市场更新：Meta、Bitcoin、原油和经济都在狂飙。还能持续多久？

First of all, I want to start by saying that income inequality is a made-up problem. It’s not real. It’s not real because the passage of time and capitalism improve the quality of life of every person living in this capitalist country. The poorest of the poor today often live better than the richest of the rich 200 years ago.

This is a social problem, exacerbated by social media, where you can now see how the rich live. This causes feelings of envy. Jonah, how are you? Can you hear me? Nice to see you. It’s great to hear from you.

Okay, great. I started work. I’m here at my parents’ house. That’s why you see this beautiful carpet hanging behind me, rather than a regular background. Not only that, Jonah—sorry, Avi—I’m actually wearing one of my dad’s suits and his tie.

Does it suit you?

It fits. It fits. We’re actually the same size, which is great, so I didn’t have to have anything altered. He is absolutely, absolutely, absolutely obsessed with clothes. He probably has the most incredible suit collection I’ve ever seen.

For those of you who don’t know—I don’t know how you would know this—he used to work for the IMF. He’s been an economist for 30 years, and I think he’s had to go to work in a suit every day. One of the jokes you start the conversation with is, “Is it the Impossible Missions Force or the International Monetary Fund?”

The same organization Tom Cruise works for?

The power of Mission: Impossible. That is what he does, or what he used to do, for a living. He is still an economist. I guess you don’t like shopping like an economist, but it’s great. I have access to all of this.

Now, I will say that if he hadn’t spent all that money on these amazing suits, I might have had better vacations as a kid, because all I did as a kid was go to Florida in August, when it was cheap. But at least now I can reap the rewards and wear suits all the time, so you guys look really professional, Avi.

You’re definitely putting me on display. You’re from the branch of Judaism that hangs rugs on the walls and values proper appearance and nice clothes. I’m from the branch that just wears rags and doesn’t value appearance. We don’t haggle for carpets because they’re unnecessary. A jar of pickles is enough to last through the winter. Goat milk—that’s my team.

1. Diamonds Are Collapsing (And Might Become Chips)

Anyway, listen, Jonah, this is a great team. I’m not going to lie. I’m not going to judge people who like pickles. But I will say that we indulge in drugs from time to time. As long as we are not Jews who trade diamonds, we’re not Jews who trade diamonds, then we have a good time.

I don’t know if you’ve seen it, but diamond prices are literally dropping to zero. I recently tweeted about this.

It’s funny. I showed your tweet to my wife, and she said something like, “I would never, ever buy a lab-grown diamond.”

The whole point of diamonds, Jonah, is that they are precious. I just don’t understand this. This is such a fake trend, and only real diamonds are important to me. These lab-grown diamonds that are beating the price of diamonds are just an Instagram trend.

So, literally by chance, last night I had dinner with the CEO of the largest diamond lab in the world. This guy is a legend, and he’s now moving from manufacturing, which is just cutting diamonds, to B2B: making diamonds for jewelry and selling them to Indian jewelers.

Tell me what a silicon wafer is. It’s like a crystal that you make chips on, right? Tell me, please. Tell the audience about it. I’ll pretend I know what you’re talking about.

Essentially, a computer chip is built from a silicon wafer. The way a silicon wafer is constructed, and its purity, determine how advanced the chip that can be made from it is.

I could do a whole podcast about this, but I don’t want to waste everyone’s time on the minutiae of computer-chip manufacturing. Silicon is a great substrate for this because it conducts heat well. It has the correct chemical properties and the correct molecular properties.

But a better, more optimal substrate for making chips would be diamond, if diamond wafers could be produced at a low cost. That’s currently not possible, or is becoming possible with these new methods of growing diamonds in a lab.

Did you know that diamonds are the best conductors of heat of almost any material in the world?

Yes, I knew. I knew it. This comes from my background in materials science and chemical engineering.

That’s true. You would have learned about this in chemistry. Essentially, the molecular structure of diamonds is such that they are predominantly composed of carbon. There isn’t a lot of other junk in there that could prevent heat from passing through. So this is an ideal characteristic for chip manufacturing.

If only a diamond wafer could be made at relatively the same cost as a silicon wafer. Silicon is simply obtained from sand; it’s very cheap. Then you would have a quantum leap in chip production, and you wouldn’t need Elon to send data centers into space. You could just do all the heat conduction here on Earth, and it would be much more efficient.

This guy is actually transitioning his entire diamond jewelry company, and he produces lab-grown diamonds for $6 per carat. You can get a rough diamond the size of Kim Kardashian’s for about $100. Something like the Queen of England’s jewels would literally be about $1,000 worth of jewels.

Something that is, you know, the Hope Diamond—a unique find in the history of mankind—you can just produce. That’s why the price of diamonds is falling. But if he can successfully translate this into wafer production for TSMC and Intel, for the big fabs of the world, what a company that would be. We would make chips out of diamonds instead of silicon.

This is madness. The biggest problem with the diamond market is that historically it has been tightly controlled by De Beers. What you see in any tightly controlled market is that the moment the monopoly breaks down, prices completely fall on their own, because prices are completely artificial.

They create demand and limit supply, basically just to meet slightly less than the demand that exists, so they can keep prices at the right level. This is the main problem with monopolies in general: They can set the prices.

What you’re getting now with these lab-grown diamonds is a huge supply in the market, and people don’t really care about it. The average person doesn’t really care whether they are lab-grown or real.

Obviously, people like you, Jonah—you did a really good job. You married a woman who now has a fairly high standard of living, as well as high expectations of you. If you buy her a lab-grown diamond, she’ll be upset.

