The Market Is NOWHERE Near The Top (Data Proves It)

0:09Hello, everyone. We've got a lot to discuss today. We're live today from the desk of Anthony Pompliano.

0:28Now everyone knows that the stock market continues to fly higher and that pessimists are screeching that everything is overvalued. The bears, they do have plenty of data to point to as part of their case. Creative Planning's Charlie Bellolo recently pointed out that the S &P 500 is now trading at 3.15x sales. It's the highest valuation in history. Now, this should be concerning to investors, right? Overvaluation. Not so fast, my friends. There's a number of considerations worth unpacking here. For example, the U.S. stock market is denominated in dollars, as you all know, and those dollars have been debased at a much faster pace than what the public has been told over the last 50 years.

1:02Now, this is important because this is something that no one wants to talk about. Adam Kobisi writes that fiat currencies are in an eternal bear market. No economy around the world has maintained an average inflation rate below 2 % since the end of the gold-backed Brenton Woods system in 1971. In other words, the value of fiat currencies has fallen by at least 2 % annually over the last 54 years. For example, the U.S., Canada, China, and France, they've averaged around 4 % inflation over this period. Meanwhile, Brazil, Argentina, and Venezuela, they have seen their currencies collapse by nearly 100 % in the same time frame.

1:35So yes, you heard that right. The U.S. has actually been debasing the dollar at 4 % a year for over 50 years. That's double the Fed's target of 2 % inflation. And we know the dollar has been debased by 30 % since 2020. So you would expect stocks to trade at a higher premium to account for this monetary phenomenon. Quite literally, investors are using stocks as an inflation hedge. That inflation hedge trade will drive valuation multiples higher, which is what we're seeing. And that's exactly what we expect to happen. But before you get nervous and start dumping your U.S. stocks, it's important to know that the United States is dominating on the global stage.

2:09Alex Stapp highlights that 22 of the top 25 largest companies in the world are in America right now. A16Z's Catherine Boyle, she points out that there's been significant change over the last 25 years in those rankings. Back in 2000, 25 years ago, Catherine shows that only three of the top 10 largest companies in the world were American. Now, eight out of the top 10 are American. So stocks are hitting the highest valuation multiple in history. American companies are disrupting the world, and the U.S. dollar is being debased at an alarming rate. These should all be market top signals, right? You should be worried.

2:42That's what your financial advisor probably will tell you. Again, not so fast. Bitcoin, the purest macro asset in the world, suggests that we are not anywhere near a market top. Ex-user Cyclops shows that zero out of 30 Bitcoin bull market peak indicators have hit so far. The pessimists can yell and scream. The bears can predict doom and gloom. But the actual data, the real math here, suggests that we're in a bull market and it's not going to end anytime soon. One of the most interesting developments this year is that retail investors seem to be winning while all the macro investors and the big hedge funds, they've been on the sidelines.

3:15They've been completely wrong and they've missed this big rally. Now, a big reason for that is because the retail investors have been trained to buy the dip. There's a great article in the Wall Street Journal today that talks about this, that these buy the dip investors blindly continue to buy whenever stocks go down. That's been a winning strategy. But Jordy Visser, a 30-year veteran of Wall Street, he recently told me a very different reason why maybe those macro investors have been so wrong. It's because they don't understand what's happening with artificial intelligence. Take a listen to what Jordy had to say on this topic.

3:44All right, I'm gonna give you a take here that I've not written about yet. I've not talked about yet. I listen to a lot of podcasts. I find my brethren of macro interviews to be out of their mind right now. And the reason they're out of their mind is because they know nothing about artificial intelligence. They have not studied it. They have not gone through it. And I'm going to bring this back to something you said at the beginning. And this is for all of them out there. You've been wrong. I mean, continuously waiting for recessions, calling for hyperinflation. I mean, this has been continuous.

4:16And yet you don't put any time into using LLMs to a degree that makes you realize how fast things are changing. And the reason that matters, if you believe, and I wrote a substack last week on the carousel of progress and how that silly ride at Disney where you'd go through 100 years of innovation or whatever amount of years, we are now compounding at a pace of innovation which is going decades and years. The reason that's important is Scott Besson gave another interview with the same people you mentioned last week after the AI action plan. And what he said is critical to this Fed discussion. He said, we are in a stage right now of AI where the infrastructure is getting built out and starting next year, we will see the handoff to productivity.

5:06Scott Besson understands what the Fed should be doing right now, which is why Trump believes he needs to get rid of them because who gets hurt from higher rates? Wealthy people? No, they have cash. They're loaded with cash. They can sit there. That's why when they raised rates for the first time in history in this country, the net corporate tax interest payments collapsed. And I remember showing this chart to people going, do you understand what this means? It means we have an economy where the cash is owned by a few companies. And then the smaller businesses are the ones that are getting hurt by higher rates.

5:40The Microsofts and the Apples, and they don't get hurt by higher rates because they don't borrow any money. This is not the same economy as what you guys saw before 2007. seven. This is completely different. Well, if the companies are benefiting, then everyone who's on the bottom 50 % of the country, the student loans, the whole thing, they depend on interest rates. So I believe the Fed should be lowering rates because they should be forecasting where productivity is, not today, where it's going to be three years from now, because that's what they're doing with inflation. They're embedding that they believe inflation is going to go higher, while Scott Besson, the Treasury Secretary, who is speaking with AI people all day long and is part of the AI action plan is saying, no, productivity is coming starting then.

