Netflix Wins the Warner Bros. Bidding War

26:31And they also adopted the Amazon model of quite frankly, overspending to try and run away with it with cheap capital, recognizing that other media companies had made the mistake of letting their shareholders' lips get around the crack pipe of profits. And they said, no, we're not profitable. We're going for growth and share. And investors loved it so they could just show up with, quite frankly, more artillery. But Netflix is arguably one of the great success stories, probably the success story, the biggest success story in media. Would you say more? Maybe it's fucking meta. Anyways, I'm going with Netflix.

27:05But yeah, what they've done is just extraordinary. We'll be right back after the break. And if you're enjoying the show, send it to a friend and please follow us if you haven't already.

27:47Thank you. the web. With the recent launch of Design Pages, a free canvas-based design tool, Framer is more than a site builder. It's a true all-in-one design platform, from social assets to campaign visuals to vectors and icons, all the way to a live site. Framer is where ideas go live, start to finish. Ready to design, iterate, and publish all-in-one tool? Start creating for free at framer.com slash design and use code markets for a free month of Framer Pro. That's framer.com slash And use promo code markets. Framer.com slash design. Promo code markets. Rules and restrictions may apply.

28:48combines your multivitamin, pre - and probiotics, superfoods, and antioxidants into one simple green scoop. It's one of the easiest things you can do to support your body every day. I have been taking AG1 for a while. It tastes bad enough to know that it's doing something and good enough or acceptable enough that I can actually drink it. It's a busy time of year, and the new year is just around the corner. All this to say, it's never too early to jumpstart your nutrition, and AG1 has got you covered. AG1 has their best offer ever. If you head to drinkag1.com slash markets. You'll get the welcome kit, a morning person hat, a bottle of vitamin D3 plus K2, an AG1 flavor sampler, and you'll get to try their new sleep supplements, AGZ, for free.

29:29That's drinkag1.com slash markets for$126 in free gifts for new subscribers.

29:41Support for the show comes from LinkedIn. If you've ever hired for your small business, you know how important it is to find the right person. That's why LinkedIn Jobs is stepping things up with their new AI assistant. So you can feel confident you're finding top talent that you can't find anywhere else. And those great candidates you're looking for are already on LinkedIn. In fact, according to their data, employees hired through LinkedIn are 30 % more likely to stick around for at least a year compared to those hired through the leading competitor. That's a big deal when every hire counts. With LinkedIn Jobs' AI assistant, you can skip confusing steps in recruiting jargon.

30:12It filters through applicants based on criteria you've set for your role and services only the best matches so you're not stuck sorting through a mountain of resumes. LinkedIn Jobs' AI assistant can even suggest 25 great fit candidates daily so you can invite them to apply and keep things moving. Hire right the first time. Post your job for free at linkedin.com slash markets. Then promote it to use LinkedIn Jobs' new AI assistant, making it easier and faster to find top candidates. That's linkedin.com slash markets to post your job for free. Terms and conditions apply.

30:49We're back with ProfG Markets. Anthropic is gearing up for an IPO which reportedly could arrive in early 2026. OpenAI appears to have a similar timeline setting up a race to the public markets. This moment marks a new chapter in the AI story, one that has evolved at a rapid pace over the past year. We've seen model launches. We've seen massive capital expenditures, numerous circular deals, growing bubble fears. And now it appears that the IPO race is on. So, Scott, we'll get your reactions to Anthropic potentially going public. Those are the reports. But I also do think this is kind of a good moment to just kind of review where we are in the AI story, which has been through many twists and turns throughout 2025.

31:37and we're coming to the end of the year here. But I'll just start off with just the way we want to frame this. And that is, clearly we are entering a new chapter, but I just want to go over the chapters that we've seen in the AI story so far. You know, we started at the beginning of the year with what we would describe as a sense of optimism about AI. There was DeepSeek, of course, which made people anxious, but then we very quickly got over it. NVIDIA led the gains, the S &P hit a record high. Then we went into the second chapter, which was what seemed to be the euphoria chapter. And that is where the majority of the gains happened this year.

32:14We saw all of these crazy AI deals that were announced, massive CapEx spending increase announcements, and it seemed that AI could do no wrong. Now we're entering into this kind of, we don't know what to call it phase, where people seem to be a little bit more anxious about what is happening. and this leaves anthropic and open ai in kind of an interesting position going into 2026 so i guess just to start start this off where would you say we are at in the ai cycle right now what how would you describe the market sentiment towards ai and then we'll get into anthropic it feels as if around the narrative going from ai boom to ai bubble that the market is climbing a wall of worry.

