The Pomp Podcast
00:02:14 · Jordi Visser
[00:02:14] S3: This is not what hedge funds wanted. It's not what my portfolio wanted either. But, first of all, the the Democrats were favored to win going into it, so it wasn't the outcome of the Senate. It was the extent of the damage. It was Texas and the surprise because Abbott was over 60% going into it. But I I think the story, rather than get into people's fears over what this will mean, I don't really think it has a huge impact on next year from what'll be built. Most of the things that are already under construction will get finished. I think the fear for people really comes from, number one, this is a tangible thing to make the next two years slower, for sure. Regulations will get heavier in certain states, and those states are important. There's no way having a new governor in Texas won't slow down the process of getting it done. So to a degree, we were living in a world where when you have all of the major tech people on inauguration day in the presence of the president, and then you have this happen, I I wouldn't say it's too surprising that the market on the AI side or the tech side in general is is not happy. For me, I don't think this changes the demand side of compute. I don't think it changes the fact that the stocks had already discounted this. And when I say they've already discounted this, we're significantly off the highs in most of these stocks. I can tell you from the ones that I still had left, plus the ones I started adding a couple weeks ago, of which I've added more this week, I've yet to make a purchase that isn't lower than it was when I made the purchase over the course of the last couple months. So it's been a problem, but we've been talking a lot about deleveraging. And I've made some bold statements, which I'll keep saying, which is the peak of hedge fund leverage has passed. We will never ever ever again be as levered as we were in dollar terms overall. There's rumors today, we're recording this on Thursday, there's rumors today of a couple hedge funds being, at least their equity business being shut down, but bigger stories floating around coming my way. But today is kind of the first day that I would say there's a liberation day type panic selling.
00:04:37 · Jordi Visser, Anthony Pompliano
And for me, that just means that after going through what's effectively been we peaked in early June, we've given back, depending on the name, the overall myogenic portfolio has given back over 60% of the gains that had happened from the beginning of the year till then. It's still less than that from a year ago, from when Opus 4.5 came out. But we have done significant damage on the AI trade, and I think the way people should think about it going forward, when I've talked about the difficulties that all public stocks will have by 2030, and the fact that I think the growth of pretty much all public companies will be done, and they will effectively become, as Marc Andreessen has said, bonds, and that's what we're in. We haven't talked about this before, but I'm writing a paper on... You may be interested in this, this will be good for you. But Marc [00:05:32] S1: I would love to understand what you mean by growth of public companies will be done by 2030?
00:05:39 · Jordi Visser
[00:05:39] S3: Yeah. I think all all companies that have large groups of people will be disrupted by AI. I think this is a world headed through tokenization, through small entrepreneurship, that the government, what's happened in the midterms, and the most important thing for people to take away, do you believe that AI progress will only go up from here? Of course. Okay. So that means cyber risk will go. Terror risk will increase. Job replacement will increase. Companies that have a monopoly on this stuff, that have margins that are enormous, that are firing people, the labor versus capital situation will worsen. If you're a big public company, you're targeted via cyber. You're targeted via government intervention. You're targeted... The public companies, the big ones, I don't think there'll be any growth. So Marc Andreessen made this comment two years ago, which I'm writing a paper on. He said everything in the S and P 500 is basically 492 are bonds, eight of them are call options, which is exactly what I believe. Starting when AI took off, the eight biggest companies became a mad race to dominate AI. Larry Page publicly said, or Gavin Baker said for Larry Page on an interview, I'll bankrupt this company in the race to AGI. We don't talk about AGI as being this winner, one takes winner thing anymore. So my whole belief has been, and this is the reason why I believe in Bitcoin is that there are no more moats. And that when your business gets there, it's not that you won't be a $5,000,000,000,000 company. But growth comes from a lack of government involvement. It comes from multiple expansion. It comes from all of those things. We're starting to see the the negatives of of AI this year, and I think it's only gonna worsen.
00:07:28 · Anthony Pompliano
[00:07:28] S1: Alright. There's a lot to unpack here. So let's start first with the 492 bonds in the S and P 500. Can you unpack, like, does that just mean they trade basically at whatever the inflation rate is? Does that mean that you get inflation plus something? Like, what would your expectation be for the 492 bonds?
00:07:45 · Jordi Visser
[00:07:45] S3: That is pretty much about what Marc Andreessen is saying. And if you go through the rest of the world, that's been about what's been happening. If you go to Europe, the stock market has done nothing since 2007. You go to emerging markets, it's done nothing. You go through most of the world, it goes through, I mean, a twenty year period where you get less than inflation. So that's been happening if you're a loser to AI, mall stocks, like all of these things, Ford, GM, I joke about them. They're still companies. They still make products that people buy, but they're not growth. So if you look out over a decade and you've owned Ford, what would you expect your annualized return to be? Are you thinking you're gonna get S and P? Or are you thinking you're gonna get S and P minus three, four, five? So what Mark said is that in the world of AI, which I agree with, all companies are gonna be disrupted. They can't reinvent themselves. So part of his argument is AI native businesses have a huge advantage. They grow. They grow rapidly, but they also run into competition eventually as well. Founders don't need there to be growth if their business is making money every single year. Right? Like if you're taking most of the money, if you're bringing in, isn't that effectively what a salary is to some degree? You're hoping you get inflation plus, but a salary is a number, and then you're hoping it grows in in some way when you first get the job. If you're a founder of a business and you have to sell off part of your business, the question is was it a good choice to make the sale? So Dario has created the most valuable company in the world, and how much does he own of it? We're starting to see that pressure growing, which was what market was talking about. And I think the eight call options, are the mag seven, they're being forced to spend an enormous amount of money for this massive payoff that may or may not happen. So if you think where nebious is, where core weave is, how would you price them? They're effectively bonds, they're not call options because I don't think they can grow up 10 times. I thought the infrastructure trades, and I still believe that the infrastructure trade will create S and P plus returns, but only for the next two years, three years, and then eventually efficiency gains and everything else will come in.
00:09:54 · Jordi Visser, Anthony Pompliano
So there's very few companies that you can say to me are gonna have a business that can outcompete anyone. If you told me SpaceX because they're doing something differently, that's great. But SpaceX is gonna have a lot of government involvement in terms of them. In fact, that might... He might be the company, the biggest target in the world right now with what's happening. So I think people have to start to realize that this election, the midterms take us to 2028, that's two more years of AI, that's two more years of a massive progress acceleration where we're gonna see pressure on jobs. I just think people have to start thinking about this for public stocks that way. [00:10:31] S1: The call options, you said there's eight, Mag seven plus SpaceX? Yeah. Is that the same thing? Okay. Now you mentioned that the 492 bonds would be S and P minus some number. If that's the case, does the S and P become uninvestable?