6:21That gets back to the AI article from The Economist. If we have GDP going at 20 to 30 percent in five years because of no people working, having 24-hour digital employees, having robo-taxis replacing transports, the biggest job in the country, and having physical labor jobs by humanoids all within the next five to 10 years, why would we be caring about whether inflation is 2.6 percent or 3.5 percent now or even four percent, shouldn't we be helping the people that are going to be disrupted by the technology? That's where I think this makes no sense for anyone who's an academic who studied their entire career and is looking at history.

6:59We're in an unprecedented time, and I think they have to start making decisions that have a forward-looking basis more than just the next two quarters. So it's pretty interesting to hear, Jordy, somebody who comes from the Wall Street world say that his peers are missing what's happening because they aren't actually in the weeds. They're not using this technology. They're not terminally online. They don't see the conversation. They don't see the demos. They don't see how fast everything is progressing. And so naturally, this gives an advantage to the retail investor. And I think that is going to be a major trend over the next 10 years or so.

7:30So keep paying attention. If you don't understand AI, then you're probably going to miss out on lots of investment returns moving forward. I recently put out a tweet about what's happening in finance, and there's a ton of people who reached out to me. So I thought that it'd be important for me to expand on it. So here's where I tweeted. There's something very important happening in finance. An entire generation of young people who grew up on the internet, they are now ascending to positions of power and influence. Makes sense, right? They've accessed the capital and they have technology at their fingertips.

7:59Hello, internet. So the speed at which these people are receiving information, analyzing insights and making decisions is very different than those who came before them. Frankly, they're just faster at doing this. So the appetite for risk, the pursuit of volatility from this generation, and the addiction to playing the game 24-7 gives them a distinct advantage. If you add in the fact that many of them have a megaphone on social media, that reach was previously thought impossible. Faster, bigger, louder, more concentrated. The internet generation, which we are watching play out right now, the internet generation has arrived to capital markets and things will never be the same.

8:36Now, one way that you can see this right now is obviously in Bitcoin. People have bought Bitcoin. They were early to it. They understood it. They held it and they told the world about it. That's a beautiful version of what happens when the internet generation understands an asset. But it's not just in Bitcoin or cryptocurrencies. We see it happening right now with Opendoor, the stock that all of a sudden a lot of attention has shifted towards. What we are watching play out is yes, there's one hedge fund manager, Eric Jackson. He came out with a really big price target. Stock was trading at 50 or 60 cents.

9:07He said, I think it's going$82. That's kind of crazy. But then retail did something interesting. They looked into his analysis and they started to agree. They've been piling their capital into the stock. But now it looks like actually retail investors are starting to say, it's like the meme, right? Look at me, look at me. I'm the captain now. Retail investors are tweeting at the management team saying, why are you not talking to us? Why are you not going on television? Why are you not raising capital? Why are you as executives and directors of the company not buying the stock? Instead, you're selling the stock.

9:41And so I think something that's interesting here is the internet generation understands they have a voice, they have capital, and they can move quickly. And so they are starting to pressure the open door management team and the board of directors on how to govern the business. And my guess is that the management team and the board of directors, they are very underprepared for this. They do not realize what is going to happen with the onslaught of the internet coming and trying to force their hand. All of a sudden, at the end of last week, we saw the open door management team for the first time in a long time directly address retail.

10:12They said, we hear you guys. We're working hard. We're trying our best, but that's not going to cut it. See, the thing is that the retail investors, they want speed. They want to see products actually being released. They want to see change happening quickly. And now there's intense pressure on the CEO, on the board of directors. And I think that two things are likely to happen. There's a big push to get Eric Jackson onto the board of directors. I think that's possible that it may happen. And then two is I also think that you are going to see the pressure eventually forced the management team and the board of directors to buy stock.

10:45If you run a company and you're not willing to buy the stock when supposedly really undervalued, then what's going on here? Why are you selling stock when it's way down? It doesn't make any sense. So Bitcoin opened doors, another example, but on top of that, then you go and you look at artificial intelligence. And I think these artificial intelligence companies now are starting to realize that as they make these big investments, as they actually start to release these models, the retail investor, the consumer who's interfacing with their product, they are both a weapon to be used to support you, but also they can come for you if you don't actually do what's right.

11:19Just take a look at OpenAI. It's a private company, it's not even public. But what you're watching is that people were very disappointed by the GPT-5 release. And so the second that that product got released, there was all this hype. AGI is coming. Everything's going to be amazing. The product actually didn't fulfill that promise. And a bunch of people online went and had backlash. So this is all the same trend. We are seeing people who now have the ability to receive information quickly. They can analyze it quickly. They can make quick decisions, but they also have capital and they also have a voice.

11:51And so what you are seeing is this vortex or this flywheel. It's going to continue to accelerate. And you're going to see the people with capital and reach start to say, I want to see what happens in this business be the right thing. It's a new form of activism that we've never seen before. And so Bitcoin, huge tailwind. Bitcoin went up a lot because people spread the word. Open door, lots of pressure on them to govern the business differently. And my guess is that the pressure and the feedback that OpenAI is getting in their new GPT-5 release is actually going to cause them to improve the product and change the way that they're doing things.

12:25So this is a new phenomenon, but I don't think that it's going to go away. I do think that the combination of capital, fast decision-making and reach is the new future of where we're going in finance. All right. That's it for today's show. I hope that you guys are enjoying it. Please make sure you're following us on X and please, please, please make sure that you're subscribed on YouTube. We're trying to grow that platform as well. I'll see you guys live tomorrow from the desk of Anthony Pompliano.