Dr. Sebastian Purcell Takes the Market's Temperature - AI & Demographics

27:45But where it's actually had an impact on the economy and where it will have an impact on the economy, very much open. I was jotting down some notes. You talked about aging, Internet of Things, robotics, digital assets. Talk about, and we'll come back to digital assets more because I know that you and I have talked about digital assets on Real Vision a great deal. But I'm curious about some of the other points. I mean, you mentioned aging. I thought that one was really interesting because once you get to age 40, you go to a doctor like once a year and they tell you, everything's fine. And you say, thank God.

28:16And then you walk away and think about it again. And this is sort of the point of this patchwork view. Is that something that you see changing? Is that something that you see that in the future, we're not going to do this kind of patch the leak strategy, but there's going to be a more fundamental systemic approach to slowing down aging? On that point, my view is that for you and I, Ash, I think we're probably over the horizon of where they could fix us. Damn it. It's exactly that experience. I'm 44, so I have that whole experience of going into the doctor, and they don't really try to fix anything anymore.

28:51They just tell you to go away. Here are these small problems, and you just hope to avoid the main ones. Technologies like homologous gene therapy seem like they're years away, and that would be the holy grail. What is that? That would be somehow coming up with a way to splice in genetic changes to everything. every single cell in your body, right? That's that, which would fix things clearly if we could do that. But that's just way out there. We're still talking sci-fi at this point. You know, I think that for those of us who've reached our age, yes, the patchwork approach is what we have. The good news is that it works pretty okay.

29:34And we may get longer lives and maybe more productive lives. Because I think that's the key thing there is to ensure that people have a higher quality of life towards in those final years, right? Seventies now are thought to be relatively, people can be relatively productive there. Nobody thinks that those are bad years necessarily. The general American population clearly thinks that the eighties, that's more or less where the cutoff is, right? As soon as you hit that range, we start worrying about presidents and whether or not they can manage things. But seventies is okay, apparently. And that's really the question.

30:07That's great news since so many of us are going to be paying off our mortgages until we're 92. Yes, exactly. So, you know, that's sort of what's happening with genetics. And I'm only looking, I'm not so much looking at age extension so much as, you know, viable years. Things like Zempic honestly may have more, you know, GLP-1 inhibitors may have more of an impact on the productivity level of Americans, their ability to live longer. Not because we're so much raising the bar for the top end of human lifespans, but because we're making the quality years that we have better quality years. Those are the sorts of things that I think longer term are very interesting.

30:48Yeah, so there we go on that end. Robotics is going to be sort of a double-edged sword. It can help, but we then start worrying about unemployment, right? So we may need some political solutions to make sure the population is able to continue. You want consumers who have money to pay for things. And if you start displacing too many of them with robotics, just to give you a story, my hometown, I grew up in Caldwell, Idaho. which is near Boise, Idaho, which may be the only city that people know in Idaho. Idaho is known for potatoes. And so I grew up in farmland. They decided recently, Micron is near this area, and they decided to build a relatively large 48 acre building.

31:34And it has 12 people in it. All they employ, because everything else is roboticized. You know, they're building chips and humans can't really build chips at that level anyway, right? It's more like monitoring and cleaning and security crew. And that's all they have. So in some areas, we've definitely moved towards a robotic solution that humans can't do. And the productivity is very high, but it doesn't necessarily notice it. It dislocates some of the problems within a nation state. Then you start worrying about unemployment rates, et cetera, like those things. So on the productivity side, the robotics is a net positive provided we can do this political stuff.

32:14Okay. I don't know. I think that's maybe we're gambling with the United States on that. Can we fix our problems politically? But if we can do them all right, then I think that's a net benefit. There are, by the way, sort of direct short-term implications of this analysis. And I don't know if you want to go to that now, but that's where my brain goes. is, okay, we've got 10 years out. We kind of know the sectors. We kind of know the areas of the globe that makes sense as a digital asset manager. I do have to act as a sort of a global macro fund manager. And things that I think long-term, China is out, at least right now.

32:51Russia is out. Most of Europe is out for France, except for maybe France. Germany and Italy are especially bad. The United States will be okay. So you start thinking like globally where you want to put your bets. what sectors even matter, right? And which areas could power sectors, right? But then we can switch towards the short term. Let's go there in just one second, because there's one other question I wanted to ask you about, which is the internet of things. And this is an interesting one as well, because this is something that we've been hearing about for decades. It's interesting. In some ways, it reminds me of AI.

