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That was amazing. That was perfect. I can tell Last In is already regretting this sponsorship. That's okay. We don't have much time, so we're just going to get straight into it. I'll start with a weekly review of Market Vitals. The S&P 500 hit a new record. The dollar fell. Bitcoin reached an all-time high and the yield on 10-year treasuries dropped. Shifting to the headlines.
In his house testimony, Fed Chair Jerome Powell said the central bank is still on track to cut interest rates this year. However, he remains cautious around the timing of those cuts. Wall Street now expects that the first rate reduction won't come until June. China set its GDP growth target for 2024 at 5%, that's the same target rate it set last year when growth came in at 5.2%. However, Beijing did not offer specific details on how it plans to achieve that goal.
The EU fined Apple $2 billion for anti-compensative conducts. Regulators said Apple has been using its app store to obstruct competition with its music streaming rivals, mainly Spotify, for a decade. And finally, Elon Musk sued OpenAI for abandoning its founding goal of benefiting humanity, and instead prioritizing profits. In response, OpenAI published post-emails for Musk which encouraged the company to raise $1 billion in funding and become, quote, less open. Where should we start?
So let's start. I just saw Elon. I was over at the four seasons and I saw this guy in a cowboy hat and I saw Trevor Noah. He's so handsome. I could have stopped staring at the guy. And then there was Elon Musk. Anyway, so... Look, if you look at the emails, he's basically suggested that he made a play for the company, wanted to take it over, and said that he actually suggested that it turned into a for-profit.
He said, that's a great idea, but we don't want you involved. He made a play to be the CEO and the largest shareholder. And they said no. And I joke that, you know, I sold Netflix at 10 bucks a share. It's now at 520. So I'm angry. I've lost power. I've lost well. So I'm going to sue Netflix. There is no written agreement between the two, between Elon Musk and the company, that they would pursue any specific vision.
So this is nothing but a nuisance lawsuit. And this is bad for the economy because if you start a small firm and your old firm or other firms start legally harassing you, it's very difficult to raise money. It's very difficult to attract employees under the auspice of a lawsuit. So I just think this is all around bad.
Hopefully a judge will recognize it for what it is and dismiss it right out of hand. Now what are real binding contracts when you tell someone that you're going to buy their company for $44 billion and you sign up and down that you're buying it. And then you decide that in a fit of mania, you may have overpaid for something worth $10 billion. And you try and get out. That's an enforceable contract.
When you agree to pay people's severance if you fire them. And then you say, no, I'm not paying you. That's an enforceable contract. What he's claiming is not in for there is no contract. So I just think it's a nuisance lawsuit and kind of the love language of Elon Musk and Donald Trump appear to be lawsuits. Anyways, I think that goes nowhere.
Exactly. And the point is that the suit is for a breach of contracts. But as you mentioned, you look through the lawsuit and you get to run page 41, you start to realize that actually there was no contracts at all. All they have is an email chain where Sam says, oh, it's going to be open source. It's going to be non profit. This is going to be good for humanity, et cetera.
And then the quote unquote agreement that they talk about is an email from Elon Musk saying, I agree. And that said. And so every legal analyst will tell you that is no sufficient grounds for a breach of contract lawsuit. So we move on to the Fed chair and his statements in the house.
So Chairman Powell, I think I thought it was wonderful that Taylor Swift was time's person of the year. I can't I cannot stand her music, but I am a total swifty. I think she's an inspiration. I can't imagine a better role model for young woman and Taylor Swift.
You know, she's a nice, pager people. Well, you know, doesn't have for vanity in her songs doesn't appear to have had a shit ton of surgery seems to be in a healthy, romantic relationship is a baller billionaire. I mean, how could you carve a better role model out of a factory of lesser role models for young woman. And then the huge Taylor Swift, and she went person of the year in terms of who's had the most impact last year, I would I would argue was actually chairman Powell.
Because inflation is how revolution start. They don't start because of an invading army or people are upset about laws being passed. They start because every day someone shows up and they say, I can no longer afford beef. I need chicken. I can no longer afford chicken. I need rice. And power goes down that's literally how societies digress into chaos or most often is this boring thing called inflation.
And chairman Powell raised interest rates 500 basis points in 15 months. That is historic. No one's ever done that before in a Western economy. And you got all sorts of shit posting from senators on the left saying that will people can't afford their mortgages and their credit card payments. And inflation has dropped down below 3%.
