Stocks Will Fall -70% According To This Expert

Perma bears are nothing new. As markets go up, there's always people sounding the alarm and telling the world that the sky is falling. We've seen it all throughout the bull market from many different faces. There's JP Morgan analysts that have warned and warned and warned again about the market collapse. They said that it's eminent that it's going to happen in the next couple of years. When those warnings are wrong, in most cases, the perma bear will readjust their warnings to be a couple more years down the road. They'll make up excuses typically pointing to the government or monetary policy for bailing out the market. And we've seen this over and over again throughout history. But there's a a few people out of all the permabars that rise to the top that get the most fame and the most notoriety for being bearish. In fact, if there was a Mount Rushmore for perma bears, there'd be a couple notable people on it. Maybe someone like David Rosenberg, maybe Peter Schiff. But there would be one person that would undoubtedly be the most featured perma bear, and that is Jeremy Grantham. He would be the George Washington of the permab bears. But unlike George Washington, who got a lot of things right and did a lot of good things, Jeremy Grantham's advice has actually not led to good outcomes for those that have followed it. Jeremy Grantham is undoubtedly the most notable perma bear and he's made his entire reputation out of scaring people out of the market. He's done this while becoming very wealthy from the US markets alone. In fact, Jeremy Grantham is one of the most respected perma bears. He is, after all, highly intelligent. He sounds smart. His writings and research are pretty well written. They seem smart. And of course, he has a nice mid-Atlantic British accent which makes him sound even more intelligent. All of these factors together along with this highly polished look make him sound very convincing when he tells people that the market's going down. Now, what I'm about to show you, this interview where Jeremy Grantham is on CNBC at the headquarters there with Andrew Ross Sorcin and Joe Kernan, I believe is one of the best interviews and one of the best just overall 10 minutes of CNBC that I think I've ever seen. It was thoroughly entertaining because things start off okay, but then as the interview goes on, they just slowly start to derail and this becomes a battle between Jeremy Grantham and Joe Kernan. Now, fill what you may about Joe Kernan. You can have your opinions about him. He doesn't talk as intelligently as Jeremy Grantham. He doesn't have the nice accent. In fact, Joe Kernan just slurs a lot of his words or mumbles them. It's hard to even understand what he's saying half of the time. and he has uh tendencies to interrupt guests and all sorts of things. But this interview is one of the cases where I think Joe is right and I think it's highly entertaining what he does here. So, we're going to be going through this entire interview and breaking down the case that Jeremy Grantham's making about the market falling 70%. Now, of course, we have a lot of other news that we'll be getting into as well later in this episode. Mark Zuckerberg recently went on to a long form podcast. He discusses the AI race, super intelligence, their spending on physical products like the meta glasses and so on and so forth. We'll be looking at that. And then of course we have the fail of the week which in this case is one of the biggest fund managers in the world which is Pulling Capital. Pulling Capital has lost $50 billion by going into the software trade. We'll be discussing the epic collapse of Pulling Capital in the fail of the week. Also, I just released my June portfolio update. It is a 90-minute exclusive. if it goes over performance and macro and every individual company. If you want to see that, you can try it out. It's included at qualrim.com. As well as you get access to tons of other exclusive content, interviews with community members, deep dives into different companies, ask me anything, and much more. All of that is included at qualrim.com. Try it out now with a free trial. Now, we're going to jump right into this CNBC segment. It starts off with Jeremy Grantham here explaining what a bubble actually is. We needed a definition of a bubble. So we found a very precise one, a nerdy statistical term, two sigma, the kind that would come up every 44 years if it was completely random. And actually it comes up every 36 years. So it's pretty close. And uh we tracked through and found all the bubbles um that met that definition. And we asked the question, how many broke uh all the way back to the pre-existing trend? And there were 26 of them. and 26 broke all the way back to the pre-existing trend and some of them went up from two sigma to 2 and a half sigma and in the case of Japan almost three sigma so they can be painfully higher than just two sigma two sigas just means two standard deviations all he did was he looked at a chart showed how stocks trade around there's the median and then there's different ranges that are different deviations and then he calls three sigas as the max range that is the super bubbles as he calls it so he took some basic math terms and then applied bubble and superb bubble to those terms. Now, when Andrew brings up the fact that it's paid to simply just ignore bubbles and continue to invest