33:24We heard that AI was going to revolutionize the world for decades. I mean, literally decades. And yet it just, it happened. It sort of sprung up in a moment. For those who weren't watching the space. Obviously, people who were in it saw those developments. But we had decades, if you're over 30, you remember your clock would flash 12 o 'clock and no one could figure out how to set the damn thing. I mean, there was a lot of sort of hype around AI for a long period of time. And then it popped out out of nowhere as this major force in the economy, a major force that we're talking about sociologically, culturally, after being sort of rumored and hyped for a really long time.

34:02IoT still to me is in that rumor and hype phase. We first heard about it about a decade, a decade and a half ago as something that was going to revolutionize every aspect of our lives. So far, no real impact from IoT. What's the status of IoT? What do you see it doing today? And what do you see it doing over the next three, five, 10 years? Yeah, so I do think that IoT is on the cusp of some rather large transformations. I happen to be advising a startup that uses IoT space. So I have really granular knowledge of that at this point. The problem with IoT is they needed to be able to track everything everywhere it moves.

34:46That's sort of one of the key things to say you are Walmart. It would be helpful if you had tags in all of your products and you could track where they were going, where they got lost, shipping problems, that sort of stuff. And in order to track all of those things that are all communicating with each other, then you can get all kinds of real, really interesting aggregate data, right? About consumer prices, where things tend to go. You know, just the whole distribution chain could be optimized with better IoT effectively. massive massive distribution chain impact this will never be this sort of thing i think especially that in that catches the popular hype but it will dramatically transform any firm that has to ship at volume all right so uh where that stands is that you have to have tags that do that and for a long time the technology was using arfed tags uh which are frequency id radio frequency id exactly And you have to actually sort of manually scan those if you want somebody to do that.

35:48So that's never going to work. That's how they track animals in the wild. And it works when a team goes and finds them again and catches the whale or whatever, tracks the tag. But if you want to track billions of products all over the world, it must be passive, not active. You will never scale with that active method. And in order for it to be passive, what you need are tags that interact with something and that probably have nanocomputers on them. uh so they do they have these now this technology is emerging and it exists right now it allows you to passively track various items uh they will interact the computers have no batteries they get powered by radio waves basically and those power the nanocomputers then they can track you know location temperature well like a bunch of stuff that you might want to track uh just as the items move around the world.

36:39You know, cell phone coverage problems exist for this. Just as you have a problem always getting a signal with your cell phone, you will have a problem tracking all of these items. That's probably an inevitable feature of this. But we are going to be able to track all of these items and that will have dramatic impact on various sectors, especially, like I said, for distribution. So when we're talking about increasing productivity, that's what I'm looking at is technologies that can offset the productivity loss. And this is one of those technologies that I think is focused and will be able to offset that productivity loss.

37:11And the firms that are developing this technologies, those firms are, they're not publicly traded, but they are the new versions of OpenAI, right? And so those will definitely be worth investing in, especially as soon as they go public. Yeah. And this is a challenge of more innovation happening in the private markets, value accumulation taking place in private markets rather than public markets. Sebastian, you've set the stage brilliantly. We understand the thesis. We understand the context. Take it away in terms of back half of this show. Talk all about the investment opportunities, investment pitfalls, and how you see the investment landscape being changed by these mega trends that we've talked about thus far.

37:53Yeah. So I think you can tell I sort of track a lot of technology stuff. And that's because it tends to have the sort of impact that could solve these problems. We're looking at technological solutions that could offset productivity losses. That isn't the only thing, though. As the world, so there's a large narrative shift here. And there's some competition among fund managers to give a nice narrative of what's going to happen over the next 10 years. Some people think that, most people agree there's going to be change in the world order. But in the world order being sort of the Bretton Woods version of the world that we know.

38:33I don't think it's going to turn into one sovereign nation going to another. Rather, it's going to turn into this, and most people I think agree, sort of smaller, more fractionalized world. And that means that very specific technologies will have an impact in certain areas. So investing in US technology matters, for example. The difficulty is that those sectors are bubbly, which is why I have a whole course on the art of the bubble, right? Because if you're looking at things this way, then you're looking at technological growth and you should probably think of say the dot-com boom. People were right that the internet would revolutionize everything.

