise and make trades and hedge and get in a stock and out of a stock.

And, oh, there's opportunity and energy now and get in and out of crypto. And, oh, definitely sell this stock and buy this stock.

And the reality is there's a huge industry that has a vested interest in tapping into that flaw and that instinct and making you believe that if you hedge your exposure here, that's smart.

If you buy this stock, that's smart, or you should sell this stock as this is happening.

And this is an industry that similar to I would describe the industrial food complex, basically creates a ton of activity and almost no progress.

I think if people just were taught at an early age, you invest. Investing means holding for a long time and not letting your returns be eaten up by fees.

And be clear, you have no, nobody has any fucking idea.

The basis of the markets is that with demographic growth and productivity gains from technology and democracy, that the markets will over the medium and long term go up into the right.

So buy assets and then don't ever sell them, don't ever trade them.

But this trading volume is essentially the world freaking out about some very serious things and then believing that they can outmaneuver these shifts in the market. I think that's exactly right.

And to your point, it emphasizes

what a great thing it is to be the middleman i mean you look at the banks you look at the brokerages i mean the banks have have done phenomenally well off of this trading revenue but you look at these brokerages i mean schwab is up almost 30 year to date robinhood is up 170

year to date i mean all of this is so good for those companies.

And I think it also highlights why being a bank is such a great business, because on the one hand, when there's stability, you have a great business in terms of deposits and interest, and you can make nice money off of your net interest income.

When there's volatility and people are going crazy, you make a bunch of money off of your trading revenue.

And it's almost like what you want to do as a business, the idea, as you say, to become a billionaire, is you want to put yourself in the position where you are necessary

despite everything.

And that's sort of what we're seeing here with with all of this trading. In terms of the retail point that we made at the beginning, so retail trading is exploding.

And this is a big part of the story here. Retail investors bought $270 billion worth of stocks and ETFs in the first half of 2025.

According to research, that is the most in over a decade. That is from Vander Research.
JP Morgan also estimates that retail investors will buy even more stocks in the second half of this year.

And if you look at at just the

share of retail investors in terms of overall market participation, get this. At the end of April, the share of retail participation in the market reached an all-time high, 36% of total order flow.

And that might sound like not that much, but for comparison, prior to the pandemic, the retail share of market trading volume rarely went higher than 10%.

And we're at 36%.

So the institutional investors are still in charge of the market here.

That's really the institutions are the ones that are driving most of these price increases or decreases. But it is increasingly becoming the retail investors market.

We're seeing way more participation.

from retail and it is increasingly having an effect on the price movement of the overall market.

I'd be curious to get your reaction to that change, which is quite a systemic change in the way global markets work. It used to kind of just be, this is Wall Street's reaction.

It is increasingly, this is Wall Street's reaction and also the Reddit Army's reaction and Robinhood traders' reaction, et cetera.

I'm just wondering if you have any thoughts on how that changes things for investors going forward.

Well, the traditional wisdom is that when retail investors pile into something, you go the other way.

The term they use is dumb money. I don't know if that is true anymore because the institutional investors have underperformed the S ⁇ P by the amount of their fees.
So see above, a giant scam.

If you see anyone advertising on CNBC,

it means you should not invest. The democratization of investing is actually a good thing.
Bringing people into the markets and making it easy for them to start investing, that is a good thing.

And I also think that our nation is becoming slowly but surely a little bit more financially literate because of the accessibility of these investment apps and also

just generally making it easier and less intimidating.

What you also have here, which is sort of a negative effect, is that I think one of the reasons that America is investing more, retail investors are a greater percentage of the total trading volume, is the same reason that America is more depressed and more anxious.

And that is, it feels like everyone's making money but you.

If you hear these stories, and you may even know someone who bought crypto, who bought Bitcoin eight years ago and is now a multimillionaire.

Or you hear about someone who bought Netflix, you know, 10 years ago and they've made 120 times their money. And so you start thinking, wow, I need to get in on this game.

And you get seduced when every piece of information is buy this, sell this, or you see these really compelling people. on CNBC and they convince you, I'm constantly wanting to buy stocks.

I hear about stuff, we talk about stuff, and I think, oh, I should be investing in nuclear. I should be doing this.
So

the feel that everyone's making money but you, the sense that you know better than the market all leads to the same thing.

People are deciding and also an instinct around a lack of free play on the savannah and risk aggressiveness, especially of the young male brain.

A lot of people just love

speculating. I mean,

let's be honest, and I'm guilty of this. I know I should never do this.
I buy and sell options. That's just fucking stupid.
It goes against everything I'm telling everyone else to do.