And here's where we are with our economy right now. We have the highest GDP growth of any large economy in the world with the exception of the Kingdom of Saudi Arabia while having the lowest inflation. That's almost impossible to pull off. We have the most dramatic job growth in history in the last year. I mean, it's literally if you showed these numbers to an economist, they would say that's impossible. You can't do it. The market's touching new highs.
Now, the problem is similar to technology or what William Gibson said about technology is prosperity is here. It's just not evenly distributed. And so a lot of people are upset and they have every right to be upset. But that's a function of policy choices. That's a function of income inequality because of tax structure, the transfers money from lower middle income households to rich households.
But if you were to try and architect an economy, I mean, literally, this is it. And just speaking in terms of America right now, we're food independent. We're energy independent. Harmless, friendly candidate to the North, harmless Mexico to the South, oceans protecting us. No one is lining up for Chinese or Russian vaccines.
The greatest technological innovation of the last 20 years is within a seven mile radius of San Francisco International Airport. So for all the ship-posting in California, they basically recreated the entire global auto industry in terms of market capitalization in the last six weeks.
So something is working here. And we're also in striking distances. Much controversy is there is around some of the things going on. Canvases were in striking distance of becoming the first multicultural democracy in the history of the world. 51% of Harvard's incoming freshman class is non-wide. I mean, we are everyone, every nation in the world would kill for our problems. Remember how China was supposedly going to kick our ass and was going to surpass our economy.
And the last three years, the Chinese stock market has shed $6 trillion in value. There are seven companies in America that have had a three trillion in the last 12 weeks. So you may not like America. And I worry that we're raising a generation of people because media likes to catastrophize. We're raising a generation of people that don't like America. And that's fine.
But we're at least bad than anywhere in the world right now. And I think a lot of that reverse engineers to very bold actions taken by the Fed share. So as much as we were hoping the kind of the punch bowl was going to be put back in front of us that should be could have really low interest rates to drive growth, which is great, which is fun, especially for wealthy people who can borrow against their stocks and make more investments.
This guy, I defer to him. He has pulled off a master class in how to essentially create a Goldilocks economy under the awesome. You got to give the president some credit here. But the economy here and the level of prosperity is staggering. Unfortunately, because of tax policy or idolatry of innovators and sort of a lottery, optimistic economy where we all believe we're going to be in that 1% and I can prove to all of us mathematically the 99% of our children will not be in the top 1%.
We have a massive amount of prosperity, but it hasn't translated to progress. Right. And that is lower in middle income households are actually doing better, but not nearly as better as the amount of prosperity recognized by other people. And we're reminded of that benchmark and that we're not doing well every day by algorithms long, when it answered. I think he's doing a great job.
We should move on to the EU finding $2 billion for anti-steering violations. One of my heroes is the EU competitive commissioner of market invest year. She's just not impressed or scared of these guys. And if you think about the US, you would not want to give up big tech for all of their downsides, weaponization of our elections, right, income inequality, teen depression.
I mean, there's a lot making our discourse more course. There's a lot of negatives. On a net level, they're positives. They add tremendous prosperity, create a ton of good jobs, a lot of utility. Right. The problems with the word net. And that is we tend to make binary decisions because that's the easiest way to process information when we say, well, if they're a net good, then leave them alone.
Well, pesticides are a net good. Fossil fuels are a net good, but we still have an EPA and an FDA. So we should absolutely hold them accountable. Go to Europe, they don't have nearly the upside. They get all of the downside. They get all of the teen depression and weaponization of their elections in the course discourse. They get a fraction of the upside.
There are very few hospitals or universities with names on the sides from Facebook or Google billionaires in Cologne or Glasgow. So we get all the shit. We're the sewer system, but we're not getting clean water. And so that is stiff in the backbone of EU regulators. And they are, their innovation quite frankly is regulation. What was interesting about this fine is that estimates were going to be that it was 500 million. It was 2 billion.
Now let's talk about why they were fine. They were fine because Spotify has said we can't compete. This is anti competitive behavior and it goes something like this. If visa think about the app store at Apple, I think of the best analogy as a credit card company to provide security, easy transfer of information.