in the market and be perma bulls, this is how Jeremy Granthm responds. >> The other problem is that it has paid um shockingly well to be a perma bull over the last 100 years more than it has paid to be a perma bear. >> Oh, of course. we we live in a a rising economy in the long run. >> Oh, of course. It's like he has no argument for it, but that's contrary to everything he says all the time. He doesn't come out saying, "Hey, you should stay fully invested. Uh the economy grows over time. You should focus on the long term." That's not the message that he shares. He shares a message of doubt, one of fear, one that says that you're investing in an equity market that's held up by simple monetary policy. It's basically fugazi holding up the market and that you should get out. So when he's actually confronted with the fact that markets are rising over time, he gives up the argument immediately. But that's completely different than everything he says and what he says again in this interview. But half the time you're waiting to get back to the old high. People don't realize that because we've just spent the last whatever it is 16 years going up. But in the long run it's half the time after 1929. you have to wait until 1954. After 1972, you have to wait until uh 80 80 >> a long time. >> 81 or 82 >> 81 or 82. And so >> this is another deceiving way of illustrating these statistics. He says half the time you're waiting to get to a new all-time high. After 2000, you have to wait all the way till 2013 to get back up to all-time highs once again. So you have 13 years of a flat market, right? That's not really the situation. If you look at what investors are doing realistically, they're not holding all of their money, never buying a stock, and then only buying on the exact top of 2000. Investors are buying into stocks all the time. 2000 was one year where equity prices spiked, then they came back down. If investors bought during normal time periods leading up to 2000 or after 2000, then they had good returns leading up to 2007 and then again leading up to 2013. They wouldn't have had a flat market if they dollar cost averaged into the market. But what he's doing is comparing one bubble spike to another and saying nothing happened in between. And that's just off the assumption you only bought during those spikes. Another important thing he leaves out here is how the market trades. Stocks don't go up and to the right in a nice straight line. They trade flat for some time. They'll they'll move down. Usually, they trade below their all-time highs, maybe 10 or 20% from their highs, and then they'll have aggressive spike upwards in a short amount of time. That means that you have to hold and be patient during those flat times for when the next leg up happens. So, what he's trying to say is the market is most of the time trying to catch up, but in reality, that's completely normal trading in the market. You buy into a company, it can trade flat or down for some time and then you'll have a couple years where it spikes upwards and then you can either sell it or you can buy more of it and and so on. But Jeremy Grantham manipulates the statistics and data to serve whatever point he's trying to make. And he does so again here. He's asked about where we are now and listen to how dramatic his response is. uh in a very real sense I'm not sure there is a comparable but uh the tech bubble of 2000 would come the closest on the ways that are the value systems are the most predictive based um on the value of the stock market compared to the GDP with with modifications uh this is u the most expensive market in American history >> so Jeremy says that based on this ratio that the US stock market is the most overvalued it's ever been and And the ratio that he's talking about is US GDP compared to the total value of the stock market. This ratio was popularized by Warren Buffett. In fact, it's referred to as the Buffett indicator because Warren Buffett himself referenced this exact same ratio back in 2001. Now, I want to dig into this because I think there's some important context here. When you look at a ratio and it's called the Buffett indicator, immediately it gives it a level of credibility because Warren Buffett, greatest investor alive, when his name is attached to anything, you're more likely to believe it when it's in terms of investing. So the Buffett indicator sounds really professional. And Jeremy Grantham referencing it here gives it even more credibility, right? He's referencing Buffett himself. The problem is the last time that Warren Buffett actually mentioned this ratio was in 2001. After mentioning it the first time, Buffett quickly stopped talking about it. He only mentioned it during a time of extreme stock valuations, extremely high PE ratios, extremely high price to sales, and companies that were going up based off no fundamentals at all. Warren Buffett throughout that ratio said the market's very expensive, and the ratio lived on. The other problem is after Warren Buffett stopped mentioning that ratio for the next 25 years, Warren Buffett himself did mention all throughout those time periods, all throughout the last 25 years that the stock market's a wonderful thing to buy, that the US market should be bought, that the S&P 500 will be much higher in the next 10 years. He encouraged investors to buy a slice of America for the last 25 years. So the bears will mention the