원문 보기
Welcome Kathy. Oh, thank you. I'm so happy to be here. Great to have you back. Yes. Yes, the second time. Yeah. So, it was about June the last time you came. Yes. Wow. Yes. Time flies. You know you're a celebrity in Korea. I could see people looking at you outside. So, would you like to say hello to those viewers who are tuning in?
Oh, yes, I would like to say hello and I also want to thank them for their very warm welcome everywhere I go, everywhere we go at ARK in in Korea. We just feel the love and I'm very grateful for that. [snorts] So, it's interesting. When I was here in June, the the semiconductor stocks cracked because we had a very strong employment report in the US and interest rates went up.
And I remember saying at the time that especially in especially in the memory space it's the most volatile space within semiconductors so to expect a lot of volatility however we believe we're in a technology revolution that's going to last for years so I took a look at SK Hynix it's it's dropped from 3 million to 1.2 million or something like that and I just looked at the valuation it's very low valuation I think there is some fear that Chinese chips Chinese memory chips are going to start competing with Korean chips and that might be true but I think two things will happen to help one is Korean companies are probably going to shift more aggressively towards high bandwidth memory which is higher value add so that's the first the second thing that I think is going to happen and from these levels my confidence is up tremendously is that this AI revolution that we're in right now if you use a baseball analogy we believe that we're not even in the first inning we're still in the parking lot waiting to get into the stadium we are in such early days and we think the demand growth is going to be explosive so we can't use past cycles to try and understand this cycle we we have to understand that AI has been unleashed in a very profound way it's going to increase productivity massively real growth rates are going to continue increasing, accelerating we think, and with them interest rates will also move up.
Now many people think that semiconductor stocks are inversely related to interest rates. When interest rates go up, they go down. That is not always true. Oh. In fact no, it's not. In fact many people remember post COVID when interest rates went up and everything got wiped [clears throat] out almost.
This time around if you look carefully inside the interest rate structure, you can break it down into inflation and real growth. The recent increase in interest rates is because of real yields which are reflecting real GDP growth. The increase has not been because of inflation and companies in the AI revolution are probably going to grow so quickly that higher interest rates are not going to affect them.
They might affect more mature companies. Yeah. But any companies involved in the AI revolution we think are going to do very well over time. The last thing I'll say is does this mean that memory stocks here in Korea are not going to be volatile anymore? No, they will continue to be volatile. It's just the nature of the animal.
They're the most cyclical part of the market. They're the most commoditized. That's why this move to high bandwidth memory is so important. So the volatility should continue but there's There's so much correction to the downside. I can't imagine that we have much further to go on the downside. Well, you know, it's interesting.
We're at a moment where an ecosystem like Amazon, which is is closing, it's becoming a closed ecosystem. They're not allowing news. They're not allowing Grok. And in fact, even Elon Musk said, "Oh, wow, maybe I need to start my own platform, my own shopping platform." So, I think news is in a good place, meaning Meta.
I think Shopify is in a very good place. Oh, it is. Yeah, Shopify is the back end for a lot of merchants. Even Instagram Instagram uses Shopify to help fulfill any orders it gets. So, we're looking at names like that. I think now OpenAI interestingly tried shopping before its time. They before agents even.
And so, I think they they tried to partner with Walmart, and Walmart turned around after three or six months and said, "This is not working." Oh, yes. So, we're so early. We're so early. It'll be interesting to see if Amazon does open up. And I think it should because odds are very high that it will offer the lowest prices and the greatest selection.
And I'm trying to figure out why it seems so insecure because this new world should should work in its favor. If it really does have lowest prices, best delivery, best selection, and so it doesn't really make sense for them to be basically saying no Muse you you and no Grok. But that's what they're saying.
So we're early on. I do think I do think Meta is doing a very good job. In fact, Nick Grouse who is our director of um consumer AI and fintech. He's director of research for consumer AI and fintech. He is addicted to Muse already. He one of the best things that happened to him and maybe your viewers will like this tip is he put in a prompt basically saying, "I know that I am that many people owe me money many and it's not friends.
It is former buildings where he lived. They did they never returned the security deposit or it's the government. He got a tax refund but he had moved and he never received it. So he was able with one prompt to find $1,500 worth of money that people owed him and it was just in limbo. Now I don't know if the Korean system here in the United States is similar but if it is, you know, you might be giving your your viewers a very nice tip right now and a good way to use Muse.
He is also using it for nutrition purposes. What should I eat today? What should I buy for the week? He is using it for workout purposes. You know, you know, a different workout every day, so he gets all the different muscle groups. And, you know, of course, he's using it to organize his calendar, make reservations, whether it's for vacation or dinner or what have you.
So, he's becoming very dependent on his agent, his Muse. Uh, no, we do not believe the upside is capped already. In fact, Muse is up to 2 million weekly average use average I mean, no daily average users, and it has been number one in the App Store, the iOS App Store, the number one productivity tool for 28 consecutive days.
