Market Report: The AI Bet, Wealth Taxes, and Jay-Z's Superbowl

0:00Haley: Okay, so I just gave my apartment a major refresh and hands down, the hardest thing to get right was the rug. I just couldn't find one that fit right. And I really wanted something that pulled the room together because like a rug is a big deal. But then I found Ernesta and Ernesta is amazing, you guys. It makes designer quality rugs custom cut to the exact size of your space. So it actually fits instead of almost fits and looks great the first time. Like in the past, I've just defaulted to stock sizes when buying rugs. And also like when you're in a New York City apartment, that really just doesn't cut it, but they're all weirdly shaped.

0:36Haley: But with Ernesta, you can send photos and dimension to Ernesta's design team and they help you get the size exactly right, completely free of charge. Hand selected by design experts, Ernesta rugs are beautiful, they're durable, and they're made for the way you actually live. Cut, finish, and delivered in as little as two weeks. Visit Ernesta.com and order five samples for only$10 and you will get$50 toward any rug of your choice. That is E-R-N-E-S-T-A dot com. This is Financial Tea. What is up, zippers? Happy Tuesday. Welcome to The Market Report, which is where I give you the three stories you need to know to stay rich this week.

1:23Haley: But before we jump in, I have to add that I, like everyone else, of course, saw the Elizabeth Holmes documentary this weekend. The numbers are insane. Like it made$15 million its first weekend and$20 million this past weekend, which is honestly bizarre. Like documentaries almost never hit consecutive eight-figure weekends. And the production budget was$7 million. So Nathan Fielder and A24, which is the production studio that made it, are absolutely caking. And, you know, one part of me was wondering, like, what Nathan Fielder buys with his riches. Like, he seems so low-key, so sort of archetyx.

2:02Haley: I mean, I could maybe see him with a cool watch in a John Mayer sort of way, but I feel like he's more investing his earnings into his next project vibes. I mean, a true artiste. But anyways, I've also been thinking about the doc from a financial perspective, obviously. I mean, my whole TikTok is filled with people's theories on the doc, which is like a really fun rabbit hole to go down. But I've been thinking about it from a money perspective. And a central part of the movie is about Elizabeth's partner, Billy, wanting a cut of the movie's profits, which he later forfeits. And I know, I know for, you know, documentary ethical reasons, subjects shouldn't get paid for documentaries and this is the right thing to do but I think it's a little crazy this whole movie is built on Elizabeth Holmes's image and name and she doesn't even get any piece of the pie like I know it's not standard and I know that she owes 452 million dollars in restitution so whatever she did make would just go right to that and be wiped out but I don't know I can't stop thinking about the irony of like little miss Holmes just building a billion dollar empire by selling this allusion to wealthy investors, who are mostly old men, by the way, then losing everything.

3:17Haley: And now this in the ass studio, A24 and old comedian are making tens of millions of dollars selling that same allusion right back to us. And I know she's a fraudster and I feel bad for everyone that she defrauded and I'm not on her side. I didn't like turn from the movie. But I just feel bad that everyone in the ecosystem gets this massive payday off of her name, like executives, directors, distributors. But then the person who built the myth, just sitting in Bryan, Texas in a federal prison cell, like watching the cultural stock price of Elizabeth Holmes hit this all time high completely for free.

3:56Oh, I also made a recoup this weekend.

3:59Haley: Yes, it did take six hours. I did find the recipe on Instagram and you rise. It was not good. Like my boyfriend kindly ate it, but it fully cost me$75 in groceries and took a million hours. And the juice was just not the squeeze. So I just want to let this be the warning to everyone. Do not comment recipe on a person's post, even if it looks amazing. They are going to DM you the link to their sub stack. You're going to spend way too much on ingredients and you're going to take an entire afternoon making it and then you're just going to be disappointed. So I don't know. I feel like this was sort of the culinary equivalent of like buying a random meme coin because a 22 year old on TikTok said that it was going to the moon.

4:43Haley: Like I was like, oh, is this gross sauce sort of a metaphor for how we consume advice online? Like we're just living in this attention economy designed to monetize your impulse, whether, you know, it's a lifestyle creator peddling a ragu recipe that they have barely tested, but then made the video just look really great. So you want to make it too. Or a Finfluencer selling you a$400 course on stock buying, or even Elizabeth Holmes pitching a blood testing miracle in a black turtleneck. I feel like the playbook is always identical where it's like the packaging is immaculate, the production value, basically cinematic.