33:00And that is the valuations aren't coming down. I mean, they come down a little bit, but not a lot. The numbers seem to be supporting or continue to kind of roll on. If I had to peg where we are relative to the dot-com bubble, we'd be in 97 or 98. And generally what you find in bubbles is when valuations go crazy, they then go insane. I feel like we're right now in crazy town. So I actually believe valuations are probably going to continue up. And I really like this. I think they were smart to kind of step on OpenAI and announce an IPO. I think the CEO there is managing his brand really well. I think he comes across a bit more as a grown-up and a bit more civic-minded than Sam Altman, who all of a sudden decides that porn is okay.

33:48and also i like the b i mean i have a bias because i've always about b2b companies not b2c or my most successful companies have been b2b not b2c and this feels more b2b anthropic than than the b2c open ai so uh i i like this i will probably try and get in on the ipo if it actually happens because i think the first big guys that get out i think the retail market is just going to go crazy regardless. And what they'll do is they'll price it. If you can get into the IPO, they'll price it below what they think it's going to go out at because it'll be a branding event for these guys and they'll want the stock to pop.

34:27What are your thoughts? I think there are two differences between Anthropic and OpenAI. Like if we're just going to simplify things down very, very simply. The first difference is what you mentioned, which is OpenAI is a consumer company. Anthropic is an enterprise company. Anthropic is generating 80 % of its revenue to from enterprises selling their API to businesses. And for OpenAI, it's flipped. 75 % of their revenue comes from consumer. So that's the first big difference if you're thinking, okay, one is a consumer play and one is an enterprise play. And then the other difference, and this is why it sounds like you are bullish on Anthropic.

35:09I am, yeah. I am too. And the reason that I am bullish largely is because kind of, as you say, Anthropic is the responsible AI company. And we've talked about the difference between how AI companies are innovating technologically, and then the work that they're doing economically in terms of balance sheet management and financial management. Anthropic is the startup that is spending a lot, but not spending like totally crazy. They are on track to break even by 2028. Meanwhile, you look at OpenAI, they are projecting to spend or lose$75 billion in operating losses in the same year. They're going to burn 14 times more cash than Anthropic through 2030.

35:53So OpenAI is the company that is basically drunk on spending and Anthropic isn't. And I think that that is a really big deal. And I think it is important in terms of the AI narrative, which I can get into in a moment. But this is very relevant because Because our buddy, Andrew Ross Sorkin, spoke with the CEO yesterday at the Dealbook Summit. The CEO of Anthropic is Dario Amadei. And he basically said what we are saying and what we have been saying in no uncertain terms. Let's just listen to what he said. I think there's a real dilemma deriving from uncertainty in how quickly the economic value is going to grow and the lag times on building the data centers that drives it.

36:42So I think there's genuine uncertainty. There's genuine dilemma, which we as a company try to manage as responsibly as we can. And then I think there are some players who are YOLOing, who pull the risk dial too far. And I'm very concerned. Who is YOLOing? So that's a question I'm not going to answer. The answer is OpenAI. Your reaction, Scott? Well, yeah, he's coming across as the adult in the room when it feels like Sam is saying, we just purchased$300 billion, signed a framework for a$300 billion agreement. I mean, haven't they committed to something like$1.2 trillion? Yeah, one and a half. Yeah, it's just sort of, it feels very musky to me that, oh, it's a lot of jazz hands.

37:24And he brought up, and this is probably virtue signaling. I don't know if I have sincere his, But he said that, look, this is going to have a huge impact on employment and labor and society. And maybe we should be thinking about some sort of tax for the massive increases in value fostered or inspired by AI companies. He probably realizes that would never go through. But he just comes across as a little bit more measured, a little bit more thoughtful. And again, I like their positioning, the kind of safer, more responsible enterprise AI in its affiliation with Amazon. on, I prefer Anthropic to or Claude to ChachiPT.

38:03I find it's a little bit more rigorous and hallucinates a little bit less. I use them both. Cautiously pessimistic is the right way to describe this market because, you know, there are some red flags here. Insider selling reached a 25-year high to November, and the last time that happened was in 2019 before the last kind of hiccup. And And there were also spikes in insider selling before the great financial recession and the dot-com crash. In other words, I would bet a ton of people at OpenAI and at Anthropic, especially with the decision around the IPO, which supposedly is going to potentially fetch a$300 billion valuation.

38:40I bet insiders are selling like crazy right now in these secondary markets. So, you know, if the market stays just level, it doesn't even need to keep going up, these IPOs will be huge because there really aren't that many pure play ways to play the AI market right now. You can invest in Microsoft. You can invest in – I guess NVIDIA is the pure play, but NVIDIA at$5 trillion.

39:09So these things will be monstrous. There will be IPO events. as long as the markets, they don't even need to go up, stay where they are. I think they'll get out. I'll be very curious to see if OpenAI decides if they want to kind of announce it. But this was a very strategic from a branding standpoint. Basically, Anthropic kind of stepped on OpenAI and it's going to dominate the news cycle over the next few days. And there's generally a connotation that the company that goes public first is further ahead than the others, which may or may not be true. But if I were going to invest in either company right now, at their current valuations, I would probably purchase Anthropik.

