Predictions for 2025

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0:54Rinse takes your laundry and hand delivers it to your door, expertly cleaned and folded. So you could take the time once spent folding and sorting and waiting to finally pursue a whole new version of you. Like tea time you. Mmm. Or this tea time you. Or even this tea time you. Said you hear about Dave. Or even tea time, tea time, tea time you. Mmm. So update on Dave. It's up to you. We'll take the laundry. Rinse. It's time to be great. Today's number, 37 million. That's how many times a Prop G episode was downloaded in 2024. for how do you know I have a podcast? I tell you.

1:45Welcome to Property Markets. Ed, that was the best I could come up with. I couldn't come up with something. That's good. We're just basking in the glory of it. It's pretty incredible now. I was pretty happy with that number. Yeah, Nah, this is the way I think. I'm like, why wasn't it$38 million? Like, it's Ed's fault. I'm a glass half empty kind of guy. By the way, I think Joe Rogan does that, I don't know, in about seven, eight minutes. Yeah, true. You put it that way. We got some work to do. Yeah. That's why we've raised your salary from$7.75 to$7.85 an hour. You're really bringing home the bacon here.

2:24That's right. Well, let's get to it, Scott, for our first episode of the year. We're going to walk through your predictions for 2025. So we'll cover your thoughts on what's in store for tech and markets and media. And we're also going to try to address some of the audience's questions and their comments from your predictions live stream that happened in December. Sound good? Yeah, that sounds great. Let's do it. Let's jump in. So your first prediction here. A new duopoly is forming. OpenAI and NVIDIA will be the power couple of 2025. 25 give us your thoughts on the open video prediction well just as there was wintel you have what is effectively somewhere between 88 and 90 percent of traffic to and the percentage of ai searches or queries powered by open ai and powered by nvidia and while there's a few players we talk about whether it's clod or we don't really talk about anyone in the chip market although we talked about IBM, but that was quantum computing.

3:27These guys have more dominance, I would argue, than Wintel. But this is the new duopoly of the age. And what's so striking is these are fairly new companies. But between the two of them, they have, I guess, NVIDIA is about$3.2 trillion, about a$3.5 trillion market capitalization. Moving on to the future of AI, software as a service and service as a software. What did you mean by that? If you think about software as a service is basically the cloud, and that is you rent out the cloud to such that people can build applications on top of it. AI, I think, is, or the next iteration of AIs, we got some of the infrastructure plays figured out or full-body contact.

4:06We got the LLMs. I do think that this new technology is going to create a bunch of new unicorns around very specific applications where people build a thick layer of innovation on top of the GPU, on top of an LLM, and offer sort of for example, a specific application that leverages an LLM and a GPU to create a very specific niche form of AI that helps people stay with backend compliance for the banking sector, or that figures out a way to offer certain types of personal injury law firms, a specific type of AI that helps them write contracts more specifically. I think there's going to be a bunch of niche applications, specifically in the enterprise, in the back office.

4:53I think it's going to create a bunch of kind of AI apps, if you will, or AI-driven apps. I think there's real opportunity in travel. There's real opportunity in health, but they will be branded. They will use, you know, OpenAI and NVIDIA will benefit because they'll be built on top of them. But there'll be little niche applications that focus on specifics. Just think about how craigslist kind of picked apart newspapers or classifieds they went after the movies then they went after car sales these applications will start kind of picking apart if you will various niche applications so i called it services of software moving on to your technology of 2025 which you have chosen is nuclear well the the stop gap or the friction and the growth of ai isn't uh or at least the smartest people in ai are the biggest players don't feel that it's customers or capital or even employees or human capital.

5:51It's the energy to power these queries, which are 10 times more energy consumptive than a similar query on Google. And whether it's Altman trying to raise money or thinking about investing in nuclear startups, or it's Bezos partnering with Constellation to reconnect or fire up Three Mile Island again, which would have just been unthinkable only a few years ago, it's clear that they've figured out that the choke point here will be, we're going to run out of energy pretty quickly, and that we've got to bring new energy online. And even Meta just announced, they've put out an RFP looking for somebody to show up and build them a giant nuclear power plant to power their business operations.

