“Unrealized” Capital Gains Tax is Economic Suicide

27:50And the chasm, because of the massive rally in the stock market globally, has grown to the point where politicians are now winning with sort of socialist messaging and punitive tax rates and sticking it to the billionaires. That's now like a very popular message, more so than it was even a couple years ago. AI is going to make this so much worse. I agree. AI is going to make inequality way worse. So I have a thought on this. I actually think this is great news because I think it's very stupid and it'll give the rest of the world a sneak preview for what happens when you try to solve a real problem with something that's only going to create a bigger problem.

28:40I think the capital flight and the flight of the creative class and asset movement, like the one thing we know about the super rich is that their money is more portable than ever. Yeah, and they know how to avoid taxes too. They're not going to sit there and be like, Like, oh, I owe you 36 % of my asset increase this year? No problem. Like, it's never going to happen. So let me explain to people how it's going to work. Capital gains on – again, not realized capital gains. Unrealized. Like, the year ends and they assess the gains of your investments that you're holding. financial assets will be taxed at 10%.

29:29So if, for example, you have a million euro portfolio and you live in Amsterdam and you make 20 % return, you're going to owe, you're going to have to either come up with cash or sell down some of those assets in order to pay 10 % of that 20 % gain, which on a million euros would be 200 ,000 euros. You would owe 20 ,000 euros. Now, to somebody who's struggling and looking around at all these glass and steel skyscrapers going up and all these luxury accoutrement of the investor class, they're probably like, yeah, pay the 20 ,000. Tough shit. The problem with that attitude is the knock-on effects or a lot of unintended consequences.

30:25Small business owners. Yeah. Smaller investors. Starting with the people who own these companies are now disincentivized from investing and looking to leave whatever domicile they're in to get away from that tax and go somewhere else. So it kills stock markets. It kills jobs. it uh it it sort of uh has a perverse impact on the profit motive and it leads to just people picking up and saying forget it i'm not staying here there's the guy who owns the grasshopper is that gonna leave remember the grasshopper in astridam it's like it's like uh senior frogs but with pot yes i may have gone there in college uh there's gonna be a lot of money laundering for the red light district possibly here's i i have this i have the solution to this how to solve the tax the billionaire, tax the rich.

31:13Just we know in working in wealth management, I think some people don't realize this, how much wealthy people utilize borrowing against their shares, against their portfolio. It's a taxable event anytime you borrow against your portfolio or shares. I think Elon borrowed against Tesla to buy Twitter. If you want to do that, that's a taxable event. Is that not a simple way people could agree to raise revenue from the wealthy? Do you think that makes way more sense it's almost like a consumption tax on debt which which is makes more sense than sell your shares to do that and pay taxes right don't we want to incentivize people to make long-term investments why so this is punishing people who buy and hold it's there's a there's a ten thousand dollar or ten thousand euro annual exemption per person those numbers are not meaningful like to what we're talking about.

32:10And then they're going to reset the assets on December 31st for the new cost basis. The brokerage firms are the ones that are going to do this 10 % tax withholding. Or you'll be able to opt out and declare those gains yourself if you're doing your own filing. It just seems really strange and it seems unlikely that very wealthy people in the Netherlands are going to stay. You're right. And then go anywhere. It's going to be an absolute mess. We're sort of trying to go the opposite way here with the Trump accounts. Not that it's going to help anybody in the next 10 years, but you got to start somewhere.

32:53Rather than penalizing people in the investing class, we're trying to create more investors. Yeah. Yeah. Keeping more people in the stock market is a great thing. Yeah. So if only we had done that 20 years ago, So I would argue like people would have people, young people who are 18, 19, 20 years old today and becoming susceptible to all this like pro-socialism content on TikTok. They might not have gone that in that direction because they might think of themselves as being part of the ownership class. But we didn't do it. We waited till this year, I guess, better late than never. But it's not going to help.

33:30We have an entire generation of people who look at unaffordable homes, salaries that don't pay their bills. And you introduce this idea, hey, let's take money from that guy. They love it. Makes perfect sense that, yeah, take it from him. He has two Rolls Royces. Why does he need a third? So I get the mentality. I just think in practice, there are a lot of unintended consequences and people are not going to like what they see. Why do you think AI makes all this worse? Inequality? I think it's just going to make the spread between the winners and losers so much bigger. I think it's just going to leave people behind who don't utilize it or it's not in their company.