39:18They were wrong that it was going to happen by 2001. An inherent feature of the technologies that will have an impact for us is that human minds are stuck with what I would call a linearity bias. People probably know about an anchoring bias. I think it was Dan Airely, a behavioral economist. At least he reported on an experiment that he ran or some professor ran with their students. They had them all come up to the front of the room and bid on a nice bottle of wine, like how much they would pay for that nice bottle of wine. And before they did that, they had people write down the last two digits of their social security number.

39:57So you could get numbers between zero and 99. People who had lower numbers, like 1.8, tended to bid somewhere in that range, the$20 range. People who had high numbers, like 9.7, tended to bid in the 90s. Their brains, for totally irrational reasons, were anchored to those numbers. That shouldn't have affected what they bid for the bottle of wine, but it did. Something similar happens when you think about emerging technologies. we tend to think of them as growing in a linear fashion, but they don't. They grow in nonlinear fashions. And the result of that is that people overestimate the near-term impact of these technologies and underestimate the long-term impact of the technologies.

40:41So that's just a recipe in short for bubbles. You're going to have bubbles with technologies. People are going to get way too interested in them at the beginning and then lose a lot of interest when they should be interested in them and then kind of try to catch up late, right? That's sort of the basis for bubble trading. And at least until AI does all of our trades, I see us as stuck with these kinds of dynamics, people getting really hyped up about things and then losing interest right when they begin to matter. So, I mean, we already discussed that, for example, with IoT. I think IoT is just about to make a breakthrough, but hardly anyone's talking about it.

41:24So with that in mind, that's where I begin to look at some of these technologies and the transformations they might have. One of them, for example, is in the sort of the EV market, you know, green tech, especially electric vehicles. That is an interesting one because it faces some sort of supply chain constraints. One of the things that Tesla did in a couple of ways, one of them is just getting enough lithium for the batteries, but another one is being able to charge our cars. So it's not as if the technology itself is a problem, but the infrastructure there is a problem. So people are then, again, really happy about the tech.

42:06It meets reality. You need to change a bunch of infrastructure. We're going to have several years of infrastructure overhaul before that market becomes completely usable in the way that people want it to be usable. That's just an example of like the three phases of hype, disillusionment, and then catching back up again in the third phase. Roughly, that is the pattern that I see unfolding in all of these sectors. I can get to specifics if you want, but yeah, we can talk specifics, but that's kind of like the general pattern. My first question is, how do you find the scale on the X axis, right? So this is, if we think about our lifetimes, guys, about our age, Sebastian, you go back to the dot-com implosion around the year 2000.

42:49It was brutal. It was painful. The thesis was correct. The time horizon was wrong. How do you begin to estimate what a time horizon looks like, and how do you psychologically prepare yourself? I mean, if you talk about Daniel Kahneman, Daniel Ariely, all these great behavioral economists, the challenge is how we perceive the world relative to some of the underlying facts about the world. How do you begin to think about that? Right. I don't. Right. Right. Like, just so there's two interesting components here, right? One of them is, so a key feature then of all of these innovations is that they're cyclical.

43:32and I just stop trying to guess exactly when that's going to happen. That is where I write algorithms to kind of just track things. People can track things. They can proxy them pretty all right. Honestly, for these technologies, they can track them all right with just standard momentum metrics over various sectors. It's going to tell you when they're declining and emerging. It's surprising that something like this complex can be resolved that easily. But what you're facing is two key features, right? One of them is that these sectors have a fundamental technology. And another is that they have, I don't know, a psychological premium built in.

44:14And measuring the psychological premium is something you can do up to a point. And write sort of well, I don't know, have a bot, crawl Twitter, look at hashtags, whatever, do something like that. But it's really difficult. And so the key thing to keep in mind is that the bubbles that happen, and we're going to continue to see these, are slow to decline. The dot-com bubble gave you, I don't know, I mean, it declined over almost three years. So you could be quarters late exiting the dot-com bubble and still have been okay, provided you started getting in early on in 95. thrive, right? It's really about being aware of what these sectors are and cataloging them, almost just having a better memory than other people about the things that people used to talk about.