The user or the merchant gets paid, the consumer knows or has incredible utility, I give a credit card. So there's a lot of technology, trust, safety, security. In exchange, these are amics get summer between 1.5 and 3% of the transaction. That is effectively the role the app store plays. Security of the transaction security, certain safety checks, quality control, and they take between 15 and 30%. Now what if visa charge 30% credit card fees, 30% to every retailer?
And then they decided, you know what, we see opportunity. We're going to go vertical into retail and we're going to buy Lulu Lemon. And if you shop at Lulu Lemon, we visa slash Lulu Lemon, they don't have to pay the 30%. So Lulu Lemon can price their products 30% below, aloe or Nike. No retailer could compete with Visa slash Lulu Lemon. That is exactly what happens when Apple goes into the music business and Spotify has to pay that 15 or 30% tax, but Apple Music doesn't.
So when a company that owns the rail starts competing directly and going vertical, that is the definition of anti-competitive behavior. And Margaret Vestier saw this and has fined them $2 billion. And these fines are perfect except they have one flaw. They need another zero. And that is $2 billion. Sounds like a lot of money. It's not. It's basically their free cash flow for I think about nine days.
If you had, that's not an exaggeration at Apple. If you had a parking meter in front of your house, they cost $100 an hour, but the parking ticket was $0.25, you would break the law. And that's the series of incentives we have in the United States. We spend years going after these companies, we find them nine days, nine weeks of their cash flow.
In exchange, they continue to engage in this behavior where they make hundreds of billions of dollars in shareholder value. So the fines are fine. They just all lack is zero. This was the biggest in a while. I think it's a great thing. We'll be right back. Support for the show comes from AdLacian. In an age of distributed work where teams might be spread across time zones, it's time to stop measuring productivity with standards from the industrial era.
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Last week his firm Tri-And Partners released a white paper that laid out that plan. The document recommended among several things, merging Hulu with Disney Plus, reducing Disney's production of sequels, establishing a CEO succession plan, and, quote, taking more shots on goal.
Disney shareholders will vote in three weeks, whether to appoint Nelson and his partner J. Rasulo to the board. Scott, I'm going to turn this to you back in October. You predicted that Nelson Peltz would successfully secure a board seat on Disney. We'll find out in three weeks, but for now I'm just wondering has your position at all changed.
So I don't know if he's going to get the seat. What I would say is the following that the analysis should be done to the lens of governance. Not who's more popular or who's more like Bob Biger's really likeable. Got these great cashmere sweaters, super handsome. He's very good at media. Do you want to come to the premiere of Frozen? He's really good. All of these guys.
The RBCO you meet was the fraternity rush chairman. They're really likeable. Nelson Peltz is not as likeable. Not nearly as likeable. Bob Biger should absolutely give Nelson Peltz a seat on the board.
Fidu Shari is a wonderful word. As a board member you're supposed to be a fidu Shari for all stakeholders, the community shareholders and employees. You get your options, you get your pay, and then you're supposed to think about other people. A great way to create a sense of being a fidu Shari on a board is if someone buys a lot of stock.
That puts them in the shoes of other shareholders. The total amount of shares owned by all of the board members on Disney, many of whom are very wealthy, is $15 million. Peltz is about $800 million. I think right there he gets a seat on the board. Now let's look at the numbers. The S&P is up I think 80% in the last five years. Netflix is up 70% and Disney is down 1%. Yet they've managed to pay themselves a lot of money.
So if someone shows up and buys $800 million with a stock, they deserve to be on the board. As someone who has served on a lot of public company boards, the easiest way to get someone to shut up is to put them on the board. Because then they have access to public non-public material information and they have to stop shit posting the company. The other thing you find, I'll use an example. This will be the weakest flex in the world. I bought... Here we go.
I bought 17% of Gateway Computer. Remember them? When I say, I raised like 80 million bucks and I'm like, cow spots, I'm a brand guy, I get it, they have shelf space at Best Buy. We're going to buy this thing, it was trading at a $1.50 share. For 78 million bucks we bought 70% of the company and I showed up and I said, I demand two seats on the board and around approximately five, I got my two seats on the board and I showed up.
And I first board meeting went through this long presentation. We have a nice brand, we should sell it to Acer. I already know the people there, we can sell it, three bucks a share. Everybody makes enough money, you know, we're off or gone. And they listen very, quietly, very politely and then they said, Scott, we engage Goldman Sachs two years ago to sell the company and we've been trying for the last 24 months to sell it.
