0:02 spk_0
Hey, welcome to the Market Hang. I’m Dan DiF Francesco. We got a full house today. We got Gus and Mark in studio, Nancy and David remote. So a bunch of really smart, good investors in me. So this will be great. Um, but let’s start with, obviously the market. Uh, you know, S&P nearing records, NASDAQ up super high, yields finally coming back a little bit, um, but still this question of, you know,You know, are we close to this edge? Should we be nervous or not? And, um, Mark, I want to start with you. Uh, you had an interesting blog or a newsletter the other day where you had the great line, the stock market is wearing noise-canceling headphones, which I just love. And for the record, always go transparency mode. Never go full noise canceling. It’s very dangerous out there, people. But I’d love for you to kind of expand a little bit on that and, uh, what you’re seeing in the market and what the, the risk that the rest of us maybe aren’t.
0:55 spk_1
Yeah, I mean, I think that’s the challenge of the day for all of us, right? So we’ve all been trained over the years to worry about yields going up and up and up and up, and they weren’t going up and up and up over the years. And then 2022 happened, 2023 happened, and we all learned that when yields go up sometimes stocks go down, and so both bonds and stocks can go down at the same time. So we’re at this crazy, crazy situation where we see these yields right on the longer end of the yield curve.That we haven’t seen since 2002 and some people that are probably watching us right now weren’t even involved in the market at the time, weren’t even alive or even alive. I was there, so you know that is the big challenge. So the question is, is, you know, we see stocks, as you said, all time highs, and of course these super high bond yields. Question is, isYou know, when is the stock market going to realize that, or is the stock market going to realize one of the two has got to be right. It’s usually the bond market that usually wins out, always, but so far that’s the big question right now. And so right now, not all stocks.Some stocks, right? That’s the, that’s the big challenge here. It’s not all stocks. The indexes are doing well.
2:05 spk_0
So I
2:06 spk_2
think that’s whereyou got it wrong though. Like everyone says that it’s the equity market guys versus the bond market guys, and it’s always like, oh yeah, the bond guys are the smartest guys in the room. I had equities here, so I take umbrage at that. But I think the equity guys have been right over the past few years. All right. I just think that theThe bond market and the equity market, they’re just focusing on two completely different things. They’re not conflicting at all. I think the equity markets, they’re focusing more on profitability and overall economic growth, while the bond market, it’s kind of changed its focus from monetary to fiscal policy, and you’ve seen the term premium go up to about 70 to 80 basis points right now. So I don’t think they’re saying something different. They’re just focusing on something completely.Opposite.
2:46 spk_0
Well, David, I’m glad you chimed in here because I wanted to pull up a, a tweet from, it’s a little ways back, but it sounds like you’re kind of still holding the same position, which is, you said in an interview, you know, the biggest risk investors have right now is not being risky enough, right? You can see it right there, you know, kind of risk on. Is that, I know that was, you know, back September 15th, so obviously things have changed a little bit in the past almost a month, but is that still the position? It’s, it’s time to be risk on no matter what.
3:09 spk_2
Yeah, uh, my position has not changed whatsoever. I mean, that’s a question we’re getting, uh, a ton right now. Like, hey, should we start to earn more fixed income than equities? And I, I, I think that is the absolute wrong decision because when you live in kind of the fiscal backdrop that we have when you’re, you know, printing money, running a 6% deficit as a percentage of GDP, when you have the debt problem that you have right now.Like if you own just fixed income, you’re just losing money safely. I mean, there’s so much debasement of your capital, even with the nominal rates at 5%. If you look at tips, they’re close to sort of 2.7%. I think the inflation rate on that number is much higher. I think you’re just kind of setting yourself up for mediocrity moving forward if you continue to own fixed coupon payment vehicles. And that’s why I think, you know, the only gain.The town continues to be stocks. Yeah,
3:56 spk_0
I mean,you see the big board here, a lot, a lot of big numbers, a lot of green, but Gus, Nancy, I’d love to bring you in here. What kind of side do you fall on? Well,
4:03 spk_3
I think you have to look at why rates are going higher. You had a supply shock, right? Oil’s gone higher that maybe comes to a head, say 6, 12 months, whatever it is. You end up having those strong growth, and that’s something else you have to look at, right? So you have strong growth.Also we just talked about the oil. You talk about, you know, underlying inflation. I’m looking at labor kind of holding in. We’re looking at, you know, the price of housing which has kind of stayed also, you know, based in a level that doesn’t look like it’s inflationary. And then the third thing is you’re looking at goods inflation, and that’s where part of the problem is. And I think the interest rate increase that we have.Is something that isn’t going to affect all of the investment that’s being made in AI that’s already from free cash flow coming from maybe a lot of the hyper scales and some borrowing. So we’re in a position where if I look at that, it’s not inflation debasement, you know, like it was in the 70s or early 80s as I remember, but you’re looking at an environment.Where interest rates are up, but markets are growing pretty substantially and they’re moving higher. We started the year at around 320 and in terms of what earnings are going to be, you know, and now we’re somewhere in that 260, 270, and next year we’re looking at 420, right? So we’re discounting that.
5:16 spk_0
Nancy, what about you? Where do you come in on this?
5:19 spk_4
Yeah, so, um, I’m, I’m just going to say ditto.AndAnd then add some color. Um, well, first of all, stocks are cheaper now than they were at the beginning of the year. Uh, so, so that’s important, we’ve seen multiple compression, uh, we’re expected to see somewhere between 30, 32, 33% earnings growth in Q3.Uh, and, and, and that’s gonna be looking backwards. So, what we’re going to be focused on is guidance. But I think importantly, I, I was managing, I may be the oldest, uh, person, uh, in the group, but I was managing money in the 90s. Uh, we had higher interest rates. Tenure was between 5 and 8%. That coexisted quite nicely with robust stock returns. It.It matters why and how quickly yields rise. And I think, for me, it looks to me like a return on capital trades. So, if I can borrow at 5, 5.5%, and I can, uh, get a return at 20%, I should be doing that as a corporate CEO all day long. Uh, and, and so for me, rates are, um, I mean, I don’t want to sound even older than I.They, but they are normalizing. My first mortgage was 12.5%. So, we sort of cut our teeth on higher interest rates. I don’t think the problem with mortgage rates is that they’re at 7+%. It’s that they’ve, they’re being compared to 2 and 3%. But if you step back and say, is this a reasonable, um,Amount to pay for debt, I would argue the answer is yes, and I think that’s why stocks continue to drive higher. And if you just look since the Fed hiked rates, best performing group is technology. Uh, counterintuitive, because I don’t think the economy’s slowing, but I think it’s part of, um, I still want to own earnings growers even in a growing environment. So, uh, we’re bullet.We’ve been, um, we’ve been right, thank goodness, but, uh, it, it’s been, it was a challenging summer. Let’s just,
7:14 spk_0
Nancy, you bring up such a good point with the rates because as someone that bought a house, uh, a little over a year ago, right, having to stomach, you know, uh, you know, at that time we got a little over 6%. It sucks, right, when your friends are like, I’m on 2.5%, I’m on 3.5.But it’s kind of one of those things like it’s all the, you’ve ever seen the show Forgetting Sarah Marshall, like, it’s over. Find a new show. Like, those days are gone. And I, and I do agree that we need to understand the context of like, just because what once was doesn’t mean what will be. Um, so I, I think that is good. Now, obviously, the big thing coming down the pipe is earnings. That’s kind of been the big bellwether for the stock market.Does anyone, you know, what’s, what is that the one thing that could slow it down, and you, Nancy, you talked about projections that’s going to be the big focus. What’s the, the, the red flag that people are nervous about as these companies start reporting? I
8:03 spk_3
think the outlook for
8:04 spk_4
me, it’s margins, I think. Oh sorry, I thought that was me, it’s margin, margin. OK. You saw the micron report, 80, you know, they’re only going to generate 86% margins and the market was horrified.So, I, I think that’s going to be where the critical focus is going to be. We’re near, um, we’re at highs for operating margins, so.Um, we’ll be watching that as well, but I, I think the market needs to sit back and, and, as Mark might say, put the noise canceling headphones on because an 86% margin for Micron is, is, it’s, it’s tolerable for me as an investor.
