市场更新：山寨币暴涨、经济遭重创、骗子继续行骗——接下来会怎样？

And so here I am, Jonah. I am about to raid the bank of the scammers. I am about to take everything from the scammers, and I'm going to put on my party hat. I'm going to wear my party hat as I take every last dollar from the people that scammed us. I'm going to wear this thing on stream, and I'm going to say, “Fuck you if you've scammed. Fuck you if you've stolen money. Fuck you if you've lied. Now we can talk about real shit.”

Bravo. That was a good rant, Avi. Great rant.

1. Avi Responds To The Allegations

Yeah, I want to be clear, Jonah: that wasn't a rant. It was a fucking promise. It's over for the scammers. Oh my God. Oh my God. Jonah, how are you doing?

Avi, that's actually all I have to say on what has happened in the last week. Let's ride. Let's break it down.

It has been a total absurdity over the last week, basically since Saturday. I've been battling tremendous allegations, and it's just been so fun. I'm not going to lie; it's been one of these things that really lights a fire under your ass. I've been in this industry now for 9 years as a professional and have managed a billion-dollar hedge fund. When I was at BlockTower, I set up the crypto arm of a $70 billion hedge fund called GoldenTree.

I've basically made it my goal in life to do crypto right, to do everything in a proper fashion. As part of that, I have basically sworn off trenching and memecoins and have told my audience over and over that memecoins are a dangerous place. I failed to heed my own advice in many ways, and I got involved with this asset called RuneScape Gold because I love RuneScape. For the first time in a long time, crypto felt quite fun.

I was part of a community that was just the best. People were pumping out memes like crazy, and everyone was having a great time because the price was going up. As we all know—

GP, the ticker is GP.

This is GP. The ticker is GP. As everybody knows, when the price goes up, it's very easy to be happy. But when the price goes down, that's when the sharks and the snakes come out.

One thing that I didn't know enough about was the distribution of this thing. It turns out that there were people out there who held a lot more of it than I thought and had hidden it in side wallets and whatnot. They tried to get me to promote their scams, like Cracker and all these other nonsense assets that drained liquidity out of GP. I nuked them. I nuked the scam assets, and I bought GP and made a lot of people very angry.

Then they sold all their GP and went on X.com and tried to tell people that I was this rugger, that I was destroying things, and that I had stolen money. Candidly, Jonah, I have no desire to steal $250,000 from people when my equities portfolio goes up and down a million dollars a day.

Yeah. It's just been quite a fun adventure to realize just how people are struggling out there. I have empathy. If people are fighting for scraps, then everything feels existential. You get people like Point Farm Cap coming out there and trying to pin things on me when, in reality, he was the scammer the whole time, as evidenced by the fact that he exited GP and I stayed in.

The chain doesn't lie, Jonah. That's the beauty of crypto: you can't actually scam and get away with it because everyone can see everything. I suggest taking a look at FOMO, taking a look at the chain, and taking a look at who bought and who sold. You'll come to your own conclusion there.

For a minute there, he had turned the tide against me. People who didn't know who I was, who didn't realize my reputation, who didn't realize that I've spent 9 years of my life dedicated to the space and have never even taken a paid tweet—I've been offered 6 figures sometimes to tweet about things—could think that I would rug this.

In fact, all it's made me do is double down, bigger and better than ever. I do not ever endorse buying memecoins, so I'm not even going to endorse that you buy GP. But if you want to ride, if you want to be part of a fun community, it is quite entertaining.

I'll show you one thing that I got, which is pretty fun. I don't know if you've ever played RuneScape, but one of the iconic items in RuneScape is the party hat.

Is it what's in your profile pic?

Yes, it's what's in my Twitter. It's that guy in my Twitter. It's called the Wise Old Man. His name is actually Dionysius, which you get to know when you do a few quests in RuneScape. He's a pretty compelling character.

It starts off with you being introduced to him while he's robbing a bank. He comes off as this very meek individual, and then it turns out that he was actually the one who broke into the bank of Draynor and stole a bunch of stuff, in the process getting a party hat.

And so here I am, Jonah. I am about to raid the bank of the scammers. I am about to take everything from the scammers, and I'm going to put on my party hat. I'm going to wear my fucking party hat as I take every last dollar from the people that scammed us and scammed you, the listener.

I'm going to wear this thing on stream, and I'm going to say, “Fuck you if you've scammed. Fuck you if you've stolen money. Fuck you if you've lied. You don't ever fucking look at me again. If you've ever done anything scammy in your life, I don't want to look at you. I don't want to hear from you. I don't want to smell you, because you probably smell like shit.

“You're done. It's over for all of you. I'm coming for you. I have your names. I have your addresses. The SEC has a case file. You're over. RuneScape for life. Now we can talk about real shit.”

Okay, first of all, bravo. That was a good rant, Avi. Great rant. I really like trench Avi. I love the Avi who just starts beef with people. You've been so professional up until this point, and now you're wearing a freaking 2-dimensional-looking video game hat. Although it is pretty cool. What's it made out of, like metal or cardboard? It looks really high-end, that thing.

Yeah, I want to be clear, Jonah: that wasn't a rant. It was a fucking promise. It's over for the scammers because I have spent so much time doing things the right way that nothing will ever piss me off more than people scamming and lying about it. If you scam, you own it.