But I imagine it's the same thrill you get from, you know, betting on Chelsea, which, by the way, brought home the trophy, Ed. Congratulations.
That's right. Do you know what the trophy was called?

It's the, what is it? The World, the, the American World Cup or the Team World Cup? Club, Club World Cup. Club World Cup.

The most important moment, and then we're going to get back to the stock market, but the most important moment. Player of the match.

Cole Palmer, but when he received the Player of the Match trophy from the President of the United States.

That was my favorite image of the year is cole palmer shaking hands with donald trump in the middle of netlife stadium i could not believe my eyes yeah my favorite image was an audio image of of the president being booed

um it all comes back to the same thing if these companies these companies are exploiting a flaw uh in our instincts and i i'll i'll end where i started buy assets Don't believe you can beat the market.

Work hard. Be disciplined.
Spend less than you make, consistently put money into the market, and never believe that you can outsource or you can outsmart or time the market.

And that these bank earnings are a incorrect philosophy that you can respond to and protect yourself against the markets.

Be clear, the market could give a shit about how smart you think you are.

And

I would not have bet that the market would be touching all-time highs right now. So I didn't bet.
What I did was I keep investing in good companies that I want to hold for at least, at least a decade.

It's so funny how the answer always comes back to Warren Buffett almost every time. It's all about value investing.
It's all about staying in, buying at a good price and holding for the long term.

That's always the answer. I mean, people are constantly trying to come up with

the cheat code in investing. It's the only cheat code that has ever held up

is the value investing Benjamin Graham Warren Buffett philosophy, which is why I'm still such a big fan of him. Just one note to your point, we often hear about

the success stories. We rarely hear about all the people who lose money.
And so that's something that I think needs probably needs more attention. But retail investors bought the dip.

They bought $36 billion in March, then they bought $40 billion in April.

Record buys.

And the S ⁇ P's up nearly 30% since we hit that bottom in April. So,

retail investors might have done pretty well so far. We'll see what happens over the next year or so.
And just to look at what they are buying, this is according to Business Insider.

The top three buys among retail investors right now are: one, NVIDIA, so they're crushing there, two, Tesla, not crushing, and three, and this is good news, the SP 500.

So,

I think right now, most retail investors are actually sitting

pretty. All-time highs.
Exactly.

We'll be right back after the break with a look at the biggest monopoly that no one is talking about. If you're enjoying the show so far, hit follow and leave us a review on Prof G Markets.

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We're back with Prof G Markets. The next batch of Amazon's Project Kuiper satellites launched last week on SpaceX's Falcon 9.

This move was crucial as Amazon must deploy half of its Kuiper satellite constellation by next summer to meet FCC requirements.

The partnership follows a three-launch deal struck in December 2023, and that agreement came together just weeks after Amazon's shareholders filed a lawsuit alleging the company unfairly excluded SpaceX from its initial round round of launch contracts.

So it's got kind of an interesting partnership going on here. You've got Project Kuiper, which is Amazon's satellite project, which is

using infrastructure that is built by SpaceX.

And SpaceX obviously owns Starlink. And those are the two main competitors in the satellite space right now.
So you have two competitors that are joining forces.

So it's kind of a strange move for Amazon. You would think that they would be trying to avoid using SpaceX rockets to get their satellites up into space.

And then on the SpaceX side, you would think that SpaceX would avoid shooting up those Amazon satellites into space because SpaceX wants to own the satellite network. So

an interesting partnership between two fierce competitors in the space industry. Break down for us why this is happening.

So, the best and the worst products of the last five years are both from the same person.

And that is, I think the worst product of the last five years is the Tesla Cybertruck. I think it is just so fucking stupid, overpriced.
It's like exceptionally expensive, but bad.

Almost like a parody.

It reminds me of that car that Homer Simpson designed in one of those episodes or something that's like a bad, it's not like something you'd see at Universal Studios and they laugh.

Remember Battlestar Galactica in the 80s?

And

the market has spoken. This thing is kind of over before it started.

Maybe with the exception, maybe the worst product launch would be the Oculus or the mixed reality headset from Apple. But the best product, you could argue, is either Starlink

or, if you were going to be trying to sound smarter, the Falcon Heavy Rocket, the Falcon 9, because it can put shit into, it can, the ability to put stuff into space is incredibly important.

There's a huge market and it's a growing market, and it's really, really expensive. I mean, essentially you have

what SpaceX, their Falcon Heavy, they can put shit into the low Earth orbit for $1,500 a kilogram. And the closest competitor, the Ariane 5G out of Europe, is $9,000 per kilogram.

So this is, in terms of

innovation, leadership, incredible vision, and a product that is just miles ahead of everybody else with huge moats.

