저자: CathieWood · 외국인
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1929~32 대공황 대비 현재 시장 집중도가 역대급이며, 중소기업 심리·소비자 심리가 2008~09 수준으로 악화. 소비자 저축률 하락·실업률 상승으로 경기 둔화 진행 중이며 연준의 고금리 장기유지가 실수일 가능성. 가격 인하 경쟁으로 디플레이션 조짐, 기술 혁신(AI·로봇·전기차·자율주행)은 비용 급감을 통해 디플레이션적 호황을 만든다는 주장. 엔비디아는 AI 칩 수요 사이클 전환 위험이 있으나 장기 성장 전망은 유지. 테슬라 Dojo 등 자체 칩 확대로 엔비디아 고객 집중 리스크 지적.
다듬은 글
People are afraid for some reason. People are afraid. Or would you release Jerome Powell? But, but I have to to tell you what exactly in this is you and me Let's go. If you look at how stock market behaves out of outside the six magazines, he speaks of what is problem. Trump or Biden? We met. many times before.
Um, the most important thing is that I I just want to start to understand, because everyone on the internet They will say that you already You know, it's like us to force people to stop compare us with standards? What don't they enough? What are you? What are you tell those people, who say: "We we believe in innovation, but maybe we disappointed." What would you Did they tell you?
So, uh, trust me, I understand that they they say because the market turned into such moment of concentration, which we never never seen before. If you look back at history, the last time we saw this concentration on US stock market during the Great depression during the period from 1929 to 1932. Uh, this is Goldman Sachs research, and, um, the analyst took the most expensive share on market and compared it with the 75th promotion percentile, and, um, we have never been more concentrated.
Oho. Never. What happened after night? Firstly, why did this happen in the period from 1929 to 1932? It was the Great depression. Level unemployment rose to 25%, real GDP decreased by almost 30%, and then wholesale prices and CPI fell by 20-30%. So the question then was : okay, that was it binary situation.
Or Will this company survive? No? And that was it. related to cash, cash cushion security and money stream. Therefore, concentration. Is this doesn't sound a bit similar to today? Cash and cash equivalents flow, cash–it king. Interesting. Very interesting. These companies with high level of reservation cash, Apple, Microsoft, Nvidia, with high cash flow, you you say that they receive, perhaps, disproportionate distribution level capital, because people for some reason are afraid.
People are afraid. I am not I know if it's you. noticed, but I felt, and not just I felt, I was watching. on statistics, where, if you look at NFIB, National federation of independent business sentiment. Therefore , this is small and medium business. The mood is like this same low as in 2008, 2009 years, closer to the bottom.
They can't get financing. You know, liquidity there is running out. If you look at consumer sentiment, and I understand that the main the numbers are as follows: oh, employment is in order, and inflation is problem. Uh, we don't agree with this, uh, and in there are many of us statistics, what is it confirms.
Moods consumers, if you are you in lower range income, they, of course, the most suffered from inflation, interest rates rate and availability of loans . So, their moods returned almost to lows of 2008-2009 . If you look at average income now, then this is the biggest the fluctuation factor in this categories from point view of the movement of the economy in one side or the other.
Average sentiment income level, which measures Michigan university, surrender and moving downwards. They not as low as low income, but moving downwards. Even high incomes turned over. And, uh, one of the reasons is in that the level Unemployment is rising. It grew from 3.4% in January up to 4% in 2023, and consumer savings , stimulating savings–everything finished.
Level consumer savings decreased to 3.6%. We are not seen this since 2008 year. Wow. So, you know, I think, What to clean when? onion, and it's very interestingly, the only variable, which we observe, which seems not agrees with this, – these are the spreads between corporate profitability and treasury bonds, especially the spreads between high-yielding bonds and treasury bonds.
Those, Those, just appeared. Those, just appeared. Therefore, you know, we see many warning signs, a lot of fear and many focusing on a certain type of stock, who not only have cash and money flow, but also consider, that they will win in this new game with artificial intelligence. AND here we come to this discussion.
Uh, Mag 6, Magnificent 6, all know this expression. Uh, many people and many investors, analysts believe, that data aggregators, what they are, what have centralized services, will become main the winners here from generative AI. AND we think that in short-term perspective some will appear interesting features and opportunities.
But if we are right, and AI is the most revolutionary technological platform in history, then he will not be in categories of sustainable innovations that I just assumed. This will be truly revolutionary, and the prey over time will get it, as we we think, another group companies. Not active players, therefore, not active players.
So interesting to be in environment where Federal Trade Commission the commission is the most antitrust organ for all my life. I don't remember. larger antitrust orientation, and all this concentration, uh , is located on record levels. So it's almost as if we are already in this recession, like others .
Yes, and I think that's exactly this is how it unfolds the rest of the story. And how Only the Fed will understand, what, um, this economy not working on autopilot and encounters inflation, I have I mean, I don't know if Have you heard of price gouging? wars now. Uh, we we see Target, Costco, Walmart.
We see McDonald's, Wendy's, even Starbucks has new low-budget package. I understood that Starbucks traffic in first quarter fell by 7%. We see, what happened and the reason, why is inflation here was a little sticky, it decreased from 9% until about three, a little sticky. Why Yes? Companies losing pace growth of units production and are trying to compensate for this, establishing more aggressive prices, and the consumer says: " Absolutely not." So now we begin to watch prices war.
This reminds me of me that I had the same battle in the early 80s. I was very young at your career, and Milton Friedman said: “You know what? Inflation stuck on double-digit levels. "Get used to it." But we left. the opposite way and entered into incredible period active management . What happened after?
1932 at that peak? Market...I made this one rough analysis...We we are going publish an article, and we will get better numbers, but if to talk about the market shares, then it increased by 62%over the next 3 years. AND disproportionately, this disproportionately gained from shares small, medium and any other companies, except shares megacapitalization.
Oho. So it's not about that megacapitalization collapsed, they did not collapse. They just stopped growing. Yes, they are just They did their job. And I truly believe that we are already close to this. So this is also very curious about the prices wars, because you see these companies, restaurants, McDonald's, Starbucks, they they are complaining about something else what people reject prices when they appear, and then, that they are simply more They are not leaving.
That's true. So is all this shouting? us that the Fed has come in too far, and whether there is then a risk that that the Fed will break something ? Um, yes, I mean what we thought in the spring On the 23rd, which is the first the gap was regional banks, and And so it was. And we overcame this, and the Fed in mainly thought: " Okay, we're good.
"worked". No, no, no problem. And therefore 22x magnification interest rates for a while more than a year, I I think the story would consider it very a big mistake, because we believe that we are entering a period, when statistics growth of units is collapsing here. But then, in addition to falling , it is very complicated environment, and norms profits started to decrease.
Um, companies that tried to set prices, This doesn't work. Now they have to reduce prices, and I think we we will see a frank deflation. I say this. for some time now. It takes place in slow motion, but it happens. It seems that now things that are just are delayed, this is it old inflation rent or insurance motor transport tools or something like that.
These laggards categories, in any in any case. So, if we move on to deflation, is that it? usually not related with recession? So it depends. So, if deflation is good deflation. So, if you look at our technologies. Therefore , robotics, energy storage, artificial intelligence, blockchain technology and multiohm sequencing in the field life sciences.
All of this is very deflationary. For example, the costs of AI training is falling by 75% per year. Costs to a logical conclusion AIs fall by over 85% per year. And we think, what will happen around AI many commercialization. Ahem, but this is a good reduction prices, because what does that mean? This will cause a boom in increasing number of these technologies.
Exactly here, in our opinion, our strategies, uh, will be justified. You, of course, had I mean picks and shovels , Nvidia is the main beneficiary, you know, main beneficiary. But if Ross is right, I don't I don't know if Ross is still here, and autonomous and autonomous taxis... Oh, okay. Thank you.
Yes. Oh, okay. Yes. If he is right, and we are not we will get a network autonomous taxis, which we expect during the next few years, then Nvidia is not should have such price, because breakthroughs, which we see in artificial intelligence, must allow to become robots better drivers than people, during the next 2 years.
Now I will say, and Elon also said that we are not expected; we expected that this will happen with less the number of breakthroughs, necessary in artificial intelligence. But we believe that now reached turning point, and we can do arithmetic calculations, saying: "Okay, now the car will defeat man," and, by the way, a person in any -in any case responsible for 85% of all road- traffic accidents.
Of course. He so crowded, that in you are completely autonomous Tesla, this perfectly. You know, this perfectly. Yes incredible, and actually this version 12 initially had some features, but became very, very good. AND remember, link below, you you will find the link at meetkevin.com, where you you can get access to great courses on creating of his wealth.
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See you soon. The price increases over time, because every time expires, the price is rising, and that guaranteed for you. In other words, if for some reason you find that the price lower, we guarantee you forever price compliance. So we plan continue price increase. See you there. We always add more value to to make sure that we not just increasing prices, but we also add a lot of value constantly and every day.
