The Compound and Friends - 2025 Crypto Predictions with Pantera’s Franklin Bi, the AI Crash with Alex Kantrowitz

Episode Date: January 28, 2025

On this TCAF Tuesday, Josh Brown is joined by Franklin Bi, General Partner at Pantera Capital to discuss the regulatory changes and predictions for Crypto in 2025 following the executive order of the Trump administration "Strengthening American Leadership in Digital Financial Technology". Then at 49:11 hear an all-new episode of What Are Your Thoughts with Josh Brown, Michael Batnick, and special guest Alex Kantrowitz! This episode is sponsored by Public. Fund your account in five minutes or less at http://Public.com/WAYT and get up to $10,000 when you transfer your old portfolio. Public Disclosure: All investing involves the risk of loss, including loss of principal. Brokerage services for US-listed, registered securities, options and bonds in a self-directed account are offered by Public Investing, Inc., member FINRA & SIPC. Public Investing offers a High-Yield Cash Account where funds from this account are automatically deposited into partner banks where they earn interest and are eligible for FDIC insurance; Public Investing is not a bank. Cryptocurrency trading services are offered by Bakkt Crypto Solutions, LLC (NMLS ID 1890144), which is licensed to engage in virtual currency business activity by the NYSDFS. Cryptocurrency is highly speculative, involves a high degree of risk, and has the potential for loss of the entire amount of an investment. Cryptocurrency holdings are not protected by the FDIC or SIPC. A Bond Account is a self-directed brokerage account with Public Investing, member FINRA/SIPC. Deposits into this account are used to purchase 10 investment-grade and high-yield bonds. The 6%+ yield is the average, annualized yield to worst (YTW) across all ten bonds in the Bond Account, before fees, as of 12/13/2024. A bond’s yield is a function of its market price, which can fluctuate; therefore, a bond’s YTW is not “locked in” until the bond is purchased, and your yield at time of purchase may be different from the yield shown here. The “locked in” YTW is not guaranteed; you may receive less than the YTW of the bonds in the Bond Account if you sell any of the bonds before maturity or if the issuer defaults on the bond. Public Investing charges a markup on each bond trade. See our Fee Schedule. *Terms and Conditions apply. Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Josh Brown are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. The Compound Media, Incorporated, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ Learn more about your ad choices. Visit megaphone.fm/adchoices

Ladies and gentlemen, welcome to the Compound and Friends. Tonight's show is brought to you by Public.com and the Public Trading App. Public's becoming a little bit of a go to for me. I'm doing some I got some stuff cooking there and I love the user interface. I love how broad the platform is. You could basically do whatever you want there from treasuries to individual stocks, ETFs. You can do crypto. They've got high yield products,

and it's worth checking out. So go to public.com slash W-A-Y-T as in what are your thoughts and see if you like it. This has been paid for by Public Investing and full disclosures are available in the podcast description. All right. Tonight's show is nuts. We did a 2025 crypto predictions with Franklin B, who is a partner at Pantera, one of the larger and one of the longest running crypto hedge funds.

And Franklin is crazy smart. And we talk about Trump's executive order, which came out late last week, and what that means for the entire crypto ecosystem, what you need to be thinking about in terms of Bitcoin, et cetera. And I learned a lot, and Franklin's first time on the show. So I hope you love it. And then, of course, we had to cover this week's AI crash and the launch of the deep seek large language model, the largest dollar amount ever to come out of one stock's market cap in a day.

Nvidia lost $500 billion basically in a day because of that. So it was kind of an earthquake in the NASDAQ this week, and we wanted to really do that story justice. So we turned to Alex Kantrowitz, who rang the doorbell on What Are Your Thoughts? and helped Mike sort out fact from fiction and really get a better understanding of what we should think about with this AI trade, what this really means for the companies involved, and whether or not there were some opportunities created during the course of this week.

So special thanks to Alex Kanczewicz for joining us and you guys are absolutely gonna love the show. So without any further interruption, I'm gonna send you there right now. Duncan, John, Daniel, make it happen. Welcome to The Compound and Friends. All opinions expressed by Josh Brown, Michael Batnick, and their castmates are solely their own opinions and do not reflect the opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any

investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast. Today's show is brought to you by VanEck. Listen up. There is a huge wave of demand currently and on the horizon from hyperscalers for data center power. And many of them have already looked to nuclear as a solution in the short to intermediate term. Why? Because it is both clean and efficient. It has one of the lowest emission profiles among energy sources and it can produce power 24-7 unlike renewable sources that produce electricity intermittently. To learn more about getting your exposure to these companies, visit vanek.com. That's vanek.com. Okay, we're taping this on Friday. Less than 24 hours ago, President Donald Trump issued his long-awaited executive order on

crypto and digital assets entitled Strengthening American Leadership in Digital Financial Technology. My guest today is Franklin B. who is a partner at Pantera Capital was the last number I saw. You guys are, I think 5.4 billion in assets was the last number I saw. Is that low? Crypto is maybe 15 and you guys are a little bit over 10. But I know you've made hundreds of early stage investments in different crypto companies and tokens.

I also know you guys launched the first ever blockchain dedicated fund in 2013 when Bitcoin was $65 per coin. So I guess what I want to start off by asking you is, and I know you guys are big into Solana and we'll talk about all that. I want to start off by asking you is, how does it feel to have the White House, the SEC, the CFTC, Homeland Security, the highest levels of government all on the crypto industry side for the first time in a decade and a half? What is that like for you guys right now? When I first came into the space, it was through JP Morgan, which has been very vocal about blockchain and not Bitcoin.

I actually got to start the blockchain team there back in 2015. I came to it from that perspective and now it feels a little bit like redemption. One of the things that I was doing for so many years was trying to convince people in the bank that this technology was going to help transform capital markets and payments and so many parts of the internet that just aren't open and aren't efficient today. Now they're talking about it. I mean it started with the Bitcoin. To JP Morgan's credit, so you're there, your job is, your role is to help build out blockchain technology and I guess assess the landscape and bring intelligence in about what's happening.

The boss of the whole firm, Jamie Dimon, every chance he gets is referring to crypto as though it's some sort of a disease. But I guess to the bank's credit, there were enough people that were open-minded internally to keep researching, keep considering the possibility that the boss is wrong. It's intentional schizophrenia is how I think about it. When you've got an organization that big, you've got to have people who think differently. I don't know if we ever really made progress in convincing Jamie that Bitcoin wasn't a scam. I think that's still in progress, but we made it up to his direct reports at least.

And I think eventually we'll get there. Yeah, I think you will too. We talked to many people within JP Morgan on the wealth side. We talked to people on the research side. I think it's probably as close as it gets at this point to just full, I don't want to use the term capitulation. I would just say like full on acceptance that, hey, this is not going away. But let's talk about what President Trump said.

So the executive order, basically this is how they open it. The digital asset industry plays a crucial role in innovation and economic development in the United States, as well as our nation's international leadership. It is therefore the policy of my administration to support the responsible growth and use of digital assets, blockchain technology, and related technologies across all sectors of the economy. And then there are several items in here, protecting and promoting the ability of citizens and private sector entities to access blockchains,

to deploy software, to mine, providing regulatory clarity, fair and open access to banking services for people in crypto. So it goes on and on and on. And the only thing it really prohibits is the issuance of a central bank digital currency, which I thought was interesting. But most of this is exactly what was promised. And I think sometime around the summer of 24,

there was this dawning realization that, oh wait a minute, conservatism and crypto are now completely aligned and that's what this election is going to be about for people in the technology industry. And it worked. This is like day two. You guys got your EO. Yeah, it's amazing to see. Going into November, there was a ton of optimism in the blockchain industry, but also sort of a sense of holding our breath. Would all of this sentiment actually convert into real action? And I think with these executive orders and with the new task force, both on the legislative side and at the SEC, you're seeing that turn into real action.

And that's great to see. The central bank digital currency part, I think it is unique because it shows that we're going to take hopefully a very similar approach that we have in traditional banking as we will to cryptocurrencies. Which is that the commercial sector and the public sector are going to have to work together rather than trusting that the Federal Reserve is going to somehow become a technology company overnight. Okay, right. So in traditional finance, the Federal Reserve does not take deposits from consumers, does not act as a bank to Americans, it acts as a bank to the banks. And that's really important because that's exactly what you're talking about. There being this commercial layer in between rather than the United States government itself

being a bank to its own people. You're saying that the prohibition of central bank issued and controlled digital currencies, so there won't be a Fed coin. You're saying that that's an important part of what's in this EO because it puts that a Fed coin. and it kind of keeps the two things separate enough. Exactly. You know, mentioning the social credit system is, you know, I think a reference to how things work in China where there is not this separation

between politics and money. And I think that's really important to preserve in America because the right to transact, the right to participate in the economy is essentially a right that we have as citizens. And so, you know, I think having a central bank digital currency actually, you know, sometime down the road can become something that gets corrupted. Whereas I think today, having banks and having intermediaries that actually serve as that distribution layer can actually be a positive for the economy. Franklin, based on your experience in the industry and all of the people you've met

and all of the people whose ideas you've read, who do you think wrote this executive order? Or who do you think contributed meaningfully to the language and the ideas that are in here because in addition to what I've quoted, there's this whole section about how it's going to be implemented and rewriting previous executive orders and rules from 2022 when it was a different administration. And obviously crypto was in a state of tumult at the time. So all of that is being broomed out the door and the language here is pretty sophisticated in terms of the way that crypto works.

