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Transcript

TradFi vs Crypto ETFs with Andrew Horowitz 🔥 Investment Advisor · The Paul Barron Crypto Show

0:07
Speaker 1: All right, Today we're going to take a look at
0:09
Speaker 1: some of the markets, also take a look at what
0:11
Speaker 1: could happen after the FOMC in terms of fed erate cut,
0:15
Speaker 1: and also how this plays into the traditional Wall Street sector.
0:19
Speaker 2: We've got a.
0:19
Speaker 1: Special guest for you today. You don't want to miss it.
0:21
Speaker 1: My name is Paul Barre. Welcome back in the tech path. Also,
0:24
Speaker 1: I want to get going before we start and thank
0:26
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0:50
Speaker 1: So today, of course, joining me is mister Andrew Horowitz.
0:53
Speaker 1: He comes to us from the discipline investor and also
0:56
Speaker 1: Horowitz and Company, a fund manager right here in South Florida.
1:00
Speaker 1: Andrew get to have it back.
1:01
Speaker 3: Hey, Paul, thanks so much, and I'm going to double
1:04
Speaker 3: up on your your coinbase. I have an account. They're
1:06
Speaker 3: so easy to use. Seriously, it is easy. Yeah, it's
1:08
Speaker 3: really easy.
1:09
Speaker 1: Anybody that hasn't been in crypto before, and even some
1:13
Speaker 1: I have a lot of people who are you know,
1:15
Speaker 1: they've been in two or three bull runs and they
1:17
Speaker 1: still think coinbase is still one of the best. So hey,
1:20
Speaker 1: listen if you guys want to check a little bit
1:22
Speaker 1: about discipline investor. This is is of course his blog
1:26
Speaker 1: and also his podcast, the longest financial podcast running in
1:31
Speaker 1: the history of podcasts. So this is the og og
1:36
Speaker 1: of podcasting when it comes to finance, you know, even
1:39
Speaker 1: though podcasting has only been around for you know, like
1:41
Speaker 1: fifteen years.
1:42
Speaker 3: I know, but I remember the first time in two
1:44
Speaker 3: thousand and seven when my publisher my first book, says.
1:46
Speaker 2: To me, hey, you know what a great I have
1:47
Speaker 2: a great idea. I said, what's that?
1:49
Speaker 3: A way to promote your book would be to do
1:50
Speaker 3: a podcast. And I'm like, what's that? That's a podcast?
1:54
Speaker 2: What are you talking about? I have no idea what
1:55
Speaker 2: that means though, so yeah, I love it.
1:59
Speaker 1: Hey, Andrew, all the news right now talking about ETFs.
2:02
Speaker 1: Obviously we see the lineup, we get the Bloomberg guys
2:05
Speaker 1: on here. They're constantly just blown away by the success
2:09
Speaker 1: of both the Bitcoin and the ethereum ETFs. When you
2:13
Speaker 1: look at this right now, you being a fund manager
2:15
Speaker 1: working with a lot of high network individuals, what do
2:18
Speaker 1: you think, what are people asking about? And are they
2:21
Speaker 1: asking about these ETFs?
2:23
Speaker 2: So, you know, it's funny.
2:23
Speaker 3: It's interesting you mentioned that because you and I have
2:25
Speaker 3: talked way back about you know, what would happen if
2:29
Speaker 3: there is the creation of this easy access for people,
2:33
Speaker 3: which it really is. It creates a much different environment
2:37
Speaker 3: for investing in crypto than it was before, right when
2:39
Speaker 3: they were these ETF versions, much much more trackable, and
2:46
Speaker 3: it actually tracked appropriately, no major premiums or discounts on it.
2:51
Speaker 2: So for me, I like to stay in my lane. Right.
2:53
Speaker 3: That doesn't mean I like or dislike crypto. That has
2:57
Speaker 3: nothing to do with it, right. I mean, you go
2:58
Speaker 3: to a particular doctor, you know, you have knee pain.
3:02
Speaker 3: He's like, yeah, but I'm a dentist. I'll be happy
3:04
Speaker 3: to talk to you about it. You know, I know
3:06
Speaker 3: a lot about this, maybe because I went to medical school,
3:08
Speaker 3: but uh, this is not a thing that we do.
3:10
Speaker 3: My clients don't ask me about bitcoint zero.
3:14
Speaker 1: That's zero clients right now.