8:39 spk_0
Sure, Gus, ditto,
8:40 spk_3
ditto on that. But the other thing, right back at you, Nancy, the, the other thing I wanted to say is it’s going to be the conference calls because you’re hearing about in Texas and in Virginia, the two biggest.Areas for data centers, you know, some slowdown potentially, but you also have in Texas, I know they’re going through audits in terms of energy usage. So are you going to get allocated? Are you going to have some sort of a delay? Are things going to back up at all? And that puts a question mark into the AI trade which then flows down into industrials and some other players that might not, you know, have the computing power or things that they need to institute AI in the fast way that they’re expecting to. Sure,
9:17 spk_0
David, anything you’re keen on.
9:18 spk_2
Gus Mark, I got, I got one, you know, Gus, Mark, and Nancy, like, debunk my theory here because, you know, I was just talking about some clients the other day, and obviously, we’re gonna see some type of growth slowdown. And to Nancy’s point, we’ve seen overall valuations of the market go down from 22 times to start of the year to 1919 times the start of the year. I think everyone wants to say it’s like rates that is bringing valuation down. I think it’s the index becoming more, you know, asset-heavy and less.Free cash flow centric. So if we know, you know, if growth is going to come down, or we just see the hyper scalers start to grow less, I think everyone thinks that the market is going to fall apart. But I would actually disagree, and this might be a hot take. I think that valuation has already come down enough that if you see the hyper scales, you know, spend less on Capex, their overall free cash flow is going to go, you know, higher, which while earnings may hurt, earnings may hurt.Hurt overall return. I think, I think overall valuation can actually go higher, and I think that can really insulate the market if hyperscale or capexs does slow down.
10:21 spk_0
But will it slow down, right? I mean, you know, Muse just came out and talks about charm and all these other things that they’re coming out. It seems like the, the status quo has been plowing more and more money in. It doesn’t feel like there’s going to be a pullback because it’s this frantic race that if, if I pull back, that means I’m going to lose that much more in this race, right?I don’t know, um, yeah, sure, um, Mark, why don’t you, you know, um, chime in here as far as kind of where your position is.
10:47 spk_1
Yeah,first I feel like I have to sort of, I have to my cold water, yeah, yeah, I like, like, OK, no, uh, no, I’m not throwing cold water. I just have to make myself clear, uh, I’m very constructive on equities, OK, because, you know, I came out of the, I, I came hot out of the gate with the bonds, OK. I’m just saying I am watching rates very, very closely. Rates, I do believe we have to watch, we do have to watch interest rates, right? So I do believe that earnings.Growth, at least for the next 12 to 18 months, is going to continue. Of course it will be bumpy. We too, just like just like Nancy, we’re watching margins very, very closely. That might be some of the early sort of signs that things are getting tough. Look, even if things are bad, they’re still so much better than they have been historically. There are still great thesis to own most of these, especially in the tech sector, specifically in the AI ecosystem. The fundamentals are really, really strong in termsValuations, etc. However, again, I hate to be that, you know, that guy. A lot of these hyper scalers and a lot of these companies are relying more and more on debt. OK? You can’t just turn that spigot off. They’re all needing that capital right now. And by the way, oh, we’re talking about debt, OK. That means if yields are going up, that debt is becoming a little bit more expensive. I’m not saying it’s going to crash the party and everything’s going to reprice and it’s going to be bad. It’s just something that we have to watch.Carefully, right? They don’t exist, both of them in separate, uh, in separate categories, right? You say you’re an equity guy, I’m an equity guy. Um, but that said, you know, equity guys have to see what’s happening over the nerds on the bond desk. And so, you know, I learned early on to pay attention to what the bond guys are up to. And then I learned that, oh, they’re the guys at the repo desk that sit like in the basement with the stock loan guys. That’s where you really find out what’s going on. Um, and so, you know, it’s just all about sort of these things, which were, I think for many years.is kind of detached. They’re just becoming more and more attached. And so like I said, I don’t think the bond market is going to crash the equity market, but it’s definitely something we’ve got to watch, right? So I mean it’s definitely it’s got its finger on the pulse of a lot of what’s going on in the economy right now. I think a lot of the economic data that we’re seeing, which is a lot of it backward looking, is not really very helpful in looking at the macro data, not very helpful in looking at stocks at this point. We’re looking very, very closely at stocks, but there is a point.There is a point where, you know, if, if things start to happen with consumption with all these other areas that kind of we all laugh at now, right, because stocks just keep going up and up and up and up and you know, look, again, you know, you could have been, you could, I don’t want to make fun of equity people.But you know, we made fun of bond. I think we can, you know, I know a lot of fantastic, you know, equity people who just, you know, bought equities when everyone was buying and did very, very well, you know, bond people, it’s much more difficult, right, right, because there’s so many challenges in making money with bonds that
13:47 spk_0
go ahead,
13:48 spk_4
Nancy. I, I was just going to jump in.
13:51 spk_1
I wanted to get them going.Got you.