So who would you say is behind these ideas? I think it's a combination of entrepreneurs who have been in the industry and have been good actors, right? It's folks like Coinbase, it's the blockchain association that have been working with legislators over the past few years to say, look, this is the kind of framework that we need. We've been talking to all the companies that are trying to do things the right way. And I think it's also something that David Sachs, who has been appointed as the crypto and AI czar, has been making sure is how we approach this kind of thing, is to actually listen to the industry. And when you look at some of the other parts

of the executive order around protecting the access to the traditional banking system for digital asset companies, that's something that you'll only hear from founders. I mean, you mentioned we've invested in hundreds of companies across the whole blockchain ecosystem. And we've seen it firsthand. Dozens of companies calling us saying our banking accounts have been shut off overnight

just because they saw the word blockchain or they saw the word crypto. Yeah. This is the operation choke point stuff that Marc Andreessen had been tweeting about. just because they saw the word blockchain So, people trying to build companies in this space were treated like pariahs by the traditional banking system. I think in part because maybe there was some paranoia in traditional finance about regulators. But part of that is not really paranoia. We watched them execute a couple of banks in 2023 that were doing business with crypto companies and it almost looked like this is a warning, this is what happens if you bank these people.

So it was like a healthy paranoia. So you think all that stuff is probably done now? Hopefully. Whether it's a real or perceived paranoia, what it ultimately does, it has a chilling effect on entrepreneurs being willing to build in the space. And that's the biggest thing that I think will change over this coming year, is the actual impact of a lot of the policy will probably need one or two years to take place,

but the sentiment that's going to change in the technology sector, where entrepreneurs have held themselves back from building on blockchain because it's just not worth it. Why would I spend the next five to 10 years of my life trying to build what I think is a meaningful product if it's going to get pulled out from under me or if my bank accounts are just going to get shut down before I can even make this successful?

One of the aspects that I think the regulatory regime under Biden and honestly under Trump won, one of the aspects that they did not like about the crypto ecosystem was just the sheer amount of frauds and scams and people who were bad actors and people who were utilizing the excitement about blockchain and bitcoins to their own nefarious ends. And of course, that continues to this day. And I think the presidential meme coins, dollar sign Trump, dollar sign Melania coming out a day before the inauguration, almost sort of like, I don't want to say justifies some of that regulatory distaste,

but I guess it kind of like makes you feel that there is another side to the story and there is a need for there to be real regulations. What do you guys think when you see that stuff? Does it tarnish the industry overall, or can people compartmentalize it at this point and say, yeah, of course there are scams, there are penny stock scams too, we don't shut down the stock market over it? It reminds me of that old Spiderman quote, The power of blockchain is that it makes the ability to create new capital markets, form sort of new marketplaces where this type of speculation can be almost put on steroids

compared to the traditional system. It opens it up to this kind of speculation that runs rampant. We're not looking for a complete deregulation of the industry, right? We don't think that makes sense for the long term. We really want just sensible regulation where bad actors like FTX and Celsius end up not having free reign

while good actors actually can come in and work with regulators to actually come up with policies that make sense. The fact that that wasn't possible created this huge adverse election thing where the folks that had the most flexibility and the most sort of area to play in were the bad actors.

And hopefully that can change now that we open a path for them to actually work with policymakers. Yeah. So it looks like we're going to get some rules within 30 days on the president's desk for him to vet. That's part of what the working group is here to do. Under Gary Gensler, the SEC basically looked at this stuff and said, we don't need new

rules. These are all just securities. That is not going to be the stance of the new administration. So we might have very similar rules to traditional securities markets, or we might have a radical departure. We may also end up in a situation where some of the rules for traditional finance are reconsidered in light of what you're able to do in the crypto world. And that's why I think this is such an important story for investors, whether they're heavily

invested in crypto or completely on the other side of the spectrum and have no interest in it. I think this kind of like almost overnight revolution that's about to take place is notable and going to have a really big impact going forward for everyone. And it ultimately just comes down to making sure that America stays competitive, right? I think the fact is that technology leads the world and the U.S. has to lead in technology for us to continue being a dominant force. So I agree. I think the industry has been asking for new rules and regulation and someone has to listen to that and say, look, we need to put in the work.

All right. So let's turn to your predictions for 2025. This is a really great piece. This is available at PanteraCapital.com as part of your ongoing blockchain letter. present with great clarity. One thing is clear about the year ahead, 2025 will be a turning point for the crypto industry. And you point out, imagine the state of the internet if Jeff Bezos went to jail for selling books online. Or Steve Jobs was sanctioned for launching an app store. Or Jensen Wang had to build Nvidia offshore and build companies and train people and hire? What should we think about in the next few, let's say next few months?

Yeah, that's a great question. Being in the industry for so long, we hear the critiques coming from folks outside the industry. From me? Yeah, sure. That, look, you've been selling us this dream for so long, where is it, right? Where is it?

And I think what I want people to take away is, look, this is the first time that a new technology has been held back so much by regulation. You know, you just, you didn't see this to this extent with e-commerce and the internet and social networks. And so a lot of the entrepreneurial energy has been held back. A lot of products have been held back from actually being embraced by the customers who want it.

So I think there's a couple of areas that will really start to take off now, now that the regulatory landscape. So let me tear you up. You point to a convergence of three megatrends to unlock crypto adoption from this year forward. Gateways, developers, and applications. So let's start with gateways. This is connecting, you call it the legacy financial system, I'll stick with traditional, but this is connecting banks and brokerage firms with blockchain rails so that it's a

little bit more seamless, the back and forth between things in US dollars, for example, and things in crypto terms, products and services that can move back and forth between the two. I would agree that that should be the priority. Tell me about why gateways are going to be important. Yeah, when you look at the market cap in crypto today, it's basically at $3 trillion. And it's all crypto native assets, right?

It's Bitcoin, Ethereum, Solana, things that are just native to crypto networks. But the real power and the real inflection point comes from the traditional system bringing over $1,000 trillion of financial assets, right? The net worth that's held by individuals, corporations,000 trillion of financial assets, the net worth that's held by individuals, corporations, governments, all of those I think follow the simple rule in finance, which is that assets want to go wherever they can flow most freely, trade most efficiently, and find their most attractive price. And so when you think about a share of Apple today, it's listed on the New York Stock find their most attractive price.

It's listed on the New York Stock Exchange, it's held in your brokerage account. There's people in countries outside of the US who love to own Apple. They love to have a piece of ownership in that, system, you need your local brokerage or local FinTech to find the right connections and actually bring that asset over. That's called depository receipts. And that's why you can trade Alibaba on the New York Stock Exchange. So some people would say there's a reason for those gates and that we don't necessarily

want all of those gateways open. We don't necessarily want of those gateways open. America, it sounds like from within the blockchain industry, the answer is always going to be a resounding yes, people should be able to move their money where they want. Is that where you guys stand on that? Is that the ideological bent of the argument? I think that's the starting point. You know, I think the default assumption is that

if we truly own our assets, we should be able to have them available on any exchange. There's no reason why it needs to be just New York or just Hong Kong or London. It should be available anywhere because that's the best way to do price discovery. It's the best way for a free market to run. Now there's always going to be a counterforce. There's always going to be other priorities that the US government needs to go and satisfy,

which is protecting our national interests. But I think that comes after, right? That comes when you actually identify the problem and before you freeze out all of the good things that are happening in capital markets or should be happening, right? The markets that should exist but don't. And that's where blockchains are really powerful is by enabling those markets. happening, right?

On-scale platforms that can effectively onboard new users and existing assets, regional on-ramps like Bitso in Latin America are processing over 10% of US to Mexico remittances using blockchain. So that's like Western Union, that's like a money gram. Somebody is here working, they want to send money home to their family. gains acceptance now and less regulatory scrutiny, could that be 50%? Yeah, it makes a huge difference. That's basically a month's wages for a migrant worker. And so the fact that that's how much gets paid out to Western Union and MoneyGram today is just disproportionate to the value that they're providing.

I think that so and others in Brazil and Mexico, Argentina, you know, they're providing a really valuable service, which is that payments don't have to be this gate kept service. There's something that you have a right to do, you have a right to send the money that you've been earning where you want to send it. And so, sending that cost to as close to zero as possible is really something that will add value to just the economic GDP of the world. One more example you use in terms of gateways is a company called Ando. It's a platform that is going to do tokenization work for traditional existing securities,

like U.S. Treasuries, for example. You note that there are $20 trillion in US Treasuries currently. They do not trade on the blockchain. They are not digitized. They are not tokenized. Absolutely. Ondo, I think, is one of the biggest stories to watch this year, they started with US treasuries, tokenizing them and distributing them outside of the US where exactly that kind of market need is present. People want to own some type of yield or some type of wealth preservation asset that is

tied to the strength of the US economy rather than their own local economy. But that's just the start, right? US Treasuries are just beginning. They're competing already head to head and sometimes doing even better than BlackRock and Franklin Templeton who are doing the same thing. There's $2 billion of tokenized Treasuries already, but it just sets up a blueprint for everything else to come on chain, right? At the end of the day, this is just a template that you can apply to stocks and bonds and

the rest of capital markets. So I think this is just a set of dominoes that's starting to fall. So a foreign investor who may not have access to the ability to buy US treasuries through a local brokerage firm or bank in their home country can have an account that connects with the Ondo platform. They can take their own local currency, they can convert it into a digital ownership stake in US treasuries.

They own a coin that is backed by the treasury. Exactly. They own a token that's backed by US Treasury and that's custodied at a financial institution. They get the yield as well. Exactly. them to do that today in the traditional system, they need to go find a partner, they need to go sign a bunch of contracts. It's a six month thing if everything goes well. This is something they can do overnight. It's connecting to an API and just as easy as doing that. So it's also about helping the local financial systems actually modernize. Okay. A couple of other names that you mentioned here. Tip Link, which is I guess micro payments in crypto denominated terms.