I've dealt with scammers before in the past—real ones, people that actually know who I am. Jonah will know that when FTX went down, SBF called me personally to try to save him because I was at GoldenTree at the time. He was distressed and thought we were the perfect people to save him. I saw right through the bullshit, hung up the phone, and never talked to him again.

Right. Right. I saw it.

The difference with this world of memecoins is that these people are scamming for pennies. It's embarrassing. It's actually quite sad if you think about it.

To the people who pointed out, “Look, I didn't know what I was getting into,” I've always been a large-cap trader. I trade perps. I trade spot. I'm an investor. I didn't do my diligence when I got into this space. I didn't realize just how horrible it was and how many people are just out for themselves. It really is a total difference in ethos.

I think it has to do, in large part, Jonah, with post-COVID money. It just felt like something that you needed to grab and run away with, right? Because it's not real. It doesn't matter. It's all online. People think they can hide. People think they can scam. People think they can do this, and they can do that.

The reality is that if we as an industry want to move forward, we actually have to be loud about it. We can't let people come in, extract money, and then walk away and spend it on who knows what. We need to protect the people who come into this place. That's part of our job. If you have influence, if you have reach, do the right thing.

2. What Actually Counts As A Scam

Yeah, because you set an example for people with your actions. Let me ask, though—I've got to ask: is it a scam to sell a memecoin?

No.

Okay.

No, it's not a scam.

Not at all.

In fact, that's what trading is. You buy something, you sell it. You sell it to willing market participants at the market price.

Yeah, there you go. So that's totally fine. You can—

What was the scam that happened? Let's dig. Let's pick it apart. Here's the key.

This is the scam, Jonah. This is very important to understand. The scam is when you launch a coin, especially when you have social trading and public wallets. You launch a coin, you get involved with something, and you say, “This is my position.” But in reality, you have 5% in your public wallets and 20% somewhere else.

You say, “I'm never selling. I'm never selling. I'm never selling.” The price goes up, and you don't sell your public wallets; you sell from your private wallets. That's a scam. That's illegal. Not only that, if you do that and try to blame it on somebody else who's actually trying to do the right thing, you know what you're doing more than anything else? You're muddying the waters.

If you overwhelm people and just spread accusations, nobody will trust anything. Trust is the most important thing in the world. You cannot break trust. If people cannot believe what they see, that's a terrible society.

That has actually led to the degradation of our society as a whole. When you look at social media, when you look at all of the propaganda that gets pushed out about different wars—we won't get into it—the whole premise is that you push out so much shit that people can't verify it, that they get overwhelmed and stop even looking for the truth because they assume that they can't find it. They assume that everyone is out there to scam them.

3. Twitter Beef, Posers, And Getting Back To Builders

Which is maybe a good way to be, but it doesn't have to be that way. If we can build a society where people can put trust in others, and projects that are launched and companies that are built are built on the premise of actually trying to do something good, fun, or useful, that's so much better.

That's why the SEC exists. It's why the CFTC exists. That's why we have regulatory bodies, because we have to dissuade people from filling our markets with crap. We have to dissuade people from acting poorly. Very important. That's why I care about this stuff.

No, I agree.

GP for life, man.

Crypto for life.

What's the hat made out of? What's the hat made out of? What material? Point Farm? Anyway, I'm done. Anyone who knows me knows that I've never gotten publicly angry at anyone, ever. It's just not something that I've done. I'm a pretty calm person. I'm pretty chill. I'm very reasonable, for the most part.

Jonah, you've known me for half a decade now. Have I ever gotten angry?

Not really. No. Maybe I've provoked you and you've gotten upset at me for saying something unfair to you, but that's about it, right? I've walked it back, and then you calmed down pretty quickly.

Honestly, I kind of like Twitter beef. I think conflict is healthy. I think it exposes problems and leads to better outcomes for everybody who's willing to have an honest approach. That's sort of why you and I talk in the first place, right? There's a tacit understanding among traders that you're going to debate your ideas. If there's a vicious disagreement about something, it can often lead to a reevaluation that results in more profit, right?

I remember getting into screaming arguments with people on trading floors about how they could even think something was a good idea. They'd defend it, and sometimes I was right. Sometimes I would realize I was wrong, and when I realized I was wrong, I would adapt my strategy.

Now, what you're doing with this scammer guy who shall go unnamed—I don't even know who he is or why he's—

His name is Point Farm Cap. The other one is named Ryan Trost. Remember those names if you ever see them. Okay, I'm done. I'm done. I'm done being angry now.

Point Farm Cap is a stupid name.

It literally has “farm” in the name.

And Ryan Trost—that's also a stupid name.

He's fully doxxed, too.

Why would you?

Imagine scamming when you're fully doxxed. It's totally insane.

Ryan Trost is just a terrible name. Anyway, if they're earnestly trying to scam people by pretending to promote something and then quietly dumping, shame on them. And if they're just having an open debate with you about the ethics of memecoins, the whole space may benefit as a result.

My takeaway from all of this is just: don't trade memecoins. They seem like a snake pit, an illegal chicken fight, and the personalities involved are unsavory. Normally, we like to rise above that world, but it seems like there's enough going on in there that it's fun to get involved.

Honestly, to me it seems like a distraction. The opportunity cost of your time is high. No matter what your net worth is, you could be making a lot relative to that net worth with your focus and your attention. I think the big, unfactored externality of memecoin trading is the opportunity cost that it extracts from you.