Now, it No one has done that since ChatGPT. So, it's very popular. So, when we made that trim, it was not it was not a trim focused on Meta at all. It had had seen some appreciation, but the reason we did it is we had the opportunity to buy a private company in our ETFs, Kalshi, for prediction markets.
And we because we run with so little cash in our portfolios, we had to take a little bit from all almost all of our stocks. So, that's why it showed up as as sell, but it wasn't an investment call. It was, "We need to make room for this opportunity we're so lucky to get." I think we're one We might be the only ETF that owns Kashi in the United States.
And we also in the private world own Open AI in our ETF. So, we're very lucky to be getting these opportunities. I would like to talk about a stock you bought recently. I think it was yesterday. Debt concerns were rising recently, and KWEB dropped like 15% a day except for today, just after after I bought the stock.
Wonderful timing. So, what made it so attractive? Um it is our thesis that we're not even in the first inning of this AI revolution, and we are going to need so much more cloud capacity. Now, we didn't know that Jensen Huang would come out one day after we bought or same day. We we bought it 2 days in a row.
Oh, you Uh-huh. And and so, Jensen came out and said, "If anything, their credit rating should be going up. We're fully backstopping. They don't need the government." Uh and most of the contracts, which are with hyperscalers, they're good for these contracts, meaning they will pay the contracts. They will satisfy the contract.
So, um you know, this happened to us with Coinbase, too. Uh when Coinbase was absolutely getting killed by um SEC Commissioner Chairman's the chairman Gensler's commentary and by the SEC serving it with a Wells notice. We knew back then that we bought on that the stock collapsed. This is the same kind of thing with Corey but the stock collapsed back then and why did we buy it if the SEC was against it because the judicial system was starting to rule in favor of crypto and against the SEC.
So when we buy it is with knowledge it's not just to take advantage of a stock plummeting. Although we are a liquidity provider. We will buy when stocks are down whereas momentum players will not and we will sell stocks when they're up whereas momentum players will not. So this is what makes the market.
So let's move to China now. Six seem to rattle both US and also Korean chips lately. I think opinions split about this issue but how big of a hit is this to the three memory stocks SK Hynix, Micron and also Samsung Electronics? Yes never underestimate the Chinese when it comes to manufacturing. I've always wondered why they didn't get into memory sooner and the answer is it's hard.
It's hard to manufacture. So maybe they figured it out. We they have gotten better with technology especially since President Xi Jinping is saying new productive forces and anti-involution. Although we don't see you know we don't see that the competitive dynamic changing there too much. So I think our answer to this is one we're going to need so much more memory than people understand.
So, we have another player coming in. Uh, we do think that the Korean players have an edge and will maintain an edge in high-bandwidth memory. Uh, and so that's probably where the revenue will begin to shift more. So, so that's good. And we need high-bandwidth memory. Now, many people look at our purchase of Cerebrus uh, uh, that's in the public market and we owned Groq, g r o q, that Nvidia effectively bought, uh, because neither one of them is dependent on high-bandwidth memory.
But, that was just, uh, a way of saying high-bandwidth memory is in short supply. Uh, and I think with the Chinese coming in, let's just say they are successful on the more commoditized end, the consumer device end, let's say. Um, you know, the recent increase in prices is not good for devices. Uh, the technology works best when prices are falling or when the quality is, uh, increasing at the same price.
Uh, so I think that, uh, getting those prices down will re-stimulate the consumer part of the consumer device part of the economy and that will be important. Whenever I see prices going up in technology, I do get a little nervous because the price elasticity of demand, uh, is so high. And what that means, uh, you know, when you raise prices on something, consumers will respond and they have responded recently.
Yeah, they have. So, [sighs] digital asset Yeah, it's very interesting. There If you look since 2019 when institutions became interested in in crypto and Bitcoin specifically, um the correlation between gold, physical gold, and digital gold, Bitcoin, is 0.1. Hardly any correlation at all. Oh. Uh and asset allocators are looking for assets that are not highly correlated.
Well, what had sold off recently? Uh it was Bitcoin. What had appreciated recently? It was gold. Yeah. Uh and so what we're seeing is the Bitcoin to gold ratio has turned around. Uh and if you look at the chart, and we can provide it to you if if you would like be great. Yes. Uh you look at the chart, you'll see that even though it's very volatile, Bitcoin to gold, the uptrend, long-term uptrend, is in place.
Uh and so we believe that asset allocators are short Bitcoin and are probably moving in gradually here and long gold. Uh so they're probably rebalancing a bit and maybe taking their first positions ever in Bitcoin. People talk about how strong October is for Bitcoins, but honestly, I haven't seen it recently, this cycle,
Right. this month. When can we see the upward going up? Um you know, I think I mean I never know about month to month and and that's not how how we're thinking about it. Um, we thought if Clarity passed if the Clarity Act passed, uh, that that would be a major green light for institutions to move in and so there's some disappointment about that and that's one thing that has happened to keep the lid.
