TDI Podcast: Ross Gerber Unplugged (#987)

25:50Ross Gerber:Right. You know, they get every single guest on every single show. The question, particularly on CNBC, hey, is the Fed going to raise rates? I'm like, is that all? Who cares what this one individual thinks about the Fed? But unless CNBC is really trying to make what they say the reality, because that's kind of some of the things that they talk about in the morning, the politics and all that and bringing everything back. Financial media does not reach a large audience. So, you know, going on CNBC, you could yell fire in the theater all day long. Nobody's running. Okay. So if you turn on CNBC today, that's basically what the guests they choose is people who yell fire in the theater.

26:34Correct.

26:35Ross Gerber:So there's no value to CNBC. Like, like I I'm on these shows and they don't ask me as much as they used to. And for whatever reason, you know, it just depends on the producer of the moment. But like, you know, if you look at their content versus like Bloomberg or Fox Business or or any of the news networks, it's like, why do I see Tom Lee every day? Every day. You know him. It's like every day. Jeremy Siegel. The guy just says the same thing every day. And it's like, well, nobody's saying like a lot of what you're saying is completely wrong. Like there was a huge correction in July, for example.

27:16Or like at the end of last year, oh, Bitcoin's going to this or that. None of that worked out. He's got this Bitcoin immersion company.

27:23Ross Gerber:Oh, have you seen the stock there? Yeah, so he loses people like 80%. And nobody says nothing. Tom Lee just goes on TV, blah, blah, blah. But, you know, I think discussing interest rates is probably one of the least interesting conversations that the public could want to listen to. Right. Discussing what's going on. Like I had a tweet go viral over discussing what's going on with the Lakers and the Dodgers. You know, people care about like that when it comes to business a lot more than they care about what the Fed's going to do, which is nothing, by the way. The Fed's not going to do anything.

27:58So you can talk, talk, talk. You know what you could talk about is the fact the Fed doesn't need to do anything because rates are going up anyways. Right.

28:05Ross Gerber:Well, he did that, right? I mean, that was – I was actually – just to talk about this rate issue, which may be barring to some people. I was shocked. I mean, not, you know, terminally, but to a point when Warsh came out and said, let the markets do what they're going to do. I'm thinking, oh, my God, are you tempting the markets to actually do something? That is probably not in your best interest. Well, I don't think he came across, you know, like what he wanted it to come across because the market does tell the Fed what to do. Yeah, of course. To be honest. Yes, of course. So the market's telling the Fed to raise interest rates by 50 basis points, you know, the two years at four and a quarter.

28:45So the two years at four and a quarter that, you know, they should be raising interest rates 50 basis points, maybe 75. But that serves no purpose because short rates don't really matter in the cause and effect of inflation today. So what rates do isn't going to change inflation. What's changing inflation is policy from the government. And so if people want lower inflation, you just got to look at the big orange guy in the White House and say, hey, this is all on you. But the Fed isn't going to stop it. It isn't going to help it. It isn't going to do anything. And the Fed can't do anything. So markets are also adjusting to the fact that net savers of money like Google and Meta are now net borrowers.

29:29So they're competing. So we said it here in the office the other day. Would you rather loan Google money for five years or the U.S. government for five years? And Google will pay you more. It just seems obvious that you would buy the Google bond.

29:42Ross Gerber:Naturally. And that's exactly what's happening. Investors are saying, you know what, U.S., you're not so good anymore. You know, you used to be this, at least the perception of being really solid country and really solid economy and really solid financials. And you'll pay your debts at all costs. And now all the old rules are out and all that. So you're more like an emerging market now. And now we're paying emerging market rates. I've always said that we laughed, we scoffed for years. Oh, my God, look at the pigs. Remember that? Look at the pigs. Oh, my God. They have 120, 150, 200 % debt to GDP, right?

30:16Ross Gerber:And then it's like, oh, that's terrible. Now we're the same. Well, and I want to preface the statement with saying I am not a Democrat. I'm not a fan of politics or either party. So don't attack me and say, oh, the Lib hates Trump. I'm just saying from an economic perspective, the policies that this administration have put in are wildly inflationary, have become inflationary, and rates are simply adjusting to it. And if you don't like it, you shouldn't have voted for him. Well, this is nothing new. We're going to have another election in three months, and America will decide if they want to continue this nonsense where Congress does nothing.