All the time that you spend arguing with Point Farm Cap on Twitter is time you could spend building a systematic strategy or whatever. I'm not accusing you of anything, Avi. I know you're already really successful and well off. I'm just thinking more from the perspective of the listener.

These debates are interesting. During my era, Jerry Springer was interesting, or maybe during your era, Avi, certain reality TV shows or programs were interesting just to watch people squabble and fight with each other. But it's not sustainable or profitable over the long run.

That said, it is this era's reality TV show. It's like online gambling theater, and there are a lot of posers on X. I've gotten into a ton of them. I mean, look, the big ones—the 2 biggest people who I think have good intentions but just kind of get under my skin are David Hoffman from the Bankless podcast and that guy 6529.

Both of them, I think, are in the same vein as this Point Farm Cap guy, right? There's a grand vision. With the Bankless guys, it's, “We're building a new financial system together.” It's like, no, we aren't, and neither are you. You're a couple of dudes—talking heads trying to earn a living.

And then with the 6529 guy, it was the whole “NFTs are going to become reality” thing, and we're all just going to live in some 2-dimensional Snow Crash shitscape that he built, which looks worse than Wolfenstein 3D or Doom. That also seemed a little far-fetched to me, but the fact that they're out there promoting it so hard is a grander, more elaborate version of what Mr. Point Farm Dingleberry does with this 1 particular memecoin ecosystem.

It's all just a shill. My thoughts are that it's probably best to sidestep all of these people and listen to podcasts instead of following stuff on X for investment advice. Podcast form is easier to tease out. I agree with you—the weirdos, you know.

Look, I went nuclear on Twitter for the first time in my life because I've never had anyone come at my reputation that way. That is extremely important to me. My actions and my reputation are the most important things that I have because they are a reflection of who I am as a human. When you come at me for that, you're basically saying, “You are a bad person,” and I will not stand for that.

So every minute that I spend arguing with this guy and bullying him off Twitter is a good minute to me, but only for a period of time. After the stream, I got my anger out. I actually just don't even give a shit anymore.

The core thing that we need to remember here is that finance is full of sharks, especially in areas where it's completely zero-sum. If you look at crypto as a whole, there are so many projects that are building in a positive-sum fashion, actually doing things that are going to further the financial system. They're building companies that are going to make real money. That is the name of the game today.

We strayed a little bit from this with the talk of memecoins, but to get back to the core of it—and what we've been saying for the last 2 years—it's time to refocus our efforts as an industry on the things that matter. What matters is good product, good revenues, good team.

That's why we like things like—I interviewed Brian Pellegrino last week from ZRO, and afterward I got long ZRO. I shorted ETH to isolate the alpha. I got long on Pear Protocol because I like it. But I basically thought to myself, look, ZRO is actually building something that the financial system might use. That's positive-sum if we reduce costs for people at the end of the day. This is where we need to refocus our efforts.

I'm so excited by what's happening in the markets right now across the board. Whether it's in equities, you're seeing them shrug off the war quite well, I think. You're seeing crypto show tremendous strength and real integration.

You had the Robinhood Summit just yesterday and the day before, where Vlad came out and spent a lot of time on crypto, announcing the introduction of perpetuals via Bitstamp, which was kind of a weird choice. I never thought of Bitstamp as a real exchange, but sure.

I bought some Bitcoin on there back in 2012. It was really crappy, but it worked, dude.

Focus on the builders. Focus on the Vlads of the world. Every time you look at Twitter, your algorithm should be: “Am I looking at a Vlad, or am I looking at a Point Farm Cap? Where is this person on that spectrum?” Just optimize for the Vlads of the world—the people who are building.

4. Iran Is Cornered: The Strait Of Hormuz Trade

You mentioned oil. I can't help myself. I just have to jump in. Javier Blas—fantastic, the best reporter in the entire commodities space and the author of one of my favorite books called World for Sale about the commodities trading industry.

He wrote that book. That's a book that you recommended to me, and I encourage everybody to go read it.

Everybody should read that. Totally fascinating.

Every aspiring trader should read that book. He put out a tweet 8 hours ago that is the single best take on the geopolitical situation in the world today. He wrote a column. Let's walk through it.

But his tweet is: “If you ask me who's prevailing in the battle over the Strait of Hormuz, it's clear President Trump has the advantage. The problem is that the oil market thinks Trump has been so successful that Iran would have no other option but to escalate militarily.”

That's his tweet, and his column is about that. So he's basically saying Iran is screwed. They wrote an open letter to the American people saying, “Hey guys, just so you know, death to America.” What we meant by that is, “We don't like your regime.”

It would be better if you guys were faithful worshippers of Allah, his prophet Muhammad, and the Quran. This is me paraphrasing the letter. That’s basically it: It talks a lot about the Quran, about Islam, and about how “death to America” doesn’t mean death to the American people. It means, “Hey guys, we recommend that you replace your capitalist democracy with an Islamic dictatorship, a theocracy. That’s what we mean by death to America—not the people of America. Awesome. We love you. XOXO.” That’s what Iran wrote to America.

To me, it’s the last dying gasp of an empire that’s about to get absolutely deep donkeyed by this blockade. Their inflation is out of control. They literally can’t buy or sell anything. They’re screwed. Their commerce routes have gone from deep-water ports and, let’s call it, an 11- to 12-figure oil industry to camels with stuff strapped to their backs walking across Pakistan to facilitate exports and imports. This is not an economy that’s going to last very long.