5:20Haley: And then the underlying asset has no actual fundamentals, which brings me to why you need to be fiercely protective of where you get your advice and why I'm so glad that you are listening to the Financial Tea podcast. Because in a world full of algorithm chasing hype, this really is the antidote. Like I am not here to sell you smoke or mirrors or any sort of overcooked promise. Like we actually do the homework. We vet all of our facts. We cut through the noise. And I'm just here to tell you the unvarnished truth about money. So yeah, do not comment recipe, but do comment tea when I post a new episode so I could send you the link.

5:57Haley: Oh, and also, yeah, of course, make sure you subscribe and leave us a rating. As I told you, we are up for renewal, as real sippers know. So this is a very important right now because we're trying to keep making the show. And you know, numbers don't lie. Check the scoreboard. Anyways, let's jump into our three stories because I know you're not here just to hear about my fail sauce. So our first story is about index funds because yours and mine is secretly dating big tech. And you know, index funds as this like holy grail. I always tell you to buy them. Don't buy individual stocks by index funds.

6:35Haley: It's one ticker. You get access to hundreds of companies. You don't have to like be a day trader. You can have this amazing portfolio just in one go and then just let compound interest do the heavy lifting and go enjoy your life. And by the way, that still is the gospel. I love index funds. Warren Buffett famously advises everyone to own them for a reason. And it's really because active managers of funds charge fat fees. But with the index, it's cheaper and they always beat them. The tea that nobody is talking about is that index funds are currently making ultra expensive bets on AI, whether you, as the person who bought the index fund, swiped right on it or not.

7:15Haley: So like if you own S &P 500 fund, which I own so many of, like VOO or SPY or maybe your 401k target date fund, you might think that you own a diverse slice of American businesses. Oh, I own a piece of banks and airlines and laundry detergent. But in reality, the S &P 500, those funds are weighted by company size. So basically, the bigger that the company is, the more of your money will go right into its stock. So right now in S &P, just 10 companies are making up roughly 40 % of the entire index. And I just want to be clear that at the peak of the dot-com bubble, and I'm not saying that we're in a bubble, but I just want to share this, that number was 27%.

8:00Haley: So that means that one out of every$10 you invest, four are riding on just 10 tickers. And right now, those companies are all making the exact same all or nothing bet on AI. And this week is earnings, which means that companies report like how they're doing. And around 160 companies are going to report earnings. What we're really holding our breath for are the earnings of Microsoft, Alphabet, and Amazon. because alongside Meta, these companies are spending billions, like historic billions on chips and data centers and AI. And now the market just wants to know, like, is all of this AI spending actually driving profit?

8:42Haley: Or are we just sort of burning cash to keep up with each other? Like, is it this dick measuring contest of who can spend the most of AI? And look, you did not hear me say dump your index funds. Like I am fully basically invested in index funds. This is where I keep my money. And by the way, this concentration is why your 401k and your portfolio has crushed it over the last five years because these stocks are doing so well. But I just really believe that being a smart investor means knowing what you owe. And I talk so much about S &P 500 funds that I want to talk about it. And look, if you're 10 plus years from retirement, like I am, you can chill.

9:16Haley: Like dollar cost average, tune out the daily earnings drama and just let the market naturally cycle and rebalance. It totally will. But if you're someone who thinks like 10 boardrooms controlling 40 % of your wealth is nerve wracking, you can also check out an equal weight S &P 500 ETF like RSP. So that means that every company will get an equal 0.2 % slice, which means that you will drop your top 10 company exposure from 40 % down to 2%. And then, you know, you can buy some international funds or small caps and you're going to get true diversification, which is why, which is what you really thought you bought in the first place.

9:54Haley: But I don't want you to get me wrong. Index fund investing is still the best while building tool in history. I just want to be clear that right now you aren't just betting on America. You are betting on AI and bake rolling that build out. And I am too. But like I said, I'm 10 plus years away, so I'm going to let it ride. But if you're closer to retirement or you have more of an issue with this morally. I just want to flag it because I talk so much about these funds. I don't want you to think that I'm like pulling one up over on you. Okay. And then our second story, speaking of AI, is about Mark Zuckerberg.

10:27Haley: Oh, he honks you guys. And sort of about the tax system in America, because I feel like there's two. There's one that like regular W-2 workers deal with. And then there is this like custom setup built for billionaires. And And we're in this really interesting time that on November 3rd, Californians are voting on a one-time 5 % wealth tax on billionaires. And I want you to notice that I said wealth tax, not income tax, because this tax will target an entire net worth. So like for Mark Zuckerberg, who's worth roughly$240 billion, that means a$12 billion tax bill if it passes. But here's the catch.

