Financial Markets Are FAKE Now, But That’s the Point

0:00Hello, everyone. We've got a lot to discuss today. Financial markets, they are completely broken now. Young people can't afford to buy a home. Retail investors are crushing Wall Street firms this year. And we've got an electric message from the mayor of New York City about drones that are being used in the subway. We're live today from the desk of Anthony Pompliano.

0:28All right, folks, I got to get something off my chest. One of the most surreal aspects of financial market since the 2008 global financial crisis? It's that Bitcoiners were right. Not in like a, I told you so way, but rather how broken the market has actually been. We had a government that decided to implement the QE playbook at every downturn since. Everywhere you look, you can see someone in the world that's stuck in that old world, yelling and screaming about valuations and frothiness. This stock's overvalued. That stock's overvalued. The market's going to crash next week. Beware of the future.

0:58See, here's the thing. These folks are looking at today's data and they're comparing it to historic data when the world ran on a gold standard. They don't realize that historic valuations matter much less today because we've got a dollar that's being inflated away. We've got a government that has outlawed prolonged market corrections and a retail investor base that has been trained to buy every single dip. Now, the most dangerous words in finance are this time's different. That is until something is actually different. And the biggest change in our lifetime to financial markets, it's how manipulated they've become.

1:29In a weird way, true risk has actually been removed from the market when you evaluate it holistically. Now, could individual stocks go down over time? Absolutely, of course. But is there a single person in the world that believes the S &P 500 is not going to be higher in a decade? What about in five years? What about in three years? Now, I'm sure there is someone out there that's lost their mind and they honestly believe the doomsday scenario. But we've got a scientific term for those people, clinically insane. They should go get their brains checked out. The United States of America has constructed the greatest economy in human history.

2:03We have built an environment that is completely conducive to creating shareholder value over the last few decades. Publicly traded companies have a persistent tailwind at their back. Why? Well, it's because the currency their stock is denominated in is going to be devalued at an accelerated rate moving forward. Remember, the U.S. dollar has lost about 30 % of its purchasing power in the last five years, half a decade. Gold is outperforming the S &P 500 over the last decade. These are not normal things. And they signal the fact that stocks are going up forever over the long run. It doesn't matter what your crazy uncle tells you about yesteryear.

2:37The market is broken. We've engineered a situation where the government is essentially guaranteeing asset owners, you will always win. They won't let the stock market investor fail en masse. That would spell the death of the U.S. economy. And there's not a single person in Washington, D.C. that's going to sit around while that happens. The market stared down our fearful leaders and the politicians and the central bankers, they blinked in 2008. It was game over from that day forward. The market's going up. Bitcoin and gold are going up even more. Central banks will print money until they destroy their currencies in every country around the world.

3:12And all you've got to do is get long and chill. It really is that simple. Bitcoiners have been screaming about this for 15 years. Now the rest of the market's starting to catch on to the joke. And eventually, even the last remaining bears, they're going to capitulate too. Because if they don't, they will continue to sit on the sidelines, waiting for the big crash that will never come. Now there's a saying in the Bitcoin world that goes, Bitcoin will stop going up whenever they stop printing money. But since they're never going to stop printing money, Bitcoin's not going to stop going up. But the same is true of stocks and gold.

3:43So ladies and gentlemen, welcome to the new normal. Make sure you're acting accordingly. It is absolutely insane how unaffordable housing has come in America. We've constructed this amazing economy. We've got the ability to have economic mobility. Somebody can come to this country, start with nothing, and end up a billionaire. There's almost nowhere else in the world where this can happen. But homes are unaffordable for the average American. I heard recently Sagar and Jetty was on a podcast with Charlie Kirk, and he laid it out perfectly. He explained why the homes are unaffordable and how dire the financial position of the average American is.

4:19Take a listen to how Sagar described this. One of my favorite things Tucker Carlson ever said, I think it was in the election of 2020, is that whoever in this election is going to make it easier for a 30-year-old American to buy a house and to raise a family is the only person who deserves to win. I think that's a really good heuristic. I mean, look at where we are right now, Charlie. The average first-time homebuyer in the United States is now 38 years old. That's a record high. It used to be 27 years old not that long ago. The median homebuyer in the U.S. is 56 years old. So, you know, this gets to the conversation that you and Tucker really had about the selfishness of the boomer generation.

4:55And it's one of those where you're watching wealth not only be hoarded in the form of a home, but to be protected with so many different ordinances and different ways of living. And I'm not trying to make this some sort of entree point into Yimbyism, only to recognize the problem. Right now, a 38-year-old who's buying their first-time home is leveraged up to the hilt to a point that they never were in the history of our country. Right now, the first-time homebuyer I mentioned who's 38 years old, 42 % of their after-tax income is being spent on their mortgage payment for that average 38-year-old.