ratio, the Buffett indicator that was used back in 2001, but they'll leave out the fact that Warren Buffett himself has been a big buyer of stocks. He's advocated for buying stocks, and he himself has never mentioned the Buffett indicator again in the past 25 years. Now, the reason that I think Warren Buffett stopped mentioning that ratio is because I believe it's not that good of a gauge anymore of calling stock market collapses or even referencing the value of the US stock market. For example, back in 2001, the majority of US stocks earned money within the United States. So, comparing the value of the stock market against US GDP, the value of the companies and the things they were earning revenue against made logical sense. When Buffett used that ratio, it made sense. But today, you can look at the biggest companies within the United States, and some of them, in fact, many of them have over half their revenue outside of the United States. That factor in and of itself of companies becoming more global is reason enough that this metric or ratio doesn't really work anymore 25 years after Buffett used it. Amongst a number of other reasons, including margins are generally higher, and the stock market's not the economy. companies can earn much higher earnings per share through buybacks and different means than the GDP can grow within the United States. So, what Jeremy does here is give an outdated ratio that's not quite applicable today that has brand recognition because Buffett once used it, but he doesn't mention the important distinctions or why it may not be as useful today. And he uses this ratio to try to convince you that the markets are overvalued when they may not be. Now, when asked about how overvalued the market really is today and how much he suspects it will drop and when he thinks this will happen, here's his answer. My guess is sometime between 2 weeks ago, 2 weeks from now, 2 months, two quarters, and conceivably 2 years. The timing is always terribly uncertain. The market's going to peak out and drop back to trend. And getting back to trend from here is uh closer to a 70% decline than a 50% decline. 70% decline you think is in order. >> Yes, I do. And and and bear in mind, we said a 70 75% decline for the NASDAQ in 2000 in our quarterly letters and it went down 82. A 70% decline. That's how much he thinks stocks are dropping within the next 2 years. Now, in question about that, Andrew says, "A 70% decline." And Jeremy goes, "Oh, yeah. And you know what? We said the same thing back in 2000 and it dropped even more. or it dropped 80%. But I think it's important to go over the track record of Jeremy Grantham because he does reference it here. He says that he did correctly call the 2000.com bubble ahead of time. He also called the 2007 housing crash and he was even bearish in 2021 before the tech bubble went down a bit. But there's a few things that Jeremy Grantham leaves out. One of them was that he was 5 years early in the tech bubble. He didn't just call it in 2000. He called it in 1995. He said US stocks were dramatically overpriced. So stocks went up uh multiples of where he said the market was already overpriced. He continued to call the bubble. Then the bubble popped, but then it went down only half of where it was the first time he called the bubble. So if you look at this, the simple math is if you listen to the first time he called the tech bubble, you actually still would have been better off just investing there and holding than had you listened to him and not invested at all cuz stocks were much higher at the lows after 2000 than they were in 1995. This makes it so his advice really wasn't useful. It would have been useful if he only called the bubble at the top or near the top, but he didn't. He called it far before the top. He called it during a time where it was actually still good to buy stocks. He'll point out that he called the 2007 top, but he won't mention that he also was bearish leading up to it. Any time point before then when stocks were actually cheap. And then after 2007, you had the 2009 bottom, you had 2010, you had 2011, and from there, Jeremy Grantham was bearish the entire time. Here's an interview back in 2011. Okay, this is the best decade to be buying stocks. >> They all break. That's the one thing they can't control. You can drive a market higher and eventually of of its sheer overpricing it will eventually pop and typically it seems to pop at the most inconvenient time. So we're going to drive this one up and this time there isn't much ammunition. In 2000 the Fed had a good balance sheet. The government had a good balance sheet in '08. It was still semi-respectable and and now it's not. It's not very respectable at all. So, what are they going to use as ammunition if they cause another bubble and it breaks, let's say, in a couple of years? >> The problem is there is no bubble that broke in a couple of years. Stock valuations went up slightly, but earnings grew dramatically within the United States. Equities mostly went up because of rapid earnings growth, not because of multiple expansion. And yes, he did get the call right in 2021. The market went down a little bit, 24%. Then it rapidly recovered and went back up to all new highs. And even if we zoom back out again to 2011 2012 where he said the market was already overvalued, the S&P 500 is up over 400% over that time period. Now, up until this point, Joe