Conversation w/ Ron Santella, OpenAI ($852B) Bigger Than JPMorgan, & Prediction Market Lawsuits

18:58Austin Hankwitz:Totally. Support for our show comes from VCX Today, the public ticker for private tech. For generations, American companies have moved the world forward through their ingenuity and determination. And for generations, everyday Americans could be a part of that journey through perhaps the greatest innovation of all, the U.S. stock market.

19:15Robert Croak:It did not matter whether you were a factory worker in Detroit or a farmer in Omaha. Anyone can own a piece of the great American companies. But now that has changed. Today, our most innovative companies are staying private rather than going public. And the result is that everyday Americans are excluded from investing and being left further behind, while a select few reap all of those benefits until now.

19:39Austin Hankwitz:Introducing VCX, the public ticker for private tech. VCX by Fundrise gives everyone the opportunity to invest in the next generation of innovation, including the companies leading the AI revolution, space exploration, defense tech, and more.

19:55Robert Croak:Visit GetVCX.com for more information. That is GetVCX.com. Please carefully consider the investment material before investing, including objectives, risks, charges, and expenses. This and other information can be found in the fund's prospectus at getvcx.com. This is a paid sponsorship. Please go listen to our conversation with Ben Miller, the CEO of Fundrise, who is also the CEO of VCX, if you think about it that way. Tons of great information in that interview. We'll link it in the show notes below. Understand the risks. Understand everything that comes with owning shares of VCX. Robert, let's jump to the radar points.

20:36Robert Croak:I know you've got some good ones here. So I vote you go first.

20:39Austin Hankwitz:I will gladly go first. And my three points today are SpaceX officially files to go public. Microsoft plans to invest$5.5 billion in Singapore. And tokenized stocks are coming to America sooner than you think. Let me get into it right now. Elon Musk's SpaceX is one step closer to staging what could be the largest initial public offering of all time. The company has confidentially filed IPO paperwork with the Securities and Exchange Commission. SpaceX is aiming for an IPO that could raise between$40 billion and$80 billion, and the Wall Street Journal has reported. The filing puts the company on track to potentially list shares in July.

21:19Austin Hankwitz:I'm so excited for this one, especially as they aim to raise at this$1.75 trillion valuation. I can't believe I'm saying that for an IPO. But if you're part of the Rich Habits Network, you might remember us offering an investment opportunity in SpaceX at a$220 billion valuation. And there were dozens of our members that invested and now are up theoretically an 8x on their investment made back in September 2024. So join the network. We have all kinds of really cool opportunities for all of our members. My next one today that I'm super excited about is Microsoft is on track to invest$5.5 billion in cloud and artificial intelligence infrastructure in Singapore through 2029.

22:05Austin Hankwitz:Their vice chair and president, Brad Smith, said the following. Our ongoing investment in cloud and AI infrastructure reflects Microsoft's long-term competence in Singapore as a long-term global digital leader. We're focused on helping people and organizations use AI by strengthening skills, increasing cybersecurity and resilience, advancing trusted governance. The announcement came a day after Microsoft said it plans to invest over$1 billion in Thailand. With Microsoft's stock selling off so aggressively, now could be a time to nibble back in and have 2029 you can thank yourself you did. And my last point today that I want to cover that I think is very important for the future of U.S.

22:49Austin Hankwitz:equities and real estate and everything else is that tokenized equities, which are essentially digital replicas for stocks traded on blockchain rails, allow people to trade 24-7 and clear trades in seconds rather than days. U.S. regulators don't permit American investors to own tokenized stocks yet, but it is allowed in many international markets, and platforms like Robinhood Markets and Kraken are making tokenized trading available currently to foreign customers. The U.S. isn't far behind with the New York Stock Exchange and NASDAQ readying their tokenized platforms. Qualified investors can already access other tokenized assets, such as money market funds, private funds, and commodities like gold.