However, regarding this reduction concepts cost of AI, there are two things I want here to discuss. Firstly, I am going touch the S-shaped AI curve, and then I I will return to reducing the cost of AI. It seems to me that when we had this moment, we had a kind of explosion and popularization of AI. Great, now we have tutor, we have resource, we have copywriter, we have therapist.
Well, that's it. the feeling that last year we saw that innovations have begun stagnate or slow. Or it's because maybe I I'm wrong, but is this potentially because we should expect, that AI innovations will appear waves? For example, occurs every 5 years new wave. Are, uh, we we are waiting for these Will costs decrease?
Or we are waiting for these Nvidia chips will established so that everyone, such as smaller companies, could really start to use them, and then implement innovation? And when is this will it happen? You are very insightful. Let me finish the answer for the last question about the recession, and then go to question about AI.
So, good deflation will cause boom in numbers units. So, we we are talking about robots, we are talking about energy storage, especially considering the all energy needs, needs for power now. Uh, we are talking about AI, you know which one really permeates everything we we do. So, this is will cause a boom.
It real boom growth. We also we believe that there will be a creative destruction, caused innovations. Our the forecast is because the share electric vehicles in global sales, including China now, will grow with a little more than 10% to 75% sales during the next five to seven years. What does this mean for engines internal burning?
You know, 90% sales–this cars with engines internal burning. Well, if prices for electric cars will fall to 20,000 dollars that they will they do? Them will have to be lowered price, but then they will lose money. Therefore, this is creative destruction, and that's the bad side deflation. What relates to cyclical sides of the recession, I I think we are experiencing a sliding recession.
By some indicators, number of started residential complexes decreased by 50%. Therefore, construction volumes housing and sales cars were insignificant. They are not returned to typical territory expansion even for a mature industry, and commercial, like office , and so on apartment buildings houses, now, on our opinion, are in recession.
So, we have there was a sliding recession. It won't be like 2008. or 2009, boom and decline. We have another one. stage, and we think that this is the consumer, and then The Fed will react quickly. And, you know, a lot people say that the Fed not political. This is the year elections. I don't think so.
that it will be political. It will be clear as day. Unemployment rate is growing. Uh, capital expenditure fall. Uh, pricing is strange lower than expected, and we already received several such reports. But there is everything, there are also many confusion, and the Fed doesn't... The Fed doesn't recognize what I just said.
I think they think, that can simply instantly lower bets on Sunday, and this will solve everything problems. So, what usually happens if you Do you know what interest rates are? rates and prices will decrease, that you Are you going to do it? Wait. You are going to wait. That's why we have recession.
Yes. That's why we have recession. Now, returning to AI, You are very insightful. Most people don't understand that you just said. That is, There is a pause here. What it? Um, I remember, on stars of the internet, we have there was a moment like GPT chat in 1993, when electronic for the first time mail connected to the internet.
It was something like: "What?" AND then Cisco went crazy . Um, she already had very good results. In a year , that is, approximately there, you know, in a year, Cisco shares fell 55%. Why? Because, me too I think that's it. happening now, strategic company executives understand how much This is an important point, and we agree with this .
And they, eh, they also appreciate risks, their directors from risk management. Hallucinations, or Are we going...? we are going implement this in our finance department? Or we are going implement this in our HR department with everyone with this data about health care? Or Are we going...? we are going implement this?
Something critically important? We talked to general director of Anthropic, one of the companies our venture capital fund. Um, and he said: "That which happened...What happened happening now, is located on periphery. We all we can write better emails and haiku, right? You know, we can...we can...we can...I I know...uh, ours department head sales in Europe writes...marries and writes a poem for everyone guest, right?
Ts-ts ...That's great. He nothing for it pays, right? It just...uh...something interesting." Hey, Dario, CEO Anthropic, said: " It will be needed. at least 2 years to core companies in really felt influence, because these strategic individuals, who accept decisions, must to estimate: how much we Are we going to pay?
How many risks do we take? we are going to take himself? What risks do we face? "We take it upon ourselves?" Another one is happening thing, and Palantir told us about this. So, Palantir helps companies to benefit from using artificial intelligence and use some amazing things that will become possible.
There said, and we we are conducting a pilot project with Palantir, which companies first must collect all data from remote places. They don't even know where are some of their data. They should them to aggregate, to purify, integrate. They must plan workflows in to your organization much more detailed today.
All this takes time. I think they are said on conferences on issues Palantir's profits, which only, I think, 10 or 20% data, I believe that only 10% of the company's data , which exist, actually ready for AI. Yes. Yes. And this is one of the most important companies that have reached success. Now this dear.
This is expensive. You know, one of the myths about Arc, I think this one the period has dissipated, especially..." When it's about Nvidia, we we'll just throw it away money for everything walks, talks looks like innovation. It's simple. falsehood. We saw, how Nvidia scales, and we watched hundredfold growth.
We rose from four to almost 400 for old shares. How much would that be? So now it would be from four to 40. Now 40. Um, we still we own it in many of our specialized briefcases, but we They said, "Wait a minute." a minute. If Nvidia is going continue, companies should to benefit, otherwise she won't should continue work".
"Hmm, me too" I really think that around 30, well, somewhere between 25 and 30 predicted sales this year and 40 times EBITDA indicator, you know, there are many good news. THERE ARE lots of good news, but what is not at all taken into account, this opportunity, and we just talked about it , cyclical downturn.
Nvidia has historically been one of the most cyclical companies, e -e, in the field semiconductors. Renewal computers. Absolutely. So this is interesting. So, uh, there is this signal, which I I was watching, and I would like to to hear your opinion from on this occasion that Amazon postponed some of your orders on H100 because they are going to wait for Nvidia's next chip.
Hmm. Tesla sent some from their H100 to XAI, so that they have enough, whatever it is reason. Yes. I am starting to to seem that companies say: " Okay, so far we have enough". "And therefore, in some moment, it seems that the prices in processing centers data will decrease, deflation will occur in processing centers data.
When is this will happen, break-even of these chips will increase, and this means to buy chips will be less desirable . So, chip prices should decrease. Then Nvidia's margin will also decrease . This will be cyclical. So, again, working in the markets over 40 years ago when I I hear the word "deficit", I start to think, and in I am economical.
experience, I'm starting think: "Okay, deficit means human nature, double order, triple order, quadruple order". And you saw that your Tesla observations correct. Um, me It was very interesting that two or three quarters ago Elon said on one from telephone conversations about profits: "You know , these artificial intelligence chips intelligence and video so good.
You know, This is so difficult. I have on mind you, I think we we'll get there, but it's hard and it will take "a lot of time." "And what are you Do you know? He received all Nvidia chips that wanted, and then even more than he had needed, sent them to XAI. And I don't know, did you notice this, but just about 6-7 weeks ago it was it was announced that started production of new Dojo chip.
So, you know, Dojo's competition will be Dojo, all hyperscalers , and the customer base Nvidia is very concentrated. Their the cloud margin is lower, than Nvidia's margin. And I I am sure that in at some point they they will say that with this There's something wrong with the picture. They are very, and all of them develop their own chips.
And then, of course you have a Tesla, which develops its own, more specialized chip. Why, in your opinion, Elon called Dojo, uh, something like, well, if I am correct I remember the phrase, this there was something like high risk, uh, Well, no, there wasn't a phrase. YOLO, which he used, but this It almost sounded like this, as if he was making a bet , and he didn't think it was had great success on one of the previous ones income statements.
Why, in your opinion, Would he dilute the Dojo? Because he wanted graphics Nvidia processors. No, Honestly, I think that's exactly what happened. Oh yeah, don't worry. for Dojo, give us yours chips. So, if you...He swindler. If you listen... He is brilliant. If you listen shareholder, um...meeting shareholders who, uh, Elon just spent...
Yes, he said, he said, he said, he said that he builds up Dojo, had respect to Nvidia, something like that, but, you know, he ...I think he thinks... what can do this. So what do you think about so shiny companies, by the way? Thank you for that. What are you think about these companies like Apple, and about artificial intelligence on devices where Apple will use own chips at least for output calculations?
Or there is a risk that artificial intelligence on devices will be damaged to a company like Nvidia? Yes, we, you know, if we are right, and that truly revolutionary innovation, I think that what you will see from Apple, it's, you know, tiptoe penetration into... You know, generative very interesting features, functionality, but very limited compared to the fact that, in our opinion, others companies will do.
For your own safety data and confidentiality they almost created barrier to entry, but, maybe they too created this barrier for the entrance, which is still what brought them benefit, inability use artificial tools intelligence the most amazing the way they do them will use. So I was curious. to interview people after WWDC, some people said: "Okay, I I feel safe.
They are not going to to do nothing "crazy." "Uh, so, that was it about what I just said. Eh, interesting. And yet those of us who does AI really think so? revolutionary, They will look for it, where is it? AI destroyer? Where is that? a company that can offer full-fledged AI on mobile devices in the same way as Apple simply cannot.