39:48Yeah, I think the narrative that we're trying to sort of map out right now is really important. And it's very confusing because, as we've said, you know, this AI story has been going up and down and the forces of fear and greed have been really in conflict with each other. And it's been very unclear. I mean, as I said, over the summer, it was very clear that everyone was very bullish on AI. And now the question is, like, how do people really feel about AI? And I think what you said there, cautiously pessimistic, is a good way to put it. And, you know, there's this, the Fed has this economic news sentiment index where they basically just map out what news outlets are saying about the economy and how bullish they are.

40:33And, you know, you can go find this chart. but basically what they map out is that you had this giant trough when the tariffs hit so everyone was very very scared then over the summer you had this giant rebound and suddenly everyone was very bullish and then as we went into the fall and as we started to hit november it came back down again and i think this is probably a mixture of the circular deals that we're seeing and everything that people were saying they were concerned about when they saw open ai announcing these ridiculous deals and oracle saying they're going to spend all of this money and i think that a good indicator of of how the market feels about things specifically ai has been the market's reactions to these capital expenditures and these announcements of capex in these earnings because during the summer if you announced a big capex increase if you said we're going to spend a ton on on ai your stock went up and we saw this with microsoft this happened in july they released this record capex forecast stock goes up seven percent google did the same thing stock goes up as well meta did the same thing their stock went up 11 now the opposite is starting to happen where if you increase your capex so you say we're going to increase our spending suddenly the market gets scared and that's exactly what we saw microsoft they report earnings they announce an increase in capex similar to what they did back in the summer but the stock drops three percent meta does the same thing they get more aggressive with their capex the stock drops more than 10 so it's so interesting because when the same thing is happening when the same material thing is happening increasing your spending you're seeing these wildly different reactions from the market which is carrying with it trillions and trillions of dollars worth of market value.

42:21And I think what that tells us is the narrative, the sentiment, the vibes, whatever we want to call it, is actually incredibly important right now when it comes to AI. It's actually not the fundamentals that are doing much work here in terms of valuations. It's the story that people are telling themselves about AI, and it's the vibes. It's how people feel about AI right now. So having a good understanding of what the vibes are, what is the sentiment, what is the narrative, is actually crucial to understanding how the market is going to move over the next several months, the next year, or whatever you want to call it.

43:00And if I had to make any predictions about where the narrative is going, what the sentiment is going to be. I think what we are about to see is that the age of exuberance and these big grand visions of artificial general intelligence, which used to be very sexy as recently as the summer, I think that's going out of fashion. I think investors are now getting scared of that. They're scared when Sam Altman goes on these podcasts and says these wishy-washy vague statements about the future of the universe, which used to be a very bullish signal to the market. I think that is flipping. I think markets are now more excited about the people who, as you say, come out as the adult in the room, who say, here is our responsible plan for how we're going to manage the balance sheet and spend the cash that we have on data centers and AI over the next few years.

43:53And I think that is going to be the bullish signal, which is why I believe that in 2026, the AI company of the year is going to be anthropic because they are signaling all of these things to the market. And I would not be surprised if by the end of the year, I mean, whether or not they're making as much money as OpenAI or more or less, I think their valuation will be higher than OpenAI's. Your big prediction in 2024 was Oracle. And you got that right. The thing that worries me is that you know ai they say ai will someday surpass human morality and which cracks me up because it it's been crawling the internet so it means it's you know if it's trying to learn morality it's like learning hygiene from a raccoon behind a 7-eleven it's just one of the things that really bumps me out about ai that was good i'm a little punchy.

44:48I couldn't sleep last night, so I took something called a Hulk Xanax. Hulk Xanax. Wow, did I sleep well. Oh my God. Like the nanny had to shake me to wake me up. She's like, Mr. Scott, Mr. Scott. By the way, she's German. She's German. She's not Latin. She's German. She had different plans for me 80 years ago. All right. Do you want to continue to talk about AI or would you rather talk about Hulk's annexes? Yes. My 2026 AI company is going to be, and my big tech stock pick, I just did this prediction stack. The AI company of 2026 is going to be Amazon. And I think the best application of AI, the second best application, I actually think the LLMs are a bit out over their skis.

45:44The IPO branding event where Anthropic will price the IPO below its market demand such that they can have that once-in-a-lifetime branding opportunity of saying the stock popped 40 % or 60%, that'll happen. But the greatest increases or shareholder value increases will happen to, in my opinion, and maybe it's already baked in, Alphabet, because I think Waymo, I think autonomous is an incredible application of AI that actually results in real money being made. And two, or the number one beneficiary of AI is going to be Amazon, because I think that the chocolate and peanut butter of AI is AI and robotics.