23:32Austin Hankwitz:Also, I want to point out that Securitize, which is a publicly traded company that is partnered with BlackRock, Apollo, KKR, and many others, that profits from this tokenized trend. They tokenized$16 billion of assets in 2025 alone. And also, I want to mention that tokenized real estate is also going mainstream with continued adoption over the next few years expected. Experts expect that growth to come from under$300 billion to$3 trillion in tokenized real estate by 2035.

24:06Robert Croak:Yeah, my call out here on this one, Robert, is that Securitize. I know there's SPAC right now. The ticker is CEPT. Very volatile. Be careful. This is not an investment recommendation. But I think people have made the mistake of only associating tokenization with crypto. and oh i have to go use or buy ondo or whatever these like cryptocurrencies are to profit from tokenization when in actuality there's a real company called securitize that is going to spack uh on the stock market here pretty soon also projecting to have nine billion dollars of securitized uh tokenization of assets just through them here in 2026 and then revenue of 110 billion in 2026.

24:48Robert Croak:So like this is a real company. You hear about the tokenization and all this stuff that's going on like CEPT. I already have, you know, a couple of shares here in the$11,$12 range. Right now it's like$10.95, whatever. But if you believe like Robert and I do in the long term of this tokenization stuff, they could be a very clear winner in this space.

25:05Austin Hankwitz:Yeah. My main takeaway with tokenization is I believe as more and more asset classes get put on blockchain rails and they become tokenized. It's going to make things quicker, more effective, better cost structures, because it's going to be cheaper to process these items. And it's going to make it better for the everyday investor who wants to invest in bigger projects, but can only do it with smaller amounts of money. So tokenization is a long way off. I love the call out. And I think long term, it's going to be great, especially for real estate, stocks, and maybe some fine art and some of these other asset classes.

25:39Robert Croak:Very cool. So let's now jump to my radar points, Robert. I've got Oracle laying off a ton of people, unfortunately. Google unveiling their Gemma version 4 open source model. We'll talk a bit about that. And then now, of course, we alluded to it before, the longest bond market drawdown on record, 68 months. Let's now jump to that first headline about Oracle. The cloud computing and database company is cutting jobs across all of their business lines. Full scope of the layoffs aren't yet clear, but some employees said that those internal metrics are showing a count of reduction in the thousands. An analyst at TD Cohen earlier this year predicted that Oracle would shed as many as 30 ,000 jobs and even have to sell some of their assets as they try and finance this AI infrastructure project.

26:26Robert Croak:Oracle's project with OpenAI, known as Stargate, calls for several data centers in the next few years. Investors and analysts also consider the deal to be very risky because, again, Oracle is taking on tens of billions of dollars in debt and they've partnered with this unprofitable AI company called OpenAI. Maybe analysts and investors get a little bit more excited about the partnership now because OpenAI has raised$122 billion and will potentially IPO. But regardless, Oracle is really doubling down to this AI infrastructure, and it's sad to see that another big company is laying off workers because of AI.

27:03Robert Croak:Now, something not sad is Google unveiling their Gemma version 4, which are these sort of open source models. I definitely did not pronounce that correctly, but it's pretty cool regardless. Google wrote in a blog post, These are purpose-built for advanced reasoning and agentic workflows, delivering unprecedented levels of intelligence per parameter. This breakthrough builds on incredible community momentum. Since the launch of our first generation, developers have downloaded Gemma over 400 million times, building a vibrant Gemmaverse of 4th in 100 ,000 variants. keep the gamma verse melted i don't want any of that verse stuff metaverse gamma verse where are

27:42Austin Hankwitz:we going here where are we going that's so 2021 but google says the gamma 4 model family can handle

27:47Robert Croak:complex logic and agentic workflows with the largest models such as the 31b model currently ranking as the number three open model in the world so if you're looking for an open source model to run on your mac studio maybe gamma 4 is a good way to think about it and finally this headline I think is really important because it ties into our conversation with our former hedge fund manager coming up shortly is the longest bond market drawdown on record. The bond market has now been in a drawdown for 68 months as of March, 2026, by far the longest in history. The milestone puts the post 2020 bond bear market in a category all of its own.