30:55Nothing. Nothing to do what's best for this country. And once again, I don't care if it's a Democrat or a Republican. They're doing nothing to rein in horrible policies that are bad for American consumers and families. And American families are going to show their displeasure in November. That's what's going to happen.

31:15Ross Gerber:I would tend to agree with you. Hopefully, the fact is that, you know, you have this kind of debt load, which, by the way, hasn't necessarily hurt anybody yet, right? Right. We keep on paying everything off and what they want to call it, MMT, you want to call it some other kind of lucky economics. But now what's interesting, because you touched on this, but we could explore this. One of the things that we liked about the Googles, the Metas and the Apples and all that was the very little limited debt that they held. They had no debt. No debt to a degree and enormous free cash flow. Now, that dynamic all of a sudden has changed.

31:58Ross Gerber:Are they taking the lead from the government like, well, we can have a lot of debt at reasonable rates. And nobody seems to care because nobody seems to care a little bit here and there. but free cash flow has dropped off a cliff for these major companies. I don't think it's fair to compare the two. And one reason is because the U.S. government can just tax the hell out of us forever. Or create money. Or print money. Google cannot per se do that.

32:29I think for the Googles of the world, investing in the most impactful technology that we've seen, maybe ever, it's really wise because this is, we're now in an existential battle for who's going to be the Google of the future. Okay. So whatever it was up until AI doesn't matter anymore because if you don't compete for what will be, you will not be there. Okay. It's really simple. I think I tweeted something the other day because we're working on cloud. We've, we're so ahead in AI at my firm that cloud can't keep up with us. So the issue we're having is that we can't do what we want to do because of actual rules.

33:09Like we can't like use client personal data on AI because it's not secure. Right. And so like we've been working with Anthropic and other investment firms are working with Anthropic to try to get secure, you know, data centers that are not connected to the rest of the world so that we can actually run models and things like that on AI, which is going to be a game changer for running financial plans, for example. Right. And so we've now got it Where we can take your tax returns, your credit card statements, any statement. We just scan it into AI and it builds everything for you now. It's fucking amazing.

33:44The problem is we have to redact everything and we can't use client name. So it's just not scalable. But they're working on this. They're saying soon. But investing in AI for these companies, I was trying to compare it to if you imagine an old library that had all the file cabinets and remember all the micro fees. Microfiche, yeah. That we used to use. Yeah, yeah. Okay, so if you tell a young person like Alex here who's working here, we'll ask him what microfiche is. I had no idea. Alex might know because he's one of those wise young people. Yeah. But we used to actually do research with this shit.

34:18I remember. Right? Remember you had to turn it this way.

34:20Ross Gerber:They were physical files, right? And you had to turn the wheels on the microfiche. Yeah, you turn the wheel, and then you find the article, and you push print. Yeah, yeah. Right? And then I'd highlight the article where it said, this is what's good or whatever. We did this. We spent time doing this. Yeah. at Penn Library. I spent a lot of time at the Penn Library looking through these stacks of files. So now imagine a data center at AWS. Essentially, a CPU-based data center is exactly the same as the library. It's just files that you've stored onto a server that you can query when you want that file.

34:51That's basically how modern computing works. So you go onto the web and you want to watch a YouTube video. That YouTube video sits at AWS in its closet. And when you say, watch me, It comes out of the closet, you watch it, and then it just goes back. That's basically how data centers work today. Then AI comes around. Well, what's the difference? When we went from CPUs to GPUs now, well, the GPUs can read the documents and now tell you something about those documents. Well, this is a whole other thing. So now I've got to take every one of these pieces of data or videos or whatever, and I move them from a CPU-based data center to a GPU-based data center.

35:31And once I do that, now I can actually work with these things in real time without just calling it up and back. You see what I'm saying? So now I can say, summarize these 10 videos for me in a one-page summary. And it can watch all 10 of the videos and then do this for you in a very rapid amount of time. So this just takes a tremendous amount of compute and memory, which they just don't have. So, you know, this is an incredible time for companies to invest as we move every piece of data, essentially, from a CPU-based data center at AWS to a GPU-based data center at AWS. And that's why this is so lucrative and why there's so much investment and why these companies have negative free cashflow because if they don't do this, somebody else will.