Kernan, the other host, has been quite quiet. In fact, you haven't seen him on the the screen at all. He's not there because it's just been a discussion between Jeremy and Andrew Ross Orcin. But it becomes clear that Joe has been biting his tongue this whole time. He's sitting there watching Jeremy spout his nonsense like he usually does. and Joe finally decides to talk. >> What was in in 2021 and 2022, what was your superb bubble call? And that predicted an imminent catastrophe crash across stocks, bonds, real estate, commodities, and stocks. The another one in 2023, another collapse prediction. >> No, no, no. But how about how about in >> 2021 was a super >> The only two times I clearly said it's now. The other times I said it's overpriced. The 21st century has been overpriced by the standards of the 20th century. 100 years of data we've been overpriced. >> But is there any argument around I was going to make an argument around a technology >> or 2010 through the 2010s? Did were you ever bullish through that entire period? Um >> Joel brings up the most relevant question here. Has he ever really been bullish throughout this entire bull market? And Jeremy tries again to defend his track record. >> 2009 almost there. Uh I posted my only one pager called reinvesting when terrified. >> But but most of the time there's a big big bull market 2010 2010 to 2020 >> 666. >> Okay. But >> and nobody else by the way was touting the market. >> Okay. that week, that month, >> but through 2010 that huge bull market to 210 to 220. >> From 2010 until today, the PE has averaged over 60% higher than it did for the prior 100 years. >> Now, I don't know when you decide to say the market is overvalued, but if you're traveling at 60% higher PA than it used to be, I think that it doesn't say the market's going to collapse, but it does indicate it's expensive. >> See his defense there? He's called out for being bearish during one of the biggest bull markets throughout history, an entire decade plus long bull market. And he says, "Yeah, but the PE ratio is 60% higher than the median average throughout the last hundred years." Without actually looking into any reason why the PE ratio may be higher. Maybe it's because stocks within the United States have grown their revenue outside of just the US, so risk is reduced as they've had global diversification revenue. Maybe it's because the average margin of the S&P 500 company, especially the ones leading the stock market, is much higher. They're much more profitable businesses. Maybe it's because the moat's wider. US companies have actually gotten stronger throughout the decades. Uh maybe it's because they're growing faster. Revenue growth usually means that ratios go up. There's a dozen good explanations of why PE ratios may have expanded a little bit over the past 50 years. This is not an intelligent response. This isn't highly analytical. He looks like he's intelligent. His write-ups sound convincing, but when you actually look at his explanations for why he's been wrong, the PE ratio slightly expanded is not an excuse to miss out on a 10 plus year bull market. Jeremy should have just said that he's wrong, but he's not going to do that. He's going to try to point to the market and say that the market has been wrong. So, so far we have that the market is the most overvalued it's ever been on a ratio that's been outdated for 25 years that Buffett himself, the one that really coined the ratio or made it titled about himself, hasn't used for 25 years. And there's multiple reasons to believe that ratio isn't meaningful today. That's what he's basing the core of his argument on. Uh and then when it comes to him being wrong for the past decade as the market's gone through an epic bull market, he says, "Well, the PE ratios have been slightly higher over the past decade." That's how he excuses that big blunder. And then he moves on to comment about Bitcoin. And this seems to be the final straw from Joe Kernan. For some reason, the the Bitcoin commentary is really what gets under Joe's skin and where they really get competitive. >> I think it's a a useless speculative >> that goes to zero in your in your calculus. >> No, years and years, decades and decades. It will dwindle away, I suspect. Not not with a bang, but a whimper. >> And you think that because >> because it it it's not a stable form of value. It just have, didn't it, for no particular reason in a strong economy. So, you can't depend on it in that way. And by the way, over the same time period, gold made a strong gain. Yes, it's down from the peak, but it's it's made a strong gain over that time period. It's people don't use it to make serious trades. They don't use it to buy their dinner and and pay at the supermarket. So, what the hell does it do? What it does is allows crooks to move money around without leaving a trace. Now, the funniest part about this is this take on Bitcoin is actually unremarkable. He just said that the US stock market will fall 70%. And Joe goes back and forth with him a little bit about that. But then when he talks about Bitcoin slowly going down over time and that it doesn't have much utility, which I believe is somewhat of a mainstream take for many value investors, this is nothing really notable by Jeremy Granthm. The US claim is way bigger. That's the entire world global economy. He's calling for a 70% collapse. But for some reason, this criticism in Bitcoin