28:31Robert Croak:As a sign of structural repricing, The Bloomberg U.S. Aggregate Bond Index drawdown started in August of 2020 and has persisted much longer than any previous fixed income slump, historically burning out within a year or so. Bonds absorbed the initial blow from the pandemic-induced inflation shock. Then they, of course, had to weather the Federal Reserve's fastest tightening cycle in decades. but now they're facing markets that keep questioning how low rates can actually go in the future as this war with Iran sends energy costs surging. We all know higher energy costs, higher inflation. Fed's not going to cut rates if inflation is sticky.

29:08Robert Croak:The question for the bond market and its investors is whether that sticky inflation is around and the new oil shock keep the post-2020 drawdown alive even longer. If you want to keep an eye on this one, go type in AGG on your platform. That's the iShares Core US Irogate Bond ETF. You click the five-year chart on that. Not good. Not good.

29:30Austin Hankwitz:My biggest takeaway, and I love your points today, is that Oracle laying off 30 ,000 workers, and I did some research, and it says they laid off 30 ,000 of 162 ,000 workers. So that's not just a small percentage. That is a large chunk of their workforce. And it just goes to show you AI is here to stay. It is real. It is efficient. And people need to get ahead of it.

29:55Robert Croak:All right, Robert, let's now jump to our conversation with a former hedge fund manager. Today, we are joined by Ron Santella, founder and CEO and CIO of Equable Shares. Ron brings over 40 years of experience managing equity, options and volatility strategies, something very important right now, across any and every type of market cycle. He began his career in 1985 at O 'Connor & Associates as a listed options trader before going on to serve as head trader and portfolio manager for arbitrage strategies at Grace Brothers.

30:29Austin Hankwitz:And in 1990, he founded SAM Investments, a hedge fund focused on convertible bond and volatility arbitrage strategies, and spent the next 15 years managing a series of hedge funds throughout different market environments. He later launched a family office to invest his own capital alongside a select group of partners, refining his approach to alternative strategies and risk management. And in 2008, Ron stepped in as CEO of Fox River Execution, an institutional brokerage firm where he rapidly grew the business before leading it to a successful sale to SunGuard in 2010. Today, through Equable Shares, he's focused on building strategies designed to help investors stay invested while managing downside risk, positioning his approach as an alternative to reactive, knee-jerk reactions that we talk about all the time.

31:21Austin Hankwitz:So, Ron, welcome to the Rich Habits Podcast. For the very first time, we're excited to have you and chop up what's going on, what should our listeners be thinking about, and what's next in the markets. Appreciate you and Austin having me today. I'm very excited to be here from Naples, Florida. And as you said, there's a lot going on in the market, so ready to jump right into it.

31:40Robert Croak:Let's jump right in. We're seeing a lot of mixed signals right now between sticky inflation, uncertain rate cut expectations, geopolitical tensions. Everything's moving up, down, left, right in circles. Personally, as someone with 40 years of experience in these markets, how are you thinking about positioning in this type of environment? As I was listening to my history that you and Robert read over 40 years, one thing really hit me that we're in a much more new sense of environment than we've ever been before. You know, for those of us who've been doing this for decades, we didn't have these social media, real-time news all the time.

32:13And so we get headlines and the market reacts pretty quick. When you step back from it, you know, the S &P is still only down about 4 % for the year. So just in terms of the broader market, it has not really been a catastrophe. With that said, as you rightly point out, between what's going on in the Middle East right now, bonds have ticked up to 10 years up, 30 or 40 basis point this year. There's a little angst in the market right now. And I think people are sort of searching for a way to navigate that volatility and still stay invested, which is one of the things that we provide a solution for.

32:42One of the lessons I learned going through market cycles, going back to the 87 crash, is that it's very hard to time markets. Even for those that are right and know which sectors to invest in or which stocks, picking the right time to enter or exit can be pretty tricky. And so one of our fundamental principles is to create a product, which I think we did successfully hedge, that's not really a market timer. So whether the market's going up, whether the market's going down, whether volatility's increasing or decreasing, we believe this product is a solution for any type of environment. And I think that's the key.