Very simple, not dissimilar from Venmo, I'm guessing. Just if you want to pay your gardener or you want to pay your beautician and they want to take cash, but we're in this cashless ecosystem. This is another way to accomplish that if you have assets that are digital versus dollars sitting in a Venmo. Yeah, we've come a long way in onboarding people to crypto. It should feel like Venmo and the way Tip Link has really done a good job of this is it feels like just getting a text message that says, link has really done a good job of this is it feels like just getting a text message that says, hey, grandma, your grandson has sent you $5. Do you want to accept it? And in the background, it's setting up a wallet for her. It's setting up all the ways that

she needs to interact with it in a normal way. But it's crypto behind the scenes. And that dollar or that $5 that she's getting is actually much more powerful than the average dollar. It can be used in so many different places and she can take it abroad and actually use it. Okay. So the gateways are a big mega trend. The next one is developers. There are about 100,000 developers building on blockchains today. That's half of a single Silicon Valley tech giant to enable mainstream adoption. We need to increase that by 100 times an onboard 10 million developers. Do we? We need to?

What will they'll be building new products and applications. I mean, this goes back to what has been holding back tech talent and entrepreneurs coming into the space, right? A hundred thousand sounds like a lot, but in the grand scheme of things, if you're really talking about a new technology sector where there's a ton to build and so many different verticals to go after, the fact that there's only one half of a typical technology company is outrageously small. It doesn't make sense that it's been 10 years of blockchains being in full production,

and that's the talent pool that has been able to come into this space and feel comfortable. Did you have to explain to your family why you were taking your Wharton degree and deploying it on behalf of blockchain versus going to Apple? Did you have to make that explanation yourself? Did your friends from school have to do that?

Yeah, it's definitely a pushback. Because it was a stigma. It was either like, this is fake shit anyway, this is not real money, or these are all criminals. Yeah, it's definitely a pushback. It was either like, this is fake shit anyway, this is not real money, or these are all criminals. It must have not been easy to explain to everyone in your life. Yeah, I started this journey back in 2015, where every time I walked into a conference room in JP Morgan to talk about the technology, I would leave with people kind of laughing.

Half of them would say, wow, this guy is going to end up in jail. The other half would say, wow, this is not serious. We don't need to worry about it. Getting past all of that has definitely been part of that journey. and that stigma, maybe it hasn't gone away yet, but the clouds are definitely clearing. You talk about where are these developers going to go. One of the things that you seem to be excited about is multi-chain, different blockchains that talk to each other, Yeah, I guess it should be obvious to people who don't know anything about crypto that if we're laying all these rails, they sort of have to be able to be interoperable.

Yeah, it's something to sort of think about is we've had so many different operating systems, so many different social networks, and in blockchain we've only had a pretty narrow set of options. Like Ethereum, Solana, and maybe a couple of other base layer ones, but not a situation where everybody who's building something can have their thing talk to the other person's thing. Exactly. When you look back at the cycle of technology adoption, that's something that naturally has to occur. People are going to come in with new needs,

with new requirements, new things they want to do. JP Morgan coming in to tokenize their balance sheet is not going to look the same as what I want to do with my assets in a video game. And so to solve for both of those things is going to look like a different set of technology stacks. OK. assets in a video game. And so to solve for both of those things is going to look like a different set of technology stacks. You talk about zero knowledge technology and no code solutions and things that on the surface, they seem daunting.

They are in non-blockchain technology, so why wouldn't they be daunting in a crypto context? non-blockchain technology, It's the idea that you can reveal information without giving away the underlying data. So for example, one of the classic cases is if you walk into a bar and you get carded, they want to know that you're over your driver's license and suddenly they have your address, they have your phone number, they have everything about you, and all they needed to know really was that you're over 21. So they don't need to know my exact age even.

So the idea is you can verify that fact without giving away the entire set of information. And so that type of application is super useful for things that require that level of privacy. Great example of this is something that one of our portfolio companies, Varamo, is building called Freedom Tool, which is a digital voting solution. So obviously that's been a huge topic is the transparency, the validity of elections, how do we actually know that they're happening in a fair way? And they're testing out this technology now in some of the most controversial places in the world, Russia, Iran, Venezuela.

And so the idea is people can vote and verify that they're a citizen without giving away their identity. Oh, that's interesting. Okay. And then you and then let's talk a little bit about no code solutions. Oh, that's interesting. No code solutions. We've seen one of the hottest stocks in the traditional stock market last year was AppLovin. Companies that are enabling people who are building applications, software products,

I guess to do more with less to some extent is part of the story there. Why do you see this as part of the big trend in blockchains this year? I think it's one of those things that has to happen for us to get from 100,000 developers to 10 million. Is the average person building on blockchain 10 years from now hopefully is not someone

who needs to have a PhD in Zero knowledge technology or needs to understand distributed Networks right it's someone who you know you think of as building a storefront on Shopify or building a website on WordPress Right making it easier and easier to abstract the underlying complex technology away so that we can really unleash the creativity from folks who aren't as close to the technology's backend. And so this kind of evolution of going from the raw code to low code to no code to now people being able to launch websites just by talking to chat GPT. That's the same kind of evolution that blockchain is going to have to go through.

So if I have an idea for how blockchain could work, there should be tools available where I can express that idea and turn it into something without having come from MIT. Exactly. And it's just about finding out what the right building blocks are that people want to build with. Yeah, I actually think the better analog to that comes from social media. None of us are trained photographers,

but Instagram built a tool that makes our shit look good. Makes it so that we can edit photos as though we, at film school or photography school, but of course none of us did. So I see that as being an obvious thing. I don't know how many civilians will actually have something relevant that they want to build in blockchain, but like for the one out of a thousand who actually do, that could change the world

The way Kevin Systrom changed the world with with his idea for Instagram like it's we don't know How could you rule it out? I guess would be the point. Yeah, actually a great example It's live still comes from the NFT world, which you know some of your listeners might have some association with That Nick went batnik went all in on NFTs, right into the top. Yeah, a lot of people did, and it's just part of that initial exploration and experimentation. But the part that really resonated and I think has the sticking power is the fact that real artists actually embrace this movement and said, look, this is a way for me to generate new revenue where I don't need to be limited to an art gallery in SoHo

and I can instead sell to the entire world and still have the rarity and the specialness of my pieces happen through digital technology, that's the kind of thing that we want everyone to have the power to do, right? Because you can become a creator and an artist from anywhere in the world. And it takes out some layers in between the artist and the artist's fans. If you want that kind of relationship as an artist, it makes that possible. All right, let's do the last one. Applications is the third mega trend that you see as being key to this year. I'll quote you.

By most estimates, the number is around 80 million on-chain users. Much of that growth comes from crypto's appeal as Wall Street 2.0, a new place to raise capital, speculate and send money. Yes, we can all agree the biggest success in crypto so far is getting people to trade a new place to raise capital, speculate and send money. Yes, we can all agree the biggest success in crypto so far is getting people to trade crypto. Okay. I can see that being good and bad. But expanding 100X to 8 billion people from 80 million people who are on-chain will depend on crypto shift from Wall Street to Main Street.

All right. So this is the thing that people like me say. If this technology were truly as important as its believers say it is, why do I not see any examples of it in my real life other than speculation and I guess store of wealth being another obvious use. And my wife and her friends are not using it. And until they are, the promise of crypto will never be able to be said to be fully fulfilled, I guess. That's my attitude. But tell me if finally we're at the precipice of some of these things breaking through and becoming mainstream.

Yeah, exactly right. We need to break through from crypto just being Wall Street 2.0, because that's only going to attract people like you and me who are into investing. Or as I've said it, nerds and junkie gamblers. There's got to be normal people that are utilizing this stuff. Exactly. And where I see it happening first is going to be in place in things like gaming. Because you talk about your wife having a reason

to interact with blockchains. Ultimately it's the people who are playing Candy Crush. I think of the journey that Facebook went through where their first social gaming hit was an app called Farmville. And that was really the thing that led to the huge inflection point and the huge network effects in Facebook's growth.

Before that, it was just photo sharing between college campuses. And this was what really onboarded the mom and pops. And so- It's a great point. Farmville came along and people started sending it and this was what really onboarded the mom and pops. Like Farmville came along and people started sending it to each other and it was in-app purchases was the business model

and you had I guess mafia wars around the same era and maybe two or three others. I can't remember but you're right. That was probably the first time that people were like, where are you doing that? And people said, oh, on Facebook. And that was like an onboarding moment for, I guess, I don't know, millions of people. It was, it was, I think 80 million people at Farmville's Peak, which is today a small fraction of Facebook's user base, but it was really what kicked things off

because suddenly these connections between people were not just limited to college campuses. So I think crypto is starting to hit that Farmville moment. Where through the game. So people using crypto in the context of playing a game? Exactly, playing a mobile game. There's a great one out of our portfolio from a company called InfiniGods.

You can download it today, It's called King of Destiny. And when you first open it up, it feels just like another great addictive game you could play on the bus or the train. But when you get to a certain point, you get this pop-up that says, hey, would you like to sell? Insert more ETH. Well, that too, if you really love the game. But the magic of it is also that you can sell to other players What can you what can you sell? Well, you can sell the assets that you earn in the game to folks who maybe want to progress through the game faster, right? So there's this constant sort of arbitrage of you know

People who are going to be big spenders and people who are going to be big earners in the game, right? So that's like real life sounds like it sounds like America and people who are going to be big earners in the game. Sounds like America. How many people do you have playing this game right now? There's been over 2 million downloads already in just a few months. So they're well on their way, but the magic of it is that what's happening behind the scenes for you to sell to other players is blockchain. You might be selling to someone in South Korea or Brazil, and that's not something that the typical game pre-blockchain could do.