3:16
Speaker 2: They don't come up. They don't.
3:17
Speaker 3: They don't ask me about at all. I mean, really don't.
3:20
Speaker 3: That doesn't mean it's dead, and it doesn't mean you know,
3:23
Speaker 3: I own personally crypto in the form of my majority
3:27
Speaker 3: holding is in ethereum and some bitcoin and some other
3:30
Speaker 3: you know things that just have to have some junk
3:33
Speaker 3: in there. Uh, you know, over the years just faded out.
3:36
Speaker 3: But but you know, I think it's again. I I
3:38
Speaker 3: take a little bit of a different stance. You and
3:40
Speaker 3: I've talked about this before. I think it's a great
3:42
Speaker 3: opportunity for investment. Some of the other things that it
3:45
Speaker 3: was promised to be.
3:47
Speaker 2: Maybe it will be in the future, but it's not
3:48
Speaker 2: there right now.
3:49
Speaker 1: So let's let's bring it in more to more of
3:51
Speaker 1: a general discussion on the sense because I think a
3:54
Speaker 1: lot of people who follow our show are looking at
3:56
Speaker 1: investing in these ETFs and they're trying to figure out
3:58
Speaker 1: is this a good deal right now? So a lot
4:00
Speaker 1: of low cost rates right now. If you look at
4:03
Speaker 1: other ETFs on the market, which I know you guys
4:05
Speaker 1: look at all those would you look at these and
4:07
Speaker 1: say okay, that's a good rate, and I do like
4:11
Speaker 1: these kinds of I won't call them marketing ploys or
4:14
Speaker 1: go to market strategies that a lot of these funds
4:16
Speaker 1: are doing. Is this typical of these funds to go
4:18
Speaker 1: out like this at low rates?
4:20
Speaker 3: Yeah, these ETFs a low cost. That's the whole point
4:22
Speaker 3: of an ETF. It's a very easy structure to manage.
4:25
Speaker 3: You basically just take this pile of cash that comes
4:28
Speaker 3: in and you basically can run it like a hedge
4:33
Speaker 3: fun theoretically. Yeah, but these are these are index trackers, right,
4:36
Speaker 3: So it's not like they're saying, well, at least the
4:39
Speaker 3: ones we're talking about right now, it's not like, okay,
4:41
Speaker 3: we're gonna go from bitcoin and we're going to do
4:42
Speaker 3: with theorium and then we're gonna buy, we're gonna sell.
4:44
Speaker 3: We're just they are basing this on a passive investment
4:48
Speaker 3: strategy that basically will track the value and the ups
4:51
Speaker 3: and downs the price movement of pick your name, whatever
4:55
Speaker 3: particular is. So let's just stay with the bitcoin so
4:58
Speaker 3: it stays a bitcoin. The idea is, in fact that
5:01
Speaker 3: their mandate is to be okay, bitcoin cash contract up,
5:05
Speaker 3: you know, five percent today. It should be up five
5:07
Speaker 3: percent today. The only problem is that bitcoin trades twenty
5:13
Speaker 3: four to seven. These contracts trade thinly in early pre markets.
5:19
Speaker 2: But let's just use what they really trade.
5:21
Speaker 3: The bulk of it is the nine thirty four o'clock timeframe.
5:24
Speaker 3: I mean they trade have to hours to you. But
5:26
Speaker 3: there's that weird like if it drops overnight, you don't
5:29
Speaker 3: have the opportunity to necessarily get out of it if
5:32
Speaker 3: you want to, if you're trading it, if you're in
5:34
Speaker 3: the ETF. But it all they're doing is not These
5:38
Speaker 3: are not managers that are coming up with a strategy
5:41
Speaker 3: to invest the bitcoin. They're tracking the value of bitcoin
5:45
Speaker 3: and that is a lot less work, so therefore a
5:47
Speaker 3: lot less cost.
5:48
Speaker 1: I get a lot of other asset managers on the show.
5:51
Speaker 1: We get a ton of people that are looking and
5:53
Speaker 1: a lot of them are in traditional markets commodities et cetera,
5:56
Speaker 1: trading energy, et cetera. And they're starting to ask these questions.
6:00
Speaker 1: And mostly this is coming from clients who are saying, Hey, yeah,
6:03
Speaker 1: I want to I want to expose myself to crypto.