36:23Ross Gerber:Right. They call it an existential risk to the company if, in fact, they don't keep up with whatever. 100%. 100%. And we've seen this disruption. Where are our CA televisions today? Yeah. Okay. Where are U.S. cars today? You know, like, look at the industries we've lost in. You know, one after the next, from TV sets to rare earths to whatever that are made in other places. And so the U.S. understands the value of this technology and said, We're going all in on this, and we're definitely keeping it away from our adversaries as much as possible. And we're going to build these great systems, and we're going to invest a trillion dollars a year into it.

37:05That's because we learned. But, Ross, we learned. We actually created China.

37:09Ross Gerber:We created Vietnam. We created the exporting. We created Japan. We created Germany. We didn't want to do any of this stuff, right? We're too good to making T-shirts in a hot factory. So don't tell the Iranians that if they let us win and let us take it over, they'd all be rich in 15 years like the Japanese. You know, Iranians just don't get it. Nope. But the thing is that we finally, looks like, looks like we're starting to realize that, and this is a little bit different because it's not a sweatshop in some of these regards. In most of these, obviously, it's more white collar thinking, you know, AI, the technology has to be a brainiac to do a lot of this stuff.

37:49Ross Gerber:And it's a little bit different, but the understanding, maybe it took all that to get us here, right? Maybe it took that to bring us to this point where we realize and recognize we got to do this. I mean, we have to keep it here and we got to make sure that we win this race. Let me ask you, though, let me kind of go into this discussion about, I think we've talked about this before, and this is the circular financing, the leverage. Yes, the way this is all going down. This whole thing is this, there's some weirdness in some of the ways that at the center of it all had been. It may not be really today exactly, but NVIDIA and they're buying space from here and then they're getting money back from here.

38:30Ross Gerber:And then they're going back into over there and the banks are giving them money. And then they're putting money over here. And then Microsoft says, hey, you know what? We're going to invest in ABC AI company. Hey, by the way, they're going to be committing to a five-year deal where they're going to be buying space on our cloud. Azure, and they're going to be paying us$18 million a year or something like that. Meanwhile, we're going to give them X amount of dollars to buy into their company, taking assets off of the balance sheet and turning them into revenue for the income statement. Tell me where you are with all this.

39:05So remember the railroads? Yes. So when they started, a guy named JP Morgan was kind of the banker behind this stuff. Heard of him. They needed tons of capital, right? We got to lay like metal across this entire country for trade. Okay. And it was a huge capital investment. If you remember, there was probably like 50 different railroads when it started. And they were all short lines, you know? And it was like, how many of them went bankrupt, right? So they were all borrowing money. This was help build Wall Street. It literally helped build Wall Street. And it was all circular financing. Because if I didn't like have the end consumers and the end producers of goods, on my payroll, like to do, you know, like if there was no reason to take the train, then this, this is bad.

39:51So we want to make sure that all the things make sense so that when we build the train line, it makes sense to do that. So for them to invest in like the real estate around the train stations, and then those people are paying rent back to the train, you know, like, so, so I get the concern because you, NVIDIA makes a profit and then funds a startup that will use all of its products. But that's actually how business works. Like, for example, the broker dealers give us money to help us grow for free, basically. If we grow, we get to keep it because it's good for them. Is that circular financing?

40:32Absolutely. Like, we just give them back the money, right? And fees. Yeah, right. No, I get it. Yeah. Like, a lot of businesses work this way. Look at the pharmaceutical industry. Like so many industries work this way where if we make a lot of money, we want to fund customers of our products. Like that makes a lot of sense, actually. So if you look at NVIDIA's portfolio, okay, so NVIDIA is making, let's say,$150 billion a year. They got to do something with it. So they're buying back stock. They're paying dividends. And then they got, let's say, another$50 billion a year to invest. Should they just buy Google stock or should they invest in companies that will materially help their business one way or another?