34:14There's plenty of people who have no idea what's going on right now with this. And if it makes – I don't know. I don't know what the number is going to be that they say of jobs that are going to be taken away. And there's going to be a nasty period where certain jobs – I don't even know what those jobs are going to be – are going to be disrupted. And you're going to be left behind for a few years while we try to fix that and figure out new jobs or whatever it is. And even if there's just a period where it's not like mass unemployment, but it's just there's going to be a transition period. So this happened in the Roaring Twenties.

34:41You're a big history guy. And in Roaring Twenties, when we went from the agricultural to the assembly line, all these farmers were out of luck. It was like a depression for farmers in the 1920s as all these people turned into manufacturing employees. and they got just, like they were selling assets and they were selling land and they were going out of business and they were going bankrupt all while the economy was booming. That to me will probably happen. I don't know what the industries are. It's probably pretty easy for people to guess. But I think that's what could happen. You get up a booming economy, but a handful of groups of people are just getting decimated because their line of work.

35:14You know what's so funny? Like your generation, like our, you and I, our generation, we read books about that period in high school. They made us read The Jungle by Upton Sinclair. And coincidentally, you can see my handle on the screen, which was just about like all these immigrants and farm community people being like pulled into the city because there was work. Chicago, the meatpacking, and just like the horrors of that like new industrial lifestyle. They made us all read Grapes of Wrath, which is about that farming depression, the Dust Bowl and Tom Jode and these families that were like in Oklahoma.

36:03And they're just like there was no agricultural anything to do. And like and then they would I don't think it was on purpose. But the other book from the like that took place in the 20s, they made us read was The Contra. It was Great Gatsby. And all of those books take place in the same era. and like the worlds that those characters inhabit could not have been more different, right? Like you go from the Dust Bowl in Oklahoma, Steinbeck, to F. Scott Fitzgerald, The Great Gatsby, which is the Gold Coast where I'm from, Long Island, and it's like night and day, but that's the same period of time.

36:47So to your point, there are going to be like whole groups of people or industries or whatever, where the inequality just gets worse and worse and worse, regardless of how well the economy is doing. And then there are going to be groups carrying on like they're in West Egg, like they're in the jazz age with the Gatsbys. And I agree. I can't see a scenario where things get equalized by this technology. It feels like it could only get exacerbated. I'm not going to lie. I didn't read any of the signed books in high school. I was a bad student in terms of reading. I never read a book. Did you have the Cliff Notes?

37:21I scanned them. I like skimmed them. You know what I did? I pretended that I was mad that we had to read all these books, and I secretly loved them. Okay. So you were ahead of the game. I didn't start reading until after college. I was one of those people. I'd be like, oh, man, we have to read this book, and then I'd go home and read the whole thing in one night. But I wanted to be cool, so I had to tell everyone how much I hated it. Pretended you didn't do it? Yeah. Put up the chart, growing wealth and inequality. Yeah, this is from Allison Schrager to this today. Just shows that it's like the middle is being hollowed out because more people are going into the upper class and fewer people in the lower class.

37:58So it's interesting that like the middle is shrinking, but only because more people are getting wealthy. And I think this makes it even, this is another reason why people are like, I'm wealthy, but there's people way wealthier than me. Let's tax them, right? And guess what? Oh, the gray is people making 150 ,000 or more and it's getting bigger, right? Right. That's the thing with the stock market. It's all relative. Yes, that's the thing. Let's talk about the ex-US trade. All right. Okay, Chark had made this one for us based on a Goldman Sachs chart. He recreated it. He stole it. This shows really good.

38:34But ours is better. Yeah, so this shows the spread between S &P and MSCI World ex-US since 1995. And the spread means that U.S. is underperforming. International is outperforming by a huge margin to start the year. Do the next chart. This is since the beginning of 2025. So this is European stocks, Pacific stocks. That's like that's Asia plus Australia, I think, that VPL and then emerging markets and are just smoking the S &P. We're talking 30 % outperformance, almost 40 % outperformance for some of these. Like since this is this is a real thing now that like this trend is taking hold. And I know there's a lot of people who decided I don't want international stocks anymore.

39:17I'm done with that. It didn't work for 12 years. Fine, screw it. I'm all US. And I think those people are going to have to be pulled in, kicking and screaming to this trade. I mean, they're going to buy these country stock markets after they've doubled and tripled. Like that's what they're going to do now. It's unbelievable. What, if you had to guess, what percentage of regular investors, not professionals, put the first chart back up. So this is shot. We are looking at the worst start to the year for US stocks versus MSCI world since 1995. The spread is negative 8.3%. Ben, what percent of regular investors are even aware that this is how the year began?