In reality, it’s a matter of principle. Most people just hold on to their money. They’re trying to save money on rent and groceries. When they are about to propose to their loved one, if she refuses because they’re offering a lab-grown diamond instead of a real one, then such a marriage is unlikely to last, because the wife is probably demanding too much.

My general opinion on lab-grown diamonds is that the demand for diamonds is driven almost exclusively by women who want beautiful engagement rings and want to show off compared with others.

This is the difference between the market for diamonds and other colored gemstones. People who buy emeralds, rubies, sapphires, Paraibas, tanzanites, and all other gemstones are people who actually value the stone itself. They value provenance. They buy for no other reason than to enjoy the piece of jewelry or the precious stone.

Even if you were to introduce tens of thousands or millions of lab-grown rubies or emeralds to the market, it would definitely affect the price, but not as much as it would affect diamonds. Diamonds are largely driven by necessity. They’re bought by people because they have to make a proposal.

If I were you and wanted to be special, different, unique, and really interesting, as opposed to just being the usual type, I would buy a colored gemstone. It’s much better. It will retain its value better. It will be a better conversation starter. It will just be better for you overall.

For example, try to convince your wife, if you can. Buy her a ring with a ruby or an emerald. Buy her a ruby engagement ring. Buy her an emerald engagement ring. Buy Paraiba. Paraiba is simply wonderful. It’s not on the same level as you on this matter. If you can convince your significant other to take one of them—and if not, then you can’t—you failed.

You failed on Twitter. You failed on Twitter. You tweeted, “Try telling your girlfriend to get a Paraiba or ruby for an engagement ring, or a sapphire or a cabochon or whatever they’re called—those special gemstones.”

I’m like, “Try it, try it.” By the way, you and I actually tried this on a real woman. I tagged my wife on Twitter, and she very sweetly replied that she would wear anything I gave her, because that’s true love. This is real, true love.

Avi, read between the lines. Let’s open the tweet.

Okay, we’ll open the tweet. We’re going there. You wrote, “Oh, wait.” I wrote, “Try telling that to your girlfriend.”

You wrote, in essence, “Stop buying your girlfriend diamonds. Start buying her rubies, tanzanites, emeralds, Paraibas, opals, and so on.”

Maybe this is a video introducing gemstones. I write, “Try telling that to your girlfriend.” You tag your girlfriend, and then she writes back that she’s one of those people who thinks it’s the thought that counts and will wear anything with your heart emoji.

I’m glad you turned the sound off so I could continue with this. Open the tweet itself. Share your screenshot. Come on, let’s look at this. Good. We go far here on the 1000x podcast.

So, here it is. I’m sharing my screenshot. Good. If I can increase this—yes. Good. “Try telling that to your girlfriend.”

Yes. For those of you listening, this is in response to my words that you should buy colored gemstones, not diamonds. Right here: “Stop buying your girlfriend diamonds. Start buying her rubies,” blah blah blah.

So I wrote, “Try telling that to your girlfriend.” You tag your girlfriend, and then she writes what I just read. She literally tells you, “I would wear anything. It’s the thought that counts.” But that doesn’t mean she wants it.

She tells you, “Buy me a diamond, Avi.” Seriously? You think she’s just saying that because she’s nice? She doesn’t say, “This is exactly what I wanted, Avi. Wow, thanks for reading my thoughts.” She says, “I would wear this because it’s the thought that counts.” It’s an important thought—that you bought me a bad gift.

Here’s what it means. Oh, my God. You know what? I’ll agree with you simply because you’ve been married for quite a while. I’ve never been married, and you have 3 children while I have none. So I just think, obviously, you get a diamond. You won’t get any colored gemstones here.

By the way, just as a congratulatory note, because I’m very proud of her, Olivia writes for the Free Press. She just published a great article about Temple Israel, the synagogue in Michigan that was attacked. She interviewed a lot of parishioners, mostly about their thoughts on Abdul El-Sayed, and it’s a great article. I highly recommend that everyone check it out.

She’s a phenomenal writer. I love the Free Press. I’m a big fan of Olivia. She does some truly incredible journalism.

I started reading her articles after you started dating. She is wonderful. Bari Weiss was apparently my college classmate. Maybe I should share her freshman-year Facebook page.

I don’t think she would appreciate it. I’ll do anything to get Bari Weiss’s attention. I’m a big fan. I’ve never actually met her, but since our last names are next to each other alphabetically, we’re in the same section of the physical freshman-year Facebook. I should have mentioned that somehow.

2. The Anatomy Of A Bad Commodity

But anyway, my point is where we’re going with this whole gemstone story. Let’s back off a little for the audience. The anatomy of diamonds is the anatomy of a bad product, isn’t it? It’s a market controlled and manipulated by one participant and then suddenly disrupted by technology.

This is not something that can be traded. This is not something that can be traded. Meanwhile, copper is an incredible commodity. Production is moving forward at full speed. This is the most widely distributed, competitive commodity in the history of the universe.

Everyone produces copper. There are tons of mining companies that mine copper, and yet they just can’t produce enough of it, right? When you’re looking for a good commodity to trade, it’s usually easier to trade anything on the long side than on the short side, simply because there are no borrow issues, weird mechanics, or squeezes.

When something goes up because a supplier is squeezing it, if you really understand the ins and outs of the market, you can ride that bubble and do it at the right time. But for those of us trying to trade commodities, we need to look at something driven by demand, not supply.

This little fake move up in diamonds during COVID is something you can’t trade. But this copper growth is just going to continue. Copper reached historic highs this week. I thanked myself last week for talking about it. It was a great decision.