46:19And I think Amazon is about to become, if it's not already, the Ford of the 21st century. And that is Ford, over the course of 15 years, reduced the time to build a car by 90%. And Amazon is on the same pace to scale the time from a click to the time an order is fulfilled. And they think by 2032, they could double their retail revenue, which is the largest part of their business by gross dollar volume without adding any additional employees. And the investments, here's a stat that'll just blow your fucking mind or blow mine. The number of robots in operation, automated robots, industrial robots.

46:55In the US, it's 400 ,000, excluding Amazon. Amazon is a million. The only entity that has more that is deploying or utilizing more operational robots is China. And the number two is Amazon, the corporation. And I think AI training these things is finally in their purchase early and often in Kiva. Their revenue per employee is actually way down relative to the others because they've been making an extraordinary investment in CapEx around robotics and now AI. AI on its own as a consumer application, in my view right now, is overpriced with the exception of the private to public branding event of Anthropic.

47:37But the real shareholder value increase is going to be from Amazon that's only up 6 % in the last two years versus the others, which are dramatically more because they've been spending so much money on this shit. But I think that investment is about to pay off. So where AI really adds stakeholder value, I believe will be through autonomous, the leader in autonomous is Waymo. But the real champagne and cocaine is going to be AI and robotics at the hands of the largest retailer in the world, Amazon. Yeah, I totally agree. I think the robotics have not gotten nearly enough attention. And the China point is such an important one.

48:10It's like robotics is one of those things where we are just so far behind China, it's not even close. But yes, Amazon seems to be the only sophisticated company that is properly investing in this technology. So I would agree with that. We'll be right back. And for even more markets content, sign up for our newsletter at profgmarkets.com slash subscribe.

48:41Support for this show comes from Odoo. Running a business is hard enough, so why make it harder with a dozen different apps that don't talk to each other? Introducing Odoo. It's the only business software you'll ever need. It's an all-in-one, fully integrated platform that makes your work easier. CRM, accounting, inventory, e-commerce, and more. And the best part? Odoo replaces multiple expensive platforms for a fraction of the cost. That's why over thousands of businesses have made the switch. So why not you? Try Odoo for free at odoo.com. That's O-D-O-O dot com.

49:24Ford Blue Cruise hands-free highway driving takes the work out of being behind the wheel, allowing you to relax and reconnect while also staying in control. Enjoy the drive in Blue Cruise-enabled vehicles like the F-150, Explorer, and Mustang Mach-E. Available feature on equipped vehicles. Terms apply. Does not replace safe driving. See Ford.com slash Blue Cruise for more details. In America, half of every dollar spent on brand medicines goes to entities who don't make them. While middlemen like PBMs and 340B hospitals drive up costs, Biopharma is investing$500 billion in new infrastructure and manufacturing here at home and helping patients buy medicines directly at lower prices.

50:13Tell Washington to end middlemen markups and put American patients first. Visit phrma.org slash middlemen.

50:26We're back with Prof G Markets. The Trump Accounts Program has officially launched. This initiative gives every child born between 2025 and 2028 a$1 ,000 contribution to a tax-deferred account invested in low-cost index funds. The funds can only be accessed once the child turns 18. That money will help these kids once they become adults, but it does raise a bigger question. What about the years before that? and how are we investing in children while they are growing up? Right now, the picture isn't great. Adjusted for inflation, federal investment in kids has fallen 40 % since 2021, and their outcomes reflect that decline.

51:03Math and reading scores are dropping sharply. Literacy rates are at their lowest levels in decades. So, Scott, let's start with these Trump accounts. We had Brad Gerstner on The Daily Show last week to tell us about how this all came about. He was the guy who really pushed this through Congress. He met with Trump. He had some funny stories about meeting with Trump. But he's kind of the guy behind this. He was very excited about it. I just want to get your reactions to the Trump accounts. We give kids$1 ,000 when they're born. It goes straight into the markets, locked up until you're 18 years old.

51:42Well, on the whole, I like it. So I like the concept of thinking very long term. And Australia has their super fund, I forget what it's called. Yeah, superannuation. Superannuation. And it really has, I think, paid dividends for them. But I think, okay, so let me back up. What really bothers me, and I think it's really upsetting, is just how much shit and criticism the Dells are coming under. I just want to clarify with people because we didn't say this out loud, but for those who don't know, the Dells have donated$6.25 billion to these Trump account programs, and they're basically giving$250 to millions of kids around the country.

52:27And then they've gotten some pushback from people who say, oh, these are billionaires just giving this money to get in good with Trump or whatever the criticism may be. And there's some veracity to that. Dell is no accident one of the people that is getting a big slice of the TikTok pie that Democrats don't have access to. But I just I think it's bullshit to criticize the Dells for giving six billion dollars to kids. Should rich people be dictating public policy? Should we just not tax billionaires at a greater, more progressive rate and then let our elected representatives representing broader populace decide our priorities?