6:34specifically, I would imagine there are plans around AI. And for me, most roads, if not all roads lead to what is arguably, I believe, some of the most cleanest, reliable energy, and that is nuclear. So I think nuclear is going to have a big year in 2025. We've got a listener question here from Steve, who asks, what are the best ways to invest in nuclear? I mean, I can just list a couple good nuclear energy stocks. Go ahead, Ed. You probably know more about this than I do. Constellation Energy is a big name that we've been talking about. Vistra is a good name. It's another stock you can invest in investing in nuclear.

7:10Also, Entergy Corporation. I mean, there are a lot of nuclear energy stocks out there. Those are probably the biggest three or probably the most promising. But, you know, we've also talked about how big tech is investing in their own nuclear operations. I feel like a very safe play. You're going to get some of the nuclear momentum if you just stay in big tech, to be honest. I mean, they're all investing in that anyway. What I would want to do, so I'm pretty sure all the stocks you mentioned are up pretty massively in 2024. So word is out. That's definitely right. And I would say if you're going to do this, try and find a fund that has a bunch of them.

7:42I just think it's dangerous to bet on any one of these because I think the run-up has been pretty violent here. What I think is more interesting is I remember when we started talking about GLP-1 18 months ago and how it was going to be revolutionary. And then, you know, about the time that podcasters are on to an idea, the smart money has piled in about six months before that. No, we're early. We're always early. Or really? And Nova Nordisk was up dramatically, as was Eli Lilly. But Mia Saverio, our analyst, said she found little publicly traded companies that, for example, made syringes for semaglutides.

8:21So I think if you were a fund manager, if you're a consumer, don't spend your time on this shit. Buy index funds. Or if you're really fascinated by nuclear, there's probably a nuclear ETF that's likely to be a little bit more, I don't know, diversified, if you will. But if you're a manager and you really want to do some homework or you want to take a little bit of your capital I think what you want to find is the materials or the basic boring companies that build stuffs materials for nuclear So I would imagine there's a certain type of paint resin that you got to put on these reactors Or there's a certain type of shelving or a certain type of composites or minerals or some people are saying The play is in uranium now So I think you're going to have to do more work and go further downstream and look at some of the materials and the suppliers or even the vendors that should benefit from an explosion of nuclear.

9:11Because word's out. Word is out. That's definitely right. I definitely wouldn't recommend it as if I were stock picking. Let's move on to your investment of 2025, which would be emerging markets. If you look at over the last 40 or 50 years, there's kind of 8 to 15-year periods where the U.S. outperforms the rest of the world. and then the rest of the world outperforms the U.S. And it's basically all about flows of capital. And even if you're Argentina and you have good companies, everyone has been so negative on Argentina for so long that there's just flows of capital out. And basically about 5 % of institutional money has gone into some of these emerging markets or BRICS, and it's usually around 8 % or 9%.

9:53So there's been a massive flow out of capital. So even if the company is performing well, the flow of capital out of that market means there's just fewer people wanting to buy stocks. and you've seen these markets underperform the U.S. market substantially. And now the U.S. market represents 50 % of total market cap of all stocks globally, which is what you would call a cyclical high. And everyone from Goldman Sachs to J.P. Morgan have said when stocks are this high, usually returns go down. And I believe that what we're going to see is that after a 15-year bull market run for U.S. stocks, we're going to start to see the river or the flow of capital reverse and we're going to see more people go hunting for cheaper stocks in emerging markets.

10:37Even, for example, Argentina stocks have boomed the last few months under new leadership. I think that's likely going to infect Brazil. People are going to start looking at stocks in Brazil. Stocks there actually look quite cheap still. You can buy pretty solid companies there, including their biggest bank, their biggest iron ore producer for a PE of about five. So I believe we're in a kind of a cyclical moment or a high in terms of capital flows into the U.S. In sum, I'm rotating out of U.S.-centric investments into other markets. I think the world ex the U.S. is going to likely outperform the U.S.