I want to commend you for that. I think copper is just going to keep going up. We see that the economy is now falling apart. We released PMI, and basically what we see is continued investment in AI infrastructure. Copper is the lifeblood of that, and it was a great decision.

Copper, in my opinion, will continue to grow. In fact, if you look here, you can see the slight drop that’s demand-driven. The price of copper is down a little bit today—2.3%—but we’re probably on our way to $8 per pound of copper.

Look, it’s me. It was me. I have nothing more to say about this. I just wanted to say that if you’re going to look for something to trade on the long side, look for something that is expanding on the demand side. It’s always a strategy—not something that’s squeezed from the supply side, because supply almost always comes at some point.

This is one of those things that we talk about a lot on this podcast, but one of the best ways to make money in life is to bet on megatrends. Megatrends are actually the story of demand. It’s always a demand story.

When you’ve identified an area, a sector, or a stock that’s experiencing an explosive increase in demand, for macroeconomic or local reasons, whatever it is, you’re trying to predict the demand for the asset. This is our job.

When you think about supply reduction, it very, very, very rarely leads to long-term, sustainable results. There’s this wonderful, amazing meme that every time the United States has a problem with the supply of some rare-earth mineral, everyone starts to panic about it. Suddenly, out of nowhere, some farmer in Idaho finds the largest known deposit of this mineral known to mankind, and the price just keeps falling.

If we go back to 2008, when they said we had peak oil—I remember 2008. In 2008, when I was in high school, everyone was talking about the United States running out of oil. Then suddenly the shale boom happened, and the United States was producing endless amounts of oil, and oil prices fell back to earth.

3. Why Higher Rates Are Bullish For Bitcoin

Essentially, never bet on an asset with limited supply unless demand is increasing. You just need to bet on growing demand. With all of this, the demand for things like Meta, Intel, and Bitcoin is growing.

In the last podcast, we said that this is the beginning of a new megatrend for BTC, gold, and all these assets that are currently experiencing a bearish trend. Ten-year rates are rising, in fact. This is causing a sell-off in the Nasdaq today. You see 10-year yields rising above 5%. People are scared, and I think that just leads to an overall reduction in risk across the board.

But higher rates in this particular case, as we said before, are illogical and go against what you can learn from your CFA book. Higher rates indicate that the market is saying, “I don’t trust the Fed anymore.” I think the Treasury is going to intervene in the bond markets. They’ll continue to print money, and that is fiscally irresponsible.

That leads to higher Bitcoin prices, higher cryptocurrency prices, and higher gold prices. Whether this will lead to a rise in stock prices, I’m not entirely sure. But I also believe, as my position confirms, that things like Intel, SanDisk, and the AI business continue to thrive.

Why? You saw it last week. Meta finally announced its AI assistant, and downloads are going crazy. Hundreds of millions of people have downloaded this AI assistant and are literally using AI for its intended purpose for the first time.

A lot of people just use ChatGPT to answer questions. People use Meta AI to book flights. They use Meta AI to plan trips. They use Meta AI to get their money back. I saw a viral post from one of our podcast friends, a guy named Ejaz, who runs a great podcast called Limitless that you should check out.

He tweeted that his flight was delayed for 7 hours, asked Meta AI for a refund, and got $250 back in 2 minutes. It looks like AI is solving a lot of operational bottlenecks right now, and people will start integrating it into their daily lives. We’ll see usage grow rapidly.

While inflation will be very bad for the rest of the industry—you see how the banks are affected now, and you see that credit and the lending world are really struggling—I don’t think the demand for chips, the demand for data centers, or the hyperscalers are going to be hit by inflation as much. They’re not going to be affected by rates as much as you might think.

So I’m still trading Bitcoin regardless. Some people are tweeting now that they’re selling Bitcoin because of rates. I don’t sell Bitcoin because of rates. I’m not selling Intel because of rates. I don’t sell the Nasdaq because of rates. I remain long and strong, and I intend to stay in these assets until I see something fundamentally break in the market.

Right now, I only see strength, and I have no reason to worry.

Yes, I agree with you. I’m not worried either. As I’ve said many times, you’ll have to ride this wave until the end of the Trump administration. It’s obvious that prices in the markets will only start to move forward a little, so the situation will start to become quite dangerous around the beginning of 2027—that is, in early to mid-2027.

If this current, quasi-wave of third-world candidates continues to overwhelm the Democratic Party, and they seem to have a shot at the title, it will be bad for your wallets. Politics aside, you can believe in their policies all you want, but your assets won’t be profitable if they get their way, right?

Just look at the prices of New York real estate indices under Mamdani.

This is something like decent; at best, it would be stagnation. So this is not something you want to do from a cold, bottom-up approach to financial analysis. We are still a long way from that. The music simply won't stop anytime soon—at least not within a year, probably not within a year and a half.

I don't think the socialist trend of the DSA will actually win the national election. So I think the party can last another 6 years instead of 2. That's my personal hunch, but it's too early to worry.

You just can't stay away now. You have to be almost completely immersed.

Bitcoin surprises me as much as it does everyone else. As you said last week, it was also a pretty hot take. You said rates are going up, whatever, it's good for Bitcoin. Counterintuitive, definitely not what the cycles have shown in the past, but you were right.

This thing is just falling apart. I'm so glad our mutual friend talked me out of it, as if my desire was flying out of the bag.

That's great. It increased—what, by 20% or 30% from the lows, something like that?