53:03Yes. Having said that, at some point, folks, if you want to keep criticizing people, billionaires who are giving money away, they will listen and they will stop giving money away. So that part of this, what's played out here has kind of bothered me or I don't think is fair. I like the idea. I don't like the execution. And that is, I think this, for this to be a three or four year program while Donald Trump is president, to me, it's like, okay, what we need is co-equal branches of government to create things that are systemic and last beyond the 36 months he has left. And I like the idea of money letting compound interest and a little bit of government money compound such that a long way in the future, we have more financial stability for people.

53:50So what do we, we want to take advantage of compound interest. We want to also recognize that a lot of people are not, do not understand compound interest and that one of the key advantages China has over the U.S. is they think in 50 year terms. We think in 24-month terms because of Citizen United and the fact that people are basically will do whatever – will say and do whatever they can to get reelected in 24 months or every six years or every four years in Senate and the presidency, respectively. The idea I like – I actually thought Bill Ackman's idea was a really good one,$7 ,000 to every baby born,$40 billion a year.

54:26and then they can't touch it until they're 65. And if the market continues to do what it's done, eight or 9 % since the beginning of the markets, the kid ends up with a million dollars at 65. And you think, well, okay, there's long-term thinking and then there's 65 years. But I do not think that 12 to one young people to old people now gone to three to one makes social security sustainable when you have a democracy where old people can vote in themselves more money and we can't seem to figure out a way to get a$40 billion tax credit for kids through, but$120 billion cost of living adjustment for social security flies through.

55:00The transfer of wealth from young to old in this country, who are the wealthiest generation in the history of the planet, seniors of 1.2 trillion a year, makes no fucking sense and is not sustainable. So what do you do? I like this idea. I would broaden it. I would have Congress pass it so it lasted more than 36 months. And we pretended we had co-equal branches of government. I'd go $40 billion a year,$7 ,000 per kid born. They can't touch it until they're 65 and finalize them low-cost, ETS, make some sort of contribution tax efficient or whatever from the employer or from grandma and grandpa such that the kid builds his own retirement fund.

55:36And then when they're 65, in 30 years, basically, you could say, in 30 years, we're not going to need Social Security because everyone's going to have between$1 and$3 million. And then interest rates would come down enough because of the reduction in the deficit spending and the excitement around not having a Social Security transfer every year, that the lower interest rates would begin to pay for the program itself. So I want more long-term thinking. I want to lock this money up till 65 and say, no one in America will need Social Security. For$40 billion a year, we're going to get rid of Social Security, and we're going to start to pay for it through lower interest rates in 20 or 30 years when people see the light at the end of the tunnel.

56:12So I like the idea of compound interest. I like the idea of accounts. I do not like the idea. Zero to 18, favoritism, donors leaning on the generosity of rich people and a lack of co-equal branches of government such that the next people that come along are going to do away with this bullshit. It's so interesting because it sounds like most people agree that this is actually a good idea. I feel like that is so rare with government policies where everyone just kind of like looks at it no matter what side side of the political spectrum you're on, and they just say, oh yeah, this makes sense. And it's like, what is interesting, and I agree with all of your comments, is the only things that we can find fault in this is that it's not going to last long enough, or it's not going to be implemented as strongly and vastly as perhaps we would like, because it is such a good idea.

57:07And I think that is very true. It's like, this is one of those great ideas that we want to last for a really long time. And we want it to have bipartisan support. And we want no one to be poking holes in it and saying, no, this, this, or not poking holes, but we don't want people just flagging it down because they don't like it for, you know, biased or political reasons. And so if I were to make one amendment to these accounts, my one amendment, and I agree with yours, but bigger than that, my amendment would be do not call them Trump accounts. 100%. He's politicized it. Exactly. It's like, that's the one way to make sure that this will not last beyond the duration of his presidency.

57:52Because I'm sorry if you're going to be as ridiculously divisive as he is attaching your name to anything, this is the price you pay being Donald Trump. If you want to shit on people and be rude to people, then yeah, you are going to alienate half of the country which you have done. And if you attach your name to anything, any piece of legislation, half of the population will find a way to not like it. And that's what frustrates me so much is I think Brad's goal with this was only coming from a good place. And same with Michael Dell. I mean, maybe he's going to get some benefits, but look, he gave$6 billion away.