What existing operators will be too afraid his actual implementation. Interesting. OK. So, now, when AI spending are falling rapidly, and, uh- oh, you mentioned energy needs, many people assume that energy problems are on the verge of because these centers data processing will be consumed at 10 times more energy or how much do we have necessary.
So take care communal services or something to others. Uh, it's impossible, so that, as we heard from chip Blackwell, he could perform 4 times more calculations with half the energy, yes, we actually are we won't see at all consumption growth energy, despite on what we will have much more innovations, much more use AI chips.
I think the other thing is, what is happening, because it takes two ...» One and a half to three years it is already necessary to connect to networks, and we believe that metaplatforms...and if you look at macro indicators, um, data centers or industrial production, then the closest we get to we can come, production in the center data processing, increased three times.
No, I think so. it has grown tenfold in three years . The goal, uh, when Mark Zuckerberg moved from the metaverse to artificial intelligence and just learned that he will need me I think he provided incredible volumes power supply. Others are forced to go overseas in other regions where, you know, electricity enough.
She can to be different stable. So they will have to take from generators themselves etc. So it will be detour. But I just looking at anything that grows tenfold in 3 years, and I say: "Okay. How do we we are going to do all this "learn?" "I understand. Andrew, it's true. good comment. OK. Um, how about...
You mentioned that, on your opinion, electric cars, or you predict that electric cars will be 75% market in 5-7 years. So what happens when, let's say, the Trump presidency will be very anti-electromobile ? It's interesting to see how Elon Musk and, um, former president Trump again one of them will approach one, right?
And, um, I really think so. if you think, you know, from the point of view of of what Tesla will become leading manufacturer cars here, in The USA, um, I think so. he will rally around this. You know , Trump can...he is very practical. This...This is wonderful. understanding. Me I like how you are. looking at Elon, He seems to be doing this just like that.
He is not jerk. He does for...So why is he sends all these political tweets? IN you are rational explanation for this? You know, I think Elon learned...that absence publicity—this bad publicity, and he is simply effective advertises itself, and therefore, and their cars. Brilliant answer. Thank you.
I want to buy more Tesla shares now. Damn it, Katie. Okay, very good. good. So, uh, that's it, What did you touch on? —this is a consumer recession , uh, in this constant recession. Is there no risk of the next stock market crash, or how do you What do you think about this? You know what hedging? You sell bitcoin on short positions as hedging?
If you look at that , like the stock market behaved outside MAG 6, he said that there is problem. This is the first. So, uh, I think that's maybe a little more like example of 1932, so what was still there then complex environment. THERE ARE -eh, but extreme, I I mean, concentration reached such an extreme that, uh -e, when interest rates rates have decreased, because it was problem then, and we were on gold standard.
So, uh, eat had to cut money supply. We also reduce the money supply of this once. They had reduce the cash flow mass. It was a severe recession, um, and, you know, there was no recovery boom. So, do you believe it? no, I think so Wednesday now a bit similar from a point of view vision loss interest rates, reduction in inflation, which is the reason market expansion.
Or we believe that we we can have a correction market by 5-10%? Well, it would be it is foolish to say that No. I would say that our the portfolios worked, you know, because cash and money buffer were really the most important variables. Algorithms account for over 75% trade. They are very simple, I think, and, uh, it was, uh, so we observed concentration on market.
If you you get algorithms, which essentially change the reason, they just moving towards cash and a cash buffer. This should be useful. for our strategy. That's exactly what happened, uh, during COVID. We had , we had, we were, we suffered serious blows. Uh, the market is one month before since the beginning of COVID fell to 25-30%depending on indicator.
We were fell by 46%. Then we survived the craziest, the craziest period in my career, as everyone knows. I felt very uncomfortable at the end of the 20th, on early 21st. We just received inflow of funds, and I just knew it was It will be bad, and I said: hold on powder dry on Bloomberg at hour-long show.
So I was not with Eric Shatzer, you may be You know him. And I knew, that it will be so, today we we are in the right place opposite situation . Now we are on our own. days, and ours multiomics really They are pulling down the flagship. Why? Because it is platform that is the oldest in its evolution.
Although our genomics portfolio or multiomics has 4 years, 4 and a half years of cash runway stripes, weighted market capitalization, it's not it matters, it doesn't it matters, it regarding everything that exists, especially six magazines, which, you know, it's impossible compare, so I I think we see outflow, and I think that this is now too error.
I feel that's the same to me It's bad that people sell at such levels. as I thought about people who bought stocks at the end of the 20th and at the beginning of the 21st. This is interesting. Well, yes, Ahem? So actually this is his innovations now are sold. I'll give you, so our the chosen indicator is correlation cost companies to EBITDA, that is, the cost enterprises takes into account all structure capitalization.
EBITDA, avoiding games, games financial engineering with EPS. Yes. So EPS only. I support all compensation shares. These are not expenses. But, but I have to to tell you what exactly here we are with you Let's go. IN innovations, innovation is critical it is important that everyone the employees were agreed.
I see it in to your own companies. We give everyone shares. I love compensation shares. No, no, I think that stock compensation —that's great. I just I think I am more I am supported by yours. proposal financial engineering , which you include in EPS indicators. Yes. Well, we're adjusting. them for SBC as for S&P, so and for us.
If you use our the method of adjustment, and this will appear in the newspaper. Um, S&P 500 today almost 21 times. Arc is... a little over 25 times. This is the narrowest the gap that I once- ever seen for yourself career. Oho. So, for us, because our companies now invest, uh, they invest to take advantage of these possibilities exponential growth, uh, and therefore they refuse from short-term profitability, and even so, this the gap is very small for historical standards.
So, even if we have is this growth unemployment, this forced, uh, reduction from Federal backup system, e- Well, do you think that innovative companies We have reached the bottom, which we there will be no more left nothing below? If you look at our strategies, then most suffered...uh, we we call it genomic revolution, because she is 10 years old.
Today it would be multiohmic revolution, but it also based, you know, you know, she is based on levels, which are mostly not higher than when we launched the fund almost 10 years ago. So yes, and this, of course, pulled the flagship down because we allocated more funds into this space. Let me to give you an example about how...about how we We are thinking about it.
Therefore, in the portfolio, in the top 10, there is a company called CRISPR Therapeutics. Er, CRISPR Therapeutics is currently treating two diseases. Uh, beta-thalassemia and sickle cell anemia. Now, this the word "cure" is strong, strong word. Compliance very careful. Uh, just to point out give you an example of what happens and how We have enough for this now.
we pay. Uh, first one person in research beta thalassemia, er, had that, before her genome was edited, and that's it what they did was edited one a software error in its genome once. That's all. Before this he had to to go to the hospital 17 times a year in emergency order for transfusion blood, otherwise he was dying.
More than once a month? Yes. It was terrible. Uh, he never did not contact hospitals. He recovered. AND many people know about Victoria Gray, she went on PBS. Uh, no one knew that she is going to do it. Uh, no one saw research. And she just said that a year later on that the very basis...I cured. I can't believe it.
« Okay, now we have the reality that we we can sequence human genome. 6 billions of bits of code in your genome. Now that we can to sequence it, we we can find out what It went wrong. Where... That's quite a lot... where are the errors programming. And with with age we get more and more errors programming.
Um, now that we know, and now that this cheap enough, from $200 to $500 per sequencing your genome, unlike from 2.3 billion dollars 20 years ago, now that we can to say this, this error programming, and here it is editing therapy genes to make it edit. And, uh, CRISPR working on diabetes. Um, and if Sam Kulkarni, CEO , believes that diabetes, e- uh, possible, I do I think.
Guess what? how much do we pay for this company today. This reminds me of Amazon in 2003, when we bought, and we were the only ones in my company, AllianceBernstein, at the time, who bought it? It there was a limit of 5 billions of dollars. Wow. This is new platform as such..." Intellia is also in the portfolio .
And I still think about Invite? Invitae, unfortunately, went bankrupt. Oh, I didn't know that. Yes, yes. Yes. So, one of passed us by surrogate motherhood. We actually used Invitae testing. I know. And that's it. incredible. Here how terrible was this market for this share book, because she, Invitae, had some of most important data about diseases in the world, including epilepsy.
She worked with a huge amount organizations. You know, we often say that our portfolios closest to venture portfolio of the capital you you will find on public markets shares. We don't have meaning that we are a company with a small capitalization. In fact, we all we have limited capitalization. Um, but, uh, we have to meaning that these companies, there is a possibility that that some of them will fail.
It just is. Very rarely, but it happens. AND this shouldn't have happened to happen in this era artificial intelligence. THERE ARE -uh, you know, some companies are buying up these assets for pennies. But this short-sightedness shares. markets now. Of course. I have on meaning that this is probably will happen with 23andMe.
I don't know. We have never been like this . We are not just conducted research on him, we didn't think, that he will be successful long-term player. Yes, I think I am. talked to Brad Oh my God, there's a lot about this. years ago. And I think, that the matter was, that he was not enough innovative in the field genomics.