Basically, Javier Blas writes, “Who’s prevailing? It’s Trump. Why is oil trading at $100?” Well, it’s not trading at $100 anymore. But why did it briefly trade above $100? Because the market thinks that Trump has been so successful and that Iran is such a cornered animal that it has no other option but to escalate militarily.

What Javier Blas left out—and what I firmly believe, and I think is obvious to anybody with a few brain cells firing—is that Iran cannot escalate militarily. They’re trying as hard as they can. They literally have nothing left. To me, this is one of the most giga-bullish things out there in the market right now.

The Strait of Hormuz used to be a strategic choke point. It rapidly is becoming less of one. Prewar, 20 million-plus barrels per day of oil were transiting the strait. Then it went down below 10, then it went up to 11, and now it’s at 13. I think we’re at 14 now. This is crazy. You’re basically seeing a rewriting of history in the Middle East and the Strait of Hormuz losing its relevance in real time.

To me, just to wrap up this thought, this is crazy, crazy bullish. I do not see how the world does not benefit from this as things de-escalate from here, which they really can’t escalate, right? They can only de-escalate.

But why do you say they can’t escalate? I mean, Iran can still send drones. They can still attack oil fields. It costs, like, $50,000 for a drone. Why do you think they can’t escalate?

They’re sending everything they can right now. Right now, they are escalating. They’re trying to maximize leverage to get sanctions relief. They’re giving it 110%. There’s nothing more they can do.

But the military installations in the Arabian Gulf have basically adapted and are now defending commerce, which is something I thought would have happened a long time ago. I was wrong, but it’s finally happening. They finally figured out how to whack those drones. I don’t know what cool, unreal tech they’re using, but it’s working.

5. Macro Is Astrology For Men

Every single time we’ve talked about the war and people have tried to predict its impact on the market, the answer has been, “It doesn’t matter. Markets are going up.” And this is kind of true when you talk about macro in general. Look, I love listening to macro talk. It’s kind of like astrology for men. It’s just fun.

It’s like when you go to a psychic on the side of the street next to Washington Square Park and sit down with them, and they take your palm and say, “You’re going to have 3 kids, you’re going to marry the love of your life, and then you’re going to have 7 dogs.” It’s actually just completely false, but it’s still kind of fun to listen to. That’s how I view macro talk as it relates to trading.

As in, what I just said is astrology for men: the idea that we can predict, based on geopolitics, rates, or anything, the trajectory of certain assets over a long time period. Most of the time—the vast majority of the time—it doesn’t really work. The only times that it works are when you get these massive shifts in the way that something has been for 10, 15, or 20 years.

So when you look at 2022, when the Fed raises rates for the first time because we get true inflation for the first time in 20 years, that is a massive shift and maybe should be paid attention to. The Iran war is not a massive shift. Basically, the economy always finds a way.

All the doomers out there who were telling us that we were going to get into a long, protracted war that was going to nuke the markets, and that oil was going to go to $150 or $200 and stay there for a long period of time—it can sound smart, but the reality is—

You can’t fight the trends.

I disagree. The trends are what matter, in my personal opinion. So I don’t think macro is astrology for men. I debate that. Personally, I am a macro trader. That is my career. I think that macro is often a game of just common sense.

You’re guessing. It’s not a rigorous, systematic trade. I’m also a systematic trader. Macro trading is very different from systematic trading. I’ll give you that it is far less rigorous. But if you are investing over a long time frame, macro trading becomes a game of who has the most common sense and whether they can outlast the short-term technical worries.

To me, if you just look at the strategic imbalance of military power in the Middle East, asymmetric as drone warfare might be, common sense would suggest: The Ukrainians have figured out how to use drones effectively. Are the Iranians going to be able to use drones as effectively against the United States and other G20 economies that want oil to come through the straits as the Ukrainians have been against Russian infantry? Common sense, in my opinion, says no.

Iran will not be able to do that. These little Chinese DJI drones that Ukraine uses to take out tanks do not take out ships. Furthermore, you need bigger drones to do that. You can read military blogs about this and come to the conclusion that a massive armada in the Strait of Hormuz will ultimately be able to protect maritime commerce. That, to me, seems rational.

It’s not obvious. It’s not guaranteed. But if you’d listened to me ranting about this months ago, you probably wouldn’t have panic-sold all your equities and crypto like some people did. I was right. And similarly, in 2016, 10 years ago, common sense would have suggested, “All right, shale has taken oil down to $27. The market’s not pricing an OPEC cut. OPEC can’t read their minds. I don’t know what’s going on behind closed doors in the meeting room in Vienna, but they’re probably going to cut,” right?

This is sort of how macro trading works. Stan Druckenmiller wakes up one morning and says, “There’s not enough copper. I’ve done my work.” He’s not modeling supply. He’s not modeling demand with pinpoint accuracy. He’s basically just saying, “I think AI is a trend. There’s not enough copper. All right, that’s the bottleneck. I’m going to go invest in that.” And boy, was he right.

6. Megatrends, And Retail's Edge Over The Pros

It’s not astrology if there’s a coherent, common-sense thesis that should outlast the short-term panic. I would describe macro not as astrology for men, but as things that are obvious in the medium to long term and get clouded by FUD in the short term. Basically, relying on your long-term common sense is macro trading.