40:05I'm going to say like, I'm going to say like three out of 10 maximum. Yeah, that's probably about right. I don't even think they even look at, I don't even think they know. Where would a regular investor even go to look to see what the MSCI world is doing? They don't know the ETF. I guess the 401k investor probably looks at like three and five-year charts. And over that period, we're still doing okay. Although, do my next chart here, guys. Chart on. This shows – so a lot of people say, well, zoom out a little. This is the last five years. And this shows that MSCI Japan and then international small-cap value, of which we use for clients I own personally.

40:44Full disclosure. Yeah, full disclosure. Over five years now, this is not just like a last 12 months thing. Japanese stocks and international small cap value is beating the S &P over five years now. Nobody knows that. No. They think U.S. stocks, Bubble, Mag7, AI, they have no idea that international small caps are beating the shit out of the S &P. It's crazy. There's no way they know. I know they don't know. Can you name any company in the International Small Cap Index ETF? I can't. No way. Not a chance. These things are trading for like eight times earnings, too. They probably had like 4 % dividend because they pay more dividends overseas, you know?

41:28I'm sure that it was, yeah, I know I couldn't name one of the stocks. All right. Do you think financial advisors, by and large, do you think for the most part, financial advisors have kept wealth management clients in these allocations? Maybe they've trimmed them in response to 23 or 24. But like just in general, I sort of think our industry has done a good job not giving in and forcing people to stay. I know a handful of people who go who went all U.S. and were fine with that decision. You do? Advisors? Advisors, yeah. Okay. Advisors I've talked to. But I'd say it's probably, yeah, most advisors, the average would be like 80-20 U.S.

42:09international, I'm guessing. That's like anecdotal, don't you think so? something like that. It's not, right. And by the way, that like sort of makes sense because if you're weighting it by the market cap of the world, that's how much bigger the S &P got since you and I got into the business. It really ballooned to be a much bigger piece of the global pie. I think it got to be 70, 30. Now it's like 65, 35-ish since international's outperforming. So it's still a huge amount in the US. But you're right. I think a lot of advisors have been just preaching to people. And then this is finally this happens.

42:43And they can say, see, this is why I told you this. This is why I am preaching it. We have some comments in the chat. Ben Cush says, as soon as I buy them, the international stocks will stop working. All right. I know the feeling, dude. So maybe hold off because we're enjoying this. Let me see who else. Harold Stiles says, Japan has a huge demographic problem and is doomed to fail. I don't know, dude. 2005 called. They want their thesis back. Guess what the solution to that is? Population problems. Robots. Japan is the global capital of robots. Giancarlo Sciano has a guess and an international small cap.

43:25Genco olive oil. Do you get the reference? I don't know if that's a joke or not. No. No. What is that? That was the Godfather's olive oil company in Godfather 2. He was in the import-export business or whatever. All right. All right. That's a deep. I'm doing a rewatch. Congrats on that. So anyway, it's been pretty, it's been pretty amazing to see this entire part of the investment opportunity spring back to life. So how much do you attribute this to the dollar? I mean, that's obviously a big reason for it. I know we've got some charts in here about the weak dollar that I think that set it off initially, the dollar crashing.

44:04That was the thing that got it going. Well, the thing is, what I want to say, though, before we before we do that is what I want to say is like there was no nobody fired the starting gun for these stocks to start working like there was no advanced warning they underperformed underperformed underperformed underperformed and then they start and then they it there was a turn now you and i can go back in hindsight and say oh look the dollar peaked we could say i i've talked about this a lot um where some of the countries started putting through pro-capital markets reforms. Japan is a really notable example of that.

44:44I've talked about that ad nauseum on the show. So we could do that in hindsight, but like in the moment, there was no way to know. No, no one rang a bell here. No way, dude. And that's one of the hardest parts about investing. And this is, I think, one of the lessons that we hammer home. All right, let's go to this chart. This is performance year to date by country. Yeah, this is through last week. The Wall Street Journal did this. So this is taking away the dollar in most of these. So Korean stocks are going bonkers this year, which it's a handful of stocks that make it up, right? But then Japan.