6:06
Speaker 1: Maybe the ETFs are the route here, and and I'm
6:09
Speaker 1: looking at a mix maybe it's a one percent, a
6:11
Speaker 1: two percent of my portfolio of three per sure, whatever
6:14
Speaker 1: that might be. When you look at that, what is
6:17
Speaker 1: safe for I mean, because you could do the same
6:19
Speaker 1: thing with risk stocks, especially in the tech sector. What
6:24
Speaker 1: would be a good exposure to some of these new
6:26
Speaker 1: innovative strategy you know, technologies like what we're looking at here.
6:30
Speaker 3: I mean, I think I think it is a good
6:31
Speaker 3: point that you make there by the way that a
6:33
Speaker 3: lot of let's call it, let's go way back in
6:35
Speaker 3: the way back machine and talk about blockchain, right, you
6:37
Speaker 3: know that that we don't talk about as much anymore.
6:40
Speaker 2: That was the end all be all.
6:41
Speaker 3: There was the AI before you know AI and all
6:44
Speaker 3: this stuff that is taking over Marcus. Now, I think
6:47
Speaker 3: that a lot of companies in the tech area, obviously,
6:50
Speaker 3: but also in healthcare are using a lot of these technologies.
6:54
Speaker 3: Payment processing, uh, you know, maybe there are some that
6:58
Speaker 3: you could pick up stocks like a PayPal if you
7:00
Speaker 3: want to have a stock that's just a leverage play,
7:02
Speaker 3: you could be micro strategy.
7:03
Speaker 2: Sure, so there are ways.
7:04
Speaker 3: In the in the in the traditional channels and pick
7:09
Speaker 3: these kinds of things up.
7:11
Speaker 2: In fact, you can own black rock.
7:13
Speaker 3: You get on the stock of Blackrock, and then you're like, well,
7:16
Speaker 3: they're making money on this deal, I'll make money on
7:18
Speaker 3: it too. So there's a lot of different ways to
7:19
Speaker 3: play that and to get that exposure if you want.
7:22
Speaker 2: But if you want to be a pure play and
7:23
Speaker 2: you want to use that.
7:23
Speaker 3: As part of your aults, and we have a component
7:28
Speaker 3: of our portfolios for our core most client portfolios that
7:34
Speaker 3: is an alternative strategy, and that will be fun to funds.
7:37
Speaker 3: It may have a mix of some crypto in there.
7:39
Speaker 3: It's possible that that would be inserted. It has things
7:42
Speaker 3: like also commodities we have as a position there. But
7:45
Speaker 3: the alternative strategy is a trading strategy. It's five percent total,
7:50
Speaker 3: so if you want to look at that, that's right,
7:51
Speaker 3: that's right.
7:52
Speaker 2: Now, that could change, but it's five percent of a portfolio.
7:55
Speaker 3: Maybe a percent of that or one percent of the
7:58
Speaker 3: five percent, so you four percent, all three and a
8:00
Speaker 3: half percent als one and a half could be crypto theoretically,
8:03
Speaker 3: and I wouldn't have too much of a problem. But
8:05
Speaker 3: the question is, you know, what kind of a diversification
8:07
Speaker 3: am I really getting from that? Is it really benefiting
8:09
Speaker 3: my portfolio from a downside protection standpoint? And Frankly, Bitcoin's
8:16
Speaker 3: been acting like the Nasdaq lately.
8:19
Speaker 2: Hasn't it.
8:19
Speaker 3: Yep, it's much more aligned to risk on risk off
8:22
Speaker 3: rather than an asset class that has zero or negative correlation.
8:27
Speaker 3: The correlation has been pretty tight. So therefore I have
8:30
Speaker 3: to ask myself what am I getting out of this?
8:32
Speaker 3: I mean, what am I getting from a diversification standpoint?
8:35
Speaker 1: What do you make of what's happening with Blackrock and
8:38
Speaker 1: token ised securities? They partnered with Securitize, now they're starting
8:43
Speaker 1: to pay dividends daily dividends, by the way, on this
8:47
Speaker 1: and with Biddle, And there's probably going to be a
8:49
Speaker 1: handful of other projects out there with big ones. I know,
8:52
Speaker 1: JP Morgan's talking about this. We're seeing pretty much all
8:55
Speaker 1: the majors getting into token is securities. Do you think
8:58
Speaker 1: this has a big future? Sure, a limited future? What
9:01
Speaker 1: are your thoughts there?