That's a huge undertaking, but it comes basically out of the box with blockchain technology. All right, let me reel off a couple of these rising trend predictions and then we'll wrap. Just pick one of these that you think is worth getting into for a moment. You say RWAs, also known as real world assets, excluding stable coins will account for 30% of on-chain total value. Bitcoin FI, you think there's going to be Bitcoin native finance protocols that don't require bridging. I sort of believe that could happen just because of how widespread Bitcoin ownership is

and how comfortable people seem to feel with it. Fintechs become crypto gateways. resurgence but application specific, restaking launches, which I don't know what that means. And then you've got a bunch of other stuff. Which of those is worth exploring for a non-crypto audience? I'll pick the first one, which is real world assets everybody extremely excited. And we think it's going to be- Real estate, art, securities, might be something that- I think it's going to, exactly that,

but I think it's going to start probably with people's stock portfolios. Okay. And I think the real magic moment that people are going to experience, hopefully soon, is when they realize that their share of Apple or Tesla is actually worth more after it's tokenized. And that's when I think all the financial institutions

and brokerages will wake up and say, oh wait, our customers are asking why their portfolios are not worth as much as they could be. Why is it worth more? Why is the share of Apple worth more once it's tokenized? Because once it's tokenized, you go from it being limited to a local market where people have demand to go and buy that asset

to now a global market, right? Blockchain's unlocking the first truly global capital markets. So the price discovery that's still kind of hidden to us is where people without access to the US financial system can actually go and express their demand where people without access to the US financial system can actually go and express their demand by being willing to pay a higher price for it. Foreign investors have no problem buying and selling Apple. Maybe that's not the best example,

but there are probably some securities that are more obscure, harder to access, and if they had a bigger pool of potential buyers, like de facto facto they would be more valuable. I just don't know that I would pick the largest stock in the world that's probably already 30 or 40% owned by foreign institutions as it is. But I certainly can appreciate what you mean by that.

So you think that's a 25 story, the tokenization of publicly traded securities? I think it will be. I mean, just look at the conversations coming out of the World Economic Forum in Davos, right? You've got Larry Fink, CEO of BlackRock saying, he's hoping that the SEC will rapidly approve tokenization of assets, stocks and bonds. You've got the CEO of Bank of America saying he's predicting

the same thing and if it all actually gets to green light, big banks will be extremely active on the transactional side, which to me sounds like they're going to go and buy a crypto business that'll allow them to hit the ground running. Yeah, they want to do it. They want to do it, but they need approval. They're not pioneers. running. Listen, Franklin, this has been incredible. that you guys do. Where can we follow you personally on social media? Where do we go? I'm on X and X at Franklin B, my first name, last name. Spelled B-I guys, Franklin B-I-B. That's right.

And I also publish my thoughts on a newsletter called Chain Brain, which if folks are interested in following along, they can subscribe. All right, awesome. Thank you so much for spending this time with us. We really appreciate it. Everybody go out and follow Franklin. Check out Pantera Capital.

Can we have you back as things develop? A lot's going to happen this year, so I'm happy to come back. All right. All right. Well, we'll we'll hit you later. All right. Thanks. Thanks, everybody. Talk to you soon. We're here. Hey everybody. Wow. The chat is lit tonight. Did you see Michael? Yeah. We're here. Hey everybody.

Wow. The chat is lit tonight. Did you see Michael? Yeah, it's been going on since 11 am lighting up. People are excited. The people love Aoi. I've come to learn and this is one of the biggest Aoi weeks since. It's the biggest.

It's a big, this is a big one. All right. And we guys, we will not disappoint. We're gonna go, we're gonna go deep and seek some truth out of this situation. John Carlos here, Matthew Stavick, Rob Fitzpatrick, Georgie D, Jerry's here,

Magnus, what's up man? Chris Ace. Don't forget about 454SS. True. Manny is here. Akbar Mohammed, Cliff, Mark Pugh. Hi from the UK. Hello. Who else? Bob Rice. We've got some dudes, some ladies, too.

All right. Everybody's here. The chat is lit. Welcome to What Are Your Thoughts? My name is Downtown Josh Brown. With me as always, my co-host, Michael Batnik. Michael, say hi. Hello. Hello. All right.

And we have a sponsor we want to tell you about before we get directly into the content. Who's sponsoring the show tonight, Mike? It's Public. And Public is... I will. It's a platform where you can buy, sell or hold. What do you want to buy? You want bonds?

You want stocks? You want crypto? You know, you know what I'm doing it public right now. I'm dollar cost averaging every month into iBit and GLD, I think. Um, and, uh, and I, and I keep my six month treasuries there as well, which we used to refer to as like the T-Bill account. Now they call it the six month treasury account. But like I'm just steadily adding.

It's connected to my bank account. I don't even look at it. I don't even really care. And it's so easy. So I'm a big... Playing it casual. Very casual investing. Big public fan.

All right, guys. This has been paid for by public investing full disclosure and podcast description. If you want to find out what public can do for you go to public.com slash W A Y T as in what are your thoughts and it's all there. I want to announce also we gave away a book last week, a signed book, and the winner is Daniel DeJesus, who says he is a super fan and listens to everything. Daniel McColl will be in touch via email and has a signed copy of my new book headed out to you.

So thank you so much for watching. It sounded like you were about to say Daniel Day Lewis. Daniel Day Lewis is not a super fan that I'm aware of. All right, we're going to talk DeepSeek and the spooking of the Mag7 and we're going to get into some of the stuff that took place with the AI stocks this week. Is that a doorbell that I hear? Who could it be? It's Alex Kantrowitz ladies and gentlemen. Alex welcome to the show. Great to be back. Great to see you guys. So Alex is in Miami. He thought he would be on vacation this week. Nope. It's gonna be a working vacation where you do the bare minimum and you hang out on the beach the rest of the week and that has not proven to be the case.

Emphasis on the working part. Yeah. I have Mike envy. Look at this gentleman's Mike. Michael, you see what's going on? Yeah, I like it. Hey, Alex, so one of the things that's going on here. Wait, this is the same mic as Josh.

It's just a camera angle. No, Josh has the fluffing thing. So Alex, some people have been talking about, like, Wysenthal was asking, hey, wait a minute. Why did the Deep Seek stuff, like, break on Sunday night when it's, like, been here for the last couple of weeks? Like, what was the trigger for all of this that we're going to talk about?

So it's a new model that they released called DeepSeek R1 that does reasoning. So you could basically ask it difficult questions, and you see it right out its chain of thought, basically trying to figure out how to answer your question the best way. And then it spits out a response. And so that is the model that came out last week.

And it took a little bit of time for people to catch on to it. But what they realized was, after the evaluations happened, that it was about as good as the best models in the world. I mean, it ranked number three, tied for third, on this ranking of large language models called chatbot arena where they literally blind test these the output of these bots one against one and you can evaluate which did best. So it was number three, right? Anthropic, which raised four billion last year and is about to raise another two billion, is in the teens. So that's how good this model was.

But there's a second component to this that is really important to talk about, which is that the model's open source. So basically what DeepSeq did was it told developers, download the model, you run it on your hardware, do whatever you want, customize it, and it'll be as good as ours. And so I think what happened on Friday was basically the tech industry figured out that this was impressive because the testing had happened. Then they started to run it on their own machines, and they were able to replicate performance.

So over the weekend, you started to have everybody in the tech world who's tinkering with this stuff confirm that this stuff works. And then by Monday, you had perplexity running deep-seek that had been altered to not censor sensitive issues to China, like the Taiwan question, like who's the president of Taiwan? And then all of a sudden, there was this mass realization where people went like, oh my goodness, this model is good.

This model is independently verified. And this is the third part, it's cheap. And it is, I think, three to five percent of the cost of OpenAI's cutting edge reasoning models to run. That's why you've had this perfect storm. There seems to have been this thing where Joe Weisenthal, who is extremely online, and while he gently mocks the Twitter VC crowd, he also follows

all of them and he had been talking about this way prior. And so I think like when Joe saw that the tech and venture people on X were really excited about it, he kind of took it upon himself to start talking about it more, which is, I think, the transmission mechanism from how it jumped from VC Twitter to finance Twitter. Wait, hold on, Josh. Are you saying that Joe wiped out $600 billion worth of market cap with a tweet? I think, look, I wrote about it on Friday morning and I'm very far divorced from that whole like online Twitter world. But I, like the way that I follow news,

I had seen enough articles in the tech journals that I follow start to pop up. So I wrote about it Friday morning at like 7 a.m. And the stock market did not react on Friday. It wasn't until Monday. So Alex, to your point, something about the marination of this over the weekend as people were testing it on their own machines is what really sent it. And Josh, you made a great point on CNBC

that it was a lot of the attention happened on Twitter where you had, it's this amazing sort of chemistry where you have all the people in tech that are sharing insights about artificial intelligence and testing this and sharing their perspective. And then you have two different groups in the financial side. You have the people that have been betting against Nvidia, which you pointed out on CNBC, who are like taking the information. Which is every active manager, every active manager in the world, basically.