Yes, Bitcoin is up 20% to 30% from the lows, but the real story is the rest of the market. We're finally seeing it. Take Solana, for example. LetsBonk.fun is showing huge volume. I think they made $8 million yesterday. They completely destroyed Pump.fun.

Basically, we're seeing assets actually start to move, and demand for cryptocurrency is really coming back on a large scale. This is a broad rally. You see how Zcash has grown 30x in the last year. It's complete madness, and such profitability from such a large, liquid asset as Zcash attracts new participants to the market. This is about the best you can get for cryptocurrency.

The thing I'm having trouble with Bitcoin is that I'm long Bitcoin. I like Bitcoin. It's wonderful. But, for example, my Intel trade significantly outperformed BTC. BTC is up 30%; Intel is up 45% to 50% from the lows. For me, it's actually an easier position because I think I can hold Intel for the next 3 to 5 years and probably get $5 more out of it.

I'm not entirely sure where Bitcoin is going. The beauty of Bitcoin is that it can be traded efficiently. I don't know how I can do that with Intel; I don't really know how to trade it. I know how to accumulate it when it's cheap and then hold it, basically betting that it will go up to $200, $250, or $300, and just wait for it.

As for Bitcoin, it's like when you trade for a long time around $60,000, and then a bunch of bad news appears that doesn't lead to a drop. You can buy a bunch of Bitcoin and get a good deal on it. But in the long term, some of these other assets, in my opinion, perform better.

This is why people are so invested in Zcash. People are talking about crazy targets for Zcash. They're talking about $20,000. They're talking about $30,000.

Will that pull Bitcoin? I'm a little more reserved now, let's say. What is Zcash really capable of?

I think it's capable of reaching, maybe, $5,000. I think Bitcoin whales blessed Zcash, and a crypto narrative formed around it. Right now, it's really the only asset besides Bitcoin that has a monetary premium.

I think people will keep it. I think people will feel very comfortable holding it because it has a real fundamental thesis. It's truly the only private cryptocurrency you can access, because you cannot access Monero through regulated means. You can buy Zcash on Robinhood. So there's a great story here.

Obviously, this is very volatile. I don't recommend using leverage when trading Zcash, but I think it's one of the reasons why the crypto market is thriving. You need people. Once someone makes a ton of money in the market and shows their profits and losses, and you see that you can do it on a large, liquid scale, that's what attracts people.

Zcash is something that institutions can allocate funds to. It's something that pension funds can allocate funds to. This is really driving a new narrative for cryptocurrency, and I'm quite constructive about it, both in the short term and in the long term.

4. AI Will Save Crypto

I think that if you're in cryptocurrency and haven't already allocated funds to Zcash, it's probably time to think about taking some of your Bitcoin stack and allocating it to Zcash, because I think it will continue to outperform BTC. I think a new narrative has emerged in cryptocurrency.

So I agree with you. I don't know how to trade Zcash. I'm afraid to touch it. I don't like buying assets that are getting hot. I've been burned too many times. You're probably right; it's just not for me personally.

However, there's a new narrative brewing in cryptocurrency that I think is partly driving the growth. This isn't that new if you've been following cryptocurrency news on X every day like we have, but it's now making its way into the wider media. For example, The Wall Street Journal and The New York Times have been talking about this for the last week or week and a half.

Agents have become understandable to ordinary people. The AI agent was something incomprehensible to the average person on the street until now. Now it's pretty clear: with Manus or Grok bots, you can literally just ask an app on your phone to do something for you, and it will do it. So the concept of an agent is no longer so ephemeral and difficult to understand.

Agents, like cryptocurrency, are a kind of clunky payment technology for people, as we all learned the hard way during the last cycle. Cryptocurrency is a great mechanism for agent payments. It won't be like Bank of America being your agent's bank account, but it will definitely do the trick.

Your agent can have a Bitcoin wallet and move BTC, or have a wallet on Base and move USDC or Tether. So, to be honest, it's kind of funny, but AI agents will save cryptocurrency.

I think the biggest wealth-creation process, essentially on-chain, will not be the result of JPMorgan and BlackRock deciding to get together, sing “Kumbaya,” create ETFs, and distribute them to wealthy investors, which was kind of the basis of the previous few cycles.

Now it will be more like this: these little robots that live in the cloud will partially pay each other for goods and services with crypto tokens, stablecoins, and so on. I think this is a huge step.

5. The Most Bullish Chart We've Ever Seen

Going back to the broader markets, I think about why I'm so optimistic about everything, even if my theory about politics and the DSA is off. Brad, can you show this diagram on the screen? I've talked a little bit about artificial intelligence and shale in a few previous podcasts.

Here's a great chart. This is essentially the cost of technology, which declines as the technology improves from its starting point. Computing spans 1940 to 2001. Electricity didn't actually get much cheaper from 1892 to 1973.

The price of AI is declining faster than that of any advanced technology in the history of the world. When the price of production drops to zero, the S&P 500 increases significantly.

Why is that? Essentially, this will either replace or augment the workforce, depending on who you argue with. I believe this will augment the workforce, and it will go directly into GDP.

To me, it's similar to what you were talking about earlier on the podcast about peak oil and shale gas providing economic growth, even as a once-scarce commodity becomes surplus—or perhaps because of it. This is literally happening in real time. If you don't invest, if you're not on this train, you're missing out.

I think this is madness. We've never seen such an important technology, and we've never seen any cutting-edge technology, whether important or less important, appreciate so quickly. To me, this is the most optimistic graph I have ever seen.

This is bullish for cryptocurrency. This is bullish for the stock market. Not bullish for bonds, of course, but essentially bullish for risk assets. What do you think about this chart? What do you think about it? This is complete madness.