33:13I think for those who want to stay invested, you want to keep your money in the market. You don't want to pull it out. And so you need that balanced portfolio to give you that kind of conviction to stay invested. And that's where I think we provide a solution.

33:25Robert Croak:Yeah, I think something that Robert and I talk about a ton on the show and everywhere else, of course, is time in the market beats timing the market. And a lot of people make that mistake of saying, I can jump in, I can jump out. I know exactly when to sell, when to buy. And nine times out of 10, they're doing it wrong. I think there's a stat out there, too, that says if you miss the best like 10 days in the stock market over the last decade, you would underperform dramatically. But no one knows when those best 10 days are. I think we just had the best day of the year recently. I think it was a 2.9 % day in the NASDAQ or something just earlier this week, right?

33:58Robert Croak:A lot of people might have been on the sidelines for that. Well, you mentioned your product, Hedge. I think it's a really awesome product, but why not take maybe a moment here to explain to our audience what is the HEDG ETF and how does it allow investors to stay invested during times of volatility? You know, a hedge is aligned with the name of our company. Our company is Equable Shares. And if you pull out your old Webster's Dictionary, you just want to go Google Equable, you're going to see what it means. It means calm. It means keeping things steady. That same principle just sort of underpins what HEDG is, HEDG.

34:31It's an ETF listed on New York Stock Exchange. On the long side, we're exposed to the S &P 500. We're long two ETFs, SPY and IBV. It's a pure play in the market. And I think in the current environment, it's kind of important to recognize we're having record levels of dispersion right now. If you look at the numbers through Q1, if you happen to be in energy, you might be up 30 % or more. If you happen to be in financials, you might be down 8 % or 10%, right? We're that solution right in the middle for those who want exposure right to the S &P 500. We then overlay an option hedge on it. So we're selling call options every 90 days that are struck at the money.

35:08One important footnote to that is we do manage the portfolio in a rules-based fashion. You're not going to be surprised by our outcomes. Sort of a defined outcome strategy quarter to quarter. And then the last piece of the portfolio is we layer in a put spread, an out-of-the-money put spread for additional protection. We look at that as like an insurance policy for those dramatic moves we might get into your quarter.

35:28Robert Croak:If it comes down, you got that put option spread that's going to, to your point, Ron, act as a little bit of insurance to keep your equity up versus having a crazy whipsaw effect in your portfolio. Over to you, Robert.

35:40Austin Hankwitz:Yeah, I want to ask, you know, you've been doing this a long time. I've been at this a long time. How do you typically approach times like this in the market? Like, is there a specific time you can remember from a war in the past or anything that reminds you of the current market conditions? Or is this one completely unique because we have AI and all of this new technology that's changing the course of how people invest their money? So it's a very interesting question, right? We can spend a lot of time with that. And you're right, Robert, when we've been doing this as long as you have. And I know, Austin, you're a student of the financial markets.

36:14When I look back, I think every situation seems unique. Whether it's an 87 or 98, you know, Russian default and long-term capital management, tech bubble crashed in the early 2000s. To me, it was a very big event in my life when I was running a hedge fund. When I look at the current environment, it's a single-issue market right now. The market, for the most part, is reacting to what's going on in the Middle East. And so if I just look at recent history, it's pretty similar if we just roll back to last year at the same time, a little bit of deja vu. If you go back to Q1 of 25, the single issue at that point were the tariffs.

36:48Incidentally, the market, the S &P 500 was down about 4 % in that quarter, market down about 4 % Q1 of this year. We also, we were down less than 1 % in both periods, which again, that's what we try to provide. So I guess in terms of single issues, that's how I relate. If you look at how wars have impacted the market, you'd go back to 9-11, which I think would be one of the most dramatic, right? When the market reopened after four days, I think we'd won the biggest single drawdowns on a single day. And then certainly when you fast forward to early 2022, the Russian invasion of Ukraine was another catalyst for getting the market.

37:23We certainly increased in market volatility at that time. And then, of course, 22, the Fed started hiking rates and that turned into the worst years in 2008.