I would say, okay, it's Starlink, but maybe really it's the Falcon Heavy rocket that can just get shit into space faster than anyone. What happened here is that I believe

both organizations saw good reasons to work together despite the fact I think they hate each other. And that is, okay, Amazon is trying to build out the satellite network.

SpaceX's ability to get those satellites into space is just far superior than any competitor.

So their shareholders are are saying, all right, if you need to put satellites into space, you have a fiduciary obligation to your shareholders to get them into space for the lowest cost possible, regardless of how distasteful you find the company or the person.

At the same time, in 2024, SpaceX conducted 52% of all global orbital launches and launched 84%

of all satellites by mass.

So if you think that space or everything other than Earth in the entire universe might offer economic and geopolitical advantage at some point, And one company controlling this much of it is probably not a good idea.

And my guess is that the good lawyers at SpaceX said, hey, Elon, you realize at some point the FTC and the DOJ, specifically now that you've decided to accuse the president of being a pedophile every seven minutes on Twitter, at some point the FTC and the DOJ are going to notice that we have the strongest monopoly in history on what may be actually, literally and figuratively, the final frontier.

And so they said one way to avoid scrutiny or a good data point would be we are leasing this capacity out to other firms, including our competitors.

And what it reminds me of is the, I don't know if it was a consent decree or DOJ, but basically the entire telco network in the United States, or at least the land-based network, is controlled by it's either two or three companies, AT ⁇ T Verizon, and I think, I don't know if T-Mobile rents it or has their own.

But the ability to cover the United States with cell towers is pretty expensive.

And so they've granted them that kind of oligopoly power, duopoly power, and said, it's okay, but what you have to do is rent it or lease it out to other MVNOs that want to start a telco and you have to give it to them at a market price.

So for example, Mint Mobile, which is a sponsor of this podcast, they didn't make a

hundred billion dollar investment in cell towers and networks and routing equipment.

They're renting the network under a consent decree where that said, you have to rent this infrastructure out because i think that's what's going to happen potentially at spacex is there will be some sort of agreement where it says okay if you're going to control space you have to offer other people the ability to have commercial applications in space this whole story highlights exactly this point which is probably the most dominant monopoly in the world right now uh is SpaceX.

And, you know, you think about what happened here between Amazon and SpaceX. Amazon didn't want to use those SpaceX rockets.
And so they were trying to go with Blue Origin.

And then the shareholders sue Amazon and say, this is ridiculous. You can do a Falcon Heavy for 20% of the price.

So Amazon has no choice but to go with SpaceX because of SpaceX's monopoly power and its ability to keep prices low.

On the SpaceX side, SpaceX actually has to say yes to Amazon to sell those contracts because while, yes, you can,

as a seller of a service, you can choose who your customers are, you can't do it if it is to preserve monopoly power.

And I think you're exactly right that the lawyers at SpaceX say, hey, we can't just say no to Amazon because the FTC is going to look at it and they're going to rightly confirm that the reason you're saying no to Amazon is because you are trying to preserve this monopoly that you have on the space industry.

And I just want to go over some of those stats again. So there were 154 orbital launch attempts in the US last year.
SpaceX made up 87% of those, 134 launches. It's up from 96 in 2023.

More launches than the rest of the world combined. Of the roughly 10,000 satellites that are actively orbiting the Earth right now, SpaceX owns 60% of them.

And they are planning to increase that to 30,000. You look at Amazon, which is the next best competitor.
We talked about this on the daily show.

It doesn't offer any internet service right now.

So it appears that what we have right now and what this story is actually highlighting through the fact that they are being forced to kind of partner up with each other, this is like the most dominant monopoly we've seen in a really long time.

And it's so dominant when you look at the relationship with the government, where it's not just that the government's buying from SpaceX, they actively depend on it.

You've got the military, you've got NATO allies that are using Starlink to be connected for real-time connectivity, which is important for their military operations.

We saw what happened when Elon threatened to turn off Starlink for Ukraine. And it makes me think that this is like,

I mean, we talk about what makes a great investment,

a monopoly power that is essential for humanity. This to me looks like kind of the greatest investment in the world right now.
We'd have to look at the pricing.

It's selling for $400 billion market cap right now.

But in terms of just pure monopoly power and pure utility and a human need to connect and use internet services and use satellites, I feel like SpaceX is an incredible investment. Yeah.

So if you think about the two companies in the hottest categories that have...