That's the first instinct, right? But it just shows you that one obvious bottleneck is that a lot of companies we saw a few months ago were actually limiting their use of and spending on AI because it was becoming too expensive for the performance they were seeing.

As AI continues to become cheaper and easier to use, we'll actually see an explosion in demand, because AI has not penetrated even the largest companies to the full extent expected. You'll see an explosion of use cases. You're going to see an explosion of integration, and that's the same as a highway expansion.

Traffic engineers have known about this problem for a long time. Adding 2 extra lanes to a highway will not improve traffic because it will actually only increase demand. People who used to ride the bus will now drive. You just end up where you were before.

I think that's what will happen with demand for AI. That's obviously very optimistic for the markets. Now, I think what will eventually happen is that, if we talk about profitability, artificial intelligence will be deflationary, and profitability will go down because of that.

What's happening in the bond market now is a temporary reaction to fiscal irresponsibility, but in the long run, bond prices will go up again. The flip side is that for a period of time, as long as these companies are winning, I think the stock markets will perform exceptionally well.

And so this will actually require a higher rate of return on bonds. For example, why hold a bond with a yield of 5% if the stock market yield increases from 11% per annum to 16% per annum? That just doesn't make sense anymore. And that's why so many more people are investing in stocks now than ever before, because things have been going so well since 2021. The average expected rate of return has increased significantly and will continue to increase.

So I think this period is simply a devaluation of the U.S. dollar. But it's the same thing, right? To avoid inflation, you can't buy TIPS; you're not going to get anywhere. You should buy stocks to avoid it, which I think means you can have high returns over a long period of time and still have a really good stock market. People don't really talk about this relationship: as stock yields rise, bond prices should fall. That's how it works, because people need to understand where to invest their money.

6. Real Estate Is Getting Torpedoed

And so I think a lot of people are panicking about this profitability situation for no reason, without understanding the whole dynamic of why this is happening in the first place. Isn't that right? What will be completely torpedoed as a result of this profitability is real estate investments. For example, apartment buildings—real estate—will be a terrible investment for the future unless you invest specifically in areas with a high concentration of wealth.

So ultimately, I'm referring to real estate in San Francisco, such as Pacific Heights, Aspen, Bel Air in Los Angeles, the Hollywood Hills, and Beverly Hills. They'll be fine, but if you're trying to invest in big real estate projects, my friend, a hotelier, built what was essentially the most popular hotel in America outside of New York City in 2019, 2020, and 2021. Now it is collapsing. He told me that it is absolutely impossible to build a luxury hotel in America for less than $2 million per room. At these prices, there simply isn't enough room for people.

7. Barbell America & The Vanishing Middle

However, there will be a lot of problematic hotel deals because a lot of hotels were built in the 2010s with the expectation that they would, after a few years of generating cash flow, refinance at 2%, because rates were assumed to stay low. Then rates went up, and now you can't refinance below 7%. So I think we're going to see a combination of this type of NIMBYism and interest rates, which is probably going to cause a bit of a problem with commercial and multifamily real estate. But beyond these beaten-down assets, man, the game is on. There is deflation in the literal sense in the number-one thing that makes a company more profitable—namely, artificial intelligence. Madness.

It's interesting that you mentioned hotels because there are all these offsetting dynamics happening in the markets, and it's hard to sort out what's going to be stronger and what's going to be weaker. Hotels are an example. As for the top half of the K, discretionary wealth continues to grow massively, so I think spending on travel and entertainment will skyrocket. You'll see high-end hotels likely increase their prices even more. I mean, you see it now.

I wanted to book a resort in Mexico for a few weeks. In fact, a resort that would have cost $700 a night 3 years ago is now selling for $1,200 a night. Then I looked at Mexico and thought, “Okay, maybe I should book somewhere in Canada. Maybe I should go across the street and see if I can get a nice cottage in Canada.” Literally every nice resort I've looked at—Fairmont Lake Louise, Emerald Lake—I've looked at practically every top resort you can find in Canada that's on a lake, because they look great. They are all completely sold out in October. This is incredible.

The demand is so great. And so you have to think that the economy is really splitting in half, right? You're going to have extremely high demand for high-end luxury items, and you're essentially having the middle market completely wiped out again. I think it's just a classic thing that happens in the United States: the middle class always loses out somehow, so people feel this enormous pressure.

So I think everyone is trading. That's why everyone is investing in memecoins. That's why people bet on leverage, because there's this huge desire to escape what is a dying middle and lower class and somehow make it to the upper half. But now we have almost 2 separate economies. When talking about hotels, for example, building a luxury hotel can be expensive, but if things continue the way they are, it could still be a good investment.

Yes, I mean, I think the market will have to reboot first. I think you're going to see a lot of hotel bankruptcies. In essence, the way markets collapse and then recover is a time-tested pattern, whether it was the corporate lending market in 2008 during the crisis or the real estate market during various crashes. Usually, the first thing that happens in an illiquid market is simply a halt in trading. It's crickets. This is what is happening in the hotel market right now.

It's as if the normal flow of deals just stopped. Then, eventually, after a certain period of time, there will be a kind of bottoming out. Someone will capitulate, and then another person who is having financial difficulties, next in line, will probably lose hope and sell their hotel at a price that they are not happy with. Then there will be a cascade because there are only a limited number of buyers. This obviously creates the fire sale that buyers are looking for.