41:13And that's exactly what they're doing. It's called capitalism is what it is. So if you take your capital and you give it to people that help your business grow, it's a very intelligent use of capital versus investing in something that has like the old conglomerates where now I diversify into a completely, you know, now I'm selling potato chips at NVIDIA. We want the precipitation, you know, and those conglomerates never held up over time. They always ended up getting bought up and broken up.

41:42Ross Gerber:Oh, broken up, right. Because you lose your multiple if you become too complicated, right? So markets like Pure Plays where they can assign a higher multiple to your growth rate. You know, it's kind of the problem with Disney. They got to get rid of the cable company like Comcast just did. Get rid of the cable company. All of a sudden you look like you're growing again because you are. It's just you had this one division that sucked, you know. Right. So I think I would be more concerned because I do believe markets work themselves out. I would be more concerned if what they were building didn't have such an immediate return.

42:19Okay. So because if I, so I was just telling somebody this in the office, a data center is better than an oil well. Okay. And in the old days, you put all this capital into the ground and you hit oil and then you extracted money for 25 years. Right. Okay. Very capital intensive business, lots of failure. But when you hit it right, boom, you made money for 20 years. Now think of a data center as a piece of real estate. You build a GPU based data center for$5 billion and you can rent compute. Demand for compute. And right now you can sell your compute for more than it costs you to make compute. Right.

42:54The challenge is the, can I build that factory? Not whether the factory will be profitable. You see what I'm saying? So I need power. I need to get approvals from the government. I got to buy land. I got to get equipment from all these companies that don't have equipment. But if I can get this shit together into a box, I can sell compute for a profit and a very good profit. And CoreWeave has proved this, right? Yep. And so that's the beauty of the investment is when you finish the box and it operates, you make money right away. where in a lot of companies, like I'll give you Tesla as an example, where they're building robo cabs and they're putting them in all these cities, even though full self-driving doesn't work yet, they're still preparing for the day that maybe it'll work.

43:42One day. Now, one day. And so they're putting all these cabs and they're spending all this money building this system. What they don't know is when they turn it on, let's say it works and they turn it on. And now there's 500 cabs in 50 cities in America, and they're all driving around making Tesla money. What we don't know is what can they charge for the rides versus what's the cost. We just don't know that yet. So a lot of people are assuming like what Uber makes on a ride minus what you pay the driver would then be your margin. That is a huge mistake. Okay. When you get in an Uber and there's a human driver, you understand that you're paying that driver.

44:23If you get in a Waymo and there's not a human driver, why would the expectation be that it should cost the same? It should cost less. There's no driver. Is that common sense? Yes. And so as more cabs come out into the market without drivers, what happens to the price of a ride? It goes down. Because we're

44:43Ross Gerber:now competing. And this is why they're talking about this technology being disinflationary. A hundred percent. It's wildly disinflationary what's happening with cars. Okay. And so the price of a ride right now is three or$4 or$5 a mile on Uber or Waymo or any of these. Right. But to be competitive with a car, a car is less than$1 a mile to drive. So you're in this battle of pushing your prices down to get more consumers to take rides. Because if the same amount of people keep taking rides and we add cabs, prices go down. Do you see what I'm saying? So the way I look at the RoboCab business is it's a race to the bottom.

45:24It's opposite of investing in AI, okay? Where I know I can sell my compute for a profit and maybe even a bigger and bigger margin over time because the demand's so big. With robo taxis, I know the demand is here, but I'm not sure if it grows. And I got many competitors and technology creating this, you know, disintermediation. And then with that, I get lower prices. So it's great if you're the consumer because now you're like, oh, I can take my Waymo now because my Waymo is$15 instead of$25. But if you're Waymo, what's going to happen is you're going to see ads in the car. That's what's going to happen.

46:00So the little screen, you're going to start watching YouTube. It's going to be ads. That's what it's going to be because Waymo won't be able to make all their profit just from the ride. It's going to have to have another source of revenue. And now if I'm not sure where I'm going to go to dinner, it might even make suggestions, you know, and now I'm getting paid like AdWords, right? And so Google has a reason to have caps. But if you're just running a cap business, I don't know. I don't think it's good. So everybody's bullish on Uber, the valuation, this and that. I am not at all.

