Paul Tudor Jones Issues Major WARNING For Investors

0:00Paul Tudor Jones is one of the best investors in history. He took a little bit of money and he turned it into a big old pile of money. But he just issued a very important warning for all investors. Paul Tudor Jones believes that you may not get a return over the next decade in the U.S. stock market. Take a listen to why he thinks that. When you say, are we in a bubble? I don't know if we're necessarily in a bubble. We're clearly so leveraged in equities in this country. We're so dependent upon firm equity prices at this point in time. And when I say leveraged, we're 252 % of stock market cap of GDP.

0:42So 1929, we were, I think at the top, we were 65%. And then in 87, we got to about 85 % or 90%. In 2000, we got to 170%. And now we're at 252. So you can just imagine. If you think about the periodicity of significant bear markets, since 1970, we get kind of a mean reversion about, on average, every 10 years. When I say mean reversion, let's say mean revert to the past 25 or 30-year P.E. So if we did that here, that would be, and again, these are elevated P's, way elevated beyond the 20th century. That would be a, say, a 30-35 % decline. Well, 35 % on 250 % of GDP is 80-90 % of GDP, the reverse wealth effect.

1:41Oh, my gosh. 10 % of our tax revenues are capital gains. They go to zero. So you can see the budget deficit blowing up. You can see the bond market getting smoked. You can see this kind of negative self-reinforcing effect. And so it's troubling. It's troubling. So are we in a bubble? We're clearly in a sovereign debt bubble. In the stock market, we're over-equitized as a country. We have the highest individual equity weightings in the history of the country. And then the real problem is that we're also, if you look at private equity in 2007, 2008, that was about 7 % of institutional portfolios.

2:25Now it's about 16 % of institutional portfolios. Real estate's gone up. Infrastructure bets have gone up. We're so much more liquid than we were in 2008. Now, I don't disagree with Paul. Valuations are high right now. And the stock market is definitely elevated compared to the historical comparisons. But when you go and you take a look as to what is actually driving stock valuations higher, there's one big reason. Valuations are up because companies are more profitable than ever. Opening Bell's Phil Rosen writes, S &P 500 companies have never been more profitable. Net profit margins at a record 13.4 % to start the year, despite the Iran conflict, the historic oil shock, inflation fears, high interest rates, and lingering tariff uncertainty.

3:13Phil says that corporate America is proving its resilience once again. And we can see this just this month. Mike Zaccardi shows that the S &P 500 is up almost 10 % just in the month of April. Now, we are not only seeing incredible revenue growth and valuation growth in public markets, and I understand why Paul Tudor Jones is worried, but reports came out that we're seeing the same thing happen in the private market as well. It is now rumored that Anthropic has officially surpassed OpenAI in annualized revenue. No Limit Gains writes that Anthropic just officially surpassed OpenAI in revenue for the first time, and nobody is talking about how insane this is.

3:50In January of 2025, Anthropic was doing a billion dollars of annualized run rate. In April of this year, Anthropic is now doing 30 billion. 1 billion to 30 billion in just 15 months. OpenAI sits at 24 billion dollars. The company was built by people who left OpenAI and created Anthropic. But here's what makes this even more remarkable. Anthropic did this by spending four times less on model training than OpenAI. OpenAI has 900 million weekly active users, and most of them pay nothing. Anthropic, however, has 300 ,000 business customers, and 80 % of the revenue is enterprise. It's a completely different business model, and it is winning.

4:30And AI, both in the public and private market, that is what is driving valuations higher, and that is what is accelerating the U.S. economy. Now, as these companies continue to get better at giving low-cost, high-value intelligence to the human population, it is going to require everyone to work harder than ever. Don't take my word for it, though. Paul Tudor Jones, one of the best investors of all time, he mentioned in this interview that he is working 100x harder because of the information overload. Take a listen to his explanation. I feel like I worked so much harder than I did 40 years ago, 30 years ago.

5:07Because there's more information. Oh, my God, I get 800, 1 ,000 emails a day. If I think about when I was a pit trader, I think about even the 80s, when there was so much less information. I could spend more of my time intently focusing on what the highs and lows were going to be in the day, which are really important for execution, doing what my boss Eli did, just waiting, paying attention, focusing, are we a point of maximum pain? Is there so much fear right now, which is a great time to buy? Does it look like it's going to go up forever? A great time to sell. You have to be intentional to be able to pick those points in a day.