Then the buyers enter. Then many transactions occur and liquidity accumulates again. And then the market—whether it's a hotel or the corporate bond market or something else—starts to recover. Then something like 2009 happens. You were probably still in diapers, in middle school, or something. But it looked like a general restoration of liquidity. So, for those who remember, it's a good feeling. This is a long, long wave that you can ride to where you can safely invest.

That's why I personally like to look for analogs to 2009 in my personal investments. I like to buy when things are going, like in crypto in 2022 after FTX, in December, when volumes basically dropped to 0, and then you had this sort of mourning in crypto where everything started trading again and the price increase was a bit gradual, but volumes and liquidity started to recover. I'm looking for something similar to 2009, when it's safe to participate. It's still very early. You may have missed the first inning, but it's still the second inning, right? There's still a lot of game ahead.

Now, moving on to your question about luxury spending, a K-shaped, kind of dual economy, I wouldn't say the middle class is going to collapse. I would say the middle class is just evaporating, right? What's going on? I don't know. I highly recommend everyone read this book called The Romanovs about Imperial Russia and the dynasty of emperors who lived there, the Romanov dynasty. You know, there are many analogies with the present.

It's a fantastic book that's hard to put down. I love historical books. It's 1,000 pages, but it felt like 200. There was a class of people who lived in luxury, while the majority of society lived like peasants, as the tsars were having these wild Bacchanalian feasts in their palaces in Moscow and St. Petersburg.

Of course, we are not like that in America, but it's not such a disproportion. It's not 1% versus 99%. I would say it's probably something like 20% versus 80%, which is still terrible and probably explains a lot of the political shifts on the left. But even people in the bottom quartile probably still live better than the Romanovs in terms of quality of life and general basic dental care.

However, Instagram shows what you don't have, and that's what makes it a little tricky. So, as a middle-class person, I think that what happens to the middle class in these kinds of events, these kinds of historical shifts, is that the people in the middle—the middle class—will be hollowed out. People either go up or down according to their place in the hierarchy, and you end up with the shape of America, which is not good, right? It shouldn't be like that.

And honestly, I'm worried about this. A lot of people are more worried about this than I am. On Twitter, they talk about avoiding the permanent underclass. Investing is definitely a way out of this. Gambling on memecoins is, if you're lucky. But I really think the best way to do it, as you said earlier in the podcast, is to identify trends, take advantage of them with some leverage, and take a risk on something that has a guaranteed rate with some leverage, rather than putting cash capital into things that can fluctuate a lot but are not guaranteed.

So, like copper, bottlenecks in AI, or the S&P 500 with some leverage, you're in full swing right now. I think this is probably the best way to invest your income and achieve better results.

What bothers me, although it seems a bit like long-term thinking, is the idea that there's no real safety net if you do this trading thing wrong. This is not our parents' generation, when people had pensions, when Social Security could literally help you get through retirement, and Medicare, and you could wrap yourself in the warm blanket of America that helps you from retirement to the grave. This is no longer there. I went to Lake Arrowhead with my family for Labor Day weekend.

This is a beautiful mountain lake near Los Angeles, about a 2-hour drive. We stayed at a 4-star resort. It was kind of silly. The carpets were the color of urine, but it was in a nice location right on the lake, and we got to spend the night there to have a normal family vacation in what would have been a simple resort 10 years ago.

We had to spend as much per night as the Amangiri or Post Ranch Inn in Big Sur—the 2 best hotels in the United States in 2019—charged. An orgy of luxury spending has arrived, bringing even these nice-but-not-nice resorts back to the level they were before. So people, quite legitimately, are losing a level of experience that is very important, especially for the younger generation. If you make a mistake, there is no backup plan.

8. Income Inequality Is A Fake Issue

I think that's why we see a lot of very angry, very dissatisfied participants. It's this K-shaped thing that's just unhealthy. I don't see how this could change anything, except maybe AI literally saves us. I don't know. Perhaps this creates more inequality. That's what I'm working on.

I would like to hear your opinion. For example, does AI create more of a K-shape that will eventually bring down markets in the form of socialism, or does AI even things out? This is such an important question.

First of all, I want to say that income inequality is a made-up problem. It's not real. The reason it's not real is because of what you just pointed out, Jonah. This is not realistic because the passage of time and capitalism improve the quality of life of every person living in this capitalist country. Everyone, including the poorest of the poor today, often lives better than the richest of the rich 200 years ago.

This is just the passage of time. This is the progress of technology. This is what innovation does for a country. This is what innovation does for the people. This is a social problem. It causes instability. The example is amplified by social media, where you can now see how the rich live. This creates feelings of envy. It makes you feel uncomfortable with your fate.

This is why, historically, societies have had things like the caste system. The caste system was a social technology that was supposed to help people feel good about their fate. If you were born into a certain position, you stayed in that position, and it was simply your destiny. It was God. This was your life, and it was completely locked.

In many ways, this is a very beautiful thing. I am not defending the caste system. I am explaining why it exists. In America, everyone thinks of themselves as a temporarily embarrassed millionaire. Everyone believes they can succeed, and for the most part, that's true. With enough perseverance and enough courage, you can succeed. You can do whatever you want. You can become a millionaire overnight by pressing the right buttons on the internet.

But it creates a deep feeling of discontent among the population. If you don't do it right, you see your neighbor doing something right. Maybe they'll get lucky. Maybe they're smart. But you get the feeling that the system is rigged. Is the system rigged? No. You're just not using it properly. That's the problem.

What I have to tell you is that most people are out of luck. Most people will have to work. But you just have to appreciate the fact that because the system is designed the way it is, you can move forward. This creates a sense of motivation. Most people who get rich—the vast majority of people who get rich—deserve it.