5:31Leaves very, very little room, a wiggle room. I just had a child, a baby daughter. I mean, the amount of expenses that come with having a child, both from your health insurance, premium, deductible, stroller, car seat, I mean, it changes your entire life in a genuinely irrevocable way. And then you look also for the rest of their finances. I just looked it up right before I came on the show. The average millennial credit card balance right now, today, is$5 ,000 to$6 ,000. That's in their balance. They're not paying that balance. The vast majority of Americans aren't able to meet that payment every single year.

6:05That means they're being charged userous credit card rates of some 19 % to 31 % in terms of their APR. So you are just watching runaway debt destroy the balance sheets. And then the entire system is basically, you know, we were talking about sports betting on Tucker's show, is basically trying to sell degeneracy and debt to as many Americans as humanly possible, which is just getting them farther and farther away from what makes us fundamentally happy in this world. So our country is totally broken. It starts with the homes. It also goes to debt. And the entire way that our debt finance leverage system is designed is really to the benefit of a lot of people who are older and is certainly not to the benefit of anybody who's under 40 in this country.

6:48Now, when you listen to that, it's pretty depressing. You can imagine that there are people who are out there. They're working hard. They go to work every single day. They're doing everything they possibly can. In their mind, they're doing everything right, but they simply cannot get ahead. Their wages will not grow faster than inflation. They cannot actually make enough money to buy a home, afford the down payment, do anything that would actually buy maybe a cheaper home and actually upgrade it to something that they want to live in. That isn't what we promise people here in America. And so I continue to believe if we can make homes more affordable, it will be a massive release valve of pressure for the average American, but it also will change the way that people think about our country and our society.

7:29Every single person deserves the opportunity, not the right, but the opportunity to get a home. And so let's make homes more affordable. Let's allow people to build more homes, get rid of all the local zoning issues that people are facing, allow for us to increase the supply, and ultimately you will drive down the cost of homes. On top of that, get interest rates down so people can borrow money so that they can buy a home as well. All these little things add up and it'll make homes more affordable in America and will actually improve the lives of the people who are the backbone of our economy.

8:04Eric Adams, the funniest man in New York City. There is no doubt. He's the king. You just got to crown this man. He can do it all. He's got jokes. He's got electric online content. And he is bringing some law and order back to New York City. But this morning, he dropped an instant classic on the timeline. Take a watch to this. As I always do, start my day with a smoothie, greens, some ginger, berries, spinach, celery, an avocado for the fat contents which helps the absorption of your nutrients and the greens. We had a press conference talking about subway surfing extremely dangerous but we're now using drones and we're able to look and inspect on top of the subway.

8:44When I was a transit cop you couldn't see on the top of the trains. I didn't even know what it looked like but these drones have been successful. Thank to Commissioner Tish and Deputy Mayor Daughtry. We use drones to prevent the loss of life of 200 young people. Have a nice day and stay hydrated. What politician in America could start off talking about his smoothie ingredients and end up bringing you up to speed on the use of drones in the subway? It is just unrivaled content from the mayor of New York City. And if you don't like it, the best Eric Adams line in history remains the following. I let my haters be my waiters at my table of success.

9:19Did you ever have anybody that doubted you in your career? All the time. I always tell people, let your haters be your waiters when you sit down at the table of success. Do you believe in God? 100%. I turn on my GPS every morning. My God position is satellite. I let go and I let God. You should put that in the dictionary and cement it for generations to come. Oh boy. Retail investors, they are crushing the financial institutions this year. They knew to buy the dip a few months ago, and now they are reaping the rewards. 30 % recovering the S &P in three months. But here's the thing. I think retail investors should get way more respect from the traditional financial players than what they get right now.

9:57Most people historically think that the retail investors, they're unsophisticated young people with no money, but the market has changed, my friends. There is a rise of self-directed investors. And I recently explained why these people are winning. Here's how I think about what's happening right now. Do you wanna be right or do you wanna make money? And the retail investors, I'm not talking about the people who are punting on penny stocks and have$5 on Robinhood, you know, and sitting in their mom's basement. I'm talking about the sophisticated, self-directed investors. They are making a lot of money.

10:27And guess what? If you go and you look at the distribution of ownership, retail was right about Tesla. Retail was right about Palantir. Retail was right about GameStop. Retail now seems to be right about Opendoor. Retail was right about Bitcoin. We can just go down the line. All of these different companies or assets where retail investors, they started to buy. Institutions were either negative or neutral. And then the institutions capitulated over time and eventually said, you know what, you're right. So if you go back and you look, why are there these cult followings around Bitcoin, around Tesla, around Palantir, et cetera?