13:55 spk_0
Got you. Pull them in the bait, grab
13:57 spk_4
the bait bonds and equity. So I’m not just single-minded. And I think there’s this notion that if you’re bullish, you’re not as smart as the bears because the bears can tell you everything that’s wrong. I, I can tell you too, um, I, I refer to our head bond trader as the, as the worry wart.I mean, he, he can tell you everything that that can possibly go wrong, but that’s not how markets trade. And so, I think what’s different now, and it hasn’t been easy, Mark. I mean, this year’s been a slog, and I think, you know, you, you can say, well, yeah, the indices are up, but below the surface, most stocks are, are down. And so,I, I think what you have to do when you’re thinking about it is, is there skepticism? There is a lot of skepticism. That’s good for the sustainability of a bull market. We had zero skepticism in the 90s, and it was just euphoria all the time. So, I, I know what you’re saying. The party will end, growth will decelerate at some point. But if you’re 3 years early or two years early on that bet, you leave a lot of your clients.Money on the table. So the dance is you got to keep, keep in the game and figure out how to rotate.
15:09 spk_0
And yeah, Nancy, you’re so right, because even if you’re right, you can still be wrong if you don’t capture all of those gains. It’s, yeah, and, and to your point on the, you know, the Bond people being super smart, it is easy to, if you continually just call the end of the world and the end of the world never comes, people kind of forget about them the one time it hits, you’re like, oh well, the guy hit it, so perfect, you know, so I, I definitely see your, your point. Uh, sorry, it looked like you wanted to.
15:30 spk_2
Once though, but I hey, Dan, I think, I think Mark gave the, the, the Yahoo headline quote of the day there. Bond guys, they’re nerds, and he’s
15:39 spk_0
100%, we’re crushing our bond audience right now.
15:45 spk_3
So if we look at, if we look at the banks, they’re going to be reporting in another week, and you’re going to get, you know, an outlook. So what’s happening in terms of net interest margin? Bad debt, and I think that’s going to look OK. The question is going to be.6 and 12 months from now because you ended up having a lot of software that ended up getting put on the books in terms of loans that have to be re-upped and they were done at much lower price. You’re talking about housing and your friends at 3%. Well, you also have companies that have that same situation. Sure,
16:12 spk_0
sure. And well, sorry,go ahead. No,
16:14 spk_3
just the outlooks that we’re going to get from the banks, they’re great barometers for the economy. So where do they see things? So you’re going to get an answer really quickly in terms of where the positioning should be.
16:23 spk_0
Yes, Iwill also say though, there is.the whole private credit world, right, which is that’s what we won’t get the view of, and that’s where, you know, maybe the, well, you will
16:30 spk_3
tangentially you’ve got 250 billion that was put into software during 2001, 2002, right? So that has to come up for, uh, you know, for refinancing.
16:41 spk_2
That’s a, that’s a valuation problem there, not a debt problem on that side of the,
16:45 spk_4
yeah, and, and tech debt as a percentage of the total debt outstanding is like 8%, so.I think, yes, they’ve been issuing a lot of debt, but they’re 38% of the S&P plus or minus. Um, so, so I think we have to keep that in mind, and then also remembering that some of that’s dry powder for buybacks, uh, and, and that, that’s important because that puts the floor under the market as well. So, there’s an insatiable, uh, in the shadow banking system as it’s called, there’s an insatiable.demand for corporate debt, uh, and, and in particular technology debt. So the private pension plans, the, uh, I’m sorry, the insurance companies, the state-run pension plans, they can’t get enough. I love it because they’re like low risk, but they leverage all their debt.So I want to,
17:31 spk_2
would any of you guys on this call though say that the private credit side of things is going to be the one thing that’s going to make this house of cards collapse right now?
17:39 spk_3
I don’t think so at this point. I think you’ve got time if you know, to see how things play out and you’re going to start getting revenue coming through, right, because a lot of the AI that’s being that was put in place a year ago, a year and a half ago are starting to see revenues being generated, whether it’s anthropic in their, um, you know, in their 10Q or I’m sorry, their cases, saying, you know, we’re looking at I think 2 billion in terms of revenues that are coming through. So you know there is a time.As time goes on, we’re going to start seeing cash flows and monies come in to pay down that debt and expand what they’re doing currently.
18:13 spk_0
I think with the, uh, David, to your point about the private credit, what maybe worries me or gets me a little nervous is, you know, a couple of years ago when obviously rates spike, it becomes a very hot thing on Wall Street, right? Private credit. Everyone wants to get into private credit. It’s the hottest job to get into. Um, so, you know, sure, those, those top tier, right, debt, that kind of lands in private credit, I think that will ultimately be fine. But like, as you kind of go down the totem pole and more and more people want to get involved, where does that,Debt land, what’s the underwriting process, you know, I mean, what was it, uh, Jamie Dimond famously called it the cockroaches, right? So, so when does that come to fruition and, and how have those cockroaches been nesting and, and how big does that get? Maybe it’s only a small pile of it and something that the market can absorb, or maybe it’s a lot bigger. I mean, the big issue with private credit is that it’s private and to Nancy’s point, it’s shadow, so we don’t really have a full sense of it, but that’s where I, I get a little bit uneasy.
19:05 spk_2
Yeah, it’s just a black box that to your point, that’s why people are afraid, but, you know, it’s still just a $2.2 trillion dollar industry. So it’s not huge in, in the grand scheme of things. And obviously, the software is gonna be where the quote unquote, problem children are gonna be, not on the top end, especially like the more vertically integrated companies. It might be down the wrongs. But if you look at, I think Goldman Sachs put this statistic out there, it’s like, of all those loans on.PC for software companies like the loan to value on those loans is like 30 or 40%. So I think that’s just what everyone’s expected to be. I, I don’t think it’s gonna be a problem actually at all moving forward in the future because the interest coverage ratios they have on there is like 2, 3x. So it’s more of the valuation problem than the, the debt repayment problem.