If you're not getting rich, maybe it's a skills problem. But that's okay, because there is a way out. There is a way out. That is to trust the American experiment, to trust the American economy, and to put your dollars to work in the Nasdaq and the S&P. You don't need to trade. Trading is something you can learn to do well, and it's something that can definitely make money, but it's not something everyone should do.

That's what worked for me and for Jonah—it really made his career—but the best thing you can do, and I repeat it over and over again, is invest in megatrends. Invest in what is impossible to argue with, and these are the trends the world will move with for the next 10 years.

To understand what these trends are, first of all, you can listen to this podcast, but secondly, you can also just pay attention. Anyone paying attention in 2010 knew that the internet would take over the world. This was obvious to anyone under the age of 30. You have to embrace new technologies. You have to accept new things.

You can't sit around and say we can't build data centers because it might destroy some people and poison some yellow-bellied finches. This doesn't make sense. You can't do this. Who cares about the yellow-bellied finch? We have people to take care of.

That's the basic premise of the 1000x podcast, right? For example, how will you achieve this? Pay attention. Here's what I have to say. I want to end with this particular main theme: people genuinely feel that the system is rigged.

People still think, “I don't have access to capital. I don't have the advantages that everyone else has.” Artificial intelligence fixes this significantly. Artificial intelligence equalizes opportunities for people who are willing to work.

But the vast majority of people are not ready to work. You are not willing to work hard. You are not willing to take risks. You are not ready to put yourself on display. Most people are not ready. This is normal. There is a lot in life for these people.

But this means that income inequality will obviously increase due to AI, because the people with the highest agency will use this to their advantage and suck out all the capital. Here's what will happen. Will it be you? Tell me. But probably not, because you'll probably give up. Don't give up. You will achieve your goal. This is my tirade.

Amen. I like it. Dude, what a powerful message. I have so many thoughts. I don't know. Do you need to go, or can I comment on this?

No, I shouldn't go. We can continue.

Okay. Wow. I mean, that's what a speech is. You made a few points there that I think are interesting. Let me give you a few quotes that came to mind.

Jensen Huang, CEO of NVIDIA, a brilliant business leader, said, “You won't lose your job to AI. You'll lose your job to someone who uses AI.” That's right. I'm almost fully immersed in the field of artificial intelligence now. I think I'm going to win my fantasy league this year because I created an agent that handles all these fantasy games for me.

I used to lose to people who watched NFL games, which I did in college, with these guys who are in the same league as me. I don't have any more time. These guys are now losing to a human using artificial intelligence. This happens at the societal level. You have to accept it.

The second quote I would like to mention is from Santiago R. Santos, a friend of the pod, a great guy, and a really smart dude. He tweeted something. He was essentially tweeting about FOMO—fear of missing out—and about counting other people's money.

Sorry, I just love that it was the craziest message I have ever received in this chat. “Avi, remember, many years ago you rented a space for school parties in Rockville.” Who are you? And how do you know that, man? The electronic man on YouTube, actually. What the—actually, how do you know that?

Were you one of those who promoted parties at the nightclub?

Yes, exactly. Sort of. Oh, my God. I mean, I did it. This is what I did. I just can't believe someone joined the stream and is talking about this, because there was a guy named Austin, I think, who's been doing this, too. Is this Austin, the electronics guy? Who are you? I will find you.

Sorry, that was a complete deviation from the topic. I was just really confused by the fact that anyone knew about my history of trying to do this. There was actually a whole industry. There were a bunch of people who were in huge demand for high school parties, right? There was this whole need for it, and underage people want to go to clubs, so we were throwing these parties at different places in Rockville and trying to get people involved. It was actually a lot of fun.

What the hell is Rockville?

The basic premise, Jonah, was that I was constantly trying to sleep with them, and it never worked. But that's exactly why I did it. I also made a little money here and there. Anyway, sorry, it was just absolutely—yes, it's a piece of my heart.

What is Rockville? Are you in Rockville now?

Yes. I live—I grew up in Washington, D.C. I grew up in a neighborhood called Adams Morgan. I went to high school at a place in Rockville called Charles E. Smith Jewish Day School. I went to Jewish day school, for those of you who don't know.

Hmm.

It was very off-topic. Jews love parties, so we threw parties for them.

Well, anyway, here's my opinion. Going back to what you were saying, that was beautiful. If you're a 16-year-old party promoter in Rockville, you're going to lose your gig to a 16-year-old party promoter in Rockville with artificial intelligence, right?

If you run a Grok bot and an agent, you will likely find clients and venues and negotiate better prices with your Grok bot than without it. So that's point number 1.

Item number 2: Santiago R. Santos, a friend of the pod, a great guy, and a really smart dude, tweeted something. He said he was essentially tweeting about FOMO—fear of missing out—and about counting other people's money. This is funny.

All my colleagues at Goldman Sachs and Vitol are constantly upset when someone else succeeds or exceeds their personal net worth. They are always counting other people's money.

Like this guy I know who made tens of millions of dollars early on at Uber when we were all in our 20s, making a lot less. Now he complains that he’s surrounded by hundreds of millionaires and billionaires in San Francisco because of artificial intelligence and the private equity boom. I say, “Dude, stop counting other people’s money.”

He’s just used to being the richest guy in the room, and now other prodigies are coming up to him and overtaking him. But he was never forced to do what we all did when he became extremely rich: rather than crying himself to sleep every night, he could have become a fan of the people who were succeeding.

Mark Zuckerberg is my age. I could have done some things right. I don’t have the talent he does, but I could convince myself that it could be me and then cry myself to sleep every night.