45:16So this is, a lot of them takes away the dollar on this, that just all these indices, even in the home currency, are beating the S &P 500. Now, Korea is an outlier. Korea has two companies, Samsung and Hynex. They make up like 50 % of the index, right? It's half the stock market, and they are in memory, memory chips. So similar to what you're seeing happen here with Micron and SanDisk, imagine a whole stock market dominated by those stocks. Well, yeah, if you think the U.S. is overly concentrated, all these other countries are way worse. Yes. Way worse. Their top 10 makes up way more than ours does.

45:56Taiwan, I think it's obvious what's going on there. The chip foundries. So, like, you could glance at these and sort of, like, get an idea. what's driving it, but it doesn't matter. That's another important point. In the end, there were cheaper stocks in these countries and people decided, I'm buying them. And then other people watched that and said, I'm going to buy them too. And it just happens. And if you're not allocated, you're going to watch and wave and you ain't going to be there. And that's just part of how it works. There is a weak dollar story here though. So when the dollar underperforms, typically, you'll see international stocks outperform.

46:37Not always, but that's a fairly well-understood phenomenon. Throw my trigger, guys. I had Matt make this one for me too. Go to the next one. So this is like dollar up or dollar down. And foreign stocks do way better. Gold does awesome when the dollar is down. Do you get the sense that this is what Trump and Walsh, they wanted weak dollar kind of, right? Isn't that their whole thing? Yeah. A lot of politicians want weak dollar but can't say weak dollar. that's at least what their hand is showing that they're pushing for a weak dollar and that would be the thing that could keep this going I think yes the weak dollar enables a company like Coca-Cola or Caterpillar or IBM or a multi-natt that's doing 70 % of its revenue overseas to continually surprise on earnings to the upside and another side effect of that unintentional is that international stocks do really well too but like that is an accepted phenomenon is a strategist at Deutsch who's saying

47:40interestingly AI risk in the US is a reason for why a falling dollar or is it's it's sort of like not causing the falling dollar but it's like why the dollar is falling kind of thing it's like just a global reassessment of Trump and the AI thing and the dollar not acting like a safe haven anymore. So like you see, right. So you're seeing like tech stocks sell off and you would expect, okay, the dollar should be higher because people flee to the safety of the dollar in a risk off market and they're not. And that's a really interesting phenomenon that we haven't seen in a while either. Let me just sit with the, when the source of negative equity news in the U.S.

48:25and the rest the world is doing better. It is entirely possible for the dollar to fall as equities are going down, just like in the 2002.com period, Saravellos explained. That's the currency strategist at Deutsche Bank. The less attractive the dollar as a portfolio hedge, the more incentive there is to reduce dollar exposure. And they call it the sell America trade. And I won't go any deeper into that, but I thought that was interesting. Well, and the dollar was strong for like 15 years straight. These things are cyclical. Even if it's not like the end of the dollar is here and people are giving up on the US and selling America, the dollar can be weak for cyclical reasons.

49:03And it has in the past many times. This happens. Ed Yardeni wrote about some of the stuff Europe is doing to get more serious. And I think that's also a big part of the story, why people are allocating and why you have big defense stocks across Northern Europe in particular doing really well in the stock market this year. Right, Germany finally saying, we're giving up on austerity, we're gonna actually spend money. Yes. There was a European Union last week in a Belgian castle, and they were talking about how to get rid of - I thought that castle thing was, I thought you were kidding, but you're, honestly, that's true.

49:41Yes. And they were, a Belgian, they were - Of course they were. See, the only thing that would have been funnier is if the meeting was in a bakery. Right. Like a waffle house. All right. They were talking about bureaucracy and excessive regulation and how to get rid of it so that people, and how to integrate their own capital markets because every country in Europe has its own adorable little stock market. And maybe that's not helping. And Mario Draghi spoke and he is the guy telling everyone, quote, quote, move faster. Emmanuel Macron from France stood up and said, there are no taboos. The European Commission president, Ursula von der Leyen, said, you have until June to agree on a union of financial markets.

50:35We might get a pan-European bond and stock market this year. Think about what a massive catalyst that could be. So this is Yordani. From all the lofty talk, something remarkable emerged. EU officials finally admitted that it's taken too long to get all 27 member countries to agree on a plan for greater economic efficiency. If the EU makes insufficient progress by June, smaller groups, as small as nine members, could move ahead on enhanced cooperation to accelerate these reforms. And so he just kind of like walks through what do they need to do? One, lower administrative hurdles. It's too annoying to do anything.

