Prof G Markets
00:59:15 · Ed Elson, Scott Galloway, Josh Brown
[00:59:15] S3: We're back with Prof G Markets. [00:59:17] S0: I just wanna put a footnote on your Amazon call. My big tech stock pick for '26 was Amazon. Ed likes Meta, but we pick Amazon for different reasons. While AWS, I agree with you, yeah, is gonna be a serious unlock. I think it's return or the empire strikes back around the retail unit because what I see is a collision between industrialized robots and AI. And Jassy is saying that he thinks they can double the size of their retail business by 2032, which by dollar volume is their biggest business without one single incremental hire. So all of a sudden, this large top line, low margin business is about to become a massive top line business with a... With reasonable margins. [00:59:57] S4: I like that idea. I think it's three years from now, but robots as a service, same way that AWS was initially conceived as being for internal use. Like we need our own cloud. Then the thing that got Sundar the top oh, job is we're gonna turn this outward and everyone's gonna utilize this. It's not impossible that what you just said, Scott, ends up being really important, which is, do you wanna own your own robot really? Or do you wanna utilize Amazon's by then fleet of millions of capable robots and rent them? And it could be big.
00:59:57 · Josh Brown, Scott Galloway
[00:59:57] S4: I like that idea. I think it's three years from now, but robots as a service, same way that AWS was initially conceived as being for internal use. Like we need our own cloud. Then the thing that got Sundar the top oh, job is we're gonna turn this outward and everyone's gonna utilize this. It's not impossible that what you just said, Scott, ends up being really important, which is, do you wanna own your own robot really? Or do you wanna utilize Amazon's by then fleet of millions of capable robots and rent them? And it could be big. [01:00:39] S0: 400,000 industrialized robots in America sounds Amazon. Amazon has a million. You said something before, Josh, that struck me that how... That what you think is bad for the markets actually is good for these guys. You said something that really struck me. You said recently that high interest rates and high oil prices turn out to be great for the market. What did you mean by that? [01:01:01] S4: We make this mistake. We talk about business or corporate America monolithically as though like it's all one thing. And what's good for business is good for business. [01:01:13] S0: Or good for people of the economy, right?
01:01:15 · Josh Brown
[01:01:15] S4: Yeah. So the reality is when you look at the S and P 500, those are not just businesses, those are literally the best one and two companies on the planet in their category. Almost by definition, the way you get into the S and P 500 these days, I think the minimum market cap is around $2,530,000,000,000. So these are obviously companies that have proven they can do billions of revenue. You have to be profitable. So this is not business. These are 500 Michael Jordans. People don't understand this. They think that there's some correlation between business, like all businesses, and there really isn't. When you have higher compliance costs, higher energy costs, difficult trading issues, and international law, and all of these things that are a huge headache for an average or a substandard business, those become moats for the biggest businesses because they are the only places that can appropriately staff with the experts that help them navigate, or they have the scale to almost circumvent. The Mag-seven, these are basically nation states with ticker symbols. So sometimes struggles in the economy actually end up being tailwinds for the largest companies in each sector because they actually take on a comparative advantage and they take market share from everyone else. And the only proof of that idea that you need to see is a fifteen year chart of the Russell 2,000 versus the S and P 500 or the NASDAQ 100 versus the Russell 3,000. Then you begin to understand, oh, you mean all these challenges along the way were actually showing up in the stock market in the form of regulatory capture, economies of scale, and all these things that benefited the S and P five hundred. So unlike Rocky, the investment class is not busy rooting for underdogs. We are reveling in the fact that we have these international champions that trade publicly here in The US. And the worse conditions get for most companies, the more of an advantage they find themselves squeezing out when you get to the other side.
01:03:47 · Ed Elson, Josh Brown, Scott Galloway
[01:03:47] S3: I think a lot of people hear that, Josh, and they're like, that's depressing, or that's a shame. It's like [01:03:54] S4: This is why you guys have me on the show, though, because I'm... I I say what it is, not what I [01:03:59] S3: would like do. Josh was [01:04:00] S0: the most uplifting person we speak to. [01:04:02] S3: But I guess my question for those [01:04:04] S0: Your guy's Zitrin makes me wanna find guns and butter. I mean, anyways, go ahead. [01:04:10] S3: For those who hear that and are like, okay. So the biggest companies continue to get bigger. The rich get richer. The winners win more than the losers.
01:04:10 · Ed Elson, Josh Brown
[01:04:10] S3: For those who hear that and are like, okay. So the biggest companies continue to get bigger. The rich get richer. The winners win more than the losers. [01:04:20] S4: No, no. Anthropic is gonna create when all is said and done, thousands of multimillionaire households. I have spoken to people who work there. These are regular people. Not everybody working at Anthropic is on their third go round in Silicon Valley with like stock options coming out of their ears and $10,000,000 houses. They're regular people. They followed their dream. They wanted to work on something that had meaning some way or another. They met a recruiter from this company. They took the job. They believed in what the company was doing. They're still there. They've accumulated stock options. We talk to people who have never had investments, who are now gonna have $50,000,000 overnight. This can still happen in America. It'll never happen in Europe. They're almost right laws against it. It's crazy, but it's true. I don't want, Ed, I don't want what I said about size advantage and national champions and that dominance to be construed as it only benefits the rich and the rich keep getting richer. [01:05:33] S3: Yeah. Because the reality is these companies are in are in everyone's four zero one k. I mean, we're talking about the S and P, but there is a dynamic of bet on the biggest companies, bet on scale.
01:05:33 · Ed Elson, Josh Brown
[01:05:33] S3: Yeah. Because the reality is these companies are in are in everyone's four zero one k. I mean, we're talking about the S and P, but there is a dynamic of bet on the biggest companies, bet on scale. [01:05:45] S4: In the public markets, that actually is an investment thesis. It's been working for, like, a decade and a half since the financial crisis. There are a lot of reasons behind that that we don't have time to get into. Monetary policy, we don't police necessarily. We don't even pay attention to monopolistic behavior anymore, except briefly when there's a Democrat in the White House. Like there's a lot of things that go into that stew, but you can still invent something that changes the world overnight. You could still come out of nowhere. The best investments are not necessarily being birthed in Cupertino at Apple. Like a lot of cool things are being invented elsewhere and you can change your life, change your coworkers and your employees' life. You can do that in America still. In the public stock market, basically, the S and P 500 is being driven by the earnings power of like 50 or 60 companies. The other companies, it's not that they're not also profitable. They're not big enough to move the chains mathematically in the index. So what I'm trying to say is don't think about is this is such and such good or bad for business. Ask the smarter question. Is this good or bad for the MAG seven? Is good or bad for the S and P one hundred? Because that's what will affect your investments.