11:01Because retail bought at very low levels. And then as the stock price or the asset price rose, they were making money. They got excited. If you bought Palantir and it was low, and now Palantir is high in the stock price, you love Palantir. You want to kiss Alex Karp. Your family is talking about how crazy you were to be buying the software company stock and you're sitting there counting your pennies, laughing at them. Bitcoin, same thing. Tesla, same thing, right? Just go down the line. How about the early investors in micro strategy now known as strategy? How about the early investors in meta planet?

11:39You just go down the line. That's why these cult following started because people figured out that they front ran the institutions. And so it goes back to the idea. Does retail get it right every time? Absolutely not. Does Wall Street get it right every time? Absolutely not. No one's batting a thousand. But the major stories in finance of the last seven or eight years, retail has beat the institutions to those themes. Now, does that mean that the institutions are all sitting there with no exposure? And hold on, hold on. Why do you think that's happened? Because what you now are getting is you're getting a confluence of trends.

12:12You have access to information in a way that retail previously didn't have. The second thing is that retail actually can take more risk because they're not managing other people's money. One of the things that people don't understand about the traditional financial system and the firms in particular and the hedge fund, et cetera, it's all a relative performance game. If everyone else is up 5%, you're content with being up 8 % because you just beat your peers. Yeah. But if the market is up 20, are you actually winning, son? Right. And so what retail cares about is absolute return. I don't care what my peers are doing.

12:48I don't care about this. I just want to make money. And so it is a pure form of investing, in my opinion. There's not all these, oh, we need to be risk mitigated. Oh, we need to have portfolio construction. Oh, I need to worry about my sharp ratio or my Sorrentino ratio, or I need to worry about this or, oh, no, I need to have this kind of custodian. it is pure, like what I would consider pure PVP free market. And that ultimately leads to better returns. They have capital, they can go anywhere, they can do anything, they don't have to report to anyone, and they can take maximum risk. Now, when most people hear risk, they say, oh, that's scary.

13:23Well, if you're taking risk with a hedge fund, because you're managing other people's money, now all of a sudden, they really care about what is your risk adjusted return. They really care about what is the portfolio construction? What are your risk limits? What is this? But all the stuff, right? That's why these multi-stripe hedge funds, like their goal is to return like 12 % a year. If they can consistently return 12 % a year, 13 % a year and do it with minimal risk, home run. Because the institutions, that's what they want. But the individuals go out there in the street and talk to retail investors.

13:55If they got 12 % a year, would they be happy? Hell no, right? What they're looking at is they're trying to figure out how do I create wealth? A lot of these institutions, a lot of these financial firms, they're trying to protect wealth, right? That's not what these people on the internet are doing. They're trying to create wealth. So what do you do? You're on a more concentrated portfolio. You take way more risk. You're looking for more asymmetry and you seek out more volatility. But I would argue the things that are positioned as the safest things in finance are actually the most risky? Holding bonds, losing strategy, holding dollars, losing strategy.

14:32So you look at it and you say, the average financial advisor would go tell someone to create a 60-40 global portfolio. 40 % of your portfolio is an L. Because over time it gets devalued. You just are getting crushed. What bonds in a traditional 60-40 portfolio, what are you gonna go hold, TLT? And just get your face ripped off, right? So what ends up happening is that you see an entire generation saying, wait a second, why would I put that stuff in my portfolio? Maybe I'll do 60 % stocks, 40 % Bitcoin. Now, whether you like it or not, I can only tell you what I see in the market. Some of you may not like it, but it doesn't make it untrue.

15:11And that's why I am paying attention to this trend. And I think it is an important part of financial markets going forward. In fact, before I let you go, I should mention that I am hosting a conference for independent investors. It's aptly named the Independent Investor Summit. The conference is going to be on September 12th in New York City. I got a bunch of friends coming to speak. Jordy Visser, Jeff Parr, Darius Dale, the Nigerian brothers, and Mr. Humanoid himself, Chris Camelo. Each investor is going to share their views on stage about the market. They're going to explain their broad investment thesis.

15:41And then they're going to give their single best investment idea on that day to those in attendance. So you're not going to want to miss this. I hope that I'll see you guys there at the Independent Investor Summit. you can check in the description to get a link to go buy tickets. That's it for today's show. I hope you guys are enjoying this. I'm having a blast putting it together. Hopefully you're learning as much as I am. Please make sure that you're following us on X and please, please, please make sure that you're subscribed on YouTube as well. I'll see you guys tomorrow live from the desk of Anthony Pompliano.