45:02And then just following them forward will give you a better approach to them. When you say I don't, what you're saying is it's almost impossible to track on a fundamental basis where you see these inflection points in terms of pricing. But surprisingly, on a technical basis, you can actually follow momentum and sentiment indicators, which will give you a sense of the cyclicality of that investment, which has, it seems, almost a surprising degree of signal in it. Right. Yeah. I mean, the only fundamental basis that you can use is, I mean, we track liquidity flows quite a bit. and so we get granular about that with you know cryptocurrencies for example is making sure that digital assets making sure that there is enough free liquidity in the market and then i mean that's like a reservoir you want to make sure that you're watering your crops right so the actual flows or the watering of your crops um you can look at that by you know u.s dollars into various exchanges or things like that and look at those measures to to really track that capital is moving into the space.

46:11So if you wanted a fundamental basis, that would be the way to look at it. Because these technologies are emerging, they'll always be considered growth technologies, and hence they will be further out on the risk curve. They're not going to be on the conservative side, they're going to be on the growth side of the risk curve. And that means that if you wanted to look at anything fundamental for them, yes, liquidity flows overwhelmingly, that's where you go. But beyond that, you have to look at, well, okay, that's still not granular enough. So that's when you can look at, yes, technical metrics matter.

46:43You can throw a lot at it. You can make it more or less sophisticated. I run a whole MLL go over this, but yeah, honestly, technical metrics can matter for just assessing when sentiment is finally changing because ultimately the thing that moves capital into this space is hope, hope in new technology. you. So Kathy Wood, by the way, has the opposite approach. She picks her sectors, waits for them to capitulate, and then buys a lot. And so her view is a very long-term view. That's kind of what's running ARK Investments is that these technologies will transform the world and we're just going to buy every capitulation event, a large dump in some price in a company that we think has promise.

47:26that's that's her approach i just find that you're going to get a lot of volatility with that and it's better right because the the prices move up so much given sentiment that it's uh better to just not try to do that whole buying and holding these things is uh a recipe for um well some i don't know more stress than i would like to bear and i'm the guy who manages a crypto fund um so So I guess it's nice work if you can stay solvent that long. Right. I will say there's that too. If you can drop, what, 60 % and then everyone still loves you, then fine. But yeah, I do find a lot of overlap with what they're doing there at ARK Investments.

48:10I do think that they have a lot of the key sectors down. Again, it's the timing, though. The timing will ruin you if you do this wrong. There are other areas that matter, though, that are just broadly cyclical that follow from that global analysis. Look, if we're going to be re-regionalizing, then you have to worry about how we're going to be getting the stuff that we're getting. A lot of the commodity-based trades are themselves pretty straightforward. Oil is going to be a problem. The United States patrols most of the U.S. waters still. If we didn't do that, global oil supply would be disrupted.

48:45That's a relatively inelastic market. Small changes in global oil demand sort of create dramatic price changes. And so you can watch those areas too. I do find that as our world changes over the next 10 years, the key thing that we're going to want to watch are commodity cramps. We're going to find that will result in pretty immediate price spikes. And by pretty immediate, I mean one quarter. Again, we're not talking like day trading here. We're talking like one quarter price spikes that go up as a result of supply crunches that are just going to be part of our just investing lives going forward.

49:26And some of that stuff can be really easy to trade. Oil prices go up. You know what happens? Oil stocks go up. The price of lithium goes up. Most lithium companies make money. This stuff is not terribly difficult to track. Yeah, it's interesting. And I know something else that you tracked, as you pointed out earlier, was this idea of liquidity flows, which in a certain sense, and we can do this very easily. I mean, if you look at Bitcoin and you look at the responsiveness to, for example, rate cuts here in the United States, you almost see this place where fundamentals meet technicals. Right. Yeah.

50:03And that's why we do think that, so looking at global liquidity, I don't know, a bunch of people have done this. Even in crypto Twitter, people are doing this. So regular people are now mapping global liquidity flows to various cryptocurrencies and just putting it out there for everyone to see. The correlations are pretty solid. And that's what you would expect. Of course, it's not just, again, that's water in a reservoir. If you want to make specific bets on Bitcoin or whatever other coins are out there, you do have to kind of be a bit more granular about that. But in general, that is not hard to track.

50:43You can search most of it. And the interesting implication is that probably there's this thesis that cryptocurrencies operate by a halving cycle, that Bitcoin's supply constraints are what have historically caused price increases. but it turns out that a closer correlation is between Bitcoin prices and global liquidity. If you map that over the various cycles, people tend to see that it was just sort of coincidence. You get a Bitcoin halving. That's when the issuance of Bitcoin is dropped by half. That happens every four years, but it looks like that was just a coincidence. So you got a huge spike in whatever, 2012, 2016, 2020, there's an expected spike in 2024, etc.