46:34Ross Gerber:I find the, I like the original idea that came up with, which was we're going to have this self-driving, full self-driving or whatever you want to call it, depending on the company, right? But this concept of an autonomous vehicle, right? This concept that we're not going to need to buy cars anymore. If I did, if I do have a car, it doesn't need to sit in my driveway all the time. It could be automatically called up to be a driver all around the place, which would mean that I can make money on it as I'm sleeping in theory. Yeah, but do you actually believe that? No. Right. I'm just saying that was the - Well, number one, I'm not giving up my car because I have shit in my trunk right now that I need.

47:12Exactly. Like my golf clubs or whatever. Yeah. And so like, what do I do if I'm not sure if I'm going to play golf today? You know, like I'm not sure. So, you know - No, I get it. Do I take my robo cab to work? Yeah. Where do the golf clubs go when I get to work? You know, like, I don't know. So I don't see that. And then I always thought the best model was exactly what Tesla was doing, which is building great EVs that could drive themselves. So I love the idea of getting in my car and pushing a button and it drives me completely safely to my destination. I mean, how could you not sell that car?

47:45Right. Right? We have eight minutes. For some reason, Elon thinks that he has this vision of transportation in the future. And you can see it in his TerraFab video. That's basically like the Blade Runner future.

47:57Ross Gerber:It's literally the Blade Runner future. That's exactly what came to my mind, by the way. Right. Yeah, exactly what you were talking about. With those cars and the weird, with the weird, it's like the toaster. The fifth element. The toaster thing. Yeah. And so I was like, Elon just watches these movies and then he like wants to create that. But he's forgetting that there's these humans in the way. Poor humans. I know. And us humans, we want our own cars. We want different colors. I want to wrap my car with a matte black wrap and a weird rim. And if anything people do is customize cars, right? Right.

48:30Boats and cars. Have you ever been to one of these car things? You know, I'm sure they have them in Florida. You go to these car things and everybody's got their sweet car and customized car out there. I mean, people love these things. Kids love these things. I love them too, to be honest. And it's like, I'm not going to go to a day where everybody has three color car. We all have a Model Y and that's how we get through our lives in this weird dystopian world where we're all driving a Model Y that's white. like this is like hell to me. That's like hell. Yeah. Okay. Right. I'd be running around spray painting the freaking cars, at least so there'd be different ones.

49:03A little something, something. We only have a few minutes left, but I want to cover a couple of items. So we're going to go quickly through them.

49:07Ross Gerber:Situational awareness. Thoughts on that meltdown? Oh, I love them. Love them. What do you love about them? Yeah, I gave me a chance to buy Micron the other month for cheap. And you got to look at the fact that Ken Griffin picked it up at a bargain. Or is somebody saying he could have done it? I think he made like$4 billion on that trade. Unbelievable. And I give Ken credit. Ken's a master, and I give him a lot of credit for being the master of trading. I mean, this guy, between owning 20 % of the market and then being allowed to have a hedge fund that trades, knowing what everybody's doing, seems like a wild conflict of interest, right?

49:51For some reason, the government seems to be fine with all that. That said, I mean, just a masterful, masterfully crafted way to take this kid's money. And quick. It's like a lesson. Yeah. It's like a lesson for inexperienced people like this Leo Ashen.

50:08Ross Gerber:But he's still around, by the way, and he's still making trades. He did$400 million. Well, he won't last. Don't worry. I know that. Yeah, that's clearly. And it looks like he's taking a lot of the playbook. All the kids at my firm came in with this guy. They came in six months ago. Oh, have you been following this guy, this guy's trades? Are we trading in the same shit? I look at his portfolio, I go, same shit we own. Right. But heavily leveraged. Oh, he's a fucking genius. He owns Micron. Like, same with us. Yeah. Okay, it's six times earnings. Right. Like, for some reason, the market doesn't want to believe that Micron's going to sell chips, but they are.

50:38So this guy just leverages up 4X on Micron, gets wiped out. I go, is he a genius or a fucking idiot? Well, this is like a something. So if you're a fucking idiot, if you're an idiot, you know, trust me, over time, you're just not going to make it. Yep. And so the fact that he married the anthropic woman and has this big anthropic stake that staved him from going bankrupt, he should be very grateful to his wife. And if you looked at the wedding pictures, I've never seen a happier man at a wedding. And when the man is that happy at a wedding, you know something's bad.