I'll tell you on 23andMe . Yes. This is, hm. When we conducted research, that is when he went bankrupt, he did everything was still third behind by the magnitude of the factor, which contributed to our indicators from the moment of creation, that is approximately 10%CAGR since creation. Uh, and this because you are fixing profit when you have crazy time, like, uh, 2020.
21, yes. So, how are you? where do you think, for example, GLP-1 fit into this? I have I mean, we know, that this is not genomics. Right. But I want to hear your opinion. on them. Of course. This is great. This is the old way. drug development, and he very powerful. Therefore, if we are right, and CRISPR is...
Am I right? remembered that this limit of 5 billions of dollars? 5 billions of dollars. If they treat diabetes, think about that this means in future. Medicines for diabetes means that GLP is cosmetic drugs. Right? Who will compensate them? They cost 1000 dollars per month. I I know many people, who accept them.
They look perfectly. But if this only for cosmetic use and price will remain so, then I don't...I think that the market will be much smaller. People don't they can afford this to allow However, if they lower prices, and competition will start moving in sphere generics and others... generics, but there are fakes, which, you know, these companies, Novo Nordisk and Lilly, chasing, because they are fakes, and they set much lower prices.
So they already see some of them...problems . Oh, that's really interesting. Okay, that's exciting. So then Donald Trump, returning to Trump, hmm. says he wants to release Jerome Pavel. Were you released? Would you like Jerome Powell? Let's see what they are. will do when evidence will appear. Good.
You know, if you he still has a chance to be fired Katie ... Well, I think the whole Fed —this is a problem. Free everyone. Or just close business. You know, it's disappointing. us to the blockchain and Bitcoin and everything another. Can we just go to this... Absolutely, please. . Absolutely, this is ideally.
So, Art Laffer, who is my mentor in colleges. Many of you may know him, Laffer curve, supply-side economics . Er... Every time I met you, You mentioned Art. Because I am so much He is guilty. He helped me get my first work at Capital Group, when I studied at his school. class. I was still studying at colleges.
So that's it. I got into this. career, but not only with for this reason. I think that he is brilliant. And we asked him cooperate with us over our first article about bitcoin in ...2015. At that time Bitcoin cost about 200 dollars. AND he read the newspaper and said, "Oh my God, this is it, what I've been waiting for since 1971 when we closed "golden window." "Wow." He said: "This is global decentralized, without human intervention, based on monetary rules system, the first in history.
This is very a grand idea. Private money. We we return to private money." He said: "This is fantastically". "He means that the Fed changed the world, and we moved on to, you know, controlled by the government, yes, printing money. AND I don't think the dollar will disappear. I think that strong currencies will become stronger, and many currency markets, developing, will disappear because their citizens will start buying insurance policies from corrupt regimes or reckless modes.
So we'll see. what will happen. Dollar will compete with Bitcoin, what will happen? perfectly. This is interesting. Yes, I...okay, I am now I'll throw you a chip. Emm, we know that governments love fiat money, because they can create more. It is obvious that this creates inflation. But if we are in deflationary environment, they can essentially freely print money, so What are you creating now?
stable inflation, Let's say 2%, right? AND now the government can to strengthen their power, your expenses, your donations and continue to collect votes as a result this. Well, I think so. what I described is It is very traditional that what is it system. Moving on on bitcoin, although it is... very clean, he deprives all this state power.
And I don't I know if he wants this. government. I think we overcame the biggest risk. I think that genius Bitcoin was in because as much as he was hidden. You know how he is scaled as we now we have United States... What is this? 55-60 millions of people who they own it. It became a problem election year.
When I saw that in you now crypto is running the president, obviously. Exactly. So what's up? happened? So, you have was what I think prompted more Democrats vote for FIT, that is, the Law on financial innovations and 21st century technologies century that corresponds to the 21st. Hmm, 76 Democrats, shock that they prompted, I think, three things that Trump announced.
Number one, he was going to accept donations for campaign in cryptocurrency, Bitcoin. Number two, he was going to protect the right to independent storage cryptoassets. Critically important for community. And number three, there was one more thing, that he has another one digital banking currency? No digital central bank currency bank, but that's all It wouldn't have happened anyway.
We, we, we live in Florida. Governor Where is Santis, that's the question state rights. Governor DeSantis said: "We are not let's introduce CBDC our state." "If you have there are states like Florida, Texas and others who are not are going to accept CBDC, this is not will happen. OK. So, I think we passed the point highest risk in public policy.
AND Did you notice when China actually closed bitcoin. It's interesting that they closed, but they didn't made a decision on that it is illegal. They just said, that no one else will never be able to do it buy, right? I I think that many of them holds it, right? Yes? But, um, when they actually closed Bitcoin, it got there to another place.
You are not can you close it. None places where it would be possible strangle. Right. I think the thesis is not is to to kill or liquidate bitcoin. Instead, if the thesis is that you can you replace central banks by around the world cryptocurrency, then you essentially deprived significant power of governments all over the world, that, probably right.
And you know, then you have there will be much a more transparent system. But the loss of power will huge for politicians. And that's why I I just don't see that. large economic states ever accepted..." this, while their currencies are not will fail. When their currencies are failing, that happens to everyone, they are experiencing all failures.
If this happens now, Egyptian pound, many people they don't know this, it fell by 40% in March. IN you are Javier Millay in Argentina. Miley in Argentina, in you are Nigeria, naira fell by 50% for last year. Think about it. These people have their own purchasing ability and wealth in these currencies, they are now a little more carefully think about what I need it here.
insurance. And I just been there Salvador, had opportunity and privilege to meet with President Bukele, which one now focuses his success, now that he effectively got rid of gang, and I can give you to say that I felt quite there safely. Donald Trump said that they sent them everyone here. Uh, regarding Bitcoin and artificial intelligence, he really smart.
If you are a leader and you know what the economy is is only 30 billions of dollars. Nvidia is a company worth 3.3 trillion dollars, right? Country worth 30 billions of dollars, eh- e, uses two most important technology, uh, implementation, and I talked to Art Laffer, actually, which one now Salvador advises and, yes, it helps them.
He does his thing. contribution to this world. He very confident in this. Hmm, this is will raise the position El Salvador in the world. I I think theirs economy, its the economy can to grow tenfold in 5- Bukele's one-year term precisely because of these two technologies. Being built on trust and real innovations , against corruption, transparency and, you know , strengthening reserves, some of which are now in Bitcoins.
And not seeing panic from the bank . You know, you have a rising currency, and not a currency that depreciates. Now they are already tied to the dollar, so yes. So, but so crazy continuation, and then I will stop at this one. the topic of government. Just me just tried to run for the position of governor against Gavin Newsom.
I just I I endure I can't do it. Sorry. But I just believe that these systems will make everything to survive. Therefore, further thesis. What Salvador will happen starts to grow, everything perfectly. This is a system, based on the fact that people invest their insurance policies in Bitcoin. Then they elect someone who promises great expenses, who creates the central bank, and you immediately return to this.
Uh, you know, I-I think, What is the stake here? in what he does bet on virtuous cycle. Why do you want come back to this? Why? Why? And you know, with from the perspective of how we we are going to break government... No, no. Break...Yes, Yes, Gavin Newsom about...Yes, I think so Youth is our hope, how are they, you know, always is.
I really am I think so, and I think what exactly do we see here, how bitcoin becomes the problem of the electoral year. And who could think? I have on I mean, what everyone thought, what we have so far will be CBDC. This is true. Right? JP Morgan is already close to 3 years worked with the Fed. That's it.
And, uh, yes, that's It was exciting. Young people today, on this topic, Mhm. What should they do to to succeed? That to become financially independent, this...this... A matter of choice better work, better career, better licenses? You know what? you tell people who come to you and They say: "Listen, I want to invest.
more, but to me need more capital, so that invest more." "Uh, where, where, what are you What do you say? What do I need? tell your family children? I have a lot. call options options regarding what will happen in this country. Congratulations, yes. Um, well, by- first, one of the things, what I admire is that from the educational our point of view guided students to where The world is moving.
And you do it in St. Petey. Yes, in Pete we did ours research age-appropriate high school, this curriculum with natural sciences for the entire district Pinellas. These are state schools. And we agnostic, state, private, charter. Your company manages curriculum in natural sciences for the entire district high school.
We are with the hired ones teachers. It called Arc Education Initiative. Yes. Initiative. Yes. Thank you. Thank you. Yes. And you know, Florida always had to try harder, because her education the system was considered so bad, small so bad reputation. If I am broken. So, starting with education, very important put them on the right side of change.
And then, when they are making their way to college graduation, you know, this is where you you are taking a risk. And there is...If you are on the right track on the side of change, you know, read our research. What is the right side of change? Consider the source. I I mean, that's all, what we do, but what, in our opinion, there is right side changes?
Uh, and let's get started. to lean into this direction, finding companies that, uh, on your opinion, will use these technologies or will even launch their. You know, I was waiting, until I will turn 57 years old, to establish company. Uh, I think If I were growing up today, I would would have founded it much earlier, much earlier.