19:50 spk_1
I’d
19:50 spk_2
be
19:50 spk_1
writhing in my seat. I’m writhing in my seat, you know, I keep.Getting sucked back into that vortex of I don’t want to be the fixed income guy. I don’t want to be that guy. I want to join the bandwagon. I am long all these stocks that everyone else is long. I love this stuff. Let your real color. I have been pedal to the metal. I have been pedaled to the metal, and just to be clear, I’m not saying the world is coming to an end tomorrow. Look, we get paid to make investments, right? That’s what we do. And you know, look.On Wall Street, and I’ve been doing this for a minute, you know, you learn early on that you take advantage of an opportunity investment. You do it until you can’t do it anymore, right? And that investment right now is very real and really, really good. It’s really solid. The thesis on a lot of these stocks that we all own probably sitting here today is super strong. I’ve never seen such a strong environment as I’m seeing today.I like to tell people it’s like this, you know, you look out, you’re on the, at the beach or on the lake, at Lake Tahoe, and you look out on the water, although you don’t have this problem in lakes, but on the beach, we have this problem. You look at the beautiful, you see a beautiful blue sea. And some people, they just jump right into the water and they swim because it’s beautiful. Other people like me, the, what is it, the worrywart Bond guy, I know that there are sharks under that.Water and I have to know because that’s who I am, what sharks are lurking under the water. I still swim. I still swim. I’m not saying don’t go and swim, but I’m telling you that there are sharks, and I like to know what’s out there, how big are they? How many teeth do they have, you know, how do I avoid them? That’s really it. OK, so I made that clear. Now let me just say with regard to, you know, I don’t think it’s prudent to ignore that fixed income and bonds and borrowing and debt.We can’t ignore that even companies that historically would not use that part of their balance sheet to raise money are doing it, right. Companies that don’t necessarily need to, but they are using fixed income to finance data center build that prudently, right, because you learn that in corporate finance. That’s how you raise money to do those types of projects, project finance. However, it’s getting to the point where some of these companies which we are.Investing in to plow money into R&D, they’re spending a lot of money on building infrastructure. They’re starting to look like utilities. We’re trading them like they’re innovators, but they’re starting to, their balance sheets are starting to look more and more like traditional utilities. And so that said, again, I’m not calling an end to the party or anything like that, but I’m saying that if the places that I’m looking to see where there might be a problem.Problem coming. Yes, I’m thinking if it’s going to start to fall apart, it’s going to start with the fixed income side, right? You’re going to start to see some problems and then once the oxygen leaves the room and then there’s investor sentiment that will play a big factor into it that’s not going to affect their ability to make money. Yes, but it’s not like you can just turn these facilities off overnight. You still have to pay those bonds back.
22:54 spk_0
I’m waiting for David to come in with stats about shark.Attacks now they only happen like once every they don’t have
22:59 spk_1
sharks at Lake Tahoe, do they? No sharks at Lake Tahoe.
23:04 spk_2
Mark, I’m, I’m gonna head out here. I’m
23:06 spk_4
a big newsletter writer.
23:08 spk_2
I’m a newsletter writer just like you, Mark, and my newsletter theme over the past quarter was Dolly Parton, and she has all these like Dollyisms, and one of them was like, if you want the rainbow, you gotta put up with the rain. So I think we recognize that there’s a ton of rain. I don’t think we’re gonna see the cracks.On the fixed income market first. Uh, what I would actually look for on the equity side of things, I think there needs to be a bifurcation on the AI winners because there’s so many perceived AI winners on the equity side, specifically on, in the small cap universe that don’t, that are, that basically the non-earners out there. Uh, they have, in financial technical terms, a crap ton of debt on their balance sheets. And I think you’re gonna see cracks in that area of the market first, and you haven’t seen that just yet.
23:49 spk_0
So I wouldn’t, go ahead.
23:52 spk_4
Go ahead. I was just gonna say, wouldn’t it, it, it really hasn’t shown up and spreads, um, and I think that’s something that we all look at, uh, as a, as an indicator. It always has historically. So, I mean, that’s not to say it can’t, and I, I think we actually all agree, um, it’s, it’s just been enjoyable to watch Mark squirm.
24:14 spk_0
Mark, I’m gonna put them on this. I wanna, I wanna hear from everybody here quick about their take, but Mark, I’m gonna start with you. We do at Business Insider, we do a quarterly thing where to invest $10,000 right now. Mark was nice enough to participate. Next time we’re gonna get all four of you involved, but, uh, Mark, again, I don’t need to, I don’t need to paint more of a picture.
24:30 spk_1
You guys are gonna kill me
24:31 spk_0
something in the article. So where, if you had $10,000 right now, whereWould you invest it? Like,
24:36 spk_1
so, OK, I, you caught me at a very weak point. All right. And, and, and I’m squirming right now, Nancy. I am.
24:43 spk_0
What’s the end of Fight Club? You caught me at a very interesting point in my life. You caught Mark at a very interesting point in his life. They did.
24:48 spk_1
Uh, you know, I was watching yields, you know, longer yields going up and up and up, and I’m like, OK, you know, look, maybe it’s prudent to like put a little bit of fix.Income in a portfolio of $10,000 right? You know, I’m still, I still tilted heavy into AI. I still, I still like the S&P, right? I still like these types of things. So, but I thought maybe a little prudent to buy a little bit of fixed income here at these levels, but not a small allocation.And just to be fair, and I did say, and I’m going to be honest, right, you can check me on this, right? I did say let’s put a little bit in bills, right, T bills, but why? I put them there because if the market pulls back, I want to have some dry powder, and I think that’s a great place to put your money right now. You can just take it out. The yields on, on this year and under paper are very attractive, and again, it’s the nicest way.You never got paid this much to hold cash. I’m not saying go to cash, but I’m saying that this is an opportunity to buy the pullbacks. We’ve been buying all the dips, right? So that’s really why I did to protect myself.
25:52 spk_0
All right, all right, you’re off,
25:52 spk_1
but youcan kill me for the bonds.
25:54 spk_0
Yes, what about you? Where do you come out on $10,000? Where are you investing right now? I think
25:57 spk_3
you wantto look where choke points are for AI, and you want to invest in those areas as well as the leaders in AI. So those are part of it, and you end up having.Companies that have been investing in this and they’re starting to see the benefits whether it’s banks, I’m looking at industrial companies. I have an energy company that’s supplying 5 gigawatts of energy to behind the meter they call it types of companies. So you can’t get power. The guys in Texas we’re talking about, now all of a sudden you flip a switch 18 months, you’re able to get, you know, your power plant going. So those are
26:27 spk_0
the things. Got it. Nancy, what about you?
26:31 spk_4
Uh, $10,000.Yeah, I think I would, um, I’d, I’d put it in the queues for now. Um, I, I just think you get broad diversification. Uh, you don’t get all the choke points, but you get most of the names that are going to succeed. And I think, I didn’t know what the time horizon was, but if it’s 4th quarter, that’s where I’d put it.
26:51 spk_0
OK. And then David, what about you? Where are you landing?
26:54 spk_2
I’m going 99% beta between the S&P 500 and the Q’s, but, you know, Mark said he wanted dried powder in case the market pulled back. I’d rather own that last 1% in long volatility and low delta put options. So, you know, he basically puts guardrails on the portfolio. If you get a pullback in the market, you know, you can capitalize on the gains from the put that have that be the dry capital to go out there and buy the dip. Gotcha.