51:11Ross Gerber:Well, the wedding was two days after he went down in flames. Could you imagine how much, could you imagine? Can you imagine? Can you imagine any of this nonsense? Can you imagine the idiots that give this guy billions of dollars? And they keep giving him more money. Because he's a 25-year-old genius. It turned out his portfolio is 50 % micron and SanDisk. Yeah. Leveraged up 4X. Like, even Cathie Wood, the worst money manager in history, is smarter than this. The worst. It's like the Korean market. That's what he did. He just took it to the Korean market with two stocks. Yeah. Exactly. Listen, one more thing.

51:42Oh, and then I'm going to leverage up the most volatile stocks, too. Of course. Like, he's never read a book about the 50 % corrections that all tech stocks have. You know, like.

51:50Ross Gerber:And semiconductors that have a definitive cycle over time. Oh, totally. Well, the worst part is I'm on TV. He could have just called me, let's say, and said, Ross, you've been trading for 32 years. I've been doing this. Somehow I got$40 billion in my fund. I need somebody with trading experience to help me. Maybe he should have just done that because I would have sat down, and in one second, I would have made him take that leverage off. Right. You know what I mean? And would have saved him. Would have saved them. Oh, yeah. I was down 5 % in July. Okay, I'll take it. And once again, Micron's my top holding.

52:26Google's my second top holding. Then I got NVIDIA as my third top holding. You know what I'm saying? And then I got Broadcom. And then I got Microsoft. So I've got just as much AI as this kid. But I'm down 5 % and he's wiped out. 67%.

52:41Ross Gerber:Last thing I want to talk about, and this goes back to the top of when we talk about being able to change your mind and do things. because this is an important lesson. I don't think that people should take this lightly. Just, okay, a lot of players cannot change their mind about things. I mean, really can't. And there's a lot of reasons why, right? There's ego. There's a lot of ego involved. I think that's the number one reason. I mean, this happens to me a lot where, you know, I've been saying something on TV. You know, I've been on TV for 15 years, and I was saying something five years ago about a stock or whatever, and I was wrong.

53:14Yep. Okay. And I changed my mind. And it's like, well, people are like, well, Ross, you love that stock five years ago. La, la, la. And they never let you live it down. And I was like, dude, I get what I tweeted five years ago, but you're skipping tweets for the last five years where you can see me change my mind in real time.

53:32Ross Gerber:But you did change your mind about something, right? Let's talk about the - But changing your mind is extremely painful and they punish you for it in public view. But it doesn't stop me. You know, like I don't care what the public says. I care what I'm saying. So if my mind has been changed, that needs to be known. And a lot of times my best investments have come this way, where I started not liking something and then people convinced me otherwise, and then I start liking it. Those are some of my best investments. So changing your mind is a very healthy thing, despite the pain of doing that. You changed your mind about Bitcoin.

54:11Ross Gerber:We talk about the Pied Pipers of this, the guys that are out there. I wouldn't say I changed my mind. I've changed my attitude towards it. Okay, I'll go with that. You look at Michael Saylor, who, by the way, I've had a 25-year grudge with after he - Oh, then you'll like me picking on him. Yeah, it's at least a 26-year issue back in the year 2000 when he did a little bit of a - It was my birthday, and I lost 50 % on MicroStrategy that I owned because - I don't know if you know this and you knew it back then, but basically the firm was booking service revenue that was five years into the future as revenue today, the full booking of it.

54:47Ross Gerber:Sounds like Bitcoin. Oh, exactly. So, you know, this whole thing is these Pied Pipers, you know, you've got like the Pumpliano. I call him Pumpliano, not Pumpliano. I know Pumpl. Yeah, I know Pumpl. I call him Pumpl. He's been on the show several times, but, you know, he went from a writer to now he's, I guess, a money manager. Well, now he's got some AI solution for everything. Yeah. So, but you've changed your mind or you've changed your attitude on it, I should say. Well, what happened, so fundamentally, I still think Bitcoin is this great idea and concept. And certainly, we're talking about government, you know, just complete recklessness with currency and printing money.