Uh, but if you Are you going to work? in the company and only Are you graduating from college? I always say that, uh, you already have one foot in to the new world. And yours? The boss—no. Yes, especially from the point of view of technologies, your role at this new job is to your boss looked brilliant.
Make sure your The boss looked bright. And with these new technologies, uh, help me companies with these two technologies, and then if they don't give you have breaks, which ones do you consider deserved , after the service...Well, then go to something else. I like that. you said that after how good served.
It seems that sometimes me too raised this issue. Sometimes this happens the impression that people they say they have the right to something, and sometimes it harms people. It repels them because they expect, and therefore they are smaller are trying. Sounds as if you were saying: first try, and then provide.
Definitely. Definitely. And you you will achieve much more if it is will do. And this is not necessarily means, that in one company, Do you understand? You may have to be wonderful boss, but no nothing like that there was no deaf person there corner. It's not your fault. boss, you know, this is bureaucracy.
Let's move on to next. Let's move on to next. Interesting. THERE ARE- uh, you think that real AI, it was the phrase you used, real AI loot will get smaller companies that can to be agile and innovative. Which our current time horizon for this? What do you think about these? the following S-curves? I think they are happening now.
I I mean, there is... The world of venture capital capital finances all kinds of startups in in the field of artificial intelligence, many of who are going bankrupt. They just go bankrupt because it only functions. This is not real operating rooms systems. Interesting. Truth? Such there are many companies, and there was a whole article, seems to be at Barron's or Financial Times, where Stable Diffusion, one of the unicorns 2023 year, now, obviously, encounters financial problems, collapse financing.
Yes, I know that. Inflection company, sponsored by Reed Hoffmann, was to become acquisition of Microsoft. There aren't many of them now. they talk about it, but You know, I think that amount of capital, which is simple rushes headlong in this space, will inevitably lead to that part of it will be lost.
Yes, yes, of course. And you know, Open AI Anthropic were very excited about that they do, and by that, how fast are they moving. We just received Claude 3.5. Hmm, I forgot there are three options. This is average . And you know, he is now outperforms GPT-4o. And here it is The race has begun. We considering Meta, but we are considering companies that also will be highlighted, and, you know, will use some of the things that these companies do.
I understand. Okay, that is, they are now appear. So Now is their time. find. This is what you, In essence, you are looking for. Um, How can we know this? uh, how do you define it, uh, what will actually happen? a real system, not just a function, as you mentioned. I have meaning that now we, obviously we can with Apple create your own emoji using AI.
But where is the profit? from this? You know, The Financial Times wrote an article about what investment in AI by 2 billions of dollars, or , sorry, for 2 trillions of dollars, lead to what? To increase 2 billion in revenue dollars. So where is the money? ? Yes, no, no. And Sequoia just came out and said: "Wait a minute" a minute, uh, 60 billions in venture capital, and I think that this underestimation.
Perhaps, "This is an outdated number." It was invested in generative artificial intelligence, and we we really see 3.5 billion in revenue. So there is a gap, and will take place a huge number commercialization. Our research show what exactly yes software software, hardware and software worked together for many years, and perhaps even that will change.
We must be open to reflections on these changes . Are companies that capable of generative artificial intelligence, which able to sell its effective software to companies that will increase their productivity in four or five times before end of the decade, will be ready pay 10% of this increased productivity by this companies.
So we let's see who helps. Now it was interesting to watch, How is OpenAI, uh, moving? ChatGPT rose from scratch up to 100 million in 2 months, at the earliest the whole story, right? ? Good advertised. What not well advertised ? Since then he stabilized or stabilized. Why Did this happen? He stabilized approximately 200 millions.
Why is this? happened? Well, they they took 20 or 30 dollars per month, depending from whether it was enterprise, or consumer, $20 per month. We we enter into a more complex economy. Even in ARK I said that we spend 20 dollars for all sorts of experience, you know, experiments and large language models.
Even I say: " Okay, okay? we are considering what we are no longer we use, and we reduce these costs?" So, maybe that's it happened, and why they canceled the fee and now switched to freemium service. So started with free, and now they are very happy again are growing rapidly. So very important to populate free service, and then we'll see.
It also becomes obvious, that if there is a side, focused on consumer, then it should be oriented for advertising, because consumers, especially young people, just not are going to pay for these things. Right? So advertising, and then this brings all the others , okay, who has this? takes away? Does it take from, you know, metaplatforms, does Amazon get much more than advertising, of course, Google?
We believe that Google is under great risk with from an advertising perspective. So, you know, there will be attempts to buy and buy, and, you know, we We are watching carefully. You know, this ties it together. with a discussion of AI with because you mentioned Ilona. I can't help but remember when the prices of lithium were sky-high, he said during telephone conversation about profits: "Boy if you just do you want to print money, get busy lithium mining." That's right, because he wanted to.
to get people involved lithium mining. Prices have fallen. They fell. So that he could do cars. Of course. Of course. Of course. And this is by the same logic or character, so to speak to say, I'm not saying that this bad, this strategic four-dimensional chess, that's what it is, oh yeah, yes, yes, yes, Dojo, this is not big deal, but Nvidia.
That's all. manipulation. What important for him, to achieve success and for his business. And he expressed his respect Nvidia. He really is respects Nvidia. Many people forget about it and about what Tesla removed the Nvidia chip from their own cars. I think this was in 2016, 2016 or thereabouts that.
Is this Yes? Well, they developed... Specifications are out in 2018. They talked about it before this. Okay, maybe that's it. then appeared specifications in 2018 year. They removed its, I think, in 2019 year. Hmm, and that's when this idea came up: " Wait a minute. Some of these hyperscalers", and I would classify Tesla as this categories, "they are going create your own chips.
So does this mean also, that others automakers potentially easier compete with Tesla with from the FSD point of view, if now these chips are becoming much better, or people create own chips like you Did you just mention it? Or maybe Tesla moat actually decreases? He actually became bigger. Because the moat— this is data.
These others companies, I have mind you, Google, that, collect data about a thousand cars? Tesla collects data on 5 million, 6 millions cars on all over the world. Short Nvidia's counterargument in to his Orin, Thor or for some reason, theirs slideshows they do for their own Drive platforms... Mmm...
uh, is that we actually have more you don't need that much data. They are trying to counteract this, so that sell Nvidia, obviously because we can take data from a smaller quantities vehicles , and then run simulations. I don't think so. You real ones are needed driving data to find out the angles cases, whose simulations never saw.
Good. You know. Good. That's a good point. Good. Good. Therefore, growing mode. Emm , Ross, who was here in front of you, very admires this company with artificial intellect. They are mine. I don't like it, but I I wanted to hear yours. opinion, and I told him that said. But I wanted to to hear your opinion about innovation at Dell.
Aha. Hmm, that was it. just...That's enough the old world, and they are trying to penetrate into a new world, and it's good for them. I look at everyone. these old companies world, HP, Dell, etc. Hmm, this is usually not the case, what are we looking at, but I understand why. value managers pay attention to these companies, because there are growth dynamics, which they can here use.
This is not that type of growth, which...It's not destructive innovation. Hmm, they... they...they will play a certain role. This will not happen. long-term, very valuable role. This is ours point of view, but I I think this is good. type of shares for investor. Of course. Good. Another strategy. It was very diplomatic manner answer this question.
So, you remembered that there is the probability that the Fed there will be a little politicized. How are you? Do you think we will get it? we are short for elections? I meant that this won't even happen if we are right, there will be much it is clearer that they need to be shortened in September. Now we'll see.
We approaching this, because this...this...this... in...the old days, in old times, you know, at the beginning of my careers, usually rates were not lowered after June, because it would be considered too much publicly political. So, that's where it all comes from This is taken. But if we are right, so how fast inflation here starts to crack.
AND I think that what the consumer simply says "no", this is the main one the reason is because they, they should, they don't they can finished with a dot vision This is interesting. Why the Fed just on the last one Fed meetings redoubled efforts about how we we measure inflation rent? Ahem. Rent, equivalent to the owners, which, as we we know, it is 18 behind months.
Why? And he addressed this question. He said: " Listen, we know. that other people question our data, but that's what what we use, and we are not changing that." He redoubled his efforts. regarding compliance this outdated inflation rate rent. If we measured our inflation today the way they do it Europeans, harmonized indices, we would already have 9 months had 2% inflation.
Yes. Why are they so stubborn? ? I think so, if you will look, and I I'm going to add this. diagram for the article, which I am writing. So, if you will look at 10-year yield treasury bonds for the last 45 years, you will see my early career days, peaked at almost 16% in 1981. And a constant downward trend.
Of course, we have there were cycles around downward trend, but this downward trend, 10- annual treasury bonds, broke. Mmm. We are on top. maximum. I have on I mean, yes, higher. maximum. Mmm. Er, it was 3%. It was maximum in 2018. Now we have reached 5% October of last year. And the Fed, in fact, considers it as message.