37:31Robert Croak:So as it relates to maybe mistakes people make during times of volatility, just kind of, you know, walked us through a couple of them. What have you learned over time as an investor? What mistakes do you now avoid that you see other investors making during times of volatility? If it's an overreaction to a headline or maybe it's... You know, Austin, I think every investor should start with a plan. It might not be a fully vetted plan, but I think you need a plan to get started. You know, I'm personally a fan of having an allocation strategy that includes some risk capital where you might invest in some private deals.

38:05That's become easier to access these days. Perhaps you get into the public markets in higher growth, and then you have a more defensive part of your portfolio. When you have a plan and you have conviction in that plan, it allows one to navigate the rocky periods because they do have conviction in the plan. I think for those that don't start with a plan, that's, quote, a mistake. I think the second thing, which I think is just human nature, is emotions drive the markets. And when you get, particularly when you get knee-jerk or quick reactions in the market, people tend to respond with emotions.

38:36is the old cliche, greed and fear. I've learned over my investment experience, particularly running a hedge fund when we were in the absolute return business, is that you had to really extricate emotion from the decision process. So I guess they would be the two biggest lessons for me. Have a plan and eliminate emotion when you're making decisions.

38:54Austin Hankwitz:One of the things relative to a personal finance plan is I don't think 90 % of the people out there, if you say, what is your personal risk tolerance strategy? I don't think they know. They all just want to get rich, but they don't have a real plan. And that's the most important thing for me is trying to define, and I love that you talked on that, what is your risk tolerance for you, not what the world says it should be, and what is your plan? Because if you can define those two things, I feel like you can take a lot of the emotion out of this. And trust me, Ron, I and Austin, we are talking people off the ledge daily in these volatile markets, and I'm sure you are as well.

39:36Austin Hankwitz:And it's frustrating because if we can get people to build that muscle and set aside the emotion, they end up performing so much better because they're not in and out constantly trying to time things because of their fear related to the headlines. So with markets still at near all-time highs, but risks are clearly elevated, how do you feel personally investors should think about protecting on the downside without fully stepping out of equities and sitting in cash? If it's okay, I'm going to start with the second question. The classic 60-40, sort of a metaphor for just having a balanced approach to investing.

40:12You want a long growth strategy in equities, and you want a little bit less volatility in income by having exposure to fixed income or something like fixed income. I think for a long time that worked. You could just throw it in there. I think 22 was the wake-up call, particularly when you had the longer-dated bonds pulling back dramatically. And so that would be the biggest example, I think, Austin, for our strategy, which was down 6 % that year versus about an 18 % drawdown S &P, where we just totally outperformed the 6040 index. Some 6040 indices were actually down 25 % that year. And so I think that gets back to what Robert just said.

40:45An investor has to know what they had. They have to know where the risk in their portfolio lies. Personally, I think one of the bigger risks that does not get talked about is liquidity risk. And I think right now the current environment where private credit is shining a light on that because I don't think private credit has a credit issue. Right now, at least, I think it has liquidity issue. And so that's another part of hedge that's important. It's we put in an ETF wrapper for a reason. It's a liquid wrapper for investors. Our underlying securities are some of the most liquid ETFs on the market.

41:12That's a risk reduction tool. I think when one invest, they should really try not to step out of equities. Getting back to one of your initial comments about not trying to time the market is really important. And so to me, an investor should have their money in growth areas of the market and benefit from positive moves in the market. But it gets back to having some insurance in your portfolio. So when I look at hedge, there were three consecutive years, 23, 24, 25, where the market was up double digits. Hedge was up double digits every one of those years, not as strong as the market, but there's still upside participation.

41:43But I think when one looks at the down periods and whether it was Q1 of last year, Q1 of this year, Q3 of 23, you're going to see that we're down less than 1 % for a period where the market's down almost 12%. And I think when you have a part of your portfolio that's actually performing well, it gives you the confidence to maintain the other portion of your portfolio and ride out some of those rocky periods.