27:18 spk_0
All right.So we’re talking a lot about AI and let’s kind of bring in some of the pricing pressure that we’re seeing. So there was a report about Microsoft slashing its internal cloud spending. Um, you know, that also came a couple of weeks ago when Chachi, when OpenAI announced Chachi PT’s, uh, premier tier subscription is going up. We also just broadly have anthropic and OpenAI looking to go public, right? They want to get their financials in order. So, I think we’re seeing some of the AI companies, right, increase.Some of their subscription models, maybe some of the users pulling back in some areas. So, I wonder, you know, I’ve used this term in, in my own newsletter, chatbot monogamy, right? This idea of, um, from the AI companies, they want to go deeper with the clients, whether it’s enterprise or a person, right? Muse wants everything. They want all of your details. Um, and then from a user perspective,Is it really realistic for me to manage a bunch of different subscriptions? We were talking before, um, uh, with some of the producers about streaming, right? Like I can only have so many streamers. Do you, do you see that as a realistic future now that people are gonna start to pull back and there’s gonna be winners and losers, and how does that impact all these companies? Mark, you’re shaking your head. Yeah,
28:27 spk_1
totally. Um, this brings up such an interesting point, right, because, um,You know, these companies, and I dare say this, it, it gets me nervous to even say it, you know, these companies where they are right now, they’re starting to look to me like commodities in a weird sort of way, right, because at some point, yes, there are notable differences, and we all know the notable differences between the different models that are out there, but at the end of the day they’re all going to serve some sort of a function and companies or individual users are going to be able to.Select their favorite based on price, based on all these types of things. You see them now, they’re talking about price. They can’t, it’s going to be very difficult to continue to exist as a differentiator, right? And at some point, even sort of the users, the corporate users or the B2B users are going to be like, oh, we’re just going to go for the one that makes the most fiscal sense. It’s going to be, it’s going to be a CFO decision. It’s not going to be the nerds making the decision saying, oh no, no, no.This one here is, you know, is smarter at this or smarter at that. Yes, there’ll be nuances, but you know we’ve seen this happen in technology before. It’s going to be very hard to continue to differentiate. Now people below that level, below the providers themselves, I’m talking about the open AIs and the anthropics, right, those guys will still be able to differentiate themselves better chips, you know, better power chip, you know, all that kind of stuff that’s all sort of organizing right now.But the people that we’re expecting the most from in the next year as these two companies, the big ones, go public, you’re going to, that’s going to be the question we’re going to have to ask ourselves, is this some sort of a sustainable moat that they’re building that’s going to make this one the winner, that’s not going to ultimately put price pressure on companies that have very, very high costs to produce their products,
30:21 spk_3
right? I’m going to take it from the other side. You have power users. There may be 5.You know, 10% maybe of all of the AI users now, those guys are going to probably look for what’s the best utilization, how do I get these models to work the best? How am I making more profit in terms of my company? Then you have the guys kind of middle in the we’ll call it the entry level. They’re looking at, you know, what goes into this recipe and obviously that’s going to be more of a cost.Conscious thing more so than anybody else probably and then you do have the CFOs that are probably going to get involved with the power users over time, but I think you’re going to draw down the pricing of this in terms of like any other model and you know you’re going to have lower and lower costs who gets more utilization, and those are the people that you’re going to look to is probably going to be the winners.
31:08 spk_0
David, you look like you want 100%.
31:10 spk_2
Yeah, it’s 100% kind of a commodity side of things. Obviously, like the muse news, you know, not being on the enterprise side of things is interesting, but like, can you blame Dario for coming out and, you know, giving all this fear porn out there to try to make people afraid of AI? Like he knows what his mode is and it’s gonna be on the regulation side of things. So I’d be doing exactly what Dario was saying before, but I mean, we’re just seeing Jevin’s paradox.Really play out in real-time. I mean, you have cheaper tokens, far more tokens, bigger total bills, but like, every time the price drops, usage is going to explode higher. And I think that’s what continues to make me very bullish about the entire space, even if it is commoditized.
31:48 spk_0
Do you think, and Nancy, I’d love to get your take too, but David, do you think that the other foot will eventually drop? What I always think about, I’m a millennial, right? AndI was raised on the millennial subsidy, right? We had DoorDash and we had all these great apps that gave us super low prices cause they wanted growth, growth, growth. And then all of a sudden, I look at my Uber Eats, and I’m like, wait, there’s this fee and this fee and this fee and my DoorDash and, and my gym subscription is this, and all of a sudden, it spikes up. So, do you think there’s a little bit of like, draw it down, get the usage in, and then as we, right when we get addicted, then the price spikes?
32:19 spk_2
Yeah, I mean, that’s likely gonna happen. I mean, we kind of had this exact same thing happen during Google. I mean, people can now look stuff up. I mean, that was kind of the narrative around Google to, you know, try to bring down overall costs. I mean, now you can just look stuff up even more faster and efficiently. So I, I definitely think it’s gonna happen. I don’t know, you know, Dan, I don’t know if I’mmillennial or not. I lived 23 days in the 80s. Drugs, sex, rock and roll. I don’t remember any of it. Um, but you know, I’m unfortunately, I’ve not been able to look at my, uh, my Uber Eats bill, but I definitely probably have those, uh, piles of fees stacking up where I need to utilize
32:53 spk_0
Muse. Yeah, I mean, I haven’t jumped into the muse, but sorry, Nancy, I want to bring you in as well. What, where do you fall on all this?
33:00 spk_4
Oh, I don’t know. I’m back on sex, drugs, and rock and roll. Um.What, what were we talking about? Um, I, I think, I think you watch what the, the smart leaders are doing. And what, what we heard from, uh, Jensen Wong about, I don’t know, maybe it was 6 months, 3 months ago, was that they, Nvidia was pivoting away from the large language models, which is not to say they’re not still dumping chips in the to the LLMs, but they were focusing on industry and they were focusing onSovereigns. And I think that’s where we’re going to start seeing bifurcation. And by the way, one of the big winners is probably going to be Microsoft, not the best product, certainly not, um, but embedded in the enterprise. And so, you know, go back to when I was growing up, and it was the question was, do you want to own a Sony Betamax, uh, player or a VHS player? Sony was superior, but VHS stole, stole the.And so we ended up with an inferior technology, um, but because it was, it was omnipresent. And so, I think you’re going to start to see changes, and I think that’s what Dario’s worried about, uh, and Sam Altman as well. You don’t pull an IPO or push an IPO, uh, because you’re, you’re optimistic about, about the future. You, you pull back and try to recalibrate. And last thing I’ll say is this wholeNonsense about the end of humanity. Um, it, it, and please regulate us. We can’t help ourselves. Oh, by the way, we just released a new model. Um, but I, behind the scenes while this was all going on. But just remember, it wasn’t that long ago that Mark Zuckerberg was like, I’m sorry, did we censor? Please regulate me. So I think it’s an old playbook for Silicon
34:45 spk_0
Valley. Also interesting that Mark is on the other side. He’s not the one, you know, it’s because he learned his lesson. But David, I got to.pardon quote for you for your next newsletter. It costs a lot of money to look this cheap. Um, so, you know, just, you know, there’s something for, for your next newsletter. But no, Nancy, I, I totally agree with you about, I, I think I’ve kind of, I’ve written about this a lot. The whole, oh, regulate us, I think it’s far too convenient. You have the rise of openweight models, which are a real risk to the business model for OpenAI and Anthropic. You also have other players kind of coming in, whether it’s the big guys like Google and Gemini continues to kind ofMake progress there. Um, and I think also it’s an easy scapegoat for, oh, we can’t release our new product, not because maybe it’s not as good as we thought, maybe be not. No, it’s because the regulators, like we, the fate guys, the fate of humanity is at hand here. So we, for, for everyone’s sake, we need to hold back. I think it’s far, far, far too convenient that all of this is, is coming down. And the other thing I, I really question is, you know, when they say they want to be regulated, how much do they really mean that? You know, how much do they really want the government.Getting in their models, getting in their source code. Like these are trillion-dollar companies. There’s so much valuable IP. I read a story the other day about at Meta, the people who are working on their top AI models, they don’t even have them on the internal org chart. These are like the, you know, another millennial. These are like the unspeakables in Harry Potter. Like, you’re not even allowed to look at these people. You can’t know who they are, you know. So if that’s the secrecy that they have around this thing, they also at the same time want to turn over to the federal government. I, I don’t, I don’t necessarily, um, buy all that.Sorry, go ahead, David.