And the lesson I learned and I'm still learning, is that when you come into a situation from the outside, what you generally find is that you're not as smart as you thought and they're not as dumb as you'd hoped. So what I would suggest, Bob Iger, he says to Nelson, come on in the waters fine. And his ideas are all sort of, they're out there, it's nothing that unique.
But instead, like almost every, I would say 50 to 70% of really brain dead corporate decisions that make no sense, it involves a man in a midlife crisis. Because ego gets in the way, this is easy. Negotiate, fly down there, tell him he's great, play golf with them. Interesting idea, what you think we should merge Hulu and we can think about that.
But I'd love to hear your ideas, would you like a seat on the board? I can't give you two, would you like one? I'm sure we could figure this out together, put them on your board and then stop this nonsense distracting everyone in the company. I'm going to cost tens of not hundreds of millions of dollars, it's going to take every senior manager tens of hours each week to deal with this shit and move on.
But now it's become about ego. I almost, I ruined a company doing this. I started coming to go to Red Ombalo. And basically, the guy who took my job as chairman is a guy named Mike Moore, it's arguably the most successful venture capitalist in history. And my partner, Road and Memo, saying the Mike was using Red Ombalo, was the dumping ground for the failed products of Sequoia portfolio companies. And I got all angry instead, Mike, you are not serving up to your fiduciary duty.
Two days later, I was kicked off the board. So I was kicked out of the band that I started. And I was very bored at this time. I was living with my mother, a longer story. And a lonely, a lonely guy, lonely board guy with a little bit of money is a dangerous person. So I thought I'll start a full scale proxy fight to replace the entire board because I'm pissed off.
And we put in Mike, who was a master of the universe decided, oh, no, our CEO is incompetent, but he decided because I wanted her out. She was amazing. The two of us literally ruined the company, literally ruined it because I was so insecure and angry. And he was so insular and master of the universe. And neither of us would just go, well, okay, what would be best for the company right now?
Why can't we come to some sort of solution to get back to building shareholder value? It was a really good company. And we just fucked it because of our egos. These guys are doing the same thing. Disney's much stronger and has much more immunity than a red envelope, but they are wasting time, they are wasting shareholder value. Put on your big boy pants, put them on the board, move on.
You know, I had a lot of follow up questions, but that was about 10 minutes. So we're going to move on. Okay. Sorry. Sorry. A house of representatives committee unanimously advanced a bipartisan bill last week that would force bite dance to divest tick tock. And if it doesn't, the app will be banned ahead of that committee vote tick tock pushed a pop up screen on the app encouraging users to call their representatives and tell them to vote against the bill.
It said quote, don't let the government strip 170 million Americans of their constitutional right to free expression and then users flooded Congress with calls. So we'll see if that's ways anyone when the bill heads to the floor vote this week. Scott in July of last year, you called for a ban on tick tock. You said quote, do I have your attention? I'm going to pull up. I'm going to pull up a tax that's related. Okay. Go ahead. Sorry. He's got to head out.
It's the bar open. I got it. I got it. Look, hold on. Let me just read your quote, which is the platform's potential for espionage is a concern, but it's used for propaganda is a clear and present danger. And real action is needed. So is this the kind of action you're looking for? So just big picture. The best thing in terms of playing offense that could happen in the world economically and maybe from a defense perspective would be if the two largest economies kissed and made up.
The fact that China and the US are withdrawing from each other is dangerous and also literally the largest tax cut in the history of the modern world would be if we re-embraced and this cold war was thawed. Because about 30% of everything in this room either came from or came through China. And if we can figure out a way to take our innovation, our consumerism, our capital and their unbelievable supply chain and labor force.
That's just a champagne and cocaine combination that makes everything cheaper in the world. And it also makes us less likely to start firing missiles at each other over the straits of Taiwan. So I see a strategic imperative and real benefit to China and the US a thaw in the relations. We should just get along. They have an unemployment problem. We have an inflation problem. They have a growth problem. I mean, we can solve each other's problems.
The company, BYD, is that it? The EV company, they should absolutely come into the US. They're not a security threat. We should have more cheap electric cars. We should have more competition. That's a great thing. That's not a security threat. I think in all of a sudden, lock the steering wheels and drive us to Beijing. I mean, what's going to happen?