9:02
Speaker 3: I mean, I think the first of all, I think
9:04
Speaker 3: they'll take note of what failed miserably in the last
9:08
Speaker 3: go round with this kind of you know, uh dividend
9:12
Speaker 3: slash interest paying deal that went on heavily leveraged nothing
9:18
Speaker 3: backing it. That was what happened before, and take what
9:20
Speaker 3: happened and badly, and you know, was a real problem
9:24
Speaker 3: and say, okay, what are we gonna do different this time?
9:26
Speaker 1: Okay, So Hester Parrish has taught one of the SEC commissioners.
9:30
Speaker 1: You know, they're their argument a lot within this area,
9:34
Speaker 1: especially when they talk about staking and ethereum is one
9:38
Speaker 1: of the core assets that is able to exist here
9:42
Speaker 1: around steaking because obviously you can do that right now
9:44
Speaker 1: if you're getting direct exposure to the asset itself. If
9:48
Speaker 1: staking were to make its way into an ETF, meaning
9:51
Speaker 1: you're getting actual yield on the asset, do you think
9:55
Speaker 1: that would change the perception of a traditional investor looking
10:00
Speaker 1: at that ETF.
10:01
Speaker 3: Well, it bring it's like anything else. It brings in
10:03
Speaker 3: a whole different investor. Right now, all of a sudden,
10:05
Speaker 3: the investor that's looking for growth is one thing, But now,
10:08
Speaker 3: all of a sudden, you have an investor I don't know,
10:11
Speaker 3: it doesn't have to be an older person, but somebody
10:13
Speaker 3: looking for yield for some reason inside of an IR
10:15
Speaker 3: for example. They're like that, that's their play, that's what
10:18
Speaker 3: they do, right. I know investors that are like not
10:21
Speaker 3: buying a stock unless it has a yield, Like okay,
10:23
Speaker 3: well think about all what you're missing.
10:24
Speaker 2: Out on he goes. I don't care. You know.
10:27
Speaker 3: The fact is if you look at the S and
10:28
Speaker 3: P five hundred, you know, thirty percent of the actual
10:30
Speaker 3: return of the S ANDB five hundred over X period
10:33
Speaker 3: of years has been the dividend yield.
10:35
Speaker 2: Right, well, I'm not missing that.
10:37
Speaker 3: What if you invest over here, you can have a
10:39
Speaker 3: lot more because of opportunity for growth. But okay, again,
10:42
Speaker 3: that's what make the world go around, right, That's what
10:44
Speaker 3: we can't argue this.
10:46
Speaker 1: So what you're saying goes wider, the band will.
10:49
Speaker 2: Opens it up to a wider audience.
10:51
Speaker 1: Yeah, which could be a big move here. I want
10:54
Speaker 1: to get into politics a little bit, of course, having
10:57
Speaker 1: some fun here. Mister Donald Trump was out there in
11:00
Speaker 1: Nashville talking at the bitcoin conference, and now he's got
11:03
Speaker 1: some official cryptos sneakers. This guy is the ultimate marketer.
11:07
Speaker 2: It's unbelievable. It unbelievable.
11:09
Speaker 3: You got like eight and ninety thousand for the I
11:12
Speaker 3: think the top seat at that bitcoin conference was like
11:16
Speaker 3: eight hundred thousand. Never sell your bitcoin talking about making
11:20
Speaker 3: a national store of bitcoin.
11:23
Speaker 1: Yeah yeah, yeah, well a strategic reserve, yeah, strategic reserve
11:28
Speaker 1: of this is what strategic reserve. Yeah, a bitcoin, Well,
11:33
Speaker 1: I don't know, is a strategic reserve of gold necessary
11:36
Speaker 1: or oil?
11:37
Speaker 2: Or oil we have oil is necessary? Yes, I agree.
11:40
Speaker 2: I think that is for regulating pricing.
11:43
Speaker 1: I think any I would look at it this way.
11:45
Speaker 1: Would we have had because we had an advantage when
11:48
Speaker 1: Silicon Valley came out and we had a strategic reserve
11:52
Speaker 1: of basically the Internet because the United States controlled it.
11:56
Speaker 1: AI most likely will play into that. I think any
11:59
Speaker 1: innovative technology you have to have a position in globally,
12:02
Speaker 1: otherwise other countries are gonna at some point going to
12:05
Speaker 1: grab it and you just never know.