11:17over the next five to 10 years. And so I think there's a lot of opportunity in some of these beaten down markets. Emerging markets is such a weird term. It feels so outdated at this point. Yeah, non-U.S. I don't know what to say. But then it's like there should be multiple different categories among emerging markets. I mean, it needs a brand. It needs a brand. Exactly. You said platform of 2025. I love this take is YouTube. Why is that? Well, when you think about streaming media, if you ask people, what's the premier streaming video platform, they would say Netflix may be wrong. It's 8 % share of total hours on streaming video.

11:52YouTube's 11%. YouTube, I believe, has 50 billion in revenue. Netflix has 38. and if you look at the numbers and just the trends, YouTube continues to take share from almost everybody and they have a paid offering. They also, I think, are the most elegant ad supported medium. What do I mean by that? Podcasts do host readovers. Those are kind of elegant and there's a skip button, so it's not quite as obtrusive or it's more palatable, but I find the ads on YouTube less obtrusive than any other ad supported media. When ads come on TV, I just can't even tolerate it. I'm like, oh shit, somehow I ended up watching Goodfellas on the TNT networker.

12:30And I'm like, that's it, I'm done. I'll see Joe Pesci get whacked next week or something. But the ads on YouTube, I think are really well done in terms of the skip now, because they say, okay, if you're not interested in this, you're not going to watch the full ads, you might as well skip now. And also just in our business, it feels like overnight, whereas Apple and Spotify kind of controlled were the primary distribution mechanisms for podcasts. Now it's YouTube. And we're scrambling to figure out a YouTube strategy. And what just struck me was Joe Rogan got 15 or 18 million downloads on traditional podcast listening devices, and he had 40 million or 50 million views on YouTube.

13:12So it strikes me that YouTube is just going from strength to strength. Young people seem to be really intoxicated with YouTube, increasing their time on the platform. So it's got an exceptionally strong ad-supported or more elegant ad-supported business model. And I love ad-supported mediums right now that are working because while more and more consumers are exiting the advertising ecosystem, the majority, the reason why our CPMs continue to go up pretty dramatically here at Profit Markets is that we attract a young, wealthy male. That is a great white rhino of advertising right now because those individuals are not watching ad-supported mediums.

13:57Most of them don't even have a TV. They're on Netflix and Spotify and YouTube. And YouTube's the only place where you can reach them if you're Pepsi or you're Warner Brothers launching a Marvel film. It's one of the few places you can still reach this group that is largely abandoned ad-supported media. So I'm just exceptionally bullish on the YouTube platform. I totally agree with that. And I'll just add one thing on. I think, as I've said before, I think one of the big strengths of YouTube is the comments section because of its ability to just facilitate socialization and interaction. And there are many other features on YouTube that are about that.

14:38The idea of having a subscriber base and having live streaming functionality. I mean, YouTube is all about interaction. It's not just about watching the content. And what I will say is that the platforms I believe are going to succeed alongside YouTube are the ones that take notes from YouTube. And there is one platform that is doing that really well right now, and it's Spotify. Spotify over the past few months has unveiled all of these new features that are definitely taken out of the YouTube playbook. They're now doing a comment section. They're incorporating video into the platform. We just saw this recently.

15:17They're letting us, as the podcaster, put out polls to interact with the audience. Spotify has gotten the memo. It's all about engagement and interaction because just watching and consuming is not interesting enough in 2025. I think the other thing I love about the comments is it's sort of like a reality check from the audience. Like if I were to go on there on like CNN and just spew some bullshit that didn't make any sense, I would never hear any feedback from it. Who does that? That was not directed at you. You're incisive on CNN and people say that. But if I were to go on TV and just say a bunch of nonsense, I would never get the feedback I need to learn actually that didn't make any sense.