That's we can figure out if they're transmitting data. She and this low cost of pearl manufacturer sustainability. I think young people, some in this room, you're purchasing powers when cut in half over the last 40 years as people my age to question more and more wealth. You should have the opportunity to buy cool fashion and feel good about yourselves. And I think that's important in this company is probably I think that does amazing supply chain.
They are not part of the CCP as far as I can tell. She and should in my opinion, we lost a huge opportunity not taking the public on the NYC, the NASDAQ. TikTok should be banned full stop. Full stop. We have let the CCP implant in the back of the head, a neural jack into the wet matter of almost every person under the age of 25.
So what if you said, well, well, the CCP owns the New York Times, CNN, the Atlantic Washington Post, MSNBC, Fox News, NBC CBS, and just for fun, let's throw in, I don't know, Gennett. The CCP owns all of them. Would we be down with that? Well, the share of attention commanded people under the age of 25 is greater than that. You are where you spend your time. And the frame of people under the age of 25 is a media company with direct ties to the CCP. And there's evidence of this.
There are eight times as many pro-Ukraine videos on reels than on TikTok. There's 600 times more, weger, and free Tibet videos on reels than on TikTok. So one of two things is happening. Either Mark Zuckerberg has his thumb on free Tibet, weger, Israel, and Ukraine issues. He's decided, I care about this stuff, I'm going to, I'm going to pervert the algorithms.
Or the CCP is suppressing weger, free Tibet, and dialing up content that might divide us. And it's a few things. One, I want to acknowledge young people have a healthy revulsion to what their parents think. That's healthy. Now, dad thinks this, I'm going to think this. Israel has not draped itself in glory. But that delta is three times greater than the delta between young people and old people in Vietnam across anything. Something is going on here.
So are we really comfortable with a future generation of civic nonprofit, government, and military leaders seeing the world through a frame of something controlled by the CCP? And here's the good news. I mean, I'll give you an example. Is anyone got this? Stop a tick-tock shutdown, and it tells you who to call, and you just call, and you call your representative. I didn't get this. They figured out whatever reason I shouldn't get this. You know who got it? My 13 year old son.
Right there, that's the problem. They're discerning what messages my 13 year old should get versus his father. I'm uncomfortable with that to begin with. So what kind of messages are if this, if you believe as I do the CCP as a strategic imperative in depositioning and weakening our role around the world, and they have the frame through what young people see the world, wouldn't they be stupid not to do this?
It's what we do. We have a division of the Army called PSIOPs. You know what they do? They try and find and invest and foment and cultivate media properties in other parts of the world so we can play a pro-American and an anti-adversary content calendar. Can you imagine what the most sought or the CIA would do with this? And by the way, let's put all of that aside. Let's just talk about trade symmetry. If they're going to let Tesla into China, we should let BYD into the US. That makes sense.
What American media company is in China? They're not going to let us talk to their youth. No way would they let an American company influence what they're using. And finally, just practically speaking, you're not going to lose your TikTok.
The ban is terrible use of words. They're saying if you don't sell this thing, we're going to ban it. They will sell it because there's too much money involved. The reason TikTok and the secondary market is trading at a $250 billion dollar value on secondary shares is because of this overhang around US political tensions.
Their biggest investors are in China and in the US and their capitalists, General Atlantic partners, Sequoia, some very big hedge funds and investors in China. They're not going to let that $250 billion be wiped out. When the threat is credible, this bill passes within a few weeks.
Bydance announces they are selling to Western interests, they get to keep their money and you still get your TikTok. This isn't a ban. This is saying we need the ownership structure to change for defense reasons. I think it's going to happen.
I just want to go back to the bill itself. One of the things you often bring up is this difference between being right and being effective. When I look at this bill, two things strike me. One is, it's very short. It's only 12 pages long. They've had a long time to figure this out.
And two is, how similar it is to an executive order that was issued four years ago by Trump. How does this end in a different outcome? They're being smarter. And the Trump ban was blood sugar, went out, ban it. Then he moved on to something else.
Essentially, the Chinese and the Russians have figured out they were like a cat chasing a dot. By the way, I give the president and the White House a lot of credit here because I think it'd be easier to wait till after the election. I don't think this is going to get him. I'm not sure this is going to help him. This is a big moving part. A lot of young people will get angry. A lot of Congress people trying to look like they're under the age of 90 will talk about TikTok and freedom of expression.