Just dominant share, the two you would zero in on would be OpenAI, which now controls about 90% of, I mean, every day, despite the press releases and all the hires making $100 million to come work at Meta

every day the market seems to be rewarding more and more share to ChatGPT and OpenAI it does feel like they're running away with it and what's interesting is they have about the same value in the private markets as SpaceX yes the difference is I would argue is that SpaceX has bigger moats I think that

Claude, like I use Claude whenever I have a question or I do I use both Claude and ChatGPT

And I can see Lama or someone else coming out of nowhere with a vastly improved product or even a deep seek or what have you and starting to take share pretty quickly from ChatGPT.

Whereas I don't see anybody right now coming for getting close to what the Falcon Heavy rocket can do in terms of launch to cost ratio right now.

The way that Project Kuiper is trying to compete, they have to pay SpaceX to compete. I mean, it's unbelievable.

What you're saying, just going a little bit more, Jason, is what you see is the most overvalued company in the world,

I believe, is Tesla, and also arguably the most overvalued media company is X. And what he's trying to do is he realizes he could very easily lose $900 billion in market cap on Tesla.

So, what I think he's going to start to do is conglomerate them and put them all under this kind of AI umbrella of XAI, and then maybe merge them or get them closer to SpaceX because the only way to salvage that trillion dollar valuation that Tesla has, which is about 950 billion of overvalued, will be to confuse the marketplace and say, no, it's not an auto company.

It's an AI slash space company that's in autonomous and collecting data and putting satellites, which collect data from my data farm of Twitter, which informs my autonomous driving, which is all based on this infrastructure of unique that space.

I think he's going to create what

Kara Swisher, my pivot podcast co-host, a traduct in here, and that is a multiple-headed hydra where he attempts to use the spin of or the umbrella aspirational feel of AI around an amazing growing product that has unbelievable moats called SpaceX to prop up some shitty assets that are going to decline massively in value unless he does something specifically Twitter and SpaceX.

And also his autonomous, which is is it's so far gone nowhere. That point on Tesla isn't just a car company, it's something bigger.
I don't buy, and I don't think we need to re-litigate that.

I think we all know why I don't buy it, and I don't think you buy it. But when you look at SpaceX,

that's a company where you could argue this isn't just a space company. This is like, in my view, this is a telco company.

The same way that you was pointing out how AT ⁇ T and how Verizon make money. I mean, this is the trajectory that SpaceX is on, and they are actively generating revenue from these businesses.

They are actively becoming systemic to society

in a way that it feels like it often doesn't get enough credit for. People try to make that point with Tesla.
I don't think it holds.

But if you were to make it with SpaceX, I think it's a lot more compelling. And you just look at the valuation now, $400 billion,

more valuable than Johnson ⁇ Johnson, more valuable than Bank of America. It's still private, but this is among the top 25 most valuable companies in the world now.

It is now the biggest source of Elon Musk's wealth, which I find just fascinating. And I think it makes sense because of how dominant they are.

It's an incredible company of all the products I've used. You know, occasionally you have those aha moments.
And again, this goes back to being critical thinkers. I do not like the man.

I think he's now no longer.

Is he still a net positive? Probably, but

anyways, I'm not a huge fan. He's he's even.

But if you're a critical thinker and you like, and you want to call balls and strikes, I think Starlink is the most impressive product I've used in the last decade.

I just can't, I just can't, when you're on a plane,

we did,

I dialed in for one of my guest appearances on this show from a plane.

You have said before that you do the FaceTime with your son from the Starlink in the plane and it's crystal clear. I was shocked by the footage when we called you from the plane.

I mean, it was clearer than when you were on the ground

by orders of magnitude. It's just striking.
And then you drill down to

an artillery or a drone's ability to zero in on the heat that's created by

the firing of a shell from a piece of artillery and the ability to immediately zero in on that heat, upload it to data to a satellite, and then send it back to the guidance system of a drone, which has created this asymmetric warfare world where $300 drones are taking out $3 million tanks.

I mean, just the implications of that kind of broadband.

are people people can't even begin to imagine just the layers of economic opportunity and influence of having that kind of control or your hand on the windpipe of

broadband and data transmission. And they have it.
It's just, it's an incredible product. It's almost as amazing as the Cyber Truck is fucking stupid.

Calling balls and strikes Ed.

We got to figure out how to make you a SpaceX investor. I know that Kimball, Elon's brother, is a fan.
Maybe that's the way in. Seems like a nice man.
That trauma went the right way with Kimball.

Yeah, no,

something went right. I think he decided, no, I'm not going to do that.
He went to therapy. But yeah, I like him.
I don't know him well, but anyway, he seems like a fun guy.

I'd like to party with him. Maybe the three of us will go out.
I'd love that. I can't wait.
Kimball, call us.