Yeah, I actually agree with that take, and I think you made a lot of extremely good points. My approach in the beginning, and why I said that, was to be a little bit inflammatory, but candidly, I see a lot of people talking about how they have to really watch the 10-year, they have to really watch the 30-year, and they have to pay attention to every single word that Waller says.

If Waller comes out a little bit hawkish, then Bitcoin’s going to $50,000. If he comes out dovish, then Bitcoin’s going to $120,000. If rates tick up and stay there, then AI buildout is going to go to zero. Maybe I’m just reacting to people being wrong about it, but I actually think that some of this stuff doesn’t even matter.

If you look at 5 years from now, whether inflation comes in hot or inflation comes in cold, whether rates are at 3% or rates are at 5.5%, I think biotech companies are going to be higher. I think copper is going to be needed for data-center buildouts. I think that Bitcoin is likely going to be higher because of increased demand. I think that tokenization of assets is going to continue.

I guess there are all these competing things that are said that try to cloud your short-term judgment on what I call—and what you call, and what other people call—megatrends, right? One of our listeners has been asking, “How do you define a megatrend?” And it’s kind of what you said. It’s where I view the world going and what I see happening.

If I have a model of the world in 5 years, we’re going to have tremendous AI capabilities. We are going to need to build out our military even more to compete with China. We are going to need to reshore chips because of our conflicts in Asia.

These are the mega trends—these are the things that I think the world is going to look like in 5 or 6 years. What downstream effects does that have? What are the things that I should buy that will benefit from that vision of the world? I'm not getting clouded by these short-term movements in the markets. I'm just trying to build good positions and good assets that I think will play out over that course.

My viewpoint is that we're very likely going to need to build nuclear facilities. In that context, people's attitudes toward nuclear are improving, and we're going to get past the regulatory hurdles. That's going to lead to uranium miners making more money. That's the concept of a mega trend, right? That is how I think you probably make the most money over a 5- to 6-year time period. You also have to be right.

I just think that spending time and energy looking at the 10-year every single day, unless you're actually a rates trader, is divorced from actually making money. It's just a way to pass time.

Let's delve into this. You're absolutely right. Short-term interest-rate trading based on a qualitative, amateur-hour take of what Waller says or what Bessent says is the opposite of macro trading. That's short-term discretionary interest-rate trading, which is possibly the worst idea ever for a newbie to any market.

As we talked about on previous episodes, the interest-rate pit at Goldman Sachs or Citadel is stacked with veteran geniuses. You do not want to go up against them. Macro trading is more like taking a big step back, applying common sense, and asking: What is a mega trend? What is not a mega trend? If it's not a mega trend, ignore it. If it is a mega trend, search for bottlenecks, asymmetries, or temporary mispricings caused by short-term panic that will ultimately yield to the long-term mega trend. That's the algorithm that should go through your head.

I couldn't agree more. Running around like a chicken with your head cut off, trying to read things that computers read in one-billionth the time it takes you to read them and analyze them a million times better than you can, is not where you want to play. Who was it? Peter Thiel said that competition is for losers. You don't have a lot of competition when you ride a mega trend, which is shocking. It should be that mega trends are the most competitive things ever because they're obvious, and there are often a lot of ways to express the mega trend.

Trade expression can be a little weird, but, funnily enough, there's an incoherent thing that I've noticed in my life and career: when there's a mega trend, it's shockingly hard for professionals to hop on and ride it. Maybe it's too volatile. Maybe crypto is too nascent.

This is where VCs, for all the shit they take on Twitter, are actually really good. The best ones are the best at it in the world. The best investors are really good at doing nothing for long periods of time. VCs just place their bets, and maybe it's because they can't sell or maybe it's because they wouldn't want to sell. They just ride these mega trends. They ride software. They ride telecommunications. Now they're riding AI better than anybody.

Anthropic and OpenAI, to some extent less so, are basically just VC wealth compounders. They're riding an obvious mega trend: holy shit, we made thinking machines. Sam Altman and Dario Amodei are offering us private shares in these thinking machines. That's a pretty cool invention—maybe the coolest one since the wheel or the air-conditioning unit, the window unit. I don't know. Let's just go ahead and ride that. People are going to need that. People are going to want to have a superintelligent oracle in their pocket at all times. Sure, I'll buy some shares of that for $100,000.

Why do mega trends even exist? I think it's because the idea is just bigger than the amount of capital that can be thrown at it at any given time. That's where the listeners of this podcast have an opportunity. Maybe we should brainstorm a few different mega trends that are going on that we haven't already talked about.

Before we go there, I do want to point out that this is where you have an edge as a retail trader. You don't have career risk. You don't have the same risk managers breathing down your neck. Really, at the end of the day, the reason that this opportunity exists is because of capital constraints.

The vast majority of capital directed into the markets is managed by professional money managers, and they have all sorts of structural, reality-based, and personal constraints that focus them in certain areas. That's why crypto was such an underallocated area for a while. Even if it was obvious to them, it wasn't obvious to everybody. If you allocated to Bitcoin before it became an institutionalized asset and it didn't work out, guess what? You're done. Your career is over. You as a retail trader don't have that risk.

Often, the best things to invest in and the best places to put your capital are where something seems obvious to you, but you can figure out why other people haven't already put their money there. When you look at copper, for example, copper is an extremely volatile asset. It goes up and down a lot. If you're a PM at Millennium, you can't have even 15% of your book in it, because if you draw down 5%, you're out. You're done. It's over for you.