51:30But that more closely looks like if you break down month by month, actions that follow liquidity, global liquidity, especially United States liquidity, because the United States is still the largest market, tend to be more directly related to that. And that means that just over September, if you had been waiting for the The Fed's expected cut and just bought before the 18th and held some Bitcoin. And then after the 18th, it went up a whole lot. Some of these bets almost look foolishly simple, but the correlations are there to support that kind of analysis. And they're relatively robust. And the reasons behind the correlations make sense, too.

52:10Risk on market. You need more capital. Yes, there may be a recession longer term. you know typically as soon as the fed starts cutting interest rates we're looking at a recession somewhere in the range of six to 18 months out typically but uh you know if you are trading cryptocurrencies six months is i don't know cryptocurrency market that's that's forever right so there's plenty of time to make money before the recession hits so yeah that's that's kind of that's how i look at the the merge between sort of the fundamentals that we have. And yeah, a lot of these technical points that are otherwise require you to analyze, use new tools, new analytical tools.

52:52It's funny when you talk about the Bitcoin halving cycle versus liquidity flows. I've often wondered this myself, which is kind of like, well, is it a surprise that the block reward is getting cut in half? I mean, I know when you look at the chart, you can see it pretty clearly, but it does sort of forget the question, why does that happened if it's known literally mechanistically in the code that that's going to happen. And yet you still see the price fluctuation. So it's interesting to try and tease that out versus liquidity cycle. Let me ask you this, by the way, 45 minutes or so into this conversation, it makes perfect sense within your thesis.

53:27When you said at the beginning of the show, you can see the long term, you can see the short term, things break down a little bit in the middle in terms of what the path to getting there is. Let's talk about the short term. Talk about what you're seeing right now. Talk about where you're seeing opportunity. Talk about where you're seeing an unbalanced view of risk. Talk about what you see right now relative to all of your indicators. Yeah, so right now, what I'm looking at is, well, I mean, another source of data that we'd really like to monitor are what we call gambling markets. and by which I mean not actual gamblers, although sometimes that, but betting markets on Polymarket or something like that, but where somebody is incentivized to place a bet on the direction of something.

54:13So if you track credit spreads, for example, between say the average 30-year interest rate on home mortgages and the 10-year US treasury, you'll find that spreads there effectively, If it's spreading, the difference between those is spreading. Bankers are expecting fewer people to pay back their loans relative to the treasuries. If it's collapsing, they're making a bet that more people will be able to pay back their loans. That's what we mean by a betting market. Incidentally, some of that data has been really strange for real estate. Not that I do anything in real estate, but we've been watching it just because you would expect that with an interest rate cut that that margin would collapse.

54:56And in fact, it has widened, which indicates that at least bankers in the real estate market think that there is trouble 18 months out or something like that. Yeah. So these are questions, you know, are we going to, one of the key questions I think our team has been discussing is not, are we going to have a recession? There's always a recession. And I think that you see headlines that are clickbaity that say, you know, one is coming. The answer is yes. One is coming. When? When is one coming? Because that makes all the difference. and typically after an interest rate cut, you're not going to see it for a bit.

55:31Very short-term betting markets on US S &P 500 are less than optimistic through the election right now. I think there's a lot of uncertainties with those markets that are suggesting if you track the ratio of calls and puts on the US S &P 500. They're a little, they don't know. They don't know. That's actually, I find that interesting. A lot of the market has been going up in expectation of interest rate cuts, but people who are hedging their bets are uncertain, which is okay. That's sort of surprising. In short, they may think that we've reached a local top. I don't know, but that's what that data suggests.

56:14Cryptocurrencies, no, those have responded very well to the Chinese market cuts, almost more than the U.S. interest rate cuts, because I think the U.S. interest rate cuts were more or less priced in. and if we're looking at Bitcoin longer term, we have to see probably the key question for all of this is unemployment, right? We're no longer looking at interest rates. We're looking at the other side of the Fed mandate because if unemployment begins to move too far above that stated 4.5 % unemployment, they don't really want it to go over that, then we will see not only more aggressive cuts, but there's a concern that at that point We are tilting into a recession, right?