55:24So, Bitcoin does represent something that can have value relative to the depreciation of other currencies. and then you have gold, which essentially functions in the same way, right? Right. But a lot of the promise of Bitcoin was that this was actually going to become something that we could use. Like, so it would become something, you know, you can actually use gold, you know, maybe it's not, you don't walk into a store and use gold, like a gold coin. But as I was saying to somebody who was arguing with me, I could easily go to the jewelry district in LA or to any pawn shop right now. There's a pawn shop on 4th Street.

56:04Good friend of mine owns it. I can come in with my gold coin, and let's say it's worth$4 ,000 today, and he'll lend me$2 ,000 or$3 ,000 against the gold coin right now. Okay? Can't do it. So Bitcoin, I can stake my Bitcoin or all this bull crap, and then they all go out of business. So gold and Bitcoin essentially work the same, and I would argue that gold is in some ways even easier to use and more usable in more places. so when big some of the premise of bitcoin was supply and demand which was so many people wanted bitcoin but there wasn't an easy way to get it and then the etf came out and when the etf came out i was like all right now bitcoin's going to go up because everybody can buy it everybody bought it it went up and that was great and then we sort of reached this maximum bitcoin moment when trump embraced cryptocurrencies and promised the world and Bitcoin hits 130 ,000 and everybody's like, Bitcoin's going to be the currency of the world, blah, blah, blah.

57:04Well, the problem is, A, they use Trump as their spokesperson. B, they use Michael Saylor as their spokesperson, right? And C, every exchange owner has gone to jail, okay? Except the Winklevosses. And so you're like, wait, hold on a minute. The only reason these guys are in jail is because Trump let them out. Then Trump goes and scams his people out of$4 billion, okay? And he rug pulls them all with his coins. And what does that do for confidence, right? Nothing, right? And then all these people are owning the IBIT ETF. You can't even use the Bitcoin this way. So I'm just betting directionally when I own an ETF that more people are gonna have Bitcoin.

57:52Well, everybody had Bitcoin. Well, everybody's holding Bitcoin going, why do I own this Bitcoin? And then they got guys like Trump ripping people off. Then you got guys like Saylor who say they're never going to sell a Bitcoin in their life. They're the Bitcoin maximalists. And then he's borrowing money to buy Bitcoin. And he's selling stock to buy Bitcoin. And he thinks he's a fucking genius. Okay. Yep. Why? Because he's taking a billion dollars from other people. That's why he thinks he's a genius. Well, now it reverses on him. So now he's selling, right, Bitcoin to buy cash back. You know, it's like micro strategy in reverse.

58:27Well, now this unwinds very poorly, you know, so he's just starving off a massive Bitcoin unwinding. And that's why I've changed my attitude on it because these guys have leveraged themselves. They've played this game like holding a bunch of dollars in the bank is somehow valuable. You know what I'm saying? Right. And then Trump's ripping people off, and the exchanges are ripping people off, and people just said, we've had enough. We've had enough. Yep. No, I agree. And they're buying gold. Yep. And you know what? They're buying gold silver. And what I say to them, and I say, you're right. You are 100 % right.

59:04I would love to go on a show with a bunch of Bitcoin maximalists today and convince me what's next for Bitcoin. Like, what's next? Where does it go from here? Well, Ross, it's just a - Because I would argue it has nowhere to go. It's just the Bitcoin winter, sir.

59:21Ross Gerber:We've been through these before. Winter, it's a$60 ,000 coin that I bought for$500. There's no winter going on. That's what they talk about. It's up like thousands of percent, okay? It's wildly successful. Like, I don't understand why people have a problem with it being at$60 ,000. I'm just saying, I think they like the volatility. Because if you look at the Bitcoin volatility recently, it's been pretty calm, which, by the way, I would present to you as what we want to happen with this. 100%. It's a currency. Right. I can't use a currency like the Turkish lira that changes 10 % a day. Right. Okay.

59:58So, yes, if I'm an exchange, I want volatility. If I'm a Bitcoiner, I want volatility because I make money off the public this way. Correct. But the public wised up. Yes. The public doesn't want it anymore. They get ripped off over and over and over again. It started with Mt. Gox. I've gone through this over and over and over again with these exchanges. Where the fuck do I even put my Bitcoin that's safe?