36:17 spk_4
And and the federal government that can’t regulate anything, including crypto or the internet. The
36:22 spk_0
track record is not great. Track record is not great. I’m
36:24 spk_2
gonna play, play on that with Dolly Parton, Nancy. I mean, the government only works 9 to 5 AI 24/7.
36:31 spk_0
Um, I wanna talk about Gus, you mentioned choke points. So we had an interesting deal today. Google with Constellation, right? Nuclear power. Now I’ll be upfront with my bias. I come from a nuclear power, power family. My dad was a nuclear engineer, so I’ve been.I have lots of propaganda of, of nuclear power, but I can be unbiased in that. I think it’s a really interesting deal, but I think it’s also interesting for the markets because, um, you know, nuclear power had an interesting run last year. This year, not doing that great, but we are seeing this deal done. What’s the disconnect between, it seems like the, the way forward with AI and theThe way to power it is probably going to be nuclear power, but the markets aren’t necessarily recognizing that. Is that because the value has already been built in, or what’s what’s your take on that? In
37:14 spk_3
Constellation’s example, I think part of it has been because they had 5 approvals for plants that they could put down, so they’re past the approval process, right? So they can get to market quicker than anybody else, and that’s why I think it was discounted already into the pricing.When I look overseas, I mean, it’s been used in France for years. It can be used here. You end up coming out with a model that is our biggest problem is we haven’t built these plants. There was one built down in Georgia. It was supposed to take 3 years. I think it took 7. It takes a while, right? So you have to have that muscle memory. So I think that this is actually the way to go, and you’ll probably see the government get involved after the election trying to get it, you know, push start this to get more nuclear plants going because it’s one of the fastest ways.That you can actually get a lot of power and push it out safely and it’s also clean,
38:03 spk_0
right, which is, it’s just, as again, as a child of a nuclear power hearing about it’s, you know, our governor at the time was not a big fan of hearing that this is not clean, this is bad. Now it’s the clean nuclear, it’s clean. It’s just, it’s all, it’s an upside down world. But, um, I don’t know if anyone else has thoughts on, on the nuclear push and power or no, um, or sorry, Nancy, I’ll
38:22 spk_4
just say one thing. I, I thought I wanted to be a nuclear power activist after the China syndrome.Uh, which you probably, none of you remember, but it, it came out, Jane Fonda, so, I mean, who didn’t want to be Jane Fonda at that age. So it was, it was a nuclear power meltdown, and then, and 12 days later we had the Three Mile Island Island meltdown. And here’s, here’s a fun fact, no one died, but we shut down all the nuclear power regulators and we poisoned the earth.If you’re following with the climate people for 40 years, uh, using fossil fuels all the way, all the while yelling at the fossil fuel companies. So, I, I think it’s awesome that we’re finally back there. Um, I, I, I grew up in an age where you hid under your desk, duck and cover nuclear bomb. Um, and I was always curious how that was going to protect me, butYou know, we obeyed. And, um,
39:16 spk_1
so I think they made desks really well back then.
39:20 spk_4
But I do think it’s, I do think it’s awesome, and we have a, a strategy we run that is invested in all the technologies we think are going to change. It’s a thematic portfolio, so highly volatile. I’m not hawking it here. I’m just saying we’re in the names, uh, we, we, we like the space, and I thinkI think it’s going to really change the way the things we’re talking about.
39:39 spk_0
Sure, I’ll just say not an investment advisor. Don’t hold any of the fancy certifications you have. I think one interesting thing to look at is people who handle the nuclear waste, right? That’s always been a big problem. We’re supposed to have Yucca Mountain in Nevada, never fell apart. Now as we have more of this nuclear power, we’re going to have more of these radio.Active rods that are gonna be created as a, you know, as a byproduct of this. We’re gonna have to put it somewhere, they can’t keep out on site. So, I don’t know, just one to look out for. Again, not a financial advisor, but just my thought. Um, let’s, uh, let’s talk a little bit about AI adoption, right? Because we talked a little bit about Muse now. And one interesting thing, we had a story, um, a CEO told us how actually Muse is driving.Him away from Amazon purchases and boosting Shopify. And the, the backstory here is that Amazon has blocked Muse, right? It’s considered a competitor, so Muse is not playing and there is a big relationship with Spotify. Um, again, it’s just one example, but I’m curious if, if this is the start of maybe bigger things as more and more people leverage Muse and, and shopping is a big piece of the puzzle here. What, what do we think there?
40:45 spk_2
I mean, is that gonna be a worry for the overall market? I mean, let’s just say that happens, all right? You know, uh, the, the corporations, maybe they spend less. Well, you know what, that boosts profit margins. What’s the one thing that markets love to see? Increasing margins. Or if they take it somewhere else, you know, all right, maybe we’re spending less here, we trim the fat to save money, but we’re probably gonna spend it somewhere else, which then incurs, you know, some type of other revenue growth. So I, I don’t see it being a, a bearish aspect whatsoever. It’s just a better stewardship of capital.
41:15 spk_0
Is anyone here on the Muse game yet?No, no, no buy-ins. All right. What about instinct? Instinct? No. So you guys are not involved on the, you guys aren’t, no one’s in on the AI agents yet. What’s, what’s holding you back?
41:31 spk_2
But mine’s not on the consumer side or whatever. Like, I’m not worried about the agents. Like, everyone’s worried like, oh, they’re gonna steal my data. My data has already been stolen probably a million times, and it’s gonna continue to be stolen. But I, I definitely need to get on the train, Dan.