And they're on Twitter, and they're getting the message out on Twitter. And then the other element is the venture capitalists. And I think it's actually Marc Andreessen who poured gasoline on this fire when he said, he said something like, this is one of the most beautiful innovations I've ever seen. And then people were like, wait, Andreessen, who's like the head of Andreessen Horowitz, the guy who invented Netscape, is calling this a beautiful innovation. It took public consciousness from being like,

yeah, there's this fishy thing in China that we're not fully sure. It lives up to the boasts to like, oh, the VC has tested it and it works. And he's been pumping it like crazy. And the reason is- But he's also an early investor in open AI. I mean, I think that, I think I heard you say, or somebody say that they did not invest in the most recent round, but he's- Right. He's involved. Yeah, but look, he passed on the most recent round. And I think that what he is

saying from a venture capitalist perspective is the fact that AI is now so cheap is going to actually make a huge difference to the startups you invest in. Because all right, you have this early bet in open AI, but what really matters is the application. How is this technology, if it is so powerful? Well, that's where the money is. Exactly. The money is the application above the LLM. 100%. And that's why Andreessen is so into this. It's because as a VC, it's Christmas for him. Because all of a sudden, any startup trying

to build on top of open AI's models, or basically regular open source models, can now use DeepSeek and whatever comes after it at 5% of the cost or 3% of the cost. And all of a sudden, the economics change for AI startups and companies that are implementing AI in a way that the equation becomes much more enticing to a venture capitalist trying to invest in this stuff.

John, can we chart on this cost versus performance that Alex could walk us through? This is from Michael Semblitz at JPMorgan. Alex, I don't know if you had a chance to look at this, but can you walk us through what this means? OK, so what I'm looking right now is the input price, right? So you wanna be about as far to the left on this chart

as you possibly can, and that's where DeepSeq is. And basically what you're seeing here is that it's the cheapest model to run on the entire chart. And when it becomes that cheap and the performance is as good as it's been, you're in the sweet spot here. Because why would you, let's say, use, I'm going to go to the other side of the chart, Claude Sonnet or something else, or the Claude Haiku, which

is a smaller model. That's Anthropix's smallest model is Haiku. Why would you use something that's going to be 10 times the price or more, where you can use Deep Seek and it's cheaper and as performant or even more performant than that? And that's why everybody is saying, OK, this could be a watershed moment for the industry,

because it enables cheaper development and its performance is about as good as what you're getting in the industry so far. Put that chart back up. The Y scale going up the left side is the test, how these models score. And one of the things being said right now about DeepSeq is that it hyper-trained in It hyper trained in such a way to do well on this test, but on tasks off the test doesn't do as well and some of those performance advantages start to fade.

Have you heard something similar? Yeah, that makes sense. So look, actually, the model I was looking at just now was 2.5, which is the cheapest tier. You have DeepSeq R1, the one that we're talking about, is the most performant here. And it's much cheaper than the most powerful models that we're talking about.

So it's important to point that out. Look, all these AI models, they are trained to get the answers to the test, right? This is what they all do. So the fact that it is the most performant, I don't think it's a real criticism to say that it was trained for the test. Of course, they all train for the test.

And your ability to do well on the test sort of talks about. All right, here's a real criticism, though. This was not, this is not really a native Chinese trained model at all. And so here are a couple of things coming from Sembilist. And Sembilist is referencing Jan Kamaraft. You know who that is? But this is some criticism that emerged during the course of the week.

I'd love to get your take. First of all, I went on perplexity, which I use when they said that they were using DeepSeek, I went on there and said, who killed more people, Mao Zedong or Adolf Hitler? And they got the answer right. It said Mao Zedong killed potentially 80 to 100 million people, which is the truth. I think he killed twice as many people as Hitler. If this were truly natively Chinese, there's no f**king way that answer would have come about on perplexity running that model. No, I have to weigh in on this. So, Josh, what you're pointing at right now is the most important thing about this model,

which is that, again, it's open source. So what perplexity did was it downloaded the architecture and then it customized it and then it ran it in perplexity. So if you go to like deepseek.com or wherever you can use the model that they run, it's gonna it won't give you that answer because it's censored. And the crazy thing about this is we have a Chinese firm who said we have this new architecture. It's more performant on the tests, it's cheaper, and you now can take it and download it. Doesn't matter are you an American firm or you're a Chinese firm and you can use it. And that's exactly what Perplexity did, where Perplexity took DeepSeek R1, downloaded it,

it customized it to the point where it might censor on the DeepSeek website. It won't censor on Perplexity now. And that's how you get that answer. Semblist had an interesting case. I'm sorry. Semblist is saying, when answering questions about Volkswagen car sales in China, ChatGPT, Grok, and Gemini all gave very different answers.

Deepseek's answer was almost identically worded to ChatGPT. He also points out, he also points out, why would a Chinese chatbot be trained on what happened at Tiananmen Square in 1989 and be so easily conjured into talking about it? Why does it talk about presidents and best cities to live in by talking about American ones, even when asked in German? Why would a Chinese chatbot refer to a single party state as a dictatorship and reject the

one party system unless it was trained on Western data with strong ideological beliefs. And last thing, when asked what model are you, in Five Times Out of Eight, version three of DeepSeek actually answers by saying it is chat GPT. It thinks it's chat GPT. So like that's like where a lot of the criticism is coming. It's like, how far did they get by just training the model on other models and then at the last minute

putting their own spin on that? And I don't know the answer. I'm not a data scientist, but it feels like there are ramifications to that answer. Yeah, so I think this is important. So one of the things that they've done is they've distilled other models down. So they are pretty upfront at the fact

that they've taken models and they've sort of trained on them and they've learned how to use some of the answers that they get from other models and put it into their answer set. Now, are they completely upfront about that? Probably not. Are they getting the answers from the test from the llamas and the chat GPTs?

Probably. But I want to talk about why I don't think it matters as much as Zimbalist might be saying. And that is that they have, wherever they've gotten these responses from, they've been able to develop this model that is more performant and cheaper. And if it was so easy to do, why hasn't OpenAI done it?

And I think that's the core thing here, is that they took the AI field and they took some shortcuts. I don't doubt it. But they've taken the AI field and they've shown a new way to do it. A new way to train these models and a new way to run these models. And it's working. And is it a little sketchy? Yeah, probably. So to the question of- Is it Tmoo AI as Dan Ives has coined? Like is it, is this just on brand China stuff

where shortcuts, faster, cheaper, here throw it out there and at first you feel like it's a viable competitor but then you realize it breaks apart the more you use it or do you think like the effect of this is going to last longer than just this week? Yeah, I think Tmoo AI is selling it short. I do think that if you talk about, let's say you talk about somebody, you talk to somebody in retail, online retail about Tmoo, They'll point out, again, all the shortcomings. If you talk to people who've

been working on the architecture of large language models, they will applaud DeepSeek. They like, reluctantly or not. And the tech industry is, I think, rightly in a frenzy over this. All these criticisms, I think, are valid to a certain degree, right? There's some sketchiness, you know, the big criticism this week was they didn't train it on the four or $5 million, they said they did. And they're probably true. Or they're hiding chips

because they have to pretend they don't have them. And again, and or spitting back chat GPT. And I'm gonna say right now that is, is or can all be true, but it doesn't negate where they've gotten the AI industry, which is that they've created intelligence that is smart and cheaper to use than anything else. And that you can sort of negate everything that they've done to get there, but the architectural advance here is big enough that it's put the entire AI industry on notice. And none of the folks who are in the industry have said this technology doesn't work.

They've questioned how they got there, but they are all just like, yeah, we've been able to replicate it. It works. So to the question of how did this even happen, like we're spending bazillions of dollars building these things and they just were able to do it. Sambula said, I've read it in a few places that the US chip ban on China indirectly led to deep seek success. By forcing China to innovate with less cutting edge hardware and software, Chinese engineers figured it out and developed innovations along the way. I thought that was

pretty interesting. Oh, yeah. So look, we have in some ways in the US a natural resource curse where we have all the money, we don't have any of these export controls. And so what the leading firms have done is say, we believe in the scaling hypothesis, which is basically the more compute and the more data. Throw as much data and GPUs as you can at the problem as possible, and it will get better. Now, it's interesting that that had.

Well, they can't. And that had been hitting a wall, actually, in the US. And that's why these companies started to introduce this reasoning methodology. But basically, yeah, the firms in China, they can't do that. And maybe if. And one interesting point about this is OpenAI is going to say that there's

a great clip going around with Sam Altman telling an audience in like, don't even try competing with us. You should do it, but you're probably not going to get as good as we will. And there was almost comfort in the fact that it took all these billions of dollars to build what the US firms could, because that meant nobody could compete with them. And you're right, because the firms in China did have those constraints, they just had to do it in a smarter way. And they got there. And that's why things are crazy. Can you debunk? Can you debunk this myth for us or confirm if it's true? They released this latest research paper during the two hours that TikTok was taken offline in the United States. And the timing is a warning from Chinese authorities that they have the ability to upend entire industries within the United States at will if we want to go down this road of banning their apps.

That sounds really far-fetched, but I do think the timing actually syncs up, and that's a terrifying thought to me. What do you think about that? Look, I don't think they were gonna sit on this, so maybe it was a convenient matter of timing for them. But that being said, they did release their previous model on Christmas Day, and I think that timing warfare, right, really has been a thing here. Where basically they're saying, you're sitting at home, you're enjoying your Christmas dinner, we're in the lab and we're working and we're releasing this.

Now, is it symbolic? Like did they get that all queued up on the 23rd of December and hit it to have it set publish? Hit it, schedule it to hit publish on the 25th, maybe. But I think that there is a chip on the shoulder of the folks in China for technology as there is for most things. Where the Western, they believe that the Western countries

have this sense of superiority to them. And so far the West has been kicking their butt. And when they can, they're gonna poke back and they've been poking back. What do you make of the reaction from both Sam Altman and Satya and some of the other people that have a huge vested interest in all this? I think Sam has been scrambling and looks a little bit desperate right now. Sam is somebody who's been so on message throughout this entire thing,

even when he was fired, right? Didn't he handle that pretty well? Like got the whole world on his side. What's happened here? He's been kind of quiet about it. He did a small tweet thread yesterday talking about how they're going to push up some releases. And by the way, stay tuned for AGI.