There is inflation, and it's, uh, 2.4, 2.5, if you break it down. Uh, but this is one of the main reasons. So, I think this is part of it. of what is here is happening. Wow. Now if I look at the same rate , I think that what will happen is will happen, considering how we we see the world, so that's it that inflation will actually start to fall, hmm, for by many indicators .
And this means not only inflation, prices will start to fall, but also growth unexpectedly will improve thanks to increase productivity, related to artificial intelligence and all these new platforms. This will be very confusing for Fed. Productivity boom. Hmm. Which could have already begun . Usually you don't see this until Years will pass, and then that's it is happening.
Wow, that's very interesting. So, I have this thesis, that in 10 years, I I've been saying this for a few times now. years, i.e. until 2032, 33 year, somewhere in this range. Uh, 30- one-year mortgage will actually be lower 2%. Mainly because I think we let's go back to trend. Exactly that one the trend you are talking about just talked about, and what deflationary forces will become so strong that we are actually find ourselves in the situation in Europe.
It my thesis. I am going to ask you about it. Uh, uh, Federal backup system just updated my scatter chart and assumed that long-term, uh, neutral rate could be 2.7 or 2.8. They are constantly increase it from 2.5. My thesis is not agrees with this, and I want to see, to Which side are you on? Are you leaning?
So, if you look at economic history, e -eh, you will try to determine such a time, like this one, with such the number of innovations, which, if he technologically provided, there is deflationary. It just like that. Uh, you will have to return to early 1900s. Now, and until the late 1800s years when...So, if you...what happened, and we did it, it was hard to get these numbers, you find that the curve profitability was inverted more half the time, uh when was inflation extremely low.
And this yield long bonds, I I don't know what theirs was. exact amount, but it is much lower, than, I think, people expected. What you also seen in the world private money to the emergence of the Fed, it was many booms and busts . So, but they were fast. They were fast. Inefficiency is not like now, when accumulates to 2008-2009 during many, many, many years, right?
Yes? Hmm, accumulation technological, technological and telecommunications bubbles during many, many years. It was similar to tulip bubble . Yes, yes, yes, yes, yes, Yes. Hmm, that is, it was real price stability. So, if we take into account long-term yield bonds, I think, you know, for me 2% and 2.7% , I don't know, but I I think it's a surprise.
will be on the lower the side of expectations. Interesting. Good. Therefore, surprise, Alice, how are you Do you think we will? ...that is, pre-COVID Europe worried about negative rates. I I mean, you have were negative rates. I think that in Germany negative rates for savings. Yes. Will the US go there too?
I don't think so. Good. Good . I don't think so. Not so bad. No. No. Not so bad. You don't like it. Germany. No. Not Germany. You Are you kidding? No. If fair, in Germany...I have there was an apology. Sorry. No. No. I have meaning that, in my opinion opinion, in Europe many problems. IN this world innovation is very It's interesting to hear how Palantir says: "We we export as much as possible more workers from Europe to the USA because they just don't will allow artificial intellect to flourish there.
Therefore we do not we are going to play favorable conditions." Just a change of subject, huh? then we seem to let's ask Ross talk to him/her a few minutes, and then we will answer a few questions and answers. But I I want to ask you what are you thinking about immigration from economic point sight?
There is such a thing belief that now actually, although immigration costs...I tweeted this statistics, I have it I'm sorry, but it was something like an assessment CBO that immigration can cost us 600 billions, but she can generate multi-trillion potential GDP. Something like this. I have find your tweet.
But in any case, the point is that with economic point from the point of view of politics, it seems as if interested to leave holes in border. This supports number of workers places. This supports economy. Of course, this is very political unpopular. What are you you see or where, on in your opinion, moving immigration from economic point vision, and how it can influence us?
So, I have two personal stories from about this. Both my parents immigrated from Ireland. Um, yes, and this country was built on backs immigrants like us we know. I'm sure somewhere There is an Irishman here. Or he? Here he is. Good. And, um, I would like to to know where. Kerry and Donegal. Both of mine parents.
Dublin. Okay, I understand. Emm, so the second question is— we are hiring immigrants. AND because they are very want to work at Arc, and many other people they won't hire them because they will not go through the process obtaining a visa, therefore that this process...This nightmare. It nightmare. So Marry everyone.
And then they will receive citizenship. It perfectly. I think that the Supreme The court has just ruled, what to give them citizenship is evil. We better start. get married sooner. IN anyway, I I think it's just appeared this week . IN in any case, This is broken. So, uh, we're going to, uh, and we are going protect legal immigrants, especially those who are here received an education, desperately wants stay here and forced to return home when we can, we can use this talent.
So that's the first. Um, I think so. immigration, legal immigration, is good. I really am. I think. Hmm, I really am. I think it's our DNA countries, and you know, of course, my parents moved here because it there was a country opportunities, and, you know, my father immediately called. So he, that is, they never depended from the government, and the government depended on them because my father went to Air Force.
So, you know, I don't I know how much it is. contradictory. I think that is legal immigration should be strengthen. I like it. I completely agree. It perfectly. Okay, two. quick questions. They can be very fast, and then, maybe we can meanwhile set this microphone stand right here, because then, maybe Ross can put a few questions from here, and then other people too will be able to line up behind him.
Thus, in we will be good a stream of questions. I I think that would be ideally. So, two quick questions on this time. Walker or Powell, who are you? Do you respect me more? Walker. Trump or Biden? So, as I said before to my children, to me two girls and boy, and they divided in opinion on this occasion.
How am I? He told them: " Listen, I I will vote for that one. the person who is best will do the work for our economy. I voter when it comes to reaches economy. And on this one basically, Trump...I have I mean, if you...Yes , if...Art Laffer describes the first 3 years Trump's presidency as the best in economic history USA.
Not the last one because of COVID, but...and me I agree...Wow. And I also took the course " Reaganomics. It was , you know... Thank you for that. Hi Katie, great. to be here with you. I I know what you said. about AI and revolution even before this became a cool kid in the city forever. So my question is probably like this: I can share AI into three segments.
One is the big chips, such as Black-Schoolse, and Nvidia is big beneficiary of this. Then the chips advanced AI, which may be Apple on devices, right? All this requires significant combination hardware and software software. So Apple can be big beneficiary of this. Then... The third is where, such as application, B2C , B2B, like ours medicine, aggregators data, right?
Many industries that can open use of AI. So my question to you, based on this, is where, on in your opinion, companies with a small capitalization can actually affect these three. So, from the point of view of these three, it will be on application side . Um, and when, when we we are talking about companies with small capitalization , I don't mean exclusively companies with small capitalization .
I mean that if you look at OpenAI, that's already a big one capitalization, right? Yes? And therefore some companies that pass through private world, will become big winners. So, um... Uh, and yet, you know, this interesting. We just constantly researching and ask questions about AI, because we we are on at the very beginning.
People don't understand, How early is it? It The Internet in 1992, or wrong? Oh, that's when I was born. That's it. THERE ARE- oh, and such early days. So, honestly, I I have to tell you that we all we are is ourselves we put this on ourselves question. One of...That, that, in our opinion, we we begin to understand, is that most disturbed part technological ecosystems today could be software provision as service.
We are with you. we observe how Salesforce has Einstein a long time ago, but he doesn't see yet opportunities for promotion. Because it's terrible. Activate...Well, you know, that's what some people say about Salesforce, but...and will be the best way. Here in Why is that? Ruinivna part of AI is everything that you hate in salesforce.com, because many people use it, but hate.
Uh, you know, generative AI can, you know, can change this. Very interesting, because Marc Benioff should be to those who should be capable of stimulating innovation, but with for some reason, it seems that they They don't do that. AND so you say that these smaller companies will be in much better position, to become destroyers, because they must be like this.
They should be, and, maybe Mark will buy them, because it was his story. Good. You know, they were too good. assimilators technological acquisitions. Uh, but I don't I know if they are too similar to the old world. You know, we're watching. on this the way we do looking at the stack, in you have the infrastructure as a service, platform as a service and software provision as service.
Software provision as The service will be, you know, barriers to entry from generative artificial intellect sharply are decreasing. And if, uh- eh, developers software there will be provisions, we don't know as far as more productive these developers will be, so the numbers so far are impressive at this early stage.
If you know what yours are engineers will be at 10 times more productive now, why are you are you going to to transfer to outsourcing what you you know, you know that you need, better, universal knife approach. So, just with from the perspective of how we we think about where there will be a revolution, but I I also think that innovators with less capitalization will consider companies such as Salesforce and others who will need change, uh, the dynamics in their companies, and -uh, these are the companies that we are looking for.
Thank you. Sincerely. Thank you. Okay, next. question. Hi Katie, very Thank you for being here today. with us. Um, I am pleased. This is actually beautiful. leads to mine question. Um, I'm talking. about what these innovators with less capitalization and more flexible companies almost have advantage now that The cat seemed to have come out of bag with LLM and open weekend code, um, a little more such things.