51:19They have this thing called the sunset clause that automatically expires all regulations and agreements and forces them to renew them over and over and over again. Enough of that. Two, integrating markets. Create a single integrated market for capital across EU member states. Three, create a single energy market. One EU energy market with cross-border grids is vital at a time of Russian aggression. And then all the things they have to get rid of. The Germany-France rift is a big one. Disagreements on tariffs and doing business with China, etc. Lack of investment incentive, okay? Well, maybe unrealized capital gains tax is not the right thing.

52:07Right, yeah. Anyway, it's interesting, and I think we're going to see something happen. And that could be a catalyst for further gains in Europe. and 100 % an investment story, not a political story. It's an investment story people should watch. All right. Did you notice that it feels like everybody on the internet is now an expert on disruption? Now is the time to shoot your shot. If you work for a startup or an AI company and you publish like a 5 ,000-word scribe on Twitter about SaaS or AI and it's like, it's very scary, like it's going to get some traction. This kid that wrote something big is happening.

52:48Great headline. He like went like nuclear viral. I think like 30 million people read this shit. And it was like the only thing people were talking about for a week. I haven't seen a blog post do that in a really – Can you even think of the last time like a market or financial or technology related post from our world did anything like that? It is funny because the AI people are saying like no one's talking enough about what's coming. Like this stuff is coming and people aren't like aren't prepared enough. But it seems like people are waking up to this. I don't know, man. Everyone's prepared, but nobody knows what's going to happen.

53:35Well, no one knows what to do, I guess. What are we preparing for? What do you do about it? That's a good question. But yes, you're right. These things are going mega viral because it's like, listen, I'm working on this stuff on a daily basis, and it's changing my life, and it's like I'm disrupting myself out of a job. That's what's going to happen to you too. Just wait. That's what everyone's saying. I said on one of my smart-ass social media accounts, the only responsible thing to do is just resign now. Like be respectful of the AI. Don't make it come find you. You bow down to it like you're a Game of Thrones knight and you just bow and yeah.

54:10Just fall on your sword. Take my sword. Bend the knee today. It's like, you can't disrupt me because I fucking quit. Like, it's the only responsible way to go about.

54:24The software stocks are ground zero for this. And Goldman Sachs created a software basket of, it's like a long short basket. of disrupted software names versus none. And I didn't bother pulling the chart up, but I just thought this bit was interesting. Goldman Sachs shows the valuation of the software industry has undergone a sharp correction. PE topped out a year ago at 51 times earnings, and now it's 27. It was the most expensive sector going into this. Shows what investors know. And now it's cheaper than media, automotive, semiconductors, and capital goods. Not the cheapest sector, but way cheaper than it's ever been before in our lifetimes.

55:11And I don't know. It feels like it's really easy to write some sort of like disruption piece, just taking that as a premise. And you could either say the worst is yet to come. Or there's a guy, Nicholas Bustamante, who wrote something that went viral this week. This is a guy with a startup called Fintool. And he basically took like every type of SaaS company or vertical market software company and explained which ones will live, which ones will die. Did you read this thing? Yes. The way that he laid it out was good. And he talked about the financial data stuff in here, which is, you know, that's important for us.

55:54New and dear to our hearts. Yeah. So that's the stuff that made the most sense to me. Like basically, do you have something proprietary? Is it just a tool? Because I've been doing more and more financial analysis on AI, obviously. It's so much easier. It's so easy. Yeah, his point was like if you're aggregating public data, nobody needs you to do that anymore. That's not a business. You can't sell that really in real life. So you either need like proprietary data, which will still have value because by definition it doesn't exist for the LLMs, or something where you are the system of record for corporations and you're not easily ripped out regardless of how much it costs.

56:36Like there's a lot going on there. Rachel Fintwood says guy stuff totally. This is like the millennials equivalent of guys in their 50s talking about World War II. Like 100%. Or guys in their 40s talking about the Roman Empire. Well, we're going to be over and underreacting to this stuff for the next 10 years at least. So Bill Gurley had something. He talked about how he said some people are shocked that Walmart and Costco have higher multiples in software companies. When so much value is in terminal value, the haunting question is will this company be around in 30 years? He says that's an easy answer for Walmart and Costco, which, by the way, I got his new book.