And then a self-me. He tipped his cap. He said, this is impressive. He didn't debunk it. And neither did Satya. Right. Exactly. But there's been no, like, usually

OpenAI has a way like reacting to the news and positioning themselves as a leader. So what do you think they're saying behind closed doors, like in private? Are they like, oh, or? Yeah, I do. I do. I think this is, I think overall, this is a pretty optimistic moment for AI broadly, right?

AI in terms of developing with AI, and what you can do and where the research goes. But I do get a sense that a lot of folks in Silicon Valley are a little bit shaken that this didn't come from there. And it should especially shake the proprietary model builders like OpenAI and Anthropic because the game just got real for them. Because they've been building their own things and they've been charging for them and they've been out in front and in the lead and they're still like in the lead although a lot less than they were before and what they now see is open source literally nipping at their heels and

It's just them against all the open source developers right now And the trajectory is that they're gonna lose right because you have all of open source Yeah, so that's what I want to that's what I want to ask you about Does Zuckerberg come out of this looking like looking prescient for having open source llama almost from the get-go? And I guess on the opposite end of the scale, on the opposite end of the spectrum, if open AI was publicly traded, if Anthropic were publicly traded, what would those stocks have been doing this week?

I'll hit those two right now. I think OpenAI and Anthropic would be down further than Nvidia was. Like 30%. It's feasible for sure. If your whole approach. So let me just say quickly about OpenAI, and then I want to talk about Zuck because it is really interesting. OK, so for OpenAI, your advantage was two things.

One was building the best model in the world. This week, your advantage is much less than it was. The other thing is that you built ChatGPT, and so you have the lead in the consumer models for AI. ChatGPT has 300 million users. If you look at OpenAI's financial projections that have been reported in the information and elsewhere, they are expected to do more revenue with ChatGPT

than leasing the model. So you could say, even if we don't have the best model, we can build our lead on ChatGPT. This week, the ChatGPT side of the business becomes way more important than it was, and it was already super important. So that's OpenAI. On the meta front, it's very complicated, but I'll try to say it as simple as I can.

Yes, Zuckerberg looks prescient for going open source, because if that's going to be the lead of this AI moment then he's going to really have a say in it but it really depends because all this investment that they've put in really only adds up if they're the leader in open source AI. If you're the leader in open source AI you get everybody to develop on your stack. All the iterations, everything comes from the tone that you set and so them being the best open source model has definitely paid dividends because their vision of AI is the one that has been seen out.

If you start up, all right, startups can grab llama and start working, not paying licenses, not adhering to some other person's structure. They just say like, all right, this exists, we could use this to build something. Now it's not obvious that that will be the go-to platform that people will build on. Spot on. Is what you're saying, okay.

Yeah, so there's a three-step process. When you build AI companies, you first build with a proprietary model like GPT, because it's easy as off the shelf. Then you change your technology to make sure that any model can plug in and you'll still be operational. Then you go open source because open source allows you to customize.

Like I was speaking with the CEO of Replica, which is a bot that you can form a relationship with and maybe fall in love with or marry. It's a story for another day. But she said that they use Llama. Michael, did you hear that? Continue. It's a, yeah. Michael, did you hear that? Continue. Yeah.

Michael, you and I can talk about it later. So they use llama. You guys could share one. OK. So they could then use DeepSeq. Right. So this is what I wanted to ask you. So if somebody today is using llama or using chat GPT.

Like what is the likelihood that they're like, wait a minute, I can do the same work, but with less billions of parameters, and therefore it'll be more efficient and cheaper, and I could just switch over and use that. Like what is the likelihood that people in Silicon Valley and elsewhere are gonna do that? Hi, I mean, they're already looking at it. It's high. What is the likelihood that people in Silicon Valley and elsewhere are going to do that? High.

I mean, they're already looking at it. It's high. But there's one other side to this, which is your meta, if your whole deal is open source, you need to find a way to replicate what DeepSeq did. So there's going to be a back and forth. Meta pushed the status quo forward with Lama, and then DeepSeek pushed them, and Meta will push back.

And you just sort of will bet on who you think will be the winner. But if you're a startup, it's incumbent upon you to be evaluating DeepSeek if it can allow you to do what you do better and cheaper. So public and public. Let's put the chart up while we go through this. So public markets are trying to figure out what's going on,

how to make sense of all this. Yesterday, NVIDIA had the largest market cap wipeout of all time for any stock. Makes sense. It was a 17% drop on one of the largest companies ever. Look at this. $589 billion, which is larger than MasterCard, Exxon, Oracle, Costco, Home Depot, and Netflix.

So the market cap wipeout was bigger than all those companies I just mentioned. There was a nice rebound in Nvidia today. But did this make sense to you? Or do you think that this was overblown in the market as fundamentally a misunderstanding what impacts DeepSeek is going to have on the space?

Yes, I spent the last day and a half thinking about why Nvidia took the hit that it did. Because if you believed in the AI story last week, you probably believe in it even more this week because it's just now much more efficient and that's what happens in hardware. The one thing that nobody's talking about that I thought might be behind this, and I'm actually curious what you guys think about this, is we might have just seen DeepSeek build something that can commoditize the state of the art in a moment's notice, or pretty quickly.

And if that's the case. Wait, what do you mean that DeepSeek is going to be able to figure out what NVIDIA is doing somehow? They're claiming to have done this without H100s. Right. So basically, this is a thing. Let's say they are getting some of the answers

from the test from OpenAI, like we talked about earlier. So your OpenAI, you spend, I don't know, $2 billion, $3 billion to train a new model. And did DeepSeq just find the architecture to then go crib notes from your model and then run it cheaper and more efficiently. And everybody is then going to go replace it with what DeepSeek has built.

This is, I think, more of an outside chance than what's actually going to happen. But it's a possibility. If they figured out a way to sort of distill these models down and run them for cheaper, then why would I, if I'm open AI, then go invest to build the next model if there's an open source way to just crib off of what I've done. That, to me, is the extreme risk.

I don't think that's going to happen. But if I'm like all this, and I'm sure you guys know this, right? All this is based off of your probabilities, certainty versus uncertainty. And things like this added a level of uncertainty to the future of Nvidia which is core to those big training runs. And guess what when you're training at 60

times tails or whatever it is there's not a lot of room for safety like there's not a lot of margin for safety. Oh yeah yeah I mean what do you guys think? Well I wanted to ask you I'm almost done pumping you with questions but we Alex we always learn so much from you because we look at everything from like a, well, what's the trade standpoint? And you're going, you're talking directly to the people who are involved in like the business side of this stuff and not, it's not about stock price every second of the day, the people that you're talking to. So we learned so much from talking to you and getting your perspective. So I saw Satya Nadella start tweeting Wikipedia articles about Jevons Paradox.

Always a good sign, right? I mean, that's like, what the f**k is going on? So this is the CEO of the third largest company in America, like, shitposting Wikipedia as like, Cope. Because Jevons Paradox, the essence is like a more efficient You can use something the more of it you will end up using and I guess that would be bullish then for AI tools Because they become more efficient. They'll become more widespread. So I think that's what that was about Maybe that's good for the chip makers, too

But the biggest impacts not in dollar terms, but in percentage drops, were not in the chips. But granted, Broadcom and Nvidia got wrecked. But the infrastructure plays, the power, the utilities, Vistra, Vertiv, all of them, like there's 20 of these now. But the companies that got these, all of these stocks doubled and tripled last year. Vistro was the best performing stock in the S&P last year. The utilities that were telling a story where they were going to be instrumental in the build out of AI, those stocks got hit the hardest. And I think the reason why is because, okay, maybe Jevin's

paradox is real and chip demand won't fall off. The power usage story, though, is now under the microscope. Do we really need as much of a buildout, of a power infrastructure buildout if we've found, unlocked a new level of efficiency. What do you think about that idea? I know it's somewhat new for all of us to really explore, but I don't think those stocks are buys. I've been thinking about the Satya tweet and obviously read the Wikipedia article and

wrap my head around Jevons paradox, which is something like you implicitly know when you think about technology, but there's a name to it now. Maybe we should coin a new phrase called the Jevons Fallacy. And that is that we've been, and this might wrap it all together, we've been talking so much about infrastructure, right? NVIDIAs of the world and the power and the cybersecurity that's sort of going to emerge based off of this stuff in the cloud hosting. But we haven't been talking very much about the applications.

It's almost like the entire AI discussion, and I'm selling it short a little bit, but a lot of the AI discussion has been based off of the infrastructure numbers. OK, so they invested $6.6 billion in OpenAI. Therefore, we can expect X return. And therefore, AI must be worth Y. But I think the fact that the applications have been so left

out of this discussion sort of points to the weakness to this point of applications, like what's been built with this AI. We know that there's been better coding tools that have been built. We know that some SaaS companies, like ServiceNow, are getting better with AI. We know that ChatGPT is a cool consumer product with 300 million users. And there are some other use cases out there.

Apple intelligence so far is DOA. Co-pilots got all kinds of complaints about it everywhere you look. We don't have other than ChatGPT and a little bit perplexity. And I read about the Claude boys. I don't know if you're aware of that trend. Oh yes. The teenage boys who only do what Claude says. Okay, we have a few of those stories,

but they don't seem like they're anywhere near the applications, anywhere near justifying this bend. And that's why I'm calling it the Jevons Fallacy, because it's like, all right, as this becomes more efficient, people will want to use it more. And to me, I'm like, yeah, only if they're knocking down the doors to use it at this point. Use it for what?