As a retail trader, you can weather that volatility. Candidly, you need to, because things like the tariff scare and the Iran war create short-term dislocations in the market. Those are driven mostly by people trying to protect their careers and profits. Traders who aren't allocated for the long term sell out of the market and crash prices. Then they probably get back in later. You, as a retail trader, can weather that volatility and actually take advantage of it.

If you can build a skill set in identifying these mega trends, you have an advantage over professional traders in many ways. I highly encourage you to always think in terms of how good a trade idea is. It's much better if you can point to reasons why people are constrained and unable to put capital into it. That's a really important part of this.

You see it more recently with Leopold, right? Leopold blew up situational awareness. He's back in the market, but he's never going to be able to allocate as much capital as he had before to the assets that will be higher in 5 years, because they're too volatile and can go down too much. You can weather that. If you draw down 50% but have a strong 5-year thesis on something, buy more. You probably have a job and income coming in.

It's also very different for people whose entire life is trading and investing. If you don't have a job or income coming in, you're going to be a lot more emotional about trading. It's going to be much harder for you because your entire livelihood depends on it, so you're going to want to protect profits. This is the discrepancy we see between retail and professional traders: you do have that advantage, and you should press it. You should use it.

Yeah, totally. I think the best way to identify mega trends is to pay attention to what you're drawn to. While you were talking, I was quietly thinking to myself, What mega trends would I want to ride now? I've got a few that I don't disclose on the podcast, but of the ones that I have discussed, copper is kind of my favorite mega trend to ride.

Druck is my favorite trader. Other than you, of course—you're my number one. Druck's my number two. I'm nowhere nearly as successful as Druck. What a guy. But you're the man. Anyway, Druck—I don't know. Maybe he's not cool. What if he's not cool? Then he can't be my number one.

Copper feels pretty safe to ride for a long time. But how do you identify another mega trend? Usually, when you see a bunch of chickens with their heads cut off running around and panicking about something, that's a good time. That's your alarm clock. It's like, "Something's going on. Let me wake up from my routine and look at this. Look at what the freak-out is about." Then see whether there's a dip to be bought along the grander scheme of a mega trend.

That is how I discovered Israeli real estate, which is another niche one that I've talked about on the podcast. That market is bonkers. It literally outperforms the S&P, and there are all sorts of tax efficiencies. When they had a bunch of wars in the Middle East, everybody was like, "This country is going to zero." The Tel Aviv Stock Exchange was the same thing. Actually, no. This is a temporary dip in a ridiculous mega trend. Let me just hop on that.

I don't really know what the squabble is about today. I think the biggest squabble is probably, "Oh my God, what about Iran? What if the Strait of Hormuz sends oil to $300?" To me, that's just a contrarian indicator that we should all feel really comfortable in risk assets right now.

7. Why Deflation Is Bullish

Because there's about to be a ton of deflation, and deflation is great for risk assets.

100%. I actually think that it's very possible that the curve ends up inverted for an extended period of time. If we do—I mean, look, if we do get deflation, if we do have technology that really enables us to get there, which I think is the reason that we would get deflation more than anything else, then it kind of makes sense, obviously, that you're going to have the 10-year and the 30-year maybe trade below the 2-year, trade below the 10-year. You're actually kind of seeing that the curve is coming in.

Despite the fact that rates are going up, short-term rates are rising much faster than long-term rates. That is a trend that I think is going to continue for the next 5 years. If you want to take that trade, maybe that's an interesting trade to you.

The best way I think you need to express it, though, is by just being in tech—just being in the Qs. That's going to be your highest bang for buck, being in your bitcoins of the world.

That is the ultimate megatrend, isn't it? The Qs. What a run. I mean, are we?

I don't even think we're late on that. I think technology is just transforming the world at an exponential rate of progress that's kind of incomprehensible to people.

Just understanding exponential progress or exponential compounding—it's not congruent with the way the human mind works, the way our neurons fire. When you look at society and how little tech mattered for the past millennia, and now—even millennials like me—technology didn't really matter that much for the first 15 years of our lives. Things didn't change that drastically.

The internet was kind of an LOL when I was a kid: “Oh, cool. You can go visit a website that says that aliens built the pyramids on GeoCities and learn about that. Whoa, cool.” The Encyclopedia Britannica was still a better reference point up until basically the middle of high school for me.

So technology is hard to comprehend for people like me. Then suddenly, now, boom—25 years later, AI is basically better than most people at most things. Not just calculating, like multiplying large numbers by each other, which computers have been better than humans at for a long time, but literally just thinking.

8. Meat Proxies: Doing What AI Can't

What's interesting—AI, just on that note, one thing I've noticed is: are you familiar with the term “meat proxy”?

No, what is that?

A meat proxy is a human being that acts as a proxy for AI—a human being that literally just copies the output of AI and pastes it to other people.

What? There's a lot of that going on, man. I notice it in business every day. I'll get emails from people that were just clearly written by AI, like, “Hey, respond to Jonah,” which is fine if it's a customer service complaint or some rote busywork bullshit, but I'm talking about real negotiations and haggling, things with dollars attached and things that matter.

People will just meat-proxy whatever Claude told them or whatever OpenAI told them.

I love that term.