57:15It's pretty good. New career book. But the thing is the undisruptible companies are going to get taken too far too. There's going to be an overreaction there as well. There already is. Yeah, Costco is trading for 54 times earnings. Walmart's trading for 45 times earnings. Yeah, we get those companies to be around, but they can still be too expensive too. The staple stocks are stupid. Like Coke and Pepsi had 85 RSIs last week. Like momentum that's off the charts and nothing fundamental has changed. And I could show you 50 of those. Put this chart up. This pincer move is the risk. So the vertical software companies, these are companies that built something special for one industry and they like something for law firms or for dentists or for mechanics or for construction companies.

58:08Like they own this vertical. And this is the pincer move. From above, you have Anthropic dropping these plugins that literally they know an industry cold and you get everything for free that you used to pay somebody specialized for. And then from below, you have all these AI native startups for every vertical. People – like the cost of inventing something is so much cheaper. So they're saying like small teams, frontier models, 80 % capability at 20 % of the price. So if you're stuck in that middle box and he has Bloomberg, FactSet, LexisNexis, S &P Global, that's not a good place to be because now you're fighting with a million startups and Anthropic.

58:50I've heard that Bloomberg is going to be disrupted for 20 years, though. That, to me, is the one that, for whatever reason, it's like the real estate market. Like, realtors, you can't disrupt realtors. They're in their 6 % commission. I feel like Bloomberg is undisruptible. So if it doesn't happen now, it's never going to happen. So Bustamante addresses that. And there's a couple of things with, like, hospital software companies, pharmaceuticals, Wall Street. There's a regulatory component to this where, like, there's, like, you need software where there's like HIPAA compliant, FDA compliant stuff built in.

59:23On Wall Street, it would be SEC regulatory. Like there is a higher responsibility in certain verticals where you can't just be like, oh, that's cheaper. Let's use that. Like there's audit trail. There's things that are built in where they're less disruptible. I think I would put Bloomberg in that category. The other thing is Bloomberg has network effects. Yeah, the people love to message each other on it. Yeah, that's the thing. So, I mean, that's harder, not impossible, way harder to replicate with LLMs, to create like a million people around the world who are able to chat and trade with each other.

1:00:02I don't know that you can really do that. I wanted to, we could finish with this. I wanted to show you Apple as an example of a company that did not go all in on AI CapEx. Their CapEx actually this year is going down. This is the best chart of the year. So far, this chart is nuts, right? Nuts. So they didn't play the game. So do you think that the Apple said, you know what? People aren't going to have two pieces of harbor on them. They're not going to have a phone and a little AI device. It's all going to go through the phone. So what do we care? It's going to come through us anyway. We'll just partner with someone.

1:00:37We don't have to spend the money. OpenAI is working furiously on a device, supposedly two. One of them is a desktop, and one of them is an amulet you wear around your neck. I could look like an asshole in a year. I don't see it. People are going to want to have multiple devices. I mean, I get that people have an Apple Watch and AirPods and stuff, but that's a thing. Apple is already ingrained in us. You're going to add a new thing? I don't know about that. Meta would tell you the goggles were wrong. It's about the glasses. and they think the form factor for AI and augmented reality, et cetera, is going to be worn on your face, not carried in your pocket because you'll be AI all the time.

1:01:22Those glasses creep me out. I think they're creepy. Yeah, maybe it's for a different generation. I don't love the idea of having somebody walk up to me with a camera in my face. It's not appealing to me and I don't want to do it to anyone else. Anyway, I did want to share with the audience, I think Apple could be the stock of the year. It's not cheap. It's 30 times earnings. But if we're going to pay 53 for Costco, then pay attention to what I'm about to tell you. Apple is going to own consumer AI. They are going to launch a Gentic Siri this year. They're two years late. Everybody gets it. And the stock is only in a 10 % drawdown from its high.

1:02:01It actually looks better than the other six Mag7 names on that metric. They have a March event, a May event, and a September event on the calendar. The March event is not a live stream, so they're probably not launching something big. The May event absolutely could be a Gentic Siri. And if it's not, the September event will be. And they're partnered with Google, and they were on search. And I think Gemini is going to power a Gentic Siri. And what a Gentic Siri means, guys, it's not another chatbot, although there will be chatbot-like features built in. Argentic Siri is telling Siri to go into the hundreds of apps on your phone and do things across those apps.