16:00And what's beautiful about YouTube is every week we are held accountable by the audience. If we say something that is dumb or rude or aggressive or something that people don't like, they're going to tell us in the comments. And that's one of the things that I love about it. It keeps us honest. I agree. And you're right around consumer engagement. And I invested in a company called OpenWeb. And all it does is help these media platforms organize their comments such that they're less toxic and the better comments rise to the top. And it makes that entire, if you will, it's its own media. Comments are its own kind of media vehicle.

16:36It makes them advertiser friendly. And then they help monetize the comments for media companies. Anyways, I think comments were sort of the last monetizable media in big tech. We'll be right back. Thank you. off your plate. You can even automatically spot tax write-offs. And the best part, there are no hidden fees, no maintenance costs, no minimum balance, and signing up is completely free. With Found, your financial world is streamlined and your time is freed up, so you can put your energy into growing your business. Oh, and by the way, other small businesses are loving Found too. This Found user said, Found is going to save me so much headache.

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19:06We're back with Profit G Markets. your media of 2025 is no surprise here podcasts take us through it podcasts are going to grow faster granted off a lower base than than meta or alphabet i believe in 2025 and i think a big the catalyst for that tsunami or the rivers reversing uh and the capital the tsunami of capital i think is going to go into podcasting is the election i mean politics are the ultimate in branding you have a candidate you have a product and they need to get 50.1 market share on a given day and the other person gets zero. It's winner take all. It's about messaging. It's about advertising in the right places.

19:46And one of the things we learned from Trump is cable news is dead and dumb. Knocking on doors makes no fucking sense. It's all about flying into podcasts, straight into podcasts. And podcasts, MSNBC and cable news, average age of a viewer is between 65 and 70, mostly female. I think it's hard to sell those people products unless it's opioid induced constipation medications or restless legs or life alert or reverse mortgage. Whereas the average listener to a podcast is a 34-year-old male who is more persuadable, who is in his mating years and makes stupid purchases, is buying a home, is forming a family.

20:26And whereas 15 years ago, one in 10 people had listened to a podcast in the last 30 days. Now it's one in two. So this is where the people are going. This is where people who you ordinarily can't reach via ad-supported mediums are going. I mean, this isn't a proxy for advertising, but it's a proxy for influence. Since the election, all of these individuals who, you know, may or may not be running for president have reached out to me and want to know my views on things. No, they don't. They want to come on our podcast and they're running for president or they're running for senator. And they realize after watching Trump, I got to be the next kingmakers are going to be podcasts.

21:10And I think where we're going to get a lot of that capital is from these local news stations or local broadcast stations that have had this unnatural sugar high every two years from political spending because campaigns are like old people vote, they watch the local news so these local news stations lose money 21 months every two years and then for three months they quintuple their ad rates and sell to the for local and statewide and federal races i think that capital is about to transition the water flowed out during the election and a tsunami is coming in of revenue into podcasting i think you're going to be the rush limbo of this next generation on the left it's going to be great that's scary which means we're going to make a lot of money and you're going to get a presidential medal of freedom i like that yeah and yeah i don't i don't i wasn't a huge fan of rush but just in the spirit of transparency i'm so i've decided i was so freaked out by this election i decided to take a break i'm like okay i've been traumatized by this thing and i i'm sick of being coarse and being angry about it i'm just gonna go dark on politics for a while what you do a politics podcast every week.

22:18Yeah, but that's friendly and nice. That makes no sense. That's me basically asking Jess Tarlov questions because she actually knows what she's talking about as opposed to me shitposting Trump. Okay. So you're not going to put your opinions out there. Yeah, it's different. But this medium is going to, it's going to be, unfortunately, it's the definition. So kids, this doesn't mean go out and start a podcast. There's 1.6 million podcasts, 600 ,000 put out regular content. I think 400 ,000, wait, 600 ,000 put out something every week. I don't think, I think outside of the top two or 300, I don't think it's economically sustainable.