They'll be like, we should let tick tack into the name. I mean, you're about to see so much ridiculous posturing, right? I want to be clear, I have been wrong on this so far. I said two years ago that it was going to be banned and it hasn't been. I think it should be.
And I based on some conversations I've had with public officials, it feels like there's bipartisan support. And people say, well, it's not popular with the citizenry. Either was World War II when we started shipping armaments across the Atlantic. That's what leadership looks like. I think very smart people have decided this in fact is a security threat. And by the way, we're going to get our cake and get to eat it too.
And also the value of tick talk when China announces that they're spending it to Western, it'll double in value the next day. So what do we get? An absence of a security threat. You're still going to get your tick talk and the shareholders are going to double the value of this thing overnight when the cloud of this issue goes away. So I think this is a win-win-win issue. I think it's going to happen every time I say that every time I say that doesn't happen. We'll be right back.
Fox creative. This is advertised the content from Atlassian. It's important that we don't try to use an understanding of productivity from the industrial era when people were sitting shoulder to shoulder in a factory setting when employees are designing their work days around their most important work, not just reacting to messages and intending meetings. They're more productive.
That's any dean, global head of team anyway, Adat Lassian. She's leading the mission to empower her 11,000 plus teammates to work from well, anyway. The office isn't dead. It's just not the solution to effective teamwork. Without team anywhere, we would probably need about double the amount of office space we have today. And that translates into meaningful annual savings that we can invest in other key company priorities.
Those savings get invested in creating the technology for Atlassian customers like Jira, Lume and Confluence. We believe that this is a more human way to work and that's something that should be celebrated. One of my favorite things is when three o'clock rolls around and my two boys come home from school and they both know that they're allowed to interrupt my beating to give me a kiss. That's something that I never got when I was in the office every single day.
Learn how Atlassian Software helps power global collaboration for all teams so they can accomplish everything that's impossible alone at Atlassian.com. That's ATL-ASS-IAN.com We're back with Prof.G. Markets. So far this year, the S&P 500 has posted 16 record closes. It's also on its longest winning streak in more than 50 years. Meanwhile, the NASDAQ is up 10% year to date and last week it also reached a record high.
What's driving this rally is of course AI as we discussed a couple weeks ago. Nvidia added nearly $280 billion in market value in one day, which substantially lifted indexes around the world. We're now reaching a point though where that excitement is turning into anxiety and some analysts are suggesting that we might be entering into a bubble.
In fact, something we're already in one. For example, two weeks ago Apollo Global's Chief Economist Torsten Slok wrote, quote, the current AI bubble is bigger than the 1990s tech bubble. Scott, you are a veteran of the.com era in 1999. You started an e-commerce company Red envelope, which we've discussed. You also took that company public. Given your experience, do you believe we're in a bubble?
If you look at the PE of the tech companies in 1999, they were trading at about 62. These are trading at about 59. But the underlying economics of these companies is far more impressive than the batch of companies measured in 1999. These companies, actually if you look at their growth and their earnings, you could almost justify this valuation.
But here's the thing. If you're under the age, especially if you're under the age of 35 in this audience, every frame, every piece of media from CNBC, even the words we choose, is meant to fuck you and transfer wealth from you to me. The fears that we're in a bubble and the stocks, these stocks, could crash. Okay, quick survey. How many of you, let's divide you into two groups?
There's people in this room who are investing. You're at a point in your life where you're trying to sequester money from your consumption and invest. You're investing. There's other people who are on the back nine and aren't working as much and need more money and they're harvesting their investments. You're in investment mode or you're in harvest mode. How many of you are in investment mode? How many of you are in harvest mode?
Okay, about 70-80% investment mode, 20% harvest mode. If you're in investment mode, if you're the 80% people here, you want a bubble. You want a crash. Because the entire shooting match for your wealth when you're my age is your ability to buy these companies at a reasonable price. I am here for three reasons. One, where and when I was born? Being born a white heterosexual male in California in the 60s was winning the lottery on just a ton of dimensions.