11:09Haley: Zuckerberg has taken a$1 annual salary since 2013. So his wealth is not sitting in a savings account. It is almost entirely locked up in Meta stock. So having to sell his voting shares to then pay the C could have slashed his control of Meta down towards 50%. So Zuckerberg was like, okay, I'm going to just leave California. We've seen a lot of founders do this. Google founders Larry Page and Sergey Brant already did before the January 1st residency cut off. But to keep him around, Meta signed a founder alignment agreement. So that means that they're issuing him a brand new class of non-voting Class C shares, and he can immediately sell 20 % of them to cover the tax bill without surrendering a single vote or losing any of his power in the company.

12:02Haley: and in exchange, he commits to stay in California for eight years or per the fine print, wherever Meta is headquartered, which means he and the company could still be together later. And you might be like, why does this matter? Why are we talking about this in the market report? I have a normal paycheck. Why would I care? And, you know, I want to talk about it because I think that it is a masterclass in how geography can really dictate your wealth. This is obviously set from New York where they take all my money in taxes, but, you know, high cost of living areas really drain you invisibly. State taxes are super obvious, but I think that the real taxes and the daily friction, like, you know, the$18 salads and the normalization of a$12 coffee and the, you know,$5 grocery run markups, which I definitely face in Brooklyn.

12:46Haley: And then the housing prices that just force you to keep way more cash on hand just to tread water. So I don't know. Liquidity is definitely freedom. And Zuckerberg got squeezed because paper net worth doesn't pay bills. Like when an unexpected tax hit or financial emergency arrives and you have zero liquid cash, you're going to be forced to sell assets when you don't want to. And obviously Zuckerberg got a corporate board to engineer custom cash for him before a tax even passes. But most of us don't have that opportunity. So I would just say be intentional about where you live, audit your cost of living and keep your cash cushion ready.

13:21Haley: My sister just moved to Nashville and she's like living her best damn financial life because there's no income tax and like everything is so much cheaper. I'm jealous. Okay, and our final story is really fast, but I just want to tell you that Jay-Z is in charge of who performs at the Super Bowl. And he put himself, like he has chosen the headliner for the 2027 Super Bowl. And he was like, yeah, I think that we should do Sean Carter. Have you guys ever heard of Sean Carter? He was fully choosing between Miley Cyrus, Justin Bieber. They were the other finalists. I just was laughing. that you got Bieber like sitting by his phone waiting for the call.

13:55Haley: And then Jay-Z like looked in the mirror and was like, you know, maybe me though. Have you ever heard of me? What's really cool is that Jay-Z's company, Rock Nation, has produced the halftime show for the NFL since 2019. They have this$5 million a year deal. And then when they did Kendrick Lamar, it got a historic 133.5 million viewers. And Bad Bunny's got 128 million viewers in 2026. So it's become this insane platform. I feel like because of Roc Nation, they really like kicked it up a notch. And so I feel like Jay was like, OK, maybe it's my time to cash in. Like this is too good to give to someone else.

14:32Haley: And so beyond sort of the sheer comedy of hiring yourself, I just feel like this is the ultimate wealth rule where stop auditioning for the gig and just own the production company. Like even Sylvester Stallone put his daughter in a movie this week and was like, yeah, it's nepotism. Like when you only trade your personal time for a paycheck, you are just the talent waiting to be picked. You're at the mercy of the buyer. You're at the mercy of Uncle Sam because every single dollar hits maximum personal taxes. But this is not the case with Jay-Z because he also didn't pitch the NFL as a performer.

15:02Haley: Like Rock Nation LLC bought the platform that decides who performs at the Super Bowl. Then they take the fees. They write up the expenses and they control the room. So it's really smart because it's very vertically integrated. Yeah, I don't know. Jay-Z really is not a businessman. He is a businessman. And I'm excited for this too because I know that Blue Ivy is going to perform with him. And you know how much that means to me from the perspective of someone who loves seeing celebrity children put to work because then they can have custodial Roth IRAs. Okay, well, I will see you Thursday. I'm doing an episode, a solo episode on Thursday about my boyfriend moving in with me, which I'm really excited about.

15:35Haley: Being very financially transparent. So I hope that you love it. And yes, stay rich. And let me know in the comments what you want more of. We're going to do more international stories next week. Love you guys.

15:52You never know who's going to show up on For the Love with Jen Hatmaker. From Mel Robbins to Tig Notaro, Kate Bowler to Stanley Tucci. I'm Jen Hatmaker. And every week, my dear friend Amy and I dive deep with incredible guests who make us laugh and cry and think a little bigger about life in the middle years. For the Love, where great stories meet unforgettable people. Follow and listen wherever you get your podcasts.