42:06Robert Croak:I like that, right? It comes down to portfolio construction because we talk about this all the time on the show where we believe in the core satellite portfolio strategy. 65 to 85 percent of someone's portfolio should be invested in a long right in the index funds and etfs we talk about like the s &p 500 the nasdaq the dow jones and then that call it 15 to 35 percent could be diversified into other maybe non-correlated asset classes we talk about real estate we talk about fine artwork we talk about the the private stuff that you were alluding to and now as people think about that true portfolio composition maybe some of that diversification should be inside of your ETF hedge?

42:44We don't think that's appropriate to try and time a hedge. I equate it to if you own a car, you're going to have car insurance. You probably don't think about it too often. You just pull it out when you need it. I don't think it's any different having a hedge in your portfolio. I think you want it there. You may not think about it a lot. When you need it, you're going to be glad you have it. At the core, there just needs to be a rational and reasonable portfolio construction plan. And whether the market's down or up, we don't differentiate. We think hedge belongs in the portfolio no matter what the market condition is.

43:12Robert Croak:Well, I think you were just alluding to something very interesting, which is like we don't try in time to hedge. And when people think about hedging their portfolios, theoretically what they're essentially asking themselves in their mind is like, do I sell my equities and sit in cash, right? It's like a black and white. Where I look at hedge your ETF as sort of the in the middle gray area, you can still be long while also having some downside protection. The bottom line is when you look at our portfolio, Austin, It's a combination of market participation on the way up, hence the double-digit returns that we've had in 23, 24, 25 in down markets.

43:47You're going to see, at least historically, very good protection on the way down and also low volatility. Volatility of hedge is much closer to fixed income, yet the returns have been much greater, at least for the last three or four years.

43:58Austin Hankwitz:Ron, what an incredible conversation. I love having you on the show, chopping it up, talking about what's happening because, you know, kind of the old joke from our earlier days in these markets was the best performing portfolios are those from people that lost their password and dead people because they don't overreact. They don't have these knee jerk reactions that Austin and I talk about every single day. And I think what you've built really helps them tactically prevent themselves because you're giving them hedge. You're giving them this hedge in their portfolios. And I think it's a really, really smart play of what you've built here.

44:35Austin Hankwitz:And we appreciate you coming on the show. Great conversation. Look forward to the next one.

44:38Robert Croak:Robert, 10 out of 10 conversation with Ron. I think it's never been more important for people listening to the show to have diversification. We talk about it till we're blue in the face. We talk about the portfolio strategy, how you should be diversified into real estate, into precious metals, into venture, into insert other fine artwork. Have a slice of the portfolio into some of these hedged products. So when times are good, they're doing just fine. But when times are bad, they are holding up and hedging your portfolio. Massive shout out to Ron for joining us on the show. I've had a hedge in my own portfolio for a while.

45:16Robert Croak:please consider checking it out. We think it's an incredible product. It's going to do awesome stuff for everyone, especially as we navigate the volatility that is the mid-term election year, 2026.

45:28Austin Hankwitz:Yeah, it was a great conversation. I love episodes like this because we're very specific on the types of guests we bring onto the show. And Ron did a really good job. And I really like hearing it for other legends in the space that have been doing it for decades because they've wavered all the storms like I have. They've been through all the dot-com booms and busts and all that. So we have a really good take on how to oosah and step back from the ledge and not have those knee-jerk reactions we talk about all the time. So what a great episode. Such a good interview. Take some notes. Ron had some really good nuggets in there.

46:04Austin Hankwitz:But as always, we appreciate each and every one of you, thousands of you, stopping by every single week for these new Friday episodes.

46:13Robert Croak:And do not forget the Rich Habits Retreat. We have literally, I think, six tickets left and their only general admission. Everything else is sold out. We are down to the last six here, only GA tickets remaining. If you're interested in joining us on May 1st and 2nd in Austin, Texas at the Rich Habits Retreat, all about venture capital investing. Our friend Chris Camillo is going to be there. Zaid Admani from the Rundown is going to be there. It's going to be fun. We're going to have a blast. If you're interested in learning more about, there's a link in the show notes below. Thanks everyone for tuning into this week's episode of the Rich Habits Radar and we'll see you on Monday.

47:13Talking To Europe