They just paste it to me. And to me, what I'm realizing more and more is that, as an investor, as a businessperson, or just as a person, your job is to do things that AI cannot do. If all you're doing is just meat-proxying the output of AI to other people, those other people will eventually realize it and just ask AI themselves instead of you.

So there's definitely a dwindling role for people who don't use AI, and a very rapidly dwindling role for people who think of themselves as AI natives but are actually just meat proxies, applying no thought whatsoever to what they're reading and what they're basically doing—just doing what the AI tells them.

The ultimate people who will succeed in investing, in business, in academia, and in science are the people who add to it, basically stand on the shoulders of the giants of AI, and do more than the AI is telling them.

Shockingly, the best, most eloquent articulator of this AI revolution is none other than Ben Affleck—Batman, right? The guy literally said, “AI is the shittiest screenwriter of all time. It's just a tool to help you think of better ideas for scenes or better ideas for tweaking dialogue, but when you ask AI to write the movie for you, it produces something really uninteresting.”

And he's like, “A lot of companies now are just meat-proxying AI output and creating content with it.”

The reason why that's not working is because AI gravitates toward the mean. It literally predicts the center of the bell curve, the average next word that will come out. It is not bold. It is not creative. It's not going to take any risks.

So that is your job as an investor: use these tools to find megatrends. It is a megatrend, and you have to use it to find megatrends. But then you also have to be bold on top of it. You can't just meat-proxy: find a megatrend, make no mistakes, “Okay, I invest in that,” right? You have to add a little bit of—you have to have balls, or if you're a lady, you have to have whatever the equivalent of balls is.

Courage—we can use the word courage.

Yeah. I think, look, it is something that's extremely important for everybody to understand. This is also the worst that AI is ever going to be.

That's, I think, the part where I disagree with you: right now, we are experiencing the worst that AI will ever be, and in 2 years, in 3 years, it will get better. Which is why I think the thing that's going to be most valuable in the future is humans performing services for other humans, where it's better if the human does it because of an emotional connection, because of a physical connection, whatever it is.

So, for example, I've talked on previous podcasts—waiters are probably going to get paid a lot of money, people in service industries, because for a long time—at least for 100 years, until an entire generation grows up with robots—people are going to be more inclined to get service from other people. It just feels better. It is a better experience for everybody.

And so that area of the world, obviously, I think, is going to be better. I think media is one of those places, right? You would, right now at least, and probably for the next 10 years, much rather have people like me and you. I want to listen to people that have done their research, that have used AI, that have thought about it, that have thought about where the potential mistakes are, and can relay it in an articulate and interesting fashion to me.

Because, candidly, using AI is very boring, right? When I get a research report from AI, it's not engaging, and my eyes glaze over and I zone out sometimes. I come back to it 15 minutes later. But with you, Jonah, I listen to you. I'm locked in. When you're talking, it's engaging. And that's just by virtue of you being a human. I mean, if you were a robot, I probably wouldn't listen to you as much.

Hey, I have to say, maybe that'll change. Maybe that'll change in the future. But some humans suck at this, by the way. I'm an engaging human. Your eyes glaze over when you read research written by somebody who sucks at writing research or who doesn't have a real opinion. People have produced slop too. Anyway, sorry, go back to it.

No, but that's again, at the end of the day, opinions are very important as well. It's funny. There are a lot of people now, and I think visually seeing somebody talk to you is obviously more engaging than writing.

I actually think writing is going to go the way of the dinosaur because it's too easy to produce full slop now. You just ask ChatGPT to write an article. I mean, there are so many tweets that are now AI-generated. Sometimes you'll read something in the freaking Wall Street Journal and you'll catch that they used AI on it.

I'll give props to this one woman, this girl named Emma Camp, who produces these great videos for the Wall Street Journal where she explains very simple topics, like rent control—why is rent control bad? You could write an article on it, but nobody's going to read it, honestly, and people have written entire papers on this and nobody reads them. People watch a 1-minute video on rent control and it goes mega-viral because it's engaging.

And so you have to ask yourself, if you're investing in the future, and you're thinking of things that are outside of what AI is going to touch, where is value going to go? It's where people are important. It's why I think media is probably a good investment now.

Yeah, I think so too. Also, another megatrend that we haven't really spent a lot of time discussing on the podcast is sex robots—the Master 5000.

Just think about how successful that's going to be when you have humanoid companions that can think. And, man, it's going to be hard for institutions to ride that megatrend, huh?

Yeah, that is true. I mean, the internet got its start with porn. I don't see why AI would be any different.

And, you know, it's like the Jon Hamm meme from Mad Men, pitching something. It's like Optimus for sex, right?

I think—I haven't done any research there at all. Maybe for the next pod, what we should do is throw up a slideshow of all the different sex robots that we've researched. But, yeah, the model for that is going to be a real smash-hit product, I'd imagine. Maybe not in the blue coastal states, but perhaps in the heartland.

I don't know. And certainly overseas.

It's a way to really pacify people as well.

It's true.

You have your AI sex robot and you don't need anything else in life, huh? Who needs a yacht when you've got one of those?

It's the antidote to social media. You have a polarizing, cortisol-rising, infuriating technology out there. Why not bring something out that just releases the dopamine and lowers the temperature?