How is this? affects your investment thesis and strategy, and on which companies, or, uh, areas you Are you concentrating? AND, Kevin, you are a lot. Are you talking about what? there are so many software provision that is so easy to iterate, them so much, and so suffer a lot failures. So I know, What are you giving away?
hardware advantage provision from the side artificial intelligence, so I would like to hear from you both, how does this affect your strategies. Of course, we are very focused on Meta and Llama. Llama 3 with open source code–this brilliant strategy, because Meta is company, oriented mainly on consumer.
I know that she is trying to change for via WhatsApp and...and so on, but this focused on consumer. But llama Llama 3 actually created for businesses, or wrong? And therefore thanks to open source all these developers software dedicated to this platform, improving it, and then Meta returns it inside and, you know, builds its own, more specialized models from above.
So we we believe that what they do, great, and we too we are trying to focus on, will Meta and Lama more commercialization in in the field of artificial intelligence, because they can. Um, uh, these are people. are not appreciated now. So, oh, of course, we are trying to focus on this, and to the extent that which one are you talking about hardware provision, and I I just want to to predict, uh, what you You say, Kevin.
I I think I know. I think You said it. Um, you know, someone has to gain from this benefit. If this, you know, the Sequoia number, I I think I already said that. previously, 60 billion against 3.5 billion. Okay, we have to to have good times payback if hardware software will continue to benefit, or wrong?
And AI is moving yes Fast, costs just fall like that quickly, what should be , it should be, but if there will be more of this commercialized, than we think, it is will also return to hardware side ecosystems. 100%I think so hardware software, probably reaches peak in pricing. I actually think that you just started this a blow from the top of Nvidia, honestly speaking.
Um, so, hmm, I think there is end of investment in hardware providing AI that is smart if someone wants to make an exchange. Um, no. personalized advice. But, uh, Apple I am very interested. I like it practical using this, we didn't touch it , but I have it many photos and video of my children with travel and vacation.
AND at least that they they say we can to do, that's what I can I ask Siri take a video of me vacation and collect all of this together like this. This is practical AI for me. Such software provision as Do me a favor. I like it. I think that Palantir is an innovator. I was really surprised how good Adobe and how fast Adobe began to integrate in Photoshop.
I just subscribed to their PDF reader version- files for $4.99 per month. She actually better than some other startups versions I've seen. So, hmm, I guess, we'll see. Yes. Good, further. Thank you for your question. We have t-shirt "do not submit take me to court, brother ". So glad you're here. Let's hear it.
Um, what do you think about blockchain stocks and cryptocurrency? What I think about stocks blockchain and cryptocurrency in general ? Well, we are very, very happy. cryptoassets, i.e. Bitcoin, Ether, Solana. This is not shares. Um, when people are talking about cryptocurrency and shares, they have on to the attention of miners.
Um, we we do not invest in miners. We are inclined stay away from highly cyclical, commercialized enterprises. They have data center, but we still think, that this is a world of boom and recession. Um, so we're there. no. Our derivative the tool is good works, there is one, there is one a name that, uh, I don't must sell.
our money, uh, directly, but we We are very proud of the fact that that ARKB, our spot Bitcoin ETF, so good showed himself, and so a lot of people, hmm, gain access to Bitcoin, because we we believe that this real money revolution. So we We consider this important. You can play this on the stock market.
Other companies, such as like Coinbase and Square, or Block who own Cash App, which are very creative work with bitcoin, and the rest of the world, especially interesting. Robinhood now wants go digital wallet. So, when we we are looking for options, we are looking for those companies, which will provide us digital wallet, because we won't have many digital wallets.
This is a bit similar to credit cards. We don't want too many credits cards. We would just Robinhood had a credit card. Yes. Oh yes. I think this one flat guy quite intelligent. Yes. Yes. Yes. Yes. Yes. He is. And then another was a cryptocurrency, and What was that? Uh, blockchain? I mean the direction of that What we think that we we think we are just at the beginning, although we we have...Our first acquaintance with Bitcoin happened in 2015, when he cost 250 dollars.
Now, at a price of 64,000 dollars, I think it's 64, 65,000. We believe that he still has a lot to do need to do, because it's new monetary system, and many people in everything the world will accept it, because it will prevent decrease in purchasing power capabilities and destruction of wealth inflation.
Hmm. How are you? It was a bit too difficult? No, it was wonderful. respond. Thank you for this is a question. Further it is about that if you are worried through short-term recession and you want to trade as much as to sell poorly Bitcoin only in short-term perspective, because you don't need to worry about earnings season or something like that.
IN short-term in the future it really risky assets. It's interesting that we learned about Bitcoin during the crash regional banks in 2023, this is what he became an asset without risk. People said: " "Wait a minute." Maybe I I need this little one. insurance, because this is happening banking, and, maybe we all are again we will decline.
"And this because Have rates dropped sharply? People are trying this. analyze, but, you know, regional banks continued fall. Uh, Bitcoin rose before Nasdaq, but only for a few days. But still, it was one of the first who...This was one of the first to ...And that was enough quickly after, uh, Sam Bankman's- Frida...So that was it interesting.
This is really it was wow, it's not easy an asset with risk. It can be an asset without risk. This is insurance. risk policy counterparty. Fair remark. Wonderful question. Thank you very much. . Let's try. this is simply because we We will be at VIP soon. dinner. Let's let's try this, maybe , a little fast.
So, maybe just very quickly...and let's go Let's answer again. a few questions, and then maybe we let's end this here for a few minutes. Good. Hi, Katie. Recently I read the biography Elon Musk, to better understand investing in Tesla. A brilliant man, somewhat was suffering. But in my own...words, he even said: "I am so I often shoot myself.
leg, what is it worth to me to invest in "Kevlar boots." « When he says something similar, I'm curious, what protective measures exist barriers to protect us, investors, from his natural inclination ? I mean, I I love this person, but I something like Kevin , I think that sometimes Are you annoyed by some people?
the things he does. So I just I wonder what you think. Yes, I had the honor to meet him and the team around him, that really importantly. Um, yes, I am. I think Robin too Denholm, chairman. Emm, yes, to learn about people around him. Robin is wonderful. I met her on shareholders' meetings. She is amazing.
Emm, very solid, very objective, very...Umm, you know, therefore, Having met him, I I feel that certain I know him somehow. He so caring about humanity. This is big, ummm, a big burden on his shoulders– save us from ourselves, ecologically, and, you know, whether it is prevention censorship or something like that.
Um, he's very good. man. And I understand, what he understands, he understands, he speaks crazy things, and..." You know, he's a little similar to Trump in in some way, because, speaking our investors, I I am watching that. what does he do from the point from a technology perspective. He so focused on this, more than any CEO .
And one more thing, which he has, unlike from many general directors, this is what he has a master convergence technologies, which happening in this technological revolution. Uh, work- taxi or autonomous taxi networks, or, you know, convergence robots, accumulation energy and artificial intelligence.
You know, most people when think about this a company like Tesla, they think about cars. He I didn't think so at all. AND I think he is uses, you know, convergence technologies, and will continue to do it this way that this will surprise people, I I think. So, what? as far as I'm concerned, then we, of course, must to conduct a proper verification and to make sure that, you know, leadership strong and whole, has the correct incentives, etc.
Uh, me I think that many of what he did and what was it for rewarded, related to this thought. What absence publicity—this bad publicity. AND that's why everyone is talking and are outraged, but he says what is actually said thinks. This has belief. So, again, we we just have to, and we regular we are calling from leadership, even more than with Elon.
Right? But we are time from time to time we meet with Elon. I don't like to meet with general directors too often, simply because we need save objectivity, and really businessmen around him, which are doing the work, must have their own leadership. You know, and he is a true leader from the department of relations with investors.
Martine, I know he just gone, but he always was good... Oh, he was wonderful. Yes. What do you think he is? will announce on the Day robotaxi, 8/8? You know, I don't know. I I think that partly the reason why he entered this date in calendar, consisted of in order to motivate employees inside, saying that we do it.
AND, you know, we have to solve this problem, both this problem and this one problem before this date . So, it will be very interesting to see what he will announce. IN we have nothing, but we announce it. Well, I think no, no, no. I think they have there is actually something thanks to the steps that they did.
Therefore, unpacked production means taxi production, human-controlled, and robot taxis at one factory, getting rid of assembly line, rethinking production. And this tells me that he wouldn't do this, if I hadn't approached this. But more importantly There is madness around. release of all people from chargers networks.
This is the decision, I I think there was another one. a sign that they closer to the robotaxi. You know, distribution charging networks, they tried all this to fill; you know, they get all complaints. And if Tesla will there be a robotaxi, or platform autonomous taxis, um, she will place charging stations in in completely different places, since it will have control over all of this than now.
So, I I think that's exactly what it is. happened. Whenever he realized: "Oh God, "Yes, we do." We ...This means that we must do it. "I I'll get to work. Uh, you will see a little drama. Perfectly. Thank you. Yes. Thank you. Wow. Yes. So every time in I have a problem. pessimistic view about Tesla, you are her get rid of.