is where he really loses Joe. >> And blockchain is a real technology and and there's there's a lot that will transform the way things are done. >> Absolutely. But we're not talking about blockchain talking about Bitcoin. We're talking about Bitcoin, which is and crypto, the whole industry. >> I mean, money is nothing there's nothing that sacred about about what represents a form of exchange. And the way that Bitcoin is structured fine, >> it it there are people that would argue with you that it has a hard fact that some people have made a lot of money like a chain letter. What what does crypto do? >> I don't understand the question. What what what does >> what is the use of crypto? It pays no dividend. It doesn't represent an asset you can put your fingers on. There is nothing there there. It is just an idea that it will go up in price. If you trust me, it will go up in price. when when in the on an island when shells were used to represent an hour of work that that you got 100 people each one >> comparison this is completely faith-based it represents proof of work represents proof of work you're going to be totally wrong on Bitcoin too you you're you're going to be wrong on everything you've >> proof of this is where we really start to see Joe go after Jeremy Grantham and the reason that I love this is because there's so many times where people like Jeremy Granth them who have been wrong for decades and decades, who got a couple calls right, are brought back on again and again without any push back. They can just espouse their views once again, talk about the market falling 70% with no push back whatsoever. And then if they're wrong, they just make some make up some excuse. They say, "Oh, well, the market was overvalued." And I I said overvalued. I didn't say it was going to collapse when they clearly said the market was going to collapse within a couple years. That's been going on for some time. And then we have none other than Joe Kernan being the one that pushed us back, being the one that's finally willing to do it, to have an uncomfortable conversation to put him on the spot to say, "You've been wrong for the past decade. Are you just going to be wrong again?" It it just shows that heroes come in all different forms. In this case, it it comes in the form of Joe Kernan. It may not be the hero that you want or the one that you like, but even if you don't like Joe Kernan on a million different subjects for a million different reasons, he is right here and what he's doing is a great service to CNBC. When we get into a bare market, which Joe may may think we never will be again, a serious bare market of down 50, 60, 70, do we think it will prosper? >> Anybody that listened to you from 2010 is you've done a grave disservice to them. >> So, if you feel fine with that, that's that that's that's what you do for a living. That's fine. I I don't have a problem. Andrew invited you on. I'm just pointing out the facts of the situation. If if someday you might be right like a broken clock, that's what we'll see. This may be a huge bubble that we're in, but you've said it again and again and again and again. >> Takes its view from gleaning the internet. >> These are this is your track record. >> It it isn't my track record. I can go through and give you quarterly letters which I have written >> prepare bracing yourself for a for a meltup, a market meltup 2018. that's already eight years proved you don't know what you're talking about and there are plenty of others like that. >> He talks about these market meltup letters which he calls for 2 weeks or a month and then he quickly changes back to a bearish stance talking about how everything's overvalued again. And even the term meltup infers that equities are dramatically overpriced and he thinks that they're just going to go up even further. That's what a meltup is. It's that things are just going to keep getting pushed up with momentum and it's baseless to begin with. So even as market calls that the market's going higher is built on bad fundamentals, bad analysis, but he's referencing those few times where he called a market meltup as big wins over the past 10 years. Joe Kernan has been right. Anybody that's listened to the overall theme of Jeremy Grantham and his overall advice for the past decade, he's done a great disservice to them. And he's right in calling him out and putting him on the spot. But from here on out, the interview continues to get more awkward. I I don't know where to go with that. Joe, you you can take them on if you're so I said my piece, you booked them. You've got your 1929 book out. Maybe it happens at some point. Maybe it doesn't. But, you know, hopefully it doesn't. The market at this point, the the the S&P is pushing 8,000 eventually, and you've probably been bearish for 80% of that. I've been uh I've been saying that the market is overpriced by long-term standards. So, >> we were 2,300 in at the bottom in April of of 2021, did you ever turn bullish? >> He just asked Jeremy Grantham that even at the bottom of 2021 when the market had a big sell-off, right? That that was Jeremy Grantham getting it right. The market sold off big, but did he ever really turn bullish? Uh he just he has to stare there and goes uh for for two seconds, three seconds because the answer is no. Jeremy Granthm never turned bullish. >> So I rest my case. >> Listen, I I I I don't have an accent game. It's your