Uh, but you know, very quickly after that the our regulators, both the SEC and uh, the CFTC uh, came in and said, "Okay, if the legislative process uh, is going to fail here, then we'll come in and provide more clarity ourselves." Uh, and so I think investors are assessing, "Fine, regulators will bring in more clarity.
That's good, but in the next administration, like if there's a turnover from the Trump administration, will uh, that administration overturn Trump's policies?" So legislation is hard to overturn, regulation is a little easier. So I think you have that kind of uh, debate going on right now. Uh, but I think longer term what's going to uh, be an important force pushing crypto and Bitcoin specifically ahead is um, is this low correlation with of returns not only with gold, but with every other asset.
And so I think asset allocators are waking up to it and thinking, "Well, okay, at least I have to experiment with a 1% position." Um correlated going up if if it's the debasement trade, they both can benefit. They're both stores of value. Um we disagree with the debasement trade as it relates to the dollar.
Uh we think the dollar will continue to move up uh because the return on invested capital in the United States is going up relative to the return in invested capital elsewhere in the world because of our deregulation. It's massive deregulation. And our effective corporate tax rate is the lowest in the world at 8% at least through the end of 2028 thanks to accelerated depreciation.
Uh so the debasement trade, sure, that's a a worry about inflation and both gold and uh Bitcoin will serve as uh the stores of value in that environment. So I think he's right about that if people really worried that monetary policy, um meaning Fed Chairman Warsh, is going to blow it. Yeah. I could see both of them going up.
Um but I think that Bitcoin has um has Bit- Bitcoin from an emerging market point of view and a store of market point of view um is is uh aligned with stable coins or they're partnered with stable coins in the emerging markets because that's where we see uh real currency stress uh starting. Uh and so I think that both stable coins, uh in terms of volume growth, and Bitcoin, in terms of price growth, will work well as emerging markets try and work through the turmoil.
[snorts] So, it's always been our bull case. The base case is closer to 750,000. Still a very big uh acceleration. And we do believe, I mean, the controversy right now, um you know, my mentor, Art Laffer, I don't know if I I spoke with about him with you on our show. Yes, he is such a believer in Bitcoin uh because it uh represents going back to something like Bretton Woods.
You know, we went off the gold exchange standard in 1971, and he's been looking for a solution ever since. Uh now he's found two solutions, uh Bitcoin for store value and stable coins, uh which which uh pay and share interest. Uh Tether doesn't, but Circle shares rewards, or Coinbase shares rewards.
Um so, one of the one of the things that Art has said recently, and again, this is getting back to the '80s and '90s, where the dollar went up a lot because of really good policies in the United States. Uh and uh what happened then is gold the gold price went down. So, there was a direct correlation there.
Go gold is priced in dollars. That that made sense. Um and uh so the question is will Bitcoin go down if if the dollar goes up? Uh well, I think that Bitcoin's role as a new asset class or the leader in a new asset class is critically important here. Uh and its very low correlation with gold is also important.
So, those are two things that we think are going to propel uh Bitcoin forward in the years ahead. And we do think as emerging markets they use stablecoins for day-to-day, uh Bitcoin's too volatile for that. Uh but as wealth grows, if we're right and this technology revolution spreads the wealth around the world, uh then in emerging markets one of the best ways to preserve purchasing power uh and wealth is Bitcoin.
And so, I think uh I think as the wealth increases around the world, Bitcoin will have will play a very important role. So, AI and crypto are literally changing the market at lightning speed. What's your best advice for our investors in Korea trying to play the long-time game? Uh well, you know, look for plays on agentic payments, agentic uh commerce, uh and uh I I and find the right ecosystem um uh in which to play.
So, we're looking at what companies are doing. Are they adopting these agentic payment methods, agentic commerce methods? It's very early. Um so, uh I think we're back to a discussion again. This is more on on the enterprise side. As businesses start running themselves or agents start running businesses, we're going to see a lot of API to API payment ecosystems develop.
I would pay attention to the companies that become a part of those those ecosystems. One of the companies we think is a sleeper here is Cloudflare in the cybersecurity space. It already is a gatekeeper for 20% of the internet in terms of protecting it. And it is getting very focused on this agentic AI world where where it will be sort of the facilitator as this is this uh is this a friendly interaction or is this a foe and become a little bit of a gatekeeper for agentic commerce and payments.
Always great to speak to you, Kathy. Oh, thank you. It's great to speak with you, too. We're speaking the same language. Innovation. Thank you for coming to the show today. My pleasure. Thank you so much. You're coming next time? Sure. I think I felt it cuz I had like a 3 3 second period. A 3 second period of
whether you will come or not. Oh, no, no, no, no. You know, this is the country of hurry, hurry. For me, that was fast. Okay, it was like a second sponsor. Okay. In in your in your world, it'd be like a second immediate.
Comments 0