58:31And now that they're called Trump accounts, it's like everyone who is even remotely left-leaning is looking for a way to say this is wrong or this is corrupt. And it really isn't. It's actually good policy. Do you think that the branding is interesting? I was thinking, did they make the same thing with Obamacare, but it was really called Affordable Care Act, right? Did it take on the moniker of Obamacare? I think that was what they dubbed it. and and by the way you know uh brad made this point as well about you know rough iras it's like the guy who who's in charge of getting it passed in this case it was trump usually the policy is named after that person but i just you know trump let's not pretend trump is like any leader in history let's not pretend that he is remotely as you know amenable or neutral to people than any previous president.

59:25He's the most divisive, aggressive, polarizing president and political figure we've ever seen. And it's by design he wants to be that person. So yeah, like, I don't want his name on it. Well, you know, he was asked about it today. And did you see what he said? No.

59:44I love that he's falling asleep. I'm so here for it. And when Rubio goes on this thing about war and geopolitics and how this is the only president that could solve this problem and bring peace to Ukraine and he's sleeping. I love the idea of compound interest. I love the idea of getting rid of some of our, I just want to get rid of social security and enforcing, you start them off with six or 7 ,000, you create all sorts of tax incentives. You totally go, you infantilize people. They can't use it until they're 65 or until they die or their kids get it or whatever. And there's no senior poverty.

1:00:23There's no social security. You just don't need it. And because these people have these investment accounts and they can start to build wealth. And there's some interesting similar programs around the world. I think, I mean, Singapore gives people homes. How do you start getting people to invest? 58 % of U.S. households hold stocks, but the top 1 % owns nearly 50%, while the bottom 50 is just 1%. Income inequality has obviously gotten worse. The share of national income going to the top 1 % doubled between 1980 and 2022. And congratulations to Brad. I think this is a real feather in his cap. And then major donors are, you know, and I think they should be applauded for this.

1:01:08They're scaling the program beyond government funding. You know, you can see it being like little Rachel's bat mitzvah. You just put money into this account, right? It becomes a place where gifts go instead of like getting your kid, you know, PlayStation or something. You put another 50, 100, 200 bucks, whatever it is. And it's tax advantage. Maybe grandparents can use it to, you know, start giving money away tax efficiently. But I like this. I like the concept. one of our flaws in our species that you want to take advantage of is that our species has a difficult time literally registering for 99 % of our time so far on this planet, the average life expectancy has been 35 or less.

1:01:49Like you're already a senior citizen in most of history because a bad cut, a broken bone, or war, or childbirth usually meant at some point in your 30s, you died. And now that's the thing about that I find so amusing is that in 10 years, you're going to look at yourself and you're going to be 36 and be like, oh, I'm 36. I'm 36 year old at Elson. I'm just 10 years older, but you'll be fine with the way you look. When you hit 46, you're going to be like, oh my God, what happened? And it's because when you look in the mirror as 45, your brain can't process it because you're not supposed to be around.

1:02:24And that way you're like, Jesus Christ, I'm fucking ugly. I mean, it's really, Ed, I'm telling you, I just like trying to avoid mirrors right now. Anyways, the species has a terrible time calibrating time. Specifically, we have a difficult time really imagining we're going to be around when we're 85. And if you could give people a magic box that says, all right, trust me on this, Ed Elson, you're going to wake up and you're going to be my age and you're going to get over how fast it went. and you understand finance, you know, putting a thousand bucks away now is 10 or 20 or 30 grand then. But most people just, even if they intellectually get it, they don't emotionally believe it.

1:03:02So let's take advantage of flaw in the species and let's start investing in kids from a very young age such that, and maybe give it to them, who knows, maybe give it to them when they're 40. And the other stat I love about compound interest is my kids are, my youngest, we're moving back to New York. My youngest is applying to schools there. And I was thinking about it. I put my kids in private school because I went through all public schools and then I was one of those people, the kids are never going to go to private school and then boom, all of a sudden they're in private school. But if you're really honest, if you took the$68 ,000 that whatever it is, Brooklyn Poly Prep or Avenues charges in Manhattan, and instead you sent them to the local public school and you put that$68 ,000 in a low-cost ETF from the age of four until they were 18, and then you left it in there, assume you're wrong.

1:03:59Assume that, in fact, public schools aren't as good as private schools, and the kid didn't get into as good of college, and he didn't find the right job at Google or KKR, and at 35, he isn't doing as well as the parents who put their kids in Avenues or Grace Church or wherever. Well, at 35, with that money, you'd be able to give your kid$3.5 million, dollars, which makes up for a lot of lost time. So people really don't have a sense for how much decent amounts of capital early on can result and can compound. And it's a flaw in the species that everybody wants to take advantage of, figure out a forced savings plan from a very young age and start putting it away.

1:04:39I think those are all such important points because it's like, what we need to be doing is figuring out a way to invest in children full stop. And the question is, like, how do we implement that? And there are many different ways to do that. And all that we've done is just, like, present a way that apparently billionaires are down with. I mean, yes, you could just raise taxes and you could invest more in children, but at the very least, this is, like, we're seeing this work. I mean, the proof's in the pudding here. Michael Dell came out and gave$6 billion that is being invested directly in children.