I think you do.

I don’t think so. I could cry myself to sleep every night for 20 years. Instead, I just became a fan of his and listened to his podcast.

So Santiago’s tweet is: “Don’t count other people’s money. Don’t FOMO over poor decisions because you see other people beating you to it. Appreciate their success and try to learn from them.”

For example, I’ve been pretty lucky in my career. I was in the right place at the right time, and I also made some good decisions. So now I have a good life in Los Angeles, thank God. I’m trying to be grateful for that instead of getting upset that there are richer people than me, which I guess sounds funny, but Los Angeles is the perfect place to embody that same K-shaped fear of missing out that you described in your epic speech 5 minutes ago.

I live in the hills. I literally look out the window, and one of the first things I see every morning is—let me share my screen. It’s called the Fractal House. Do you see this?

Yes, I see.

This is, in fact, the most beautiful piece of real estate in America. It’s on top of a hill that I’m not on. It’s 21,000 square feet—perfect. It’s real estate porn. This is the best real estate porn. This is the most beautiful house of all time.

From the top of the mountain, there’s a 360-degree panoramic view. This is an architectural masterpiece. This is effectively a Frank Lloyd Wright house of our time. I look at this, and the first thing that comes to mind is, “Wow, what an idiot I am. Look over there.”

It belongs to one of the co-founders of AQR. He’s a systematic trader. I could look out the window and think that literally every person in every house I see is much more successful than me. I thought I was doing well, and I know a lot of people who are just upset about things like that.

Instead, I think the right mentality is what we Jews think and talk a lot about on Yom Kippur: just be grateful for what we have. Be grateful before asking for anything.

Honestly, if I ever get a little bit of real estate envy, which is my weakness—I see places in Malibu or Beverly Hills where I’m like, “Damn, wouldn’t that be great?”—instead of letting it work on me, I’m just going to go on YouTube and watch one of this guy’s podcasts, see how he did it, become a better systematic trader, and start becoming a fan of the people who beat me. I certainly recommend it.

First of all, not because I’m some extremely successful person. I’m kind of in between successful people in their 40s today. But everywhere in the world, no matter who you are or what you do, there are always going to be a bunch of people who are above you and who are outperforming you in terms of their success compared to yours.

Speaking of Jensen, the way to do that is to learn from them and use artificial intelligence to overcome your shortcomings on the way to achieving what they have achieved. For Santiago, you just have to appreciate what they’ve done and try to learn from them. Appreciate them and maybe even be happy for these people, because it makes it much easier to embrace their content and be excited about achieving something similar to what they’ve achieved.

That’s exactly what came to my mind when you brought up this topic.

That’s great. Jonah, I want to talk a little bit about Judaism. This is important.

We just had Yom Kippur. We survived it. This is a day of repentance, but not repentance in the sense you might think. Yom Kippur is truly the foundation of Jewish tradition because it prepares us for the coming year.

You look back on everything you’ve done in the last year and take stock of what you did wrong—the people you have offended, the things you may not have achieved—and you say you’re sorry. You say, “I’m sorry I didn’t do the best I could,” because it’s very rare for a person to actually spend an entire year doing their best.

But the point of Yom Kippur is not to dwell on what you did wrong. The point is really to ask God for forgiveness and then look to the future. Look to next year. What can I improve? What can I do better?

Enter the year with clear eyes and a clear heart and say to yourself, “I can be greater. I can be better. I can do more for the world. I can do more for myself. I can do more for the people around me. I can do more for my family. I can do more for my children.” This is the essence of Yom Kippur.

That, I think, is the point of life in many ways: you can’t get bogged down in what you’ve missed. You may realize you missed something. You can learn from this, but you can’t let it affect you. You must forgive yourself, right? No one is more important than that.

Other people can forgive you, but really, you have to forgive yourself at the end of the day. You have to look forward and do better in the future. That’s part of looking at other people and thinking, “Wow, if I had just made different decisions, maybe I could be as rich as them. Maybe I could get to where they are.”

It doesn’t matter. What matters is where you are now and where you are headed in the future.

There’s a guy who commented on the stream: “Life is much more fulfilling if you focus on something other than creating wealth.” Well, that’s partly true. Work really gives you a sense of satisfaction. Work is something you are truly passionate about.

I think if you’re listening to this stream, you’re probably passionate about making money, investing, trading, or life, because sometimes we just talk about life on this stream. But it’s really about taking pride in your work. I take immense pride in the work we do, and I find it extremely fascinating and fun.

But he’s right. Not everything has to be about creating wealth. Not everything has to be about optimizing for the sake of the dollar. There’s a famous quote: “If you want to take away the fun of something, optimize it.”

You don’t need to do this. Is that true? That’s really the key here: we’re addressing an audience that probably wants to improve their situation in life, and we’re trying to give you, the listener, some framework, some direction, and some understanding of how you can navigate the markets.

It’s really key to looking forward and improving, and hopefully our next stream will be even better than this one in that spirit.

Amen. Amen. Dude, I like this. What a great note to end on. That was great, Avi. And to all those who are still listening, don’t forget to like and subscribe on YouTube. This is our favorite place for you to watch us, so we appreciate every follower, every like we love. Leave a comment. Increase our engagement. We love you guys. Mwah. Thank you for your presence. Nothing said on the 1000X podcast constitutes a recommendation to buy or sell any investment or product. This podcast is for informational purposes only, and opinions expressed by anyone on the show are solely their own and not financial advice or necessarily the views of 1KX Media. Our hosts, guests, and the 1KX team may hold positions in the companies, foundations, or projects being discussed.