41:45 spk_0
Yeah, I, I, I fall in the same boat as you. I get an email, I think, once a month saying that all my details are on the dark web. So there’s a lot of Dan Di Francesco’s out there. Nancy, sorry, it looks like you were gonna say something there.
41:54 spk_4
Oh, I was just gonna say I have two millennials in my household, and I’m, I’m just waiting for them to come home Christmas and get me set up on me.I mean, I, I love the idea of it because it solves problems. Um, but I, I, as I used to tell my students, I don’t, I don’t have to know how to use technology. It was my generation that invented it. So
42:13 spk_0
I love it. You heard it here first. Thanksgiving break. Look for the spike in muse downloads and instinct downloads because all the kids come home and say, Mom, Dad, you gotta get on this. Uh, Mark, Gus, what about you? Do you guys not interested in the AI agent? Is there a specific reason or just haven’t got around to it or I
42:29 spk_1
justhaven’t gotten around. I think it’s an amazing thing.I mean, it’s an amazing technology. I’ve been embracing technology from, you know, back in the day when we invented the wheel, uh, probably before Nancy got into the, because I’ve been around for a minute, uh, but yeah, no, I’ve always been very close to the tech and, and I just haven’t had a chance. I think it makes a lot of sense. I mean, we, I definitely use agents, but I use them like what would be considered the old fashioned way now, right? Through the, uh, the LLMs through the other services, uh, versus having it right there on a cute little app. But I think it’s a great thing. I mean, it’s a tool, right? It’sAgain, this whole question of is it going to end the world. I remember when we talked about, well, Nancy, of course, will remember this, right, when the, when we had, when they first came out with spreadsheets, right, everyone thought, oh my God, it’s going to end the entire accounting profession, you know, everyone’s going to lose jobs. There’s going to be massive unemployment, right? But it actually had the opposite effect, right? I mean, we became the most productive country in the world on the backs of those technology tools, right? Sure, so enhanced its consultant. This is.Just, we’re going to see this is just really the, you know, 2 and 3.0 of that, right? So it’s happening right now. Um, you know, obviously, all these questions about, all these questions that people are worried about, about their, their identity and all that stuff. This stuff all existed before. There are always nefarious people out there that are going to do the wrong thing. Look, kitchen knives, they could be really great tools if you’re trying to cut salad, but you can also kill someone with a kitchen knife or in the hands of someone who’s not defy, you can hurt yourself with it.
43:59 spk_0
I’ll,I’ll, I’ll jump.On the aging myself train, and I remember when buying stuff on the internet was like people would kind of look at you like you put your credit card on the internet. Like my, I think it was, I think it was until 2010 my mom was willing to, uh, to jump on that train. So I, I, I definitely appreciate that. I think the flip side, uh, Andreessen Horowitz had an interesting, um, report about the most used apps. I think we could put up here users for Gen Z. Um, so these are the top consumer AI apps by monthly revenue. Um, so sorry, this is active users, right? So chat GBT.Cap Cut, which I know I use is like for TikTok cutting, uh, Gemini, and another chatbot there, Canva and AI gallery, I think making your Instagram’s pretty. Um, and then if you go to revenue, um, which I think we also have that chart. So interesting that OpenAI is be on the top, but then Anthropic jumps up, which that caught out to me. I think, uh, Claude was maybe 7 as far as users, but interesting that OpenEye and Anthropic are 1 and 2 as far as revenue. Um, but yeah, I don’t know if anything stands out to anyone there. Higgsfield, I think is on the, the AI, um,You know, movie side of things, um, so yeah, it’s just, you know, Gen Z is always willing to really, um, jump in. I know we talked a lot about AI, so maybe we could pivot here to the wider economy, right, because there’s a lot of other companies out there, um, and with earnings season, what sectors are we expecting or hoping some outperformance from, uh, Mark in, yeah,
45:21 spk_1
so we talked a little bit about banks before, um, um.You know, I love that banks come first, right? Not because I love banks or anything like that, but no, because, you know, again, you mentioned earlier that they give, I look at them more for a read on what’s going on in the broader economy, right? Every single one of those banks is kind of unique in theIn the clients that they serve, right? So you get to hear something interesting from each one of those, and you mentioned the credit issue. So for me, in the last, um, again, because I am Dr. Doom, I’m always looking for when is that next crack going to come, right?And so look, I, I think all of us are, but you guys probably have gone away from that. You know, I’m waiting for that consumer to break, right? And that consumer is not breaking. And every single quarter I’m like, the consumer is going to break this quarter, consumer is going to break this quarter, and the consumers just keep spending. And I love to hear the banks talk about, you know, their credit cards and things like that. And every quarter it’s like, oh, our defaults are lower. And I’m like, wait, when is it going to finally break? But I’m going to, here’s my thing, right? This quarter I’m going to beLooking for something different. Here’s your doom quote of the day. Let’s go as if I haven’t already rolled 10 of them here. You know, I’m going to start to look at how their higher end customers are doing with their credit right now, right, because I know there’s the wealth effect, and I know, but a lot of the wealthier, the top part of the K has been really supporting consumption a lot, right? And I can say though that the top end of the K is where the problems might start, right, becauseIf you start to look at any labor problems that we’re having right now, if you looked at Friday’s numbers, last Friday’s numbers, you start to see the numbers start to look worse for white collar people, right, because of AI, right, because we are all being replaced by AI or they’re basically tamping down hiring, right? So it’s through natural attrition, basically there’s a lot of pressure on the top end, OK? And so you are going to start, there is a, there is a point.Where people, even wealthy people, are going to start to pull back, and we have seen it. We’ve heard it from Walmart before that they’re getting some wealthier, they’re getting more wealthier customers that are coming to shop in the store. You see it at Costco. You see it at all these places now where people are trading now, higher end customers, clients are now starting to trade down. So I want to hear what they’re going to say about them. That to me is what I’m listening for. Of course I’m looking for private credit and all that other stuff, but what’s theConsumer,
47:50 spk_3
so someof the other things that we look at, there are companies that actually have August quarter ends, and they reported actually pretty good numbers. Yeah, so you have that. The second thing is I always look at TSA. So if I’m looking at that’s probably if you’re taking a flight, it’s because you have excess cash, right? And those are at record numbers. And we’re also looking at Nancy had mentioned it before, if we’re looking at some sort of spread widenings and things like that, we’re not seeing credit so far. And then on the flip side, usually earnings.You end up having analysts bring numbers down and then you beat it, but for 3 quarters in a row we’re actually increasing numbers going into quarter end. So right now things look OK. Now the outlooks are the things that we’re looking at and you know what are they going to tell us? Are they going to pull back numbers? Are analysts going to get more concerned and is it going to break the difference between the winners and losers or just start todo that?