1:05:13But then it brings up this question of, okay, how do we keep going? Because at the current clip of our investment in children, as you've talked about many times before, it's not nearly enough. We currently spend$9 ,000 on each child every year. That's the U.S. government's expenditures on children. And for comparison, it costs us$17 ,000 to deport a single person. So we're spending all of our time on these deportations. As Catherine Anne Edwards told us, we spend more on deportation than we spend on childcare and school lunch. We're not spending nearly enough on children. And we're seeing the results for themselves.

1:05:55I mean, obviously, there's the effects of technology in the phones, but we're literally seeing that math rates and literacy rates among children are plummeting right now. Reading scores have reached their lowest levels in decades. Only a third of eighth graders, actually less than a third, have what we call a proficient reading score. So these are huge issues that we clearly need to start thinking more critically about. And then I think what I like about your point about how you would invest your money, depending on where your kid goes, I think it's important to think about our investment in children from a financial and ROI perspective.

1:06:37Like, we should consider the fact that if you invest in the education of children now, if you invest in the livelihood of children, it will pay off later because they'll be more productive citizens and they will contribute to economic growth. And in fact, a Stanford report just studied this flat out and they found, I find this fascinating, if we raised student achievement to levels that we saw in 2013, not that long ago, but a combination of many things, including COVID means that achievement among students has just fallen off a cliff. If we did that, the lifetime earnings of the average student would rise by 8%, and also GDP growth would be, on average, 6 % higher.

1:07:17And that's just if we got our act together in terms of educating children. I think the larger point being, this is a start, but there's a ton of work to do when it comes to simply investing in children today and we are massively falling behind, it seems like. What do we do? What do we do besides invest America? Oh, OK. Property taxes no longer are the funding vehicle for schools because schools being dependent upon property taxes means low income neighborhoods have less money for schools. We need to reform education and have hold unions and teachers more accountable. We keep throwing money. Even when we throw money at the problem, it doesn't fucking work.

1:07:57We need to start kids, boys at six versus girls at five. We need to recruit more men into these schools so boys feel like they're seen more. We need to have more freshman seats at universities such that if you're not growing your freshman class faster than population growth, you lose your tax-free status because you're no longer a public servant. You're a hedge fund with classes. We need more vocational programming. We need tax credits. We should offer every university has to have 20 percent of its certificates, be one and two year vocational programs, whether it's nursing or specialty construction or cybersecurity.

1:08:34We need to have child tax credits. I mean, I would be up for letting single mothers with kids have two or three votes because the D in democracy is working too well. Old people keep voting themselves more money. And as you said, your budget reflects your values. And when you're spending more money on separating undocumented workers from their families and deporting them than you're spending on kids, it says that you've decided that our priority is deportation and not children, which just makes absolutely no sense. So, and unfortunately, we are creating this out-of-control caste system when we spent$150 ,000 on a poor kid's education and we spent a million dollars on my kid's education.

1:09:18Well, what do you know? Kids from rich households are 77 times more likely to get into an elite university and less likely to be obese, depressed, more likely to get married, more likely to run, you know, more likely to run for Congress. Just the numbers are absolutely striking here. You have, we have to, at the end of the day, we have to figure out a way in America where your America is not about how rich your parents are, that the signal for your success, if a kid from a poor household takes the SAT, on average, he does 150 points worse than the kid from middle income home. Okay. 150 points.

1:09:54And then where income inequality really goes crazy is the upper income kid scores 250 points higher than the middle income kid. So if you were going to have true flattening or true equality, when a kid shows up from a low-income household to take the SAT, he or she has spotted 380 points, meaning if they get a 1220, that's a perfect score. And so we're perpetuating a cycle of income inequality and rage and young people who won't have the opportunities to mate. So I think from a very, very early age, we have all sorts of affirmative action in government programs. It is not based on identity. That creates more problems than it solves.

1:10:33It has nothing to do with your sexual orientation, your race, your gender. It's based on how much money mom and dad have. Full stop. Exactly. And we're going to infantilize the household. We're not, maybe don't give you straight up cash. I would do it in the form of universal childcare, tax credits for the kid. I mean, I'm talking my own book here because I got assisted lunch in elementary school. And when I think about how decent government and California taxpayers are, We used to have these coupons to get lunch, and they would send the coupons to my house and made sure that the coupons looked like the ones that were purchased by everybody else so I wouldn't feel any sense of shame.