Correct. And we need to see the applications. The applications become the most important part here. I love you. We're going to goodbye you, Alex. We want to have you back, of course. And Michael and I are going to rip through some stock charts. But I want to say you were like literally the first person that both of us thought of when we were planning this show. Thank you so much for coming by. And of course, I want people to listen to your podcast this week because I know it's

going to be lit. Tell everybody where they can hear more of what you think on the topic. Yeah, so you could just go to Big Technology Podcast. It's on every podcast app. Also, I'm Alex Cantor. It's on YouTube. We have an interview up from last week with Demis Asabas, the head of Google DeepMind.

Reid Hoffman's coming on tomorrow, although we recorded before this stuff happened. But we break down the news every Friday. And by the way, I just want to say thank you to you guys, because as you know, I'm a regular listener, viewer on YouTube. I've been watching, Josh. I watched all your appearances on CNBC before I went on today.

And you guys have been on it from a business and a technical side. And keep it up. I look forward to being in the audience now. You're the man. You're the man. All right, everybody watch and listen to Big Technology Podcasts with Alex.

Alex will talk to you soon. Michael, let's do some reaction charts from the market. Let's rip it. All right, so Nvidia took a big dump yesterday, down 18%. And it clawed a lot of it back today. I think that as we discussed with Alex, the market has no clue. Nobody knows, right? And so this volatility

is to be expected. Does it close the gap? Who the F knows, but you can expect this volatility to continue both directions. Were you surprised at the non-bounce until about three o'clock today? Were you surprised at how much Nvidia had been struggling to find buyers? I was. I'm surprised that it struggled in the morning and also equally surprised that it surged in the afternoon. Yeah, I agree. And I asked Alex a question. He didn't really take the bait, but what would... Oh, he did actually. He gave us a good answer. I'm sorry. What would OpenAI and Anthropic be doing? be doing? I think that's right. He said down 30.

You know, no, I think that's right. I think that's right too. And I don't think they would have bounced today on day two. No. In the way that Nvidia finally was able to. No, it's different. It's different. So some of the biggest winners or standouts like Meta, all time high.

Microsoft got it all back today. Apple was bright green yesterday with a huge follow through today. I'm honestly not sure why that is the case. I know that you would say that money came out of Nvidia and went to Apple. It doesn't work like that, but sure. Google under a little bit of pressure. Amazon. I have a different, I have a different take on that, but let's, let's go through these.

I want to hear you take an Apple. Go ahead. All right. So, John, skip to Apple. We have Apple, Microsoft and Amazon together. Apple went from being quote-unquote playing from behind and piggybacking chat GPT and reliant on open AI for their uh Apple intelligence. That was the narrative on Apple until yesterday. Now the narrative is look how smart Tim Cook was to not go all in and announce 50 billion dollars of build out for a stupid LLM that just got commoditized. That's the narrative shift on Apple and Apple

Apple started rallying immediately because people were like, oh, wait a minute. Now, who gives a shit who owns the LLM? So I thought that was kind of cool. I think that's a good take. Wrong Apple. Full disclosure. It's a good take and Apple was severely oversold. So it was a nice recipe for a bounce. Put that back up one more time because I want to do Microsoft. This thing's come all the way back. That part I'm surprised. All right. We have a guy in the chat right now, Situation Room, who's really good and he's going crazy.

And he's saying some wild shit, but one of the things that he's saying, which I kind of agree with, he points out the president's son-in-law, Jared Kushner, who is obviously a tech visionary, is the last check into OpenAI. What does that mean? They did a round at $157 billion valuation like three weeks ago. Check, check, okay.

And Kushner's got a venture fund. But like, if you invested in OpenAI three weeks ago in that last round at $157 billion. But my point is with Microsoft, like they're a big investor in OpenAI and they kind of, I guess they could separate from them and kind of do their own thing. And Sam Altman sounded unsure of whether or not that would happen the last time he spoke at a conference. But like, does Microsoft have more to gain

because this stuff is much cheaper or more to lose because of how in deep they are with OpenAI? I'm not sure, but the market is voting on the former. Yeah, I definitely don't know shit about that. But what I do know is I love how Microsoft's chart looks. Like, I love it. This stock had an insane rally and it's been consolidating over the past couple of months and looks like a breakout

may be coming. I mean, it may not be, but I like it. It looks healthy. How would you like to be taking OpenAI through an IPO roadshow this spring? Listen, let's see what happens. What if this DeepSeek stuff turns out to be a charade or a scam? Like we don't know. I guess you got to hope for that. All right, let's do these infrastructure plays. I don't know these companies well, so I want everyone to take my comments here with a grain of salt. But I'll tell you what I do know. I never bought into this idea. I think there are active managers who are not allowed to go crazy long on Nvidia or they thought they missed out on it.

Last year, they spent the year looking for quote unquote pure plays on AI and they hit upon these stocks that are going to provide power to the data centers. It's not that that story is not true. It's that in the end, these are still utilities and they should not sell for 27 times earnings as though they're anything other than power providers. Even if there's going to be this huge uptick in power demand, even if there's going to be this rebuilding of the infrastructure for power, et cetera, et cetera, et cetera.

I really think these stocks got crazy. And I think they're going to have these rallies, but they're going to look like, I think this is going to be a top that holds. And I think all these rallies are going to be fades from here on out. Vistra had a similarly ridiculously strong close. So maybe these things get in the gap. Who knows? But I do buy what you're saying about people,

managers looking for exposure that just can't buy Nvidia. I buy that. What was Wall Street saying today or yesterday, Josh? I mean, I know it was all over the place, but did anything really catch your eye? Because everybody put out an opinion. Yeah, well, so here's what's really interesting. This happened literally before earnings season.

So we're recording this Tuesday night. Metta is reporting 24 hours from now. Microsoft the same. Apple is Thursday. Alphabet is next week. Amazon's next week. Nvidia is the end of the month. So every one of these conference calls is going to be a referendum on what DeepSeek means

for each company's individual situation. That's one. Morgan Stanley cut all the semi-price targets. They cut Nvidia, Broadcom, Marvell, and Micron. Nvidia's price target went to 152 from 166. Broadcom to 265. That's nothing. Where'd it go from? From what to what? 166 to 152. Okay. It's at 129. It's nothing until you consider nobody ever cuts their price target on Nvidia. True. True.

Nobody cuts their price target on Broadcom. Marvell cut, Micron cut. Let me see what else. Oh, Baird says AI demand remains very strong. Buy Nvidia, buy AMD. We would be buyers. NVIDIA stands out as a less expensive stock than Broadcom. I think it's 27 times forward earnings now. When was the last time you were able to buy NVIDIA with a two handle?

No, it did not bounce at all. AMD offers the most value. AMD did not bounce at all. Just a piece of garbage. Broadcom very little bounce. John, can we throw up the chart of the green and red from FinViz from yesterday of the price action? All right, so this was at the close yesterday.

I mean, truly, historic might be hyperbolic, but maybe, you know what? No, you can use historic. This should never happen. Like the largest stock in the country falling 17%, the second largest going up 3%, other areas of the market bright green. This was a very interesting day in the market yesterday. Citigroup said DeepSeek is a risk to US exceptionalism, further Mag-7 dominance questions.

Yeah, does this call into question the way that we venerate these companies? Are we out of our f**king minds? They just put on the magazine cover the US stocks, like the rocket taking off, JC was making fun of that. We might have forgotten that the rest of the world is not just going to sit here and watch this forever. I don't think that's a good idea. Listen, if this turns out to be a nothing burger, who knows?

It is definitely a shot across the bat. This has people's attention. Look at another thing that happened inside the market yesterday, which was super healthy and chef's kiss-esque. The S&P 500 X-Tech rocket ship made a new all-time high yesterday. Talk about rotation.

Look at that, yeah. Yeah, so my mystery chart is in the same vein. But like, people did not sell these stocks and then take the money and put it back in their bank account. The money went somewhere. And that's a really good chart. Okay. All right.

Anything else before we move on? We're in topic two. We're in topic two at 545. I'm going to the Islanders game, so I've got 20 minutes. All right. Yesterday was a day, as we just mentioned. I want to show the next chart, which is a historic, truly, a historic day of outperformance of value overgrowth yesterday.

And you could say, like, as everybody turned bearish on value, value has been air quote dead for years. But up 4.6% yesterday, the type of one day return, the spread between value stocks and growth that we've seen only three other times in the last 30 years. And funny enough today, a lot of those gains reversed. So that spread was up 4.6% yesterday. It was down 2.3% today. But the point that I want to make Josh is people are trading their asses off. And one

of the stocks that got left for dead over the past couple of years that I had eyeballed, I think I took a fly on it and I bailed too early as I am often to do, unfortunately, I'm an idiot, is Robinhood. Look at this stock. Yeah. This kind of consolidation is like the right, that's what you want. This stock's going higher. I think this could end the year at 75. You know where I think I sold? I think I sold it in early 2024. I thought it was breaking out and I bought that and I probably sold it on the retest. Good job. Yeah. This company is playing offense. They're making big moves in wealth.

They no longer have a gun to their head on the crypto side of the business, which I think is pretty profitable and stock is going higher. I have very little debt. I don't personally want to pull the trigger and buy it, but I think it's going to work. It's hard to say that there was a sentiment washout with the S&P like 2% off its highs, but Todd's got a great chart showing that we had a pretty decent size spike in inverse ETF volume. And this has been lacking.

Like it's just been all straight up leveraged ETFs. So next chart shows, again, people are, they're doing it, man. They are trading and they are trading with leverage. Lots of it. Oh my God. What is it? Single stock leveraged ETF volume.

Yeah. Do you agree with me that part of the overreaction in video is due to how much of a leverage and option circus there is happening beneath the surface with that stock. So let's say it should have gone down 12% and it fell 18% because people are just like way, way over the line. Because next chart.

In terms of their positioning in the stock. Because next chart. So what we're looking at is the Granite shares, two-time long NVIDIA ETF. We've spoken a lot about this over the past couple years. NVDL. Went from zero to $5 billion in a couple of 18 months or whatever.