48:40 spk_1
I mean, well, banks had a fantastic quarter last quarter, right? So the question is, can they keep it up?Will they be able to have those fees that they had last quarter
48:48 spk_0
itlooks like bonuses are going to be big now too. I saw
48:50 spk_1
a
48:50 spk_0
report.
48:51 spk_1
I just think if anything is, you know, that’s, that’s the one sector that I think can provide the most amount of, let’s call it queasiness, right, because you know it can go either way, right, because they were just so good last quarter and the expectations right now are so high. Yes, so you know, for me, you know, obviously that can set the tone for what
49:11 spk_0
follows. David, what are you looking at? That’s
49:13 spk_2
I mean, that’s why Brian Moynihan’s comments are really the only comments I want to look at during, uh, bank earnings season. It’s actually not JD Dynamon. I think he’s been wrong a lot here lately. Like, let’s go back to the 1957 novel, novel by Ayn Randall. It’s called Atlas Shrugged, all right? You know, we know that the consumer drives like 70% of the, uh, GDP spend here in the United States. Like, and if the consumer ever shrugs, that’s what’s going to create a problem for the economy. But we always want to talk about that K-shaped economy.I mean, you know, the top part’s doing great, the bottom part’s doing terrible, but I, I actually don’t agree with that at all. If you go back to pre-COVID, like the top 1% has grown its net wealth by 108%. If you go to the bottom 50%, they’ve grown their net wealth by 129%. Obviously, it’s off a, a much smaller base, but obviously, if you look at the top cohorts, and I know Marky made a great point that, you know, if we’re going to see some spending slow, it might be on the top end. I fully disagree with that because if you look atWho owns stocks, who looks on homes. Like that’s what’s driven the majority of the net wealth over the last 10 years, and that just continues to skyrocket. And, you know, I don’t like quoting Buffett. I think he’s over pontificated, but if, if consumers have the money in their pocket, they’re, they’re gonna spend it. They’re not gonna let it burn a hole in their pocket. That’s not Dolly
50:28 spk_3
Parton
50:30 spk_0
taking shots at all over, all over the board. I love it. Taking shots at Jamie Dimond, Warren Buffett, and physically showing the Atlas shrug. Nancy, what about you? What’s, uh, what’s, what are you looking at on the, for earnings?
50:41 spk_4
Uh, well, I, I think I said it. I think we’re, we’re focused on margins and guidance because, um, I, I do think, um, God bless America, the consumer is going to continue to spend, uh, even if you look at energy costs, I mean, they were higher a few years back, uh, and so, I don’t think, um, I don’t think energy costs are going to derail the consumer. They haven’t yet.Uh, and, and if you look at the lower end of the income cohort, that’s actually been the group that has enjoyed the highest level of salary increases. So, to Dave’s point, but, um, that said, uh, they matter a lot, and, um, so we’ll be, we’ll be paying attention, uh, but I, I want to see some activity in the IPO market, uh, get restarted. I think that’ll help the banks that we own, Richard Goldman and JP Morgan.Um, then just in general, I hope you cannot hear my dog barking. No,
51:34 spk_0
you’re fine. OK. Are there bears around? Are there bears? Are there bears around? Is it protected? Do you need to, do you need to
51:41 spk_1
go? I’m not a bear. I’m not a bear.
51:44 spk_0
Exactly. I’m a bull. It’s afraid of Mark.
51:47 spk_4
He’s reacting to Mark. Um, yeah.No, uh, so, so anyway, I think I’ve said it. Yeah, we’re gonna be, and, and also the spread of AI across sectors. That has been our investing theme for the last 4 years. Old economy companies that are, um, pivoting to the new technologies. We started with digitization, remember that one? Nobody could say it before 8 o’clock in the morning, butUm, and so we’re, we’re watching that across, you know, multiple sectors.
52:14 spk_0
So we’ve done a lot of, you know, nostalgia here, which is very timely because the nostalgia economy is growing. Um, there’s a story recently about how CD sales are booming, um, which is fascinating. So I’d love to hear from all of you if there’s a 90s trend that you don’t want to make a comeback. But before we do that, I have a great business idea for any of the Gen Z, only Gen Z viewers, I will offer you 12 CDs for 1 penny.And you just have to send me your credit card details. There might be some further, you know, charging, but don’t worry about that. Just send them. And for the people who are confused, I’m talking about Columbia House. You might remember there was a famous subscription service in the back of the magazines. You got 12 CDs for 1 penny, and then every CD after that was like $45 and they wouldn’t stop coming unless you sent your firstborn. They actually just shut down, I saw in September.So it’s very, yeah, 5, which is crazy that it lasted till 2026, um, but, uh, nostalgia, uh, Gus, let’s start with you. What’s, what trend would you not like to see make a comeback? Mullets. Well, you gotta look, Andrew Wang, you know, the, the, the Facebook guy. Uh,
53:18 spk_1
I don’t feel like I can weigh in on the mullet thing. I’m just saying, and I’m thinking maybe not you either, but you know.Mark, I’d love to see a mullet come back personally.
53:27 spk_0
What would you not like to see come back?
53:29 spk_1
00 boy, I love the 90s, man. So I, I can’t say that there’s anything I didn’t like. I think all of us are now grasping for that time where we have our feet, at least one toe on the ground, but right now everything’s moving so fast. I think that’s why you’re seeing that. But I will say that if people are grasping for those.Comfort things, those things are not as easily disrupted as maybe everything else in our lives, which operate on a, you know, millisecond to millisecond basis where you actually had to listen to a tape all the way through. And if you were lucky enough, it automatically turned over. You don’t have to pull it out of the machine and put it back in.
54:03 spk_0
David, what about you? Hopefully you remember the 90s as opposed to the 80s. What’s the one thing you’d like to,
54:07 spk_2
uhI love mullets. I go to like 10 NASCAR races a year. I Mayo andjos. So don’t leave the, leave those. You can maybe take like frosted tips, but I, I wouldn’t bring back, uh, uh, uh, Beanie Babies, OK? I feel like that’s very reminiscent of what we saw in like 2021 and 20222 with the, I don’t know what those monkeys were called or the meme stocks, the gamification of the market. I feel like that early entrance was a Beanie Baby. So don’t, don’t bring
54:32 spk_0
back that. Nancy, real quick, what would you like to bring back from the 1990s?
54:35 spk_4
I’m quick. I, I’m a portfolio manager, so I’m gonna answer a different question. I have a great CD story in Europe, in Budapest. This guy comes over to the table. He’s playing, and I just like wanted him to leave. So I bought his CD and I got home and I was like, how do I play this thing? I don’t have a CD, not one in my car, not one in, yeah,
54:53 spk_0
all right, well, listen, this has been great. Thanks so much for being here, and, uh, we’ll see you next time on the Market Hang.