1:11:11And Pell grants I got. So I'm just talking my own book here, but people look at me and think, okay, he's not the recipient of affirmative action. Yeah, I was. And at the same time, I don't think Trevor Noah or Tyler Perry's kids deserve any sort of leg up here. Anyway, I think a lot of this just comes back to money. I think the less government programs in the middle, the better, because unfortunately, government programs become like parasites or barnacles. You can't scrape them off. I do think there's something about reforming the Department of Education. I hate to say it. Don't disband it by a woman who doesn't know the difference between a fucking steak sauce and calls AIA1.

1:11:45Okay, that's probably not going to be thoughtful reform. But the Department of Education has consistently gotten increases in funding since W or since George Herbert Walker Bush, and the outcomes keep going down. So this means it needs radical reform. What's happened in Mississippi is very interesting. All this wokeness around phonics and everything or images. And then they realized kids aren't reading. It was like when the Blue Man Group started in elementary school and was all about shapes and feelings and emotion. And then they woke up and said, my 15-year-old can't fucking read or write. So I do think there needs to be radical reform.

1:12:19But at the end of the day, your household, we are the wealthiest nation in the world. Every household needs a basic level of income. I don't like UBI. I want to encourage people to work,$25 an hour minimum wage. And anyways, I could go on and on, and I will. My next book, by the way, is going to be called Project 2028. Ed, I know you're very excited about this. But there are a series of things we need to do to lift up young people. And a lot of it, a lot of it is making their parents less anxious, such that that economic anxiety doesn't waterfall down to the kid. Kids in low-income households have much higher sitting or resting dystolic blood pressure than kids in middle-income homes.

1:12:55You want to talk about a kid that is fucked from the beginning, who's obese, who's anxious, who has poor relationships with women, poor relationships, opportunities for mating? Show me a kid in a low-income household. So I'm for more programs that put money in their pockets, but the hand of government isn't doing it because it's super fucking inefficient. Yeah, which I do think this almost exactly does. But again, we need more of it. The final thing that I would point you to is just, you know, there's the issue that the children themselves aren't being invested in enough. And then there's the other issue that is young people at large don't want to have children at record levels.

1:13:33And the share of people younger than 50 who say they are unlikely to ever have kids is at record highs right now. It's half of them. um and that's sorry that is among those who do not have children already so people do not want to have kids right now if you're young and i feel like there's this very kind of uh one-dimensional view of things where it's like oh it's because they're worried about climate change or oh it's because um you know they they don't want to they don't want to put in the work or whatever it is It's like, it's because it's just too expensive right now. And the cost of raising a child has risen 25 % in two years.

1:14:17It's$300 ,000 now. And that's not including college. So it's like, the reason people don't want to have kids right now isn't because they don't want to have kids. It's because they can't afford to have kids. and so what are we doing if if if that's the the outcome of our policies right now and i guess all i would say is like i think this is good policy i think it's i think it's great i hate that they are called trump accounts but now it's like okay how do we take this a step further how do we continue the momentum how do we make sure that maybe people start matching the dells i mean Where is Zuckerberg?

1:14:53Where is Bezos? Why aren't they investing in children as well? I think we just need to keep this train running. All right, let's take a look at the week ahead. We'll see earnings from GameStop, Adobe, Broadcom, and Oracle. We'll get the delayed job openings report for October. And we'll also hear the last interest rate decision of the year from the Federal Reserve. Scott, any predictions? Yeah, I said it earlier. My big tech stock pick for 2026 that will outperform the rest of big tech is Amazon. I think that they're huge investments in robotics. They have a million automated robots and the rest of the U.S.

1:15:33has 400 ,000. I think it's about to pay massive dividends and that the real juice in AI is around autonomous and robotics as it relates to manufacturing and throughput. And again, they have managed, decreased click to fulfillment by 90 % and are estimating they can double their retail revenue within the next seven years with a zero increase in employment. And I think that you're going to see margin expansion across their biggest revenue line, which is their retail group. Traditionally, it's been cloud that has expanded their margins and advertising, Amazon Media Group. But I think some of these big investments, which has been reflected in their underperformance because they have lower revenue per employee.

1:16:14But I think Amazon is about to show up with AI-enabled robots that they finally start to really register incredible benefits and yield and margin expansion. So anyways, big tech stock pick for 2026, Amazon.

1:16:35This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silveri is our research leader. Our research associates are Isabella Kinsel, Dan Shallon, and Chris O'Donoghue. Drew Burrows is our technical director, and Catherine Dillon is our executive producer. Thank you for listening to Prof G Markets from Prof G Media. Tune in tomorrow for a fresh take on the markets.

1:17:11In kind reunion As the world turns And the dark flies In love

1:17:44Microsoft 365 Co-Pilot is your AI assistant for work. Built into Word, Excel, PowerPoint, and other Microsoft 365 apps you use. Helping you quickly write, analyze, create, and summarize. so you can cut through clutter and clear a path to your best work. Learn more at Microsoft.com slash M365 Copilot.