12:07
Speaker 3: What's interesting is you would think that if the government
12:09
Speaker 3: got involved, it's not like a little, you know, fingerprint
12:13
Speaker 3: on the industry. It's a huge stamp and that would
12:18
Speaker 3: be incredibly bullish for the majors. And we're just talking
12:25
Speaker 3: about bitcoin because that's what Trump was talking about. Since
12:27
Speaker 3: that comment, bitcoin is not done.
12:28
Speaker 1: Well, hey listen, there's a couple of things happening right
12:31
Speaker 1: now with Microsoft. They are getting punched in the gut
12:34
Speaker 1: right here with another outage with Azure. These kinds of things,
12:38
Speaker 1: the CrowdStrike thing happens a Zure is down. This is
12:43
Speaker 1: a global issue. I mean, Microsoft just seems like they're
12:47
Speaker 1: just really kind of you know, screwing the butch here.
12:50
Speaker 1: What's happening and will this have a long term effect?
12:53
Speaker 3: So the question is why is it out and is
12:55
Speaker 3: it related still, by the way to any of the
12:57
Speaker 3: CrowdStrike stuff, you know, at all? Is there anything kind
12:59
Speaker 3: of going on with that. I don't know that answer.
13:01
Speaker 3: But what's interesting is they were riding on a high.
13:03
Speaker 3: It's like they could do nothing wrong for a company
13:05
Speaker 3: that didn't do anything right for a long time. Everybody
13:07
Speaker 3: hated if you remember, it's like, you know, the the
13:10
Speaker 3: evil Empire right under Steve Bahmer and all that. You know,
13:14
Speaker 3: don't share your technology with them if you want to
13:16
Speaker 3: ever keep your technology. That was you know, the whole
13:18
Speaker 3: thing back in the day, and it's changed dramatically. There
13:21
Speaker 3: was you know, under understand ja, this a whole new
13:25
Speaker 3: outlook on Microsoft. Company's done very well in the right places,
13:29
Speaker 3: did the right things. But now all of a sudden,
13:33
Speaker 3: we're entering into something that's really troubling for me actually,
13:36
Speaker 3: right and I think that that there's a real problem
13:38
Speaker 3: right now that the big have become too big and
13:42
Speaker 3: we're relying on just a few companies for the technology
13:46
Speaker 3: to block the bad boys trying to get in. And
13:50
Speaker 3: I don't know if that's the best idea and if
13:53
Speaker 3: in fact, you know, having these kinds of situations where
13:56
Speaker 3: you are fully reliant which night listen, they have ninety
13:59
Speaker 3: nine percent up time? So right, don't they these these these.
14:02
Speaker 1: Uh they do they do most of the clouds do, Yes,
14:06
Speaker 1: they do. I think you're backing yourself into crypto though,
14:09
Speaker 1: because blockchain is a decentralized platform that essentially would blockchain
14:14
Speaker 1: in general. You know, if you just look at decentralized
14:16
Speaker 1: node architecture, this is really architecture that was built in
14:20
Speaker 1: the eighties when you look at decentralized nodes before we
14:22
Speaker 1: started seeing cloud creation. I don't I don't like making
14:25
Speaker 1: these kind of pressures.
14:26
Speaker 2: Once once we hit.
14:27
Speaker 3: Paul, once we hit mass inconvenience, that's when it will happen.
14:31
Speaker 3: And believe it, that's where the problem is going to happen. Yes,
14:33
Speaker 3: they're going to pay either in court or are they
14:35
Speaker 3: going to pay on the on the cost of people
14:37
Speaker 3: going I'm.
14:38
Speaker 1: Not using using them out. Let's talk about this whole
14:42
Speaker 1: idea of weekly in flows to small caps, biggest one
14:45
Speaker 1: ever coming in UH. I listened to Tom Lee. I
14:48
Speaker 1: don't know if you listen to him. He's kind of
14:50
Speaker 1: talking about Tom is very bullish, very bullish. What do
14:53
Speaker 1: you think about that? He likes the small cap pivot,
14:57
Speaker 1: He likes the idea of continued up for the Nasdaq
15:01
Speaker 1: and also maybe even a return back into the major
15:05
Speaker 1: mag seven. What are your thoughts?