The economy, the unfair advantage I got, the irrational passion for my well-being and my mother and three, the University of California that when I applied UCLA at 76% admissions rates and 1200-year tuition, by the way, I had to apply twice to get in. True story. It's now $34,000 a year and the admissions rate is 9%. That's why I'm here. The reason I'm here and I can say whatever I want, I can be as profane as I want. I mean, let's be honest, I'm pretty close to getting canceled or shamed alive.
Right? Is because I'm economically secure and why am I economically secure? I'm talented. I'm not a humble. I think I'm remarkably talented. I'm not a humble person. I'm in the top 1%, which puts me in a room with the population of Germany, 75 million people. My life, my economic security is well above that. It's because in 2008, we let the economy crash. We bailed out banks, but we didn't bail out the economy. So guess what I did?
I took the $800,000 I had to my name, just an amount of money, not as much as I hoped given I'd started companies. Right? And I split it. 400,000 here, 400,000 here. Here was Apple, here was Amazon. Right? Those stakes were $37 million today. Because I got to buy in during my income earning years, because we let the markets crash.
The greatest intergenerational theft in history is if you were under the age of 40, maybe 45, the government and our leaders have decided to keep me rich. Oh, a million people dying from a virus, that would be bad, but what would be tragic is that the NASDAQ went down.
So let's ramp up the debt, because you and your kids are going to have to pay it back and make sure the NASDAQ and the stocks stay high. And it was robbery from you, because you never got a chance to buy Amazon or Apple at a decent price. You're buying in at the highs, because you're in investing mode. So is it a bubble for your sake? I hope so. I hope so. And also the structurally scary thing here is not that the markets collapse. That's not scary.
The scary thing is what might be going on here is an absolute structural shift in the economy, where there are a small number of companies, people, regions, they get all of the gains.
So what's the S&P up 24% last year? What an amazing year. No, it wasn't. About 1.2% of the companies were responsible for all of the gains. Okay, that's the definition of income inequality about to happen. When we don't have a robust set of winners, we have a small number of people, a small number of companies taking it all. The Russell 2000 small businesses.
40% of them are now have negative earnings in a strong economy. In 1990, it was 18%. So the really frightening thing is, are we moving to a Darwinian business environment, all caps, where there are a small number of apex predators eating everything.
So if you're in one of the seven of those 500 companies, you have flat returns. That's the fear. So I think we need a lot more antitrust. I think at some point, I don't think any company should be worth more than a trillion dollars. I think we should break up Apple. I think we should break up Nvidia. And guess what? More job growth. Right? Higher wages competing for people. And by the way, those stockholders would get hurt.
They're really well over the last 30 years. People own stocks who hasn't done as well, small business, medium size business, and wage earners. Wages have been flat for the last 40 years. The stock market is screened. Productivity's gone up like crazy. At minimum wage match productivity. It'd be a 23 bucks an hour, not at 725. We have a hindsight bias. We think, oh, I'm smart. I mean, how many of you actually bought Nvidia? I didn't. I didn't. And by the way, if Nvidia goes down 50% tomorrow.
OK. Unless you bought in the last 14 weeks, you're still made money. If it went down 18% unless you bought it in the last 15 months, you still made money. But how on earth are you going to find your Apple and Amazon like I did? So you can have economic security when all we're doing is a set of economic policies to ensure the incumbents, the already wealthy, the baby boomer stay rich. That's not the priority.
Everyone should have a shot when we bailed out Shake Shack and every goddamn business during COVID. It meant that the recent graduate of the Brooklyn Culinary Academy couldn't come in and buy a restaurant for pennies on the dollar. Turn, turn over. Full body contact capitalism is meant to provide young people with opportunities and the ability to buy into assets at a price when they're in their income earning years in the markets correct.
And we are slowly but surely justifying a series of policies such that there's never correction such that you never get a chance to buy in. That was a word salad. Well. I mean, I think the argument that Nvidia would make here is that actually everyone can participate in this and you mentioned, you know, I haven't bought Nvidia, but.
And then Nvidia is the third highest waiting in the S&P. And it's the third highest waiting in the NASDAQ. So there's likely not a single retirement account in America right now that doesn't include Nvidia. So in a way, we already have that exposure, but what you're describing is, you know, astronomical returns that you experience. So what would your advice be whether or not this is a bubble?
So I'm going to track the questions we get. The questions I get the most are interesting enough from mothers asking for parenting advice about their sons. The second most is from young men asking for career advice and investment advice. And on investment advice, the question getting ends down the most right now is it too late to buy Nvidia.