22:59Like the top 10 podcasts are responsible for a third of all downloads. I think the top 100 are responsible for two thirds. So I did the math. There were 2 ,800 people have been oarsmen or oarswomen at UCLA, have rode crew. 10 went to the Olympics. So at 19, when I was on crew at UCLA, I was three times more likely to go to the Olympics than have a self-sustaining podcast. I love that. That's amazing. Generously, 600 podcasts are self-sustaining economically. That's not to say don't do it. that's not to say it's not worth it. McKinsey probably has 10 podcasts that, you know, highlight their commitment to green energy or whatever it is, or it's fun or you enjoy it or you're building another business, fine.

23:47But if you're looking for an independent self-sustaining business, this is right up there with the likelihood a high school player is going to end up in the NBA. It is winner take all at this point. Next up on this list, we've got IPO of 2025, Sheehan. I looked at time on site times number of visitors to the site to come up with an attention index. And relative to its most recent round of public funding at$65 billion, it's the best value. And that is, if you look at traffic times the amount of time people spend on the site, it's a great value compared to the market cap of other retailers relative to their valuation and how much time people spend on their site.

24:31Also, the growth, this year it's going to surpass. Amazon is the second biggest apparel retailer. Next year it'll likely surpass Walmart and become the biggest apparel retailer in the world. It's also profitable. It's growing 23. Its growth sold to 23%. It's going public on the London Exchange. And if you look at the companies that have massively outperformed the market, you can bifurcate them into two categories, capital-intensive or IP-intensive. So you have NVIDIA as in design. They don't own any factories. Intel does. One does about$400 ,000 per employee. One does$2 million. If you look at Coca-Cola versus Monster, if you look at Marriott versus Airbnb, the IP-intensive low-cap-x company does three to four times the revenue per employee.

25:20And the same is true of Shein versus Zara or Inditex, which I think does about$400 ,000 or$500 ,000 per employee, and Shein is doing$2 million. It does, you know, the average retailer does about 100 styles a week. Fashion company, Fast Fashion does, I think, 700 a week. And Shein does something like 7 ,000 a day. They own no warehouses, no factories, no trucks, no planes, no stores. It's just software. using machine learning and AI to anticipate activity on the site and then, excuse me, examine activity on the site and then anticipate and predict demand and then send out those orders to the best factory or best supplier and then put in motion all the transportation.

26:04So it's all software. There's no CapEx. And those are the companies that have overperformed. I think it's going to get a lot of attention because it's going public on the London Stock Exchange, which will hopefully kind of ignite a moribund market, which has been the London Stock Exchange. disclosure, I'm an investor here. But the reason I invested is I think that the IPO market's coming back. And despite all the valid concerns about fast fashion and Shein, I think that capitalism and greed will overwhelm any concerns. And this will be the IPO of 2025. Question from Doug. But what about tariffs, i.e., let's say Trump does impose tariffs, that seems like a potential risk for Shein?

26:43Well, first off, I think tariffs are not going to be nearly the boogeyman people think they're going to be. I just don't see how—I've said this. I think the moment inflation ticks up and someone says it's because of tariffs or the threat of tariffs, I think they go away. And to a certain extent, the bond market and inflation are the adult supervision now in politics. If Trump wants to run up the deficit and the bond market starts spiking, he's going to roll back those plans. If you look at what happened with the—what was her name? Trust. It's trust. Basically, what kicked her out of office and what was the ruling party was the bond market and the currency market.

27:21It said, wait, okay, girlfriend, fine. If you want to have a plan that explodes the deficit, that's your business. But we're going to take interest rates up and your currency down. And overnight, she was out of office. And to a certain extent, I think the bond market is sort of the adult in the room with Trump. And that is, despite the fact that the Fed's been cutting rates, rates haven't come down a lot because the bond market is worried about potential deficits. It's the moment he gets anywhere near implementing a tariff on China, anywhere near the time zone of what he's talking about, you're going to see the bond market go up.