This thing fell 34% yesterday. 34%. Now granted, had a hell of a rebound today, but just. Oh my god. Yeah. This is a double long NVIDIA, fell by, lost a third of its value in a day. Yeah. Oh my God.

So yesterday, Josh, retail investors from Walter Bloomberg, retail investors bought a record, $562 million worth of Nvidia. So far, so good. You know who bought? You know who bought? The Nugget. So my 15-year- old is on Robinhood. He's got a couple hundred bucks.

He pulled the trigger in video. He doesn't know anything about AI. He, it's action. Like I think the, somehow that name was surfaced to him via the algorithm and nuggets in the juice. So let's keep it moving. What do you got? Yeah.

Uh, long shot bets. We don't have to spend a ton of time here. The journal did an article basically talking about how parlays and long shot bets are America's favorite bets. And this is in a sports realm, but I think it fits perfectly with what you just showed us. Um, so basically they are talking to people. They're talking to no-nothings who are betting on sports apps and just having fun. Parlay's accounted for 27% of the money wagered

on all sports bets last year. I would have guessed higher. In Illinois, New Jersey, and Colorado, states in which gambling regulators report data by bet type. That's up from 22% of all sports bets in 2021. These multi-leg bets delivered about 56% of sports betting revenue after payouts for companies up from 50%. So we're not getting more conservative with our gambling three years in to the sports betting app phenomenon. We are getting more risk positive. I guess would be the way to say it. It's just starting. It's early.

But this mirrors what we're seeing in the stock market with the leveraged single stock funds and the zero day options. This is a cultural phenomenon. I believe it's being driven predominantly by Gen Z. I don't think these are boomers that have been waiting their whole lives to do parlay bets on an app. I think this is young people. I agree with you. I've been eyeballing DraftKings and Flutter just because I think this is such a secular trend. The reason why I haven't bought it and the stocks look good

is because these are just like shitty businesses. You know what I mean? But I don't even know if that matters in the short term. Doesn't matter. Buy them, sell them before the Super Bowl. OK. We've got two weeks. Anything else?

Let me say, just do this one chart really quickly. Equity option index volume. This is effectively the same people. Would you agree? It's the same people doing those batches, doing these trades. Yeah, definitely. All right, you're up. Okay. We have been speaking a lot about concentration in the stock market over the past couple years because how could you not? This is a new chart for me. So credit to Goldman Sachs for pulling this one together.

They show S&P 500 concentrations and subsequent one year total return in their conclusion, as should be obvious by the chart that has no, well, the reason to it is that the level of concentration has no bearing on returns over the next 12 months. Now, you could say, hey, well, I don't care about 12 months, show me three months or 36 months or five years. Well, I don't have that, but here you go. Over 12 months doesn't mean anything. So the takeaway is when people tell you there's something wrong with the market because of

the level of concentration, you pull up this chart and say, okay, show me what's the rhyme or reason behind what you're saying because that just has not mattered in one direction or the other in particular. It could be good, it could be bad. Yeah. Yeah? Yeah. All right. I like it.

Starbucks reported tonight. I'm long the stock. Are you still in Starbucks? I sure am. All right. I think this take, this turnaround is starting, and I think this was the starting gun. It's not a huge upside reaction to the name overnight. The stock's flat now.

We have a quote. The stock's flat now. Yeah. The quarter was, it was a really shitty quarter. Now expectations were worse, but it was bad. Yeah, it was bad. It was bad. Yeah.

It's the fourth shitty, it's the fourth consecutive or the fifth consecutive shitty quarter for this name. So global comp store sales- But I think they're stopping the bleeding. Global comp store sales declined by 4%. Not great. Net revenues were $9.4 billion flat from year over year. Operating margin contracted by 300 nice knee basis points.

Woof. Our earnings per share of 69 cents, very nice. Declined by 23% year over year, not nice. Just really disgusting. So the stock is flat. Why? Because there were still a lot of beats because the expectations were so shitty. So I think flat makes a lot more sense than up 4%, which was the initial reaction, whatever.

I didn't understand that. So yeah, okay. Well it's two things. First of all, these are all upside surprises relative to very, very weak guidance. So $9.4 billion was better than $9.32 billion expected. $0.69 beats $0.66 expected. These are not good numbers, which is why they replaced the CEO and which is why the stock has done nothing for the last three years While the overall market is rallied. We have a chart Starbucks versus consumer discretionary S-bucks divided by XL y ETF. It's a piece of shit. Yeah, it has

But it's my piece of shit it has rallied recently but like look at the last four quarterly reports going into tonight We have this as a chart. They missed last time by 10%. They missed by 0.12% the time before that, missed by 15% the time before that, missed by 4%. So this is the first, that's why I say, we'll probably stop the bleeding. They were able to exceed expectations

for the first time in a year. And now back to Starbucks is Brian Nichols' campaign. So for those who are not aware, Brian Nichols is arguably the greatest living quick service restaurant CEO, took Chipotle from where it was to where it is now. He is now running Starbucks. He's got a lot riding on this personally working out and now they're writing our names on the cups with the Sharpies again. I don't know if you're excited about that. I love it. That's like a pretty...

Actually, hey wait a minute. That's like a real like back to Starbucks. I'm still getting the printed version. I got awesome written on my cup and I watched the girl do it. I feel bad they're making these, they're making them do that. But apparently this is something that's important. All right, you're making the case. I'm going to make the case, if you make the case, I'm going to make the case for one, we spend so much time talking about biggest risks to the market. And once again, as it always is,

almost always, it's what you don't see coming. Now you could have made the case, well, like, yeah, these tech valuations will vulnerable to any sort of downside surprise. But the point is, almost always, it's what you don't see coming. Now you could have made the case, well, like, yeah, these tech valuations will be vulnerable to any sort of downside surprise, but the point is you don't know where, how, when, why these surprises are coming. So just always keep that in the back of your mind. Risk is what, truly, it's what you can't think about. That's what risk is. If you're thinking about if all the fund managers are worried about some sort of risk, that's not what risk is, that's price did.

Okay, so I'm going to make the case for two real pieces of shit that I own. All right. So the first one is Zoom. This is a- That stock looks great. Okay. Yeah, I know. This is a long term chart.

It's up 40% since the summer. This is a long term chart of Zoom. And if you pull it back farther, obviously it's way, way, way worse. But let's zoom in a little bit. Let's zoom in a little bit. Next chart, please. Oof, Josh, come on. But let's zoom in a little bit. Let's zoom in a little bit. Next chart, please. Josh, come on. You're buying this.

Yeah, I actually, I think it's on my best stocks in the market list right now, to be honest with you. I think it might have just popped. Look at that RSI. I think it might have just popped. To be very honest with you, hold on. I'll tell you in two seconds. No, we don't have it, but if this keeps up, we will.

Okay, well, because this has been a dog of a stock, it is one of my smaller positions, but I think I might have to make that a larger position. The other one, another one, and honestly, I don't even know anything about Square's business. I don't know how many they make money. I mean, I kind of do, but like whatever. I don't even care about- I just sold this. Oh, do you? When did you sell it? A couple of weeks?

Well, I got stopped out of it, but- Okay. I like it. All right. Now, wait, hold on. Most of the business is merchant services for payments. Okay. Chart office. And then they have the Cash App and then they have some crypto shit. All right. So this is the long-term chart. I love how it's respecting that $80 level. Zoom in a little bit.

Now, I feel like if this thing rolls over here, that's gonna be way too many lower highs for me. So I would add to this if it breaks, but if it breaks lower, I'm probably gonna be out. All right, I would say it already did break and I got stopped out of it because it broke and I do not wanna enter back into this below its 50 day. No, I agree.

I'm going to add if it breaks like 90, 93. Yeah. You ready for a mystery chart? Let's have some fun. OK, this is a sector spider ETF. What is this? Oh, it's daily. I think this is the primary beneficiary, it appears of the, uh, large cap tech sell off.

The money had to go somewhere and people bought this to shit out of this sector. And I don't think there's a reason why I think they would just do what sector am I? Okay. So you got one out of 11 choices. So you're showing me 27 days. One month. All right. It's real estate. No.

You want to take one more? Sure. Industrials? No. Okay. What is it? You want to take a third guess or Thorn and Fowl? I'm good.

Reveal, please. Guys, this is the healthcare sector spider. That was going to be my eighth guess. Some of this is the recovery in UNH shares, obviously, and how destroyed like Lilly and all those fat stocks got. But like some of this is just people like, all right, we're selling big cap tech and we're going defensive. What the hell can we buy?

Johnson and Johnson. And these stocks just, they're 11 times earnings and they haven't gone up in three years. I'm not excited about that. They pay huge dividends and they caught a bid this week. I thought that was kind of cool. Listen, I love it. I love it. Rotation, rotation, rotation.

All right. We're going to let Michael get out of here and head over to UBS for the Islanders game. Guys, thank you so much for watching. Thanks over to UBS for the Islanders game guys. Thank you so much for watching. Thanks for listening. Thanks for being in the live chat. We appreciate you. If you want to check out my crypto conversation with Franklin B from Pantera, we're going

to post that on the podcast audio stream tonight and we'll talk to you soon. Have a good one. Whether you're just getting started as an investor or you're managing a multi-million dollar portfolio, Ridholtz Wealth Management has the solution for you. It all starts with building the right financial plan. To speak with a certified financial planner today, visit ridholtzwealth.com. Don't forget to check us out at youtube.com slash the compound rwm. Make sure to leave a rating and review on your favorite podcasting app. If you love investing podcasts, check out Michael and Ben every Wednesday morning on Animal Spirits. Thanks for listening.