guess. Whatever. But >> this this is this is the way it is. If you didn't write it, you never said it. >> Okay, this this from the internet is one thing. If it's in a quarterly letter, I accept responsibility. Okay, >> the bad news is I wasn't writing quarterly letters in 2021, so I can't point to to anything. >> Joe Cernin's question there is spectacular for a couple of reasons. Not only because it seems like Jeremy Grantham is dumbfounded by it. He's completely caught off guard. He's never had somebody address him so frankly and call out his BS in person to now he's he's just dumbfounded uh sitting there for five seconds not being able to answer because he's never faced this before. He's been able to just go on to CNBC, say what he wants to say, give the same old gimmick every single time and there's no push back. So finally when somebody does push back, whether it's Joe Kernan or anyone, it's a whole different situation. Jeremy Grantham has no real thing to jump to. He's just not used to this type of situation. You can see it there. To answer his question, he was never bullish during 2021. And his excuse of not writing quarterly letters anymore is nothing more than an excuse. If he wanted to get message out that he was bullish on the market, he has many ways of doing it. He has a website. He has ways of publishing it. He can get on the CNBC. So, there's no uh lack of opportunity to get his bullish stance out. The simple truth was is he just didn't do it. And you'll notice this same trend with Jeremy Grantham over his entire history. He never accepts fault for anything. He'll never just say that he was wrong and that his calls overall have been directionally wrong, that it was better just to stay invested in the S&P 500. The people that did that are now very wealthy. The people that follow Jeremy Grantham's entire message of being scared out of the markets are way worse off. Rather than accepting any responsibility for that, he defends his record and he comes up with hairsplitting ways to say that it doesn't really apply to him. So, this was overall just great. I like the push back here. Hopefully CNBC will do more of this. Now, moving on, we get to Meta with Mark Zuckerberg. Meta stock is currently down on the year. This is one that's one of my big buys for 2026. So, I've highlighted Amazon and Meta as my two favorite picks this year. And Meta makes sense for a couple different reasons. First of all, the stock price has moved downwards. The PE ratio is at a 17 to 18 Ford PE 16 based on 2027. And then you have a stock that's also growing its revenue rapidly. For a company that's at this ratio, it grew by 26% year-over-year. But the narrative that the market believes is currently discounting Meta to a huge degree because they don't like the way that Mark Zuckerberg is running the company. Mark Zuckerberg, of course, has the overwhelming majority of voting shares of the company. That's different than most CEOs of most companies. Most CEOs only own a fractional percentage of the company. uh they typically do whatever the board wants to do, whatever shareholders demand, and they can get fired at any time and reinstalled with someone new. You can't do that with Zuckerberg. Meta is Zuckerberg. Zuckerberg is Meta. So, it's particularly impactful when we see what's going on with Zuckerberg's head, what he's actually thinking of the company and the bets that they're making. One of the biggest bets that Mark Zuckerberg has made is that glasses will be the new type of physical product that people naturally gravitate to. And glasses just give you the opportunity to interact with technology but remain present with the people around you which I think is a really fundamentally important thing that obviously phones don't do. When you interact with your phone you're kind of interacting with this, you know, small rectangle. It pulls you away from the world around you. You want to um have technology be able to um effectively fully integrate with the world around you. So that's a big one. Another piece is that glasses are the ideal form factor for you to be able to give an AI assistant uh that that works for you the ability to see what you see, hear what you hear, talk to you throughout the day, and eventually also you display information in your field of view and and be able to overlay things on the world around you. >> So, he mentions a couple things. With glasses, you can interact and be present with other people while still having the glasses on and be using them, which is different than phones. He also mentions that there's the visual aspect to it that's different than having like AirPods. But then I believe the third thing that he mentions here is actually the most meaningful. It's the most important and I I believe it's the best bull case for glasses being an actual tech product. What is the reason why 5 years from now any of the glasses that people wear are not going to be able to have this kind of functionality to help people out throughout their day? It just doesn't quite make sense. So I think it's a very natural um design that people are used to. The big thing is that there's already a ton of people wearing glasses. And up until now, glasses are just something that have one one use case. They correct your vision. That's all glasses do. I guess there's a second use case that they do have some aesthetic to them. You can get glasses in different designs. So, they're more