Seriously, because people see it in the green glance get going like, should I be buying and then it's it's too expensive and then it goes up another 20% like, you know, it's stressful just watching the thing or I find it stressful and not having not bought it. And this is the only advice I can give you is that the financial services sector every hedge fund every alternative investment every branded financial services company is a giant grift.
My colleagues down the hall at NYU in the finance department have done a ton of analysis and basically every hedge fund every asset class that's branded the charge you fees have underperformed the S&P by the amount of their fees. The Nvidia plays the following you buy a low cost index fund.
And the S&P the thing I love about the S&P index fund is it's sort of a self selection fund because every year they kick out companies not doing well and they bring in the companies that are doing well they kick out code act and they bring in sales force. And you have low cost fees and here's the thing as a young person you don't need to be a hero. Your asset is time and you got to trust me on this.
I was in an instant ago I was in this room and I was 25 it was an instant and so if I said to you save a thousand dollars a month you're all it had last and you're all at a South by Southwest if you really tried hard you could probably save a thousand bucks a month if you're 25 or 30 or 35 and you save a thousand bucks a month and you put it in a low cost index fund.
You're going to be financially secure now maybe and you're probably if you're like me I didn't do that and I ended up in a very vulnerable spot when my first kid came along 42 I'm like Jesus Christ I'm not as economically secure as I thought because I fell into the trap of thinking I'm a baller I've taken a company public.
I'm waiting for the 10 50 hundred million dollar payday and it's going to happen check my shit out it's going to happen and it didn't a divorce the dot bomb implosion the great financial recession I ended up with a lot less money than I thought and if I had just put a little bit of money away and recognized a flaw in the species the majority of the species for the majority of the time on our planet has not lived past 35 so we can't calibrate time.
You are going to be my age 99.4% of you will live to be 65 and it's going to happen so fast do yourself a favor and have a plan B and that is get rich slowly and you can you know the thing I would end on a more like a hallmark moment.
Investing compounds it's like relationships every wonderful relationship I have is a function of early in my life I made small investments text them what's going on I made efforts little efforts checked in showed concern right those relationships compound generosity showing people concern regard consistently in a discipline way from a young age you wake up with these enormously.
Dramatically more valuable relationships and you never anticipated relationships and generosity compound to you don't need to hit to be a hero you don't want to try and find the needle in the haystack by the whole haystack and every month put a little bit of money in index fund because everyone on cmbc not everyone but 90% of them are grifters grifters charging you to and 20 for what so you can feel special because you got into some fund where you saw their commercial low cost in the market.
So cost index funds and for God's sakes don't day trade. Don't day trade back to you. Let's take a look at the week ahead we'll see inflation data for February from the consumer and producer price indices will also see earnings from Adobe Oracle and so that's the real house and finally reddit is kicking off its IPO roadshow do you have any predictions.
My prediction is the back half of the year we're going to see an IPO pollusa I think IPO I think it's going to be a great Q3 and Q4 for IPOs and everyone is waiting the bankers companies are all waiting for one or two companies to inspire the market with a huge pop first day trading now get everyone's greek lands going there are hundreds of billions of dollars in funds that are do nothing but invest in IPOs and we've had one of the slowest IPO markets last years we've had in 40 years.
So who's the icebreaker who's going to set the IPO markets on fire with big one day pops this is speculative it's dangerous to do this because everyone on Twitter will remind me when I get it wrong. But the two companies that I think are going to be the icebreakers that set the IPO markets on fire over the next six months are going to be one reddit and the number two is going to be she in and that's all show.
Let me just read out the credits because I always have to this episode was produced by Claire Miller who's sitting right there and engineered by Benjamin Spencer our executive producer Jason Stavis and Catherine Dylan. Mirciolvario is our research lead and true boroughs is our technical director thank you for listening to Profty markets here in the Atlassian Austin office from the Vox Media Podcast Network.
Join us on Wednesday for office hours and we'll be back with a fresh take on markets on Monday. Thank you Scott. Thank you Ed. Thank you Ed. Support for the show comes from Atlassian whether we're working in or out of the office every day our teams are reimagining what it means to connect and produce incredible results Atlassians remote friendly software like Jira Confluence and loom helps your team work effectively by connecting your entire organization in one shared digital world.
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