56:56And so at this point in the US, yeah, that is the key number. And there's an interesting kind of like fiat, like fiat in the sense of like will the Fed has just decided to will that 4.5 % is this sort of thing that they don't want unemployment rate to exceed. That's the key variable there. Thus far, we're okay. We're okay. You know, inflation is coming down. jobless claims are surprisingly pretty good thus far so you know it is an uncertain market but uncertain markets tend to be transitional and that means that you can get in a little early on them um so i would be you know in cryptocurrencies i'm i'm everyone there expects october to be great because it has has historically been great i think it will only be great if we continue to see interest rate cuts without a large uptick in unemployment or an uptick beyond four and a half percent.

57:53As far as the broader macro economy goes, if you were index investing or something like that, well, it's okay. That's what traders seem to, people who take bets, they seem to think it's okay. They're not overly negative, but they're not overly positive. So I think there's just a lot of concern about what various administrations might mean for the U.S. economy. And that does show up in the data that we look at. It's not that they think Trump or Kamala is better. It's that the two presidencies offer very different views as to which sectors will do better when somebody is impalpable. Yeah. So, I mean, inflation obviously ties very closely in with rate cuts.

58:35You talk about it. We're almost living in this weird Schrodinger's cat-like environment with this presidential election. It's interesting. You mentioned the short-term S &P futures. Markets hate uncertainty. We know that even when there are negative events, when they get priced in, when markets can get a handle on them, they seem to price it more favorably. Is there any signal that you're getting from this polling data? I look at the polling data every day. I go to Real Clear Politics. Oh, yeah. Look at their state-by-state polls. I see nothing other than I just throw a coin in the air. I see no indication from the data where this is going to land.

59:09Um, yeah, that data for us is sort of difficult to assess. And the large overhang with that is we do not know how accurate the polls are. Everyone in that community got burned, right, in 2016. And there's hesitancy to accept that the polling data is as good. And by burned, you mean essentially, they underreported or underpolled Trump voters. And I guess the question now is, is that happening again, or have they overcompensated in the opposite direction to try and correct for the mistake that they made in 2016? Right. They're certainly more cautious, right? And I think if you talk to the pollsters there, they claim that they've accounted for those things.

59:52People who specialize in this, you know, Nate Silver and whatnot, are far more confident in these polls than they were back then. But then again, he was confident in the 2016 polls, too, and he got it wrong. So, you know, my sense is largely to ignore that noise and say that we're close enough that who knows who could win. And that's where I like betting markets. Unfortunately, Polymarket does tend to have a skew towards Trump. It's a cryptocurrency-based market. Cryptocurrencies tend to skew towards Trump. As far as we can tell, about 2%, 3 % skew towards Trump on Polymarket as far as those bets go.

1:00:26And that means that while it typically has Trump winning, it's probably a statistical tie. Benning markets, when people put their money on the line, I just find that that's better, far better. And you can aggregate because when you're relying on polls, you're relying on specialists. But it's helpful to have the wisdom of people. A lot of these things aren't so much difficult problems to comprehend. It's that we can't source the information from the right places. And that's why crowds are better at sourcing the information. You don't need a guy with 180 IQ to figure this thing out. The math is relatively straightforward to aggregate and do your stats.

1:01:03You just need a regular person to do your stats. What you need is better information, and that is better sourced through crowds rather than specialists. And I think that that's my preference for this sort of data. I will say that as far as options markets are concerned, they see that the market is going to do better after the election. At least that's the pricing right now. In short, there's just uncertainty through the election. Afterwards, the market will figure out, yay, cannabis is either going to happen under Kamala Harris or not. It's sort of a binary bet. If you want to buy CGC right now, a cannabis growth company, and Kamala Harris is elected, then cannabis will be legalized.

1:01:47She wants to legalize it. Some real proactive steps are going to be taken, and that stock will probably shoot off 30%, 40 % in the next day. Otherwise, it'll crater. So some of these, I tend to think of that as just a fulcrum point because that market is, and it's an interesting case of an emerging market. It's not like technologies where people overestimate the impact of technologies immediately. This is a legal thing. So it's really just sort of a binary outcome as opposed to who is going to write the legislation that allows this market to flourish and who isn't. Cryptocurrencies aren't quite in that space.