5:54And when you're trading 25 different instruments, instrument by instrument by instrument, a lot of times they'll be correlated. Sometimes they're not. You have to be very intentional about that. So if while you're doing that, there's 48 emails coming in at the same time, all of which could be actionable information. I think today, for me at least, it's just a lot, lot harder, I think, because the information overload distracts me from exquisite execution. Now, it's pretty incredible to hear one of the goats of all time talk about their work ethic like that. But speaking of Paul Tudor Jones, everyone's been worried about inflation.

6:36And PTJ mentioned that he still believes Bitcoin is the best inflation hedge asset. Now, obviously, I agree with him. It was just great to hear him talk about it so matter-of-factly. And we know the government's not going to stop printing money. So take a listen to why PTJ is so interested in Bitcoin. And then in 2020, when you saw, again, all the interventions, both by Central Bank and the Treasury. You just knew that the inflation trades were going to take off. And what was, of all of them, what was the best one? At that point in time, it was Bitcoin. Bitcoin is, unequivocally, the best inflation hedge that there is.

7:17More than gold, because Bitcoin is finite. There's only so much Bitcoin that can be mined. The problem with it is inflation hedges. If you got into kinetic exchange, there's clearly going to be cyber warfare, and anything that you have to deal with electronically is going down, including Bitcoin, so strike one. And then secondly, quantum computing, who knows if and when, with AI advancing as fast as it is, that we may actually have quantum computing. Now, quantum computing, someone can come in and can hack any bank and hack anything they want to. So in terms of it being a great inflation hedge, gold increasing supply every year by a couple of percent.

7:59Bitcoin, there's a finite amount that can be mined. It's decentralized. And so in that sense, it has the greatest scarcity value of anything. Now, pretty cool to hear him talk about Bitcoin in that way. But it's not just Bitcoin that we've been seeing benefit recently. Charlie Blolo shows how various assets have been performing since the start of the Iran war. Jet fuel is up 70%. Sulfur is up 60%. Brent crude oil is up 52%. Heating oil is up 52%. And WTI crude is up nearly 50 % as well. So we're living through a generational bull market. Bitcoin and commodities are both flying. AI companies are growing towards the sky.

8:38And US stocks are doing what US stocks do. They're going up and to the right. So Paul Tudor Jones is issuing a major warning to investors. He's worried that if you invest in the S &P for the next decade, you may get no return. He's not necessarily calling for the next global financial crisis, but he is saying that you have to be very careful. Of course, you should be careful. I just happen to think that stocks are going to continue to go up into the right, mainly because artificial intelligence and robotics are going to drive a level of profitability and a level of economic prosperity that we just haven't seen in our lifetime before.

9:14Anytime you can take a technology and you can squeeze inefficiencies out of companies and you can squeeze inefficiency out of society and the economy, that is going to lead to prosperity. And so, yes, I understand the valuation argument, but as I continue to say, you cannot look back from before the internet or before the mobile phone or when people rode horses to work and compare those valuations to today. Capital flows much faster. Valuations are going to be higher because the government is printing more money. And there's simply more capital sloshing around the system. Should you be worried?

9:50I don't think so. Should you be aware? Of course. And so Paul Tudor Jones, incredible interview yesterday. But ultimately, I think that stock investors, Bitcoin investors, gold investors, they're going to do very well. The people who are going to get hurt in the U.S. economy going forward are the people who sit on the sidelines. hold cash and think that they're going to wait for some big crash. Because if there's one thing we learned in 2025 and 2026 and all the way back in 2020, the market can definitely go down for short periods of time, but it will slingshot back to all time highs and investors who can stomach all the volatility.

10:27They're the ones who keep winning. That's it for today's show. Thank you guys so much for watching. Please remember to subscribe on YouTube. We currently have just over 46 ,000 subscribers. My goal is to get to 1 million. so hit the subscribe button and I'll see all of you live from the desk of Anthony Pompliano tomorrow.