AT. Yes. Just say it." "Thank you." Okay. This is a good prospect. This is "thank you". This is "well, we We love you. Yes. Thank you. Thank you. Next question. THERE ARE -uh, Katie, your vision future very encouraging, and his nice to see you against everything this dumerism regarding AI and the like.
So, I appreciate it. Uh, mine the question is because, you know, there is such an old story: if you switched to 2024 or 2020 from 1904 year, you probably would try to invest in automobile industry, but if you did that, you would lose 90% because most companies have failed. You talked about companies with small capitalization.
Which names with a lowercase letter capitalization create products AI that provides real value, like, for example, for large and mega- companies about which "What did they say?" very specific conclusions and tasks, in your opinion, performs AI, which increases productivity big companies? Of course. So, in our private the fund is a company under called Shield AI, which, on in my opinion, will have one of the most powerful applications of AI in defense sector and will serve very large companies.
So we are very confident in this, because the government, and we we know this from Palantir, very focused on, What doesn't he know? We saw a huge step forward in Florida , where is located SOCOM Command. We we see incredible interest in helping financing of small companies that will help us with national safety and our defense.
I would say, that I am very confident in this. Of course, that it can happen, and it risk in our style investing, that's it what our companies will be redeemed. AND we would like them to remained clean playing for as long as possible, because in the event of a ransom, you know, these companies can be absorbed by the great bureaucratic systems and suffocated.
So this is it the tension with which we We are playing now. What regarding AI... just in general, every time we we consider each... If you look at majority of shares in our portfolio, uh, we spend our quarterly calls with them, the first asking questions regarding AI. AND the most important of them concerning their own data.
It secret ingredient this new world and how it use. So again, very early stages, and I I will tell you that we did some mistakes, one of them is Teladoc. He has one of the best data in country. He has no only some genomic data, but also electronic medical records, he has, you know, contacts with doctors, hospitals, insurance companies, etc.
AND still this world moving so fast, what if you don't have general director, who works hard and understands how use AI, they will be...you know, we have every Friday a brain scan is performed storm, and the past Friday one of participants of our brainstorming said, she said : “I think a lot companies get lost, because they don't move "quickly enough." « So, this is our the biggest risk.
Thank you. Yes. Okay, maybe we don't. we will be able to answer to all these questions, but let's give you one more thing, then maybe I I will allow myself combine your questions with those in There are you. I am fast. I will give you each of them after that question, and then I I will try to collect them.
together for everyone. Such way, at least you you can think, before we get kicked out , uh, since we we are late by 22 minutes, and I have problems. I already have it. So continue your question. How do you support firm conviction when the market is not necessarily agrees with yours forecast? I would be I would be grateful if you could answer, based on personal level.
Um, how are you coping this personally and as often you reviewing your thesis, when a new one appears information, as well as from points of view shareholders when they can compare your performance with S&P. Yes. Okay, so how about we to cope with, uh, low efficiency when the market turns against our style?
Uh, therefore, research, you know, focused on what is central to our work. Uh, and some of you may know this, but Wright's law, attempt to find out learning curves, cost reduction, etc., understanding how something quickly will change. Therefore, research is how we are orienting ourselves. IN we are descending market analysis, then we have to find companies, uh, and we very early we work on many of these platforms, so there will be some deliveries and failures, and the market does not loves uncertainty, especially when cash is king, right?
wrong? Cash is available king. Our companies will hungry for cash, because they invest. So, I I think it's more that what we went through newly. Uh, of course, we all have your mistakes. Uh, this one the reporting season was quite complicated. AND then we we return and we say: "Okay, is there this company is ours thesis for this companies, based on what place it is takes, uh, in this specific technology?
Are we Are we wrong? Are we "Are we wrong?" "Uh, if so, then we we will sell. One of good things, which happened this year, not exactly wonderful things happened, after that, how are we doing pretty well revived the past year, we do it again year in the fall. But this gave us the opportunity give up names, about which we we lose confidence because they not moving quickly enough.
Uh, personally, how do I feel about to fight this? How do I fight this? I I truly believe that The truth wins, and I been in many cycles when we during many years looked wrong, and we we are starting to base ourselves , and that's where we are now we are. We we base our portfolios during the last 2-3 years, just on a long base , and although we had terrible neighborhood with profits, uh, we don't They broke through this base.
So this gave us some confidence that what the market, what happened recently, - this is a shift towards very short-term time horizon, this quarter, next quarter, cash, cash cushion. This The landslide caused a lot of damage. our strategies. Uh, we are not going to change our style for this reason." reason.
Uh, and we are, but we are going to turn around, you know, suffer losses and in for some reason to move on to something else that also depressed, uh, but what about ours beliefs are higher. So , this moment, yes, was complicated. Uh, research is being conducted us focused, and uh, we have a system evaluation.
System evaluation holds us disciplined and forces us to force us... Wait, he takes it away. No, you can. continue. Let's. Good. Good. Uh-huh. Therefore, evaluation system, I I think he was going to put another one question. Sorry. Will you try? Just shout it out. very quickly. What's next? Bearing in mind " "A wonderful seven." You you say: "No, you "Turn off Tesla." No, they ruled out Tesla , and I was, uh, happy this.
I didn't think that, uh, Tesla belongs to " "Magnificent Six", therefore what should she do aggressively invest. She is not must be "active" "cow", and she should reduce prices to sell cars, because she can. She still is. profitable. So me never liked categorization. I am not I thought...it was the one the same type of shares in general.
Um, so this is it ...And I thought six shares understood. No. Oh yeah, you know, no, no, No. They start understand. This is Tesla, not Nvidia. Good. Good. So what are we doing now? let's do, uh, just before me Rio is out, this is... fast rapid fire. Uh, me I am going to unite. some of these questions, which were given.
Emm, there are ETFs that offer Bitcoin dividends. ARKB- This is a spot ETF. Why you can choose one over another? Dividends, I think they look like BITO offers, for example, profitability or any what other options strategies they they are built there, I I think. Yes. Um, okay. So no , we are just pure play Spot.
Spot Bitcoin. Light and inexpensive access. This is a public good. We are not going. do it again more difficult. Fair. Advertising at Tesla. Is this really something? will change? When I was on shareholders' meeting last year, Elon proposed try advertising in answer to...My question. It seems they tried.
Or they are enough are they trying? You know, I am again , this is a business decision. I I think they are receive a lot publicity. If people think about electric car, them interesting and want compare vehicles, Tesla will sell itself. Consent. How much are you Worried about BRICS? BRICS, BRICS and others countries are expanding.
Yes, that's right. This they doubled in the year in size, you know. Hmm. Um, you know, if you you ask whether this will cause greater geopolitical split , I look at the countries Asia, who do this, because they seem to be forced to. You know, they play on both sides fence, and, uh, I don't I will say that I am not worried geopolitics, but, uh , I am much more focused on, you know, exports deflation by China as risk.
Rightly. How important is federal debt? So, I went through this is in the early 80s, because then he bloated; he was huge, it was big argument. AND the best way solve this problem —not to tax our way out, and definitely limit expenses, but even in this case—this increase our way out, to debt ratio to GDP...and I think that this will happen because, in my opinion, growth productivity here will grow rapidly, and GDP growth will be so big that real GDP will be much, uh, bigger , more viable, than many expect .
Incredible. Hmm, if someone today is engaged in freight transportation does he need to worry about job loss due to AI? Uh, autonomous freight transportation? Yes. Yes, we invested in our private foundation in several companies with autonomous freight transportation, which are AI activities, you know, again, everything for us today is an AI activity.
Hmm, it will be very long-term, uh, transitional transition. I think that for freight transportation is it will be faster, we we think, for electric vehicles. Most people think the opposite, but you know, we have dealing with extremely conservative companies. There is big...Trade Union, huh -eh, dynamic there.
Ahem, demographic the situation is that there is a huge deficit, so this will lead to marginal, and I think that the loss of workers places, you know, and they, probably want to to retire by at that time. The last question: whether we pay attention enough attention space race, say, against China or Russia?
I think that thanks to partnership between SpaceX, SpaceX is really moving by the power of this. Government is playing a game. There is very respectful relationship. I I think that was it. part of the elevated sensitivity, that is Elon influences whether is it space, or defense, you know, with the help of discussions about AI.
So, I-I think that's it. The partnership is working. We are much better off, than it was. Everyone, Katie Wood. Yes, thank you. Thank you. Why not? advertise these the things you have given us here told? Me it seems that no one doesn't know anything more about it. We'll try a little. advertise and let's see how it goes will go.
Congratulations, dude. You are so did a lot. People You are loved. People are looking up to you. Kevin O'Leary, financial analyst and Meet Kevin, YouTuber. Always nice to hear from you opinion. Although I am licensed financial consultant, licensed broker from real estate and stables stockbroker, this there is no video adapted to you.
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