1:02:25Trump is probably better. But Kamala Harris is at least listening to Mark Cuban. and at least he's doing his job to make sure that the Democrats will have some impact on cryptocurrencies that gives them a regulatory clarity and that that market comes back. Probably in both cases, that's going to do all right. But key features, so green energy, that's an interesting space. I don't know how a lot of Republican states actually benefited from Biden's policies, even though they don't like the Democratic policies. I do tend to think that those will, when push comes to shove, still look for the support that they've been getting.

1:03:03The real outlier there is cannabis. And yeah, that one goes well with Kamala. I don't think that oil necessarily goes well under Trump, even though he's in favor of the industry. That largely turns on global sort of supply dynamics, not presidencies. Very interesting. We've got a question from JP, and it's a really interesting one. And I want to get to it before we wrap here. The question is, you mentioned a potential recession within 6 to 18 months. How does this reconcile with the leading indicators for the ISM, which indicate we're coming out of a trough in the business cycle rather than declining from a top?

1:03:43Right. Now, I've been looking at those, too. And, again, that's consistent with pretty good. with the argument that says, look, these worries about a recession are overblown. I think that a recession 18 months out from now is just always a probability. And if we're talking about that, that's not even worth addressing. Of course that could happen. Anything beyond 12 months out is far enough beyond our ability to assess with a lot of clarity. So of course it could happen. The real question is, will it happen before 12 months? And that's when the expected normalization of the federal interest rate cut cycle probably ends.

1:04:25I don't know. You can look at the FedWatch tool and have a sense of that. The ISM data is positive, right? Jobless claims, positive. Unemployment rate, not too bad. Core PCE came in really well. Yeah, for the most part, the economy looks like it's doing all right. And there is a legitimate chance that we get a soft landing, in which case, Okay. The only thing that I find that's against that in the near term, like I said, is the uncertainty that I see in the options market over the S &P 500. And that's uncertainty, not negative. It's just uncertainty. And I attribute that to the political election cycle.

1:05:04So completely consistent with the bullish case. And to be fair, I am in the bullish camp. I don't think that we will, at this point, I don't think we're going to see a recession in the next 12 months. We might in the next 18 months, but that's always a possible one. Right. Sebastian, great, great conversation here today. I knew we ran long, but I just wanted to get this conversation to the fullest out there to people. Before we wrap, I should say, of course, I mentioned at the beginning of the show that you have a Crypto Academy course called The Art of the Bubble, which you can find on the Real Vision website in the Academy at realvision.com forward slash crypto academy.

1:05:42Again, that's realvision.com forward slash crypto academy. But I wanted to give you an opportunity here to talk a little bit about that course, why you created it, and what people will learn from it. Yeah, it comes pretty directly from the discussion, as I said. So I'm looking at emerging technologies that will have an impact in solving kind of what I perceive as the next decade's problem about sort of global growth. And those technologies are bubbly. it's both the interesting thing about bubbles is that a lot of people say you want to run away from them i find that if you learn how to manage a bubble they're the greatest wealth builders you can ever put your hands on that's how i went from being a professor to being a fund manager is by trading bubbles so the only difficulty with bubbles is that they are counterintuitive like i said the linearity bias is one of those there are many biases that humans have that go into bubbles And the purpose of that course was to lay out a set of lessons.

1:06:46I make about 25 lessons that sort of keep you in line with how to trade bubbles, knowing that a great deal of what you're trading is sentiment based. There's always a fundamental basis, but there's that sentiment premium there. So you got to learn to manage that and what that means. So you're going to have to address the features of human behavior that are a bit irrational, but fortunately are pretty predictable. So that's what the course does, 25 lessons in how to manage the counterintuitive effects of bubbles. And if you can do that, I think that you have the opportunity to transform your sort of financial status relatively quickly, much faster than almost any other opportunity out there.

1:07:29Well, what a great place to end this conversation since it arises organically through the conversations we've had here for the last hour or so. Really a terrific conversation. Sebastian, we're going to do this more often. This is a great conversation. I'd love to watch you host, man, but I'd love to get you on to do this conversation more often. Yeah, I'd love it. I'd love it. This was a lot of fun. Thanks, Ash. Sebastian Purcell, thanks for joining us. Thanks for watching. Thanks for listening. Another great conversation right here on Real Vision. Have a great afternoon, everybody. picture yourself on a beach retired early and enjoying financial freedom if this is your dream then now's the time to level up your investing game and real vision can help you we arm you with the knowledge the tools and the network to succeed on your financial journey on your own terms take control of your future and visit realvision.com forward slash free that's realvision.com forward slash free.

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