1:02:46We cannot currently do that with ChatGPT or Claude. Telling Siri, move$100 ,000 from my Fidelity account into my bank account because I'm about to buy a house. and by the way, I need two tickets on Delta for our vacation and also make me a reservation. And then Siri, because this is all happening in their iOS environment, so all of these apps have to play nice with Apple and they have to be interoperable. Siri all of a sudden is on your OpenTable app. It's on the Delta app. It's in your Fidelity app. It's talking to your bank. It's moving money. It's making reservations. It's booking travel. It's alerting you as these things get booked.

1:03:34You're having a two-way conversation with it all day. The seats that you normally like to book are not available. Here are three other options. Agentic Siri is a f***ing grand slam. And they're going to do it. And Apple is never first. And they're very rarely the inventor of a category. What actually happens is they let everybody blow themselves up. and then they come in and they say, let me step aside, let me show you how it's done. And once they do that, it's lights out. And we all already have the device. There are 2 billion Apple devices on planet Earth. It's a user base that spends money, continues to stay in the ecosystem.

1:04:15All they have to do is drop an agentic Siri into this AI trade. And all of a sudden, people are gonna throw themselves out of windows. I hope it works because Siri sucks. sucks and they know it's so bad they know it it's because it doesn't do any it's useless yeah you can't ask a follow-up question like like it's it's completely useless they get it agentic siri is not going to suck they've had they're not going to release many years to work on this yeah we we are not in a world yet where people we are not yet in a world where people can imagine Apple's AI being the Jesus AI. They just can't picture it because Apple has not been in this LLM race and they're not in the CapEx hyperscaler race.

1:05:03But in the end, they are the closest to the customer. So that's how Gemini wins too then. Yeah, now people say, well, what happens to Claude? What happens to ChatGPT? What happens to perplexity? Unfortunately, if the scenario that I'm envisioning plays out, like every other iteration of technology, they become plugins. They become features. It's Apple's world, and Apple has the pricing power, and they have to pay Apple to be in the App Store, and they just become like Apple will tell them what they're worth to be included in that ecosystem. You don't think Claude could still just be the one at the office?

1:05:44Claude's at the office. Siri is for personal use. Sure. Anthropic has made more inroads into the enterprise than anyone else besides Microsoft. And absolutely. We have that now. Microsoft Teams is still the most widely used platform for communications amongst people working at corporations. I had a call with a Fortune 500 company today. I didn't have to guess what the call was going to be. I knew it would be Teams. so that Microsoft Apple dichotomy currently exists I'm Microsoft at work I'm Apple at home that 100 % could be the case if you're the guy coming along with the eighth LLM good f***ing luck you know what I mean Claude in the streets Siri in the sheets Siri on the phone and uh still spitballing that one we'll figure that one out anyway we're going to use Apple is our make the case because we're already out of time.

1:06:47And I had this whole other thing that I wanted to do, but we're going to hold off on that. Ben, I understand you have a mystery chart for us. I do. Bless us with that mystery chart. Alright, so this is from the bottom of the Liberation Day lows. Okay? How many hints do you need here? This is in percentage terms? Yeah, so this is off the lows. I'll give you a hint. One of them is a sector. One of them we've been talking about the whole show.

1:07:20Okay. Both U.S.-based. U.S.-based. Two stocks? These are sectors. These are ETFs. Oh, these are ETFs. All right. Okay. I think I know it. I'm going to say purple is SPY and orange is Vanguard Europe. Close enough. So purple is MAG7. ETF. Orange is actually XLI. It's the industrials. The industrials are right alongside the S &P since the low on Liberation Day. That's crazy, right? What was the narrative around Liberation Day for the industrials? These are the most screwed companies in the world. Done. They will never make money again overseas. Blah, blah, blah, blah, blah. Good call. All credit to research guy Sean on that one.

1:08:08He came up with that one for me. All right. Ben, did you have on the show tonight? It was awesome. good stuff dude we love having you up there chat is blowing up thank you guys so much for coming for the live i want to let you know uh do you guys have animal spirits tomorrow we do michael called in from the bahamas it's a good thing he wasn't on here today because his internet was terrible okay all right so we will have animal spirits tomorrow with michael and ben um you guys haven't asked the compound this week too we do yeah all right duncan's taking off to japan so he's got to tell us what's going on in the japanese stock market all right all right and then we'll do an all new compounded friends at the end of the week.

1:08:43Thank you guys so much for watching. Keep it locked. We'll see you soon.

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