Okay, let's take a look at the week ahead. We will see earnings from Coca-Cola, SAP, Google, and Tesla.
We'll also get a read on the housing market with new and existing home sales data for June.

Scott, any predictions this week?

I think that more than tariff policy, more than economic policy, more than focusing on trying to find

a post-conflict peacekeeping force in Gaza and rebuild that region, more than thinking about what's going to happen to the 14 million people who are about to lose their health care, I think that the president and his top staff are spending more time on the following than any other issue.

I think there's a group of some very intelligent, talented people in a room that, with the use of AI, are going, what can we put out into the news and media ecosystem tomorrow that will distract them from Epstein?

All right, write a letter saying we're firing Chairman Powell and then waive the letter, knowing everyone, every media company will see it as catnip.

And then when the markets freak out, the next day, go on and say, no, just kidding. So we can occupy and distract for two days from Epstein.
Oh, wait, I know.

Say that Rosie O'Donnell is a threat to humanity and we're revoking her citizenship. Okay, that would never work.
You can't do that. That would be rejected.
It doesn't matter.

It'll get people talking about it and it is not Epstein. 85% tariff.
You are going to see every 24 hours.

For the next seven to 14 days, something ridiculous, hollow, and empty that will have absolutely no chance of being implemented come out of the White House.

It'll be ridiculous, incendiary, more the better, and the media will immediately go for it.

It's like when a magician who is sawing his assistant in half yells out, Benghazi, or we're at the Nuremberg trials, and a witness that's about to get cross-examined starts playing the kazoo, hoping that no one will, you know, that we'll all forget why we are there.

You are about to see the most ridiculous weapons of mass destruct come out of the White House every 24 hours for the next seven days. And I want to track them and talk about them.

But my prediction is over the next three or four days, a bunch of unexpected weirdness every 24 hours that has absolutely no veracity, absolutely no possibility of being implemented, but is there for one reason to get us to look away from the fact that the president

who's not only his MAGA fans, not only the country seem to have forgave him for being found guilty of sexual abuse, is more worried about what these files say about him. I totally agree with you.

I want to get another prediction from you.

Will they look away?

In other words, will that work?

Or is this the end

of the psyop?

from Trump. Every time I think this is the red line and he's crossed it, mocking the disabled, joking about grabbing a woman's genitals, every time I thought he's crossed a red line, I was wrong.

And so I'm sticking with that. And that is

this cult is so strong. I think he calls Dan Bongino and says, Dan, get in fucking line.
And I think he says,

Yes, Mr. President.
It's so interesting because you're exactly right. We always think this is the big one and then it never is.

I think this is the big one.

I mean, this Epstein thing is the entire culmination of the deep state narrative that the world and America is controlled by this small group of people who operate in these strange rings with pedophilia and blackmail.

And that was really what this whole movement was all about.

And it is just the perfect story. It is the perfect encapsulation of all of the hypocrisy.
And it's so plain for everyone to see right here.

It would have been different if he said nothing about this Epstein stuff, if he just sort of let it disintegrate and fall into nothingness.

But the trouble is he's gone out there and he has actively said, no, look away. We don't want to release these files.
He literally,

if a comms consultant said,

we want to make you look as guilty as possible. This is the things you do.
That's what he has done.

He looks like my great dame Leia. When I walk into the kitchen and she's gotten in the trash, she won't even look me in the eye.

and she turns around and she starts like sulking away like if if i don't make eye contact with him i'm invisible he's my great dane right now he could not look more guilty

This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss.
Mia Severio is our research lead.

Our research associates are Isabella Kinsel and Dan Shallon. Drew Burroughs is our technical director, and Catherine Dylan is our executive producer.

Thank you for listening to Profession Markets from the Vox Media Podcast Network. Tune in tomorrow for a fresh take on the markets.

You have

in kind

reunion

as the world told

and the girl flies

and love

where are you headed, Ed?

I'm a SNBC.

Who are you on with today?

I'm not going to tell you. Oh, that tell her I said hello.

Tell her I said hello.

Oh, my God.

I'm headed to MSNBC.

Jesus Christ. You're literally a fucking cliche.
And I got to give it to you.

We should absolutely do, like, devote two or three minutes to reviewing your most recent MSNBC hit.

I'm actually not surprised. They love you.
You're really good on that show. Anyway, how about it?

Thank you, both. Tell Katie I said hello.

and that i'm a bit jealous that uh that you're now the the side piece and i'm literally at home cooking for our family staying loyal to msnbc as she's off taking you to the bahamas and getting

up and you know it's

she needs to come back to the to the people who attracted all those seven-year-old white women

by the way i hope we're recording this this is comedy gold it is comedy gold support for this show comes from Odoo.

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