All jokes aside, though, the megatrends are everywhere. Institutions usually can't ride them. That is our edge, Avi, and that's the edge of everybody listening here. Sometimes a megatrend so big shows up that institutions can ride it and there's still not enough capital in the world to arbitrage it out, like copper.

So, yeah, hop on the train, everybody. That's how I feel about AI drug discovery as well. It's like people—

How do you play that? You just buy XBI, buy ARCG, and buy Eli Lilly. Allocate, like, 20% of your portfolio to it and watch it 5x over the next 5 years. That's my goal.

But dude, this is buy everything, right? A buddy of mine created this company called Valerie Health. Really interesting company. Basically, this is his second startup. It's AI for private practices for doctors: it reads the faxes, books appointments, and does whatever the 16 people sitting in the reception area of a hospital normally do. It's flying off the shelves. My buddy's company is doing really great. He's going to be super successful and probably exit for billions of dollars.

9. Done With Indices

But if you think about how this filters through to the average economy or average trader, how can you participate? You would just want to buy the stocks of some of the major healthcare providers, right? That's not a drug-discovery play. That's literally just an elimination of back-office inefficiency play that basically reduces spend on this sort of thing by somewhere between 20% and 80%. We don't know. But as COGS go down, profits go up.

To me, it all just comes back to buying the S&P, right? Pfizer will be better at discovering drugs. Some hospital megacorp will be better at making money servicing its patients by having less bloat and crap involved. I don't see an industry that this doesn't touch. That's kind of my point.

I don't love indices anymore. And the reason I don't love indices anymore is because if you look at the S&P or you look at Nasdaq, it's really the top companies that are sucking up all of the gains. The reason is because we are in an economy of winner-take-all right now. This has been a trend for an extremely long time. If you go back 100 years, every single town had its own bank. Every single town had its own general store. Every single town had its own company providing services.

As the world gets more globalized and as it's easier to scale and serve more people at a time, you get this drift toward consolidation. We are in an accelerationist phase when it comes to consolidation because of the internet and AI, because these massive companies have such large distribution networks that they can kill any startup so quickly. They can just launch new products and get hundreds of millions of people using them instantly.

Most products that are being developed now are better in a network, right? All of the new advances are better the more people are using them. Especially when you think about robots, for example, a lot of the issue with robots is training models, right? How do you get a general-purpose robot to be effective? Well, you need a tremendous amount of data. The more robots you produce and the more data you collect, the better your product becomes. That is kind of just true across the board now with all of the things that are pushing forward our economy.

I just think that means, at the end of the day, it's more important than ever to allocate to specific companies because you're going to have outsized returns relative to the index. Obviously, I don't advocate for your casual investor to go do that because you do need to actually pay attention. But I think all of the people listening to this podcast probably pay attention enough to just allocate to Google, Meta, and Apple. You probably know enough to allocate to specific sectors, like buy XBI or buy the copper ETF, and have that portfolio over the next 5 years so that you actually outperform the index.

Because when you buy the index today, you're just buying all these companies that are going to go the way of the dodo—the companies that are not going to be able to compete, especially if—

They fall out of the index. I don't know about that. Also, when you buy the index, you're buying the top companies. We literally just talked about the Qs. That's just—

But the giant megacorps are killing every company that's not in the Qs, right?

But look at the actual return distribution. The top 10 companies are doing the best. Just buy the top 10 companies.

Okay. So that's it: look at the top X% of the indices and just buy the basket. I wonder if there's an easy way to do that. That's actually a really smart idea. I haven't thought of that before.

Sorry. Do what?

Like, just say I want to, instead of buying the S&P 500, buy the S&P 40.

Yeah, I think that would do better. And, I mean, look, there's this—

Is there an easy way to do that? I want to do that right now. I don't want to realize a big capital gain, but for future inflows, honestly, that's smarter.

I will take a look at that for the next pod. Yeah, me too. Good idea, man.

Anyway,

You always learn something on one of these. Oh, before we break, Case, one of our listeners, wrote, “When you have a moment, Jonah, can you take 10 seconds to talk about the photo behind you?”

Yes, it's a collab between a very famous photographer called Edward Burtynsky—his work is in museums—and this AI artist called Alvin with a Turkish last name, who does AI art. They collabed, and basically Burtynsky took a bunch of photos of commodity installations, as you can see behind me: pipes, mining, all the sorts of things that you would expect to see to extract different types of raw materials from the earth. Then the AI artist sort of stitched them together in visually appealing ways.

The series is called HyperTopographics. You can go check it out. Hexton Gallery in New York represents the artists, and you can buy these things. They come with an NFT and a signed physical. I don't care about the NFT; I want the signed physical. I believe in enjoying physical art. This thing is massive, so it makes for a good Zoom background and it's a good conversation starter.

Thank you for that, Jonah. Now I might need to go get one of my own.

HyperTopographics is dope. You have to check them out. There are so many different color schemes and different types of commodities. Just Google HyperTopographics.

I will sign off. I'll sign off by saying I love you, Jonah. This is a great conversation, as always. This is fun. We're going to return. I'll be back to talk to you guys on Friday. Love you, bro. Great talking to you. Adios. Later. Nothing said on the ThousandX podcast is a recommendation to buy or sell any investments or products. This podcast is forformational purposes only and the views expressed by anyone on the show are solely their opinions, not financial advice or necessarily the views of 1KX media. Our hosts, guests, and the 1KX team may hold positions in the company's funds or projects discussed.