of an apparel thing. So, maybe there's two use cases. But what the meta glasses or any tech glasses uh does is it makes them have a lot more use cases. This is very similar to what happened with the watch. The watch used to just tell time. Now, it can take your heart rate, your steps, and a bunch of other things. Apple added use cases to an existing product that you are already using. Meta is trying to do the same thing, adding an immense amount of use cases and functionality and technology into a product that you're already likely using. You're using glasses because of prescription lenses, and you're using sunglasses as you go outside and do things. So, I believe that the natural adaption here is the best shot that Meta has at making this a real product. But, I would say that there's notable downsides. For one, he mentions that it's more natural, at least it's not as like distracting to have glasses on as a product instead of your phone. The problem I have with that is on the phone, I can type things in in private without anybody else actually hearing or seeing what I'm doing. If I have the glasses on and I want to respond to a text to my wife, I have to speak it. I have to say the whole text message. And so, anybody around me could actually hear the text message. And that's not necessarily what you want to do with a lot of the things you do on a phone. You don't want to be having everything you say be heard. A lot of times what people do on a phone is somewhat private. Another thing that I think is different about glasses is that it's not just a slight change to put a camera on glasses. Having a camera on glasses does make it feel more uncomfortable. Like if your coworker just starts showing up and they have a camera on their face all the time, you may be wondering, are they like recording now? Could I be recorded at any time? Are they taking a picture of me? If they're just looking at me like, "Am I am I on camera right now?" Meta has tried to address this. Like, every time you record, there's a light that lights up in the frame to let you know, that's to signify that other people that you're recording. But there is a chance that Meta may come out with a more discreet form of glasses that doesn't have a camera. If they did that and there was only a mic, it would take away a lot of those concerns. You'd be able to use those in office spaces and with other people a lot more comfortably. So, we'll see this all adapt over time as this becomes more common. Now, we know that Meta is spending a lot on metagasses, but they're not spending nearly as much on meta glasses as they are super intelligence or all of their capex building to build out their own AI models and to build their own supercomputing abilities. And Mark Zuckerberg talks about the reason that this part is so important, right? So, I don't I I don't want to live in a future where there's like one big AI. I think that's a bad future. No matter how good the AI is, I think like that's not good. I think the way that this ends up being good is you actually just you you direct um the technology development towards empowering every individual. So when they own their own AI, they get rid of that intermediary. So overall, I believe that he's right here. This is a big moat increase for the company. It makes Mark Zuckerberg more insular. The company can have more autonomy and more direction over its future. Now moving on, we get to the fail of the week, which in this case is the epic collapse of Poland Capital. They're a firm that is techfocused. They seem to be riding high just a few years ago. They're going on to podcast. Things seem like they were going as well as expected. One of them is Dan David Woods. He has been on a different podcast many times. Here is for example Dan going on to the Compound and Friends podcast and explaining the investment philosophy, what they're doing with Poland Capital, the type of stocks that they're buying. That was back in 2024 when they had almost $85 billion in assets under management. And now in just a short amount of time, that's plunged down to 33 billion or a loss of over 60%. Their flagship fund, their best fund, has had a 45% decline since the 2021 peak despite a historic bull market. They say that the damage is piling up. Clients have bolted along with a slew of senior staff members. According to interviews with dozens of former employees and people familiar with Poland Capital, over the past 2 years, Moss, the CEO, has eliminated roughly 100 jobs or about half the workforce. This is overall the reason I believe these big investment firms are typically not a good idea. There's so many things that can go wrong when you have bureaucracy, red tape, multiple opinions. You have to put in different names in your portfolio that you may not want to, but an employee has been working on this name for a long time. So, you may feel pressured to. There's all these different types of incentives when you have multiple heads working together. When you manage your own portfolio, you can simply just change around your portfolio on a whim to represent your best thought at the time. But with these type of big firms, there's so much bureaucracy behind the scenes. You do not have the same level of flexibility and it can lead to tragic losses like it did in this case. So that is the epic collapse of pulling capital. That's it for this episode. Hope you enjoyed. See you in the next one.