1:00:23Ross Gerber:That's the problem. I mean, it's only a couple of things. I don't even trust these hard wallets, you know? So now they're like, oh, and by the way, quantum computing in the next five years will break the algorithm. They'll bust them all anyway. Now you're really, really screwed, which I don't know if that's true or not. But like, I'm like, you know, earning 5 % interest in a nice safe bond is not such a bad place to be. I hear you. And that's what investors are choosing. We have 0 % of clients calling here saying, I want Bitcoin. There was a moment. There was a moment. There was. There was a moment.

1:00:55But then it's, I literally, I can't remember the last time somebody's talked about Bitcoin with me. Well, I think that, once again, I think part of this is because Trump rug pulled all his supporters out of$4 billion.

1:01:08Ross Gerber:The rug was pulled by a lot of players. Well, everybody in that administration figured out that if they supported crypto, they could create these coins and soak their supporters. And that's exactly what happened. I mean, it's not like I lost money on a Trump coin. Who bought a Trump coin? Trump people. And you don't even get an actual coin. No, you don't get anything. You got to lose. You don't even have like something maybe one day. Trump's as rich as ever. You know, like, listen, I'm all for Trump supporters making direct donations to Donald Trump's wealth. I have, if that's what people want to do with their money and give it to Donald, I say you do that.

1:01:42You go ahead and do that. But that is not what I'm doing with my money. So that said, I think a lot of confidence was lost because people assumed the president was crypto friendly and the crypto people thought that he was crypto friendly. But really, he was just scamming them all. Right.

1:01:58Ross Gerber:Ross Gerber, always a pleasure talking with you about all sorts of subjects. I'm glad that you have the ability to change your minds. Who knows, maybe you and I will meet out at the Sphere and see Rush together one day. That would be amazing. I like the Sphere, and I'd love to go see Rush with you. That'd be great. When that comes out, you let me know. I will. All right, buddy. Talk to you soon. All right, thanks. Thanks. Thanks, Andrew. And that's going to wrap it up with Ross Gerber from Gerber Kawasaki, talking all things from tech to Bitcoin to what's going on in politics, also AI, what's happening with SpaceX, Tesla.

1:02:27Man, there was a lot of ground that we covered right there.

1:02:31Ross Gerber:So that was pretty awesome. I want to thank you for joining me this week, every week. Of course, you can go to listen to this directly by subscribing. And I'd appreciate it if you do. It's always good for us. You can go to Apple Podcasts, Spotify, Amazon, YouTube, iHeartRadio. The list goes on and on and on. Plus, all the podcast apps that are out there also have availability of not only the Disciplined Investor Podcast, but DH Unplugged. And actually, yeah, DHM Plugged is moving along right now. We're still working out the kinks, still trying to decide exactly what's happening. But some of the formatting that we're doing and changing, I think are pretty cool.

1:03:11Ross Gerber:So I hope that you are going to be able to listen to that and spend some time with that. Until next week, I bid you adieu. I think Tom Nelson from Franklin Templeton, and we're going to be talking about a lot of things. I have so many questions about how to actually create a portfolio based on asset allocation and diversification. Because we talk about that all the time, but we won't ever get down to it. So I think I'm going to put a slew of questions together to ask them that. And of course, if you want to go over to thedisciplinedinvestor.com, find out more about what we do for clients and how we can help you with your investments, with your estate plan, with your financial plan, all that's good stuff.

1:03:53Ross Gerber:Go over there right now. Click on a button. there's any button in the contact us area, and we'll make sure to get back to you. Talk directly to you. I will talk directly to you. I can promise you that. Thanks for joining me. I'll see you again real soon.

1:04:10Ross Gerber:This podcast is intended for informational purposes only and does not constitute personalized investment advice. Investing involves risk, including the possible loss of principle and past performance is not indicative of future results. The views and opinions expressed are those of the host and any guests and may not necessarily reflect those of Horowitz & Company, Inc., an investment advisor registered with the U.S. Securities and Exchange Commission. Registration with the SEC does not imply a certain level of training or skill. Advisory services are only offered to a client or prospective clients where Horowitz & Company is properly registered or is excluded from registration requirements.

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