15:08
Speaker 3: First of all, Tom Lee likes everything and he's very
15:11
Speaker 3: bullish on everything all the time. I think maybe he
15:13
Speaker 3: was once. Maybe he was like, ah, maybe things will
15:16
Speaker 3: slow down a little bit. Small caps, so small caps,
15:18
Speaker 3: I agree. One of the big reasons why a person
15:20
Speaker 3: like Tom Lee or the people you watch on TV
15:23
Speaker 3: will talk about small caps, we'll talk about something called
15:24
Speaker 3: the reversion to the mean or mean reversion trade. What
15:28
Speaker 3: has happened and why the small caps have done so
15:30
Speaker 3: well in my opinion, is that you got these big
15:33
Speaker 3: mammoth companies, You got these three two, three trillion dollar companies,
15:36
Speaker 3: right when all of a sudden, portfolios are scraping a
15:39
Speaker 3: little bit off where they're putting it, or they're putting
15:42
Speaker 3: in small caps. This little bit that they're taking off
15:45
Speaker 3: of the mag seven the big caps. Yeah, is a
15:48
Speaker 3: massive amount of money and they have to reposition it.
15:50
Speaker 3: Some fund managers have to be positioned, they have to
15:53
Speaker 3: be invested. Now that's thinking a small cap. So they
15:56
Speaker 3: got to take this money. It's like the guy who
15:58
Speaker 3: lived in New York. You had a two and a
16:00
Speaker 3: half million dollar house. It was like fifteen hundred square feet. Okay,
16:04
Speaker 3: it comes to Florida. He says, Oh my gosh, this
16:07
Speaker 3: million dollar house is like thirty five hundred square feet
16:10
Speaker 3: all from a million three.
16:11
Speaker 2: We'll take it.
16:13
Speaker 3: And that's what happened, this massive amount of money that
16:15
Speaker 3: has to be repositioned. They didn't really the valuation differential
16:19
Speaker 3: was like okay, so that's what happened. I think recently
16:22
Speaker 3: small caps and why so much money was flowing into it.
16:26
Speaker 1: So you got Meta, I know you like talking about them.
16:28
Speaker 1: This is up eight percent after being at the Q
16:30
Speaker 1: two earnings. You look at Meta and what they're doing.
16:36
Speaker 1: I don't know if you ever saw the recording or
16:39
Speaker 1: the video where Meta and nvideo the two CEOs were
16:42
Speaker 1: talking and you know there seem to be a little
16:44
Speaker 1: bit of you know, bromance going on between the two companies. Yeah,
16:49
Speaker 1: what are your thoughts about Meta as a whole is
16:51
Speaker 1: a AI play. Everybody's saying that Lama is the one
16:55
Speaker 1: to win.
16:56
Speaker 3: It, so basically, yeah, So the first of all, one
17:00
Speaker 3: of the big issues is that it's fascinating when Meta
17:04
Speaker 3: was investing heavily in the Metaverse stock tank, do you
17:08
Speaker 3: remember that Now they're investing forty billion dollars in capex
17:12
Speaker 3: over a period. Everybody loves it and videos moving higher on.
17:16
Speaker 3: Everybody's excited in terms of the Lama, in terms of AI.
17:19
Speaker 3: Just to make sure everybody's clear about this, a lot
17:21
Speaker 3: of different ways that Meta can utilize.
17:25
Speaker 2: The AI right.
17:26
Speaker 3: One of the big things is going to be, of course,
17:28
Speaker 3: is what they make their bread and butter on is
17:30
Speaker 3: figuring out what exactly does Barron want to buy today
17:35
Speaker 3: and put an ad right in front of you is
17:37
Speaker 3: kind of like a perfect piece of bait in front
17:39
Speaker 3: of a fish and wiggling it right there whether you're
17:42
Speaker 3: hungry or not, and you're just like, I got to
17:43
Speaker 3: take a bite.
17:44
Speaker 1: There's a lot of movement though. I think with Meta
17:46
Speaker 1: they've done a good job on their headset product that
17:49
Speaker 1: looks like we're going to see even a more thin
17:52
Speaker 1: or reduce size glasses and headset going forward. And I think,
17:56
Speaker 1: you know, in terms of the growth opportunity that they're
17:59
Speaker 1: trying to do, this could be a play out of it.
18:01
Speaker 1: And again it goes back to the whole point. It's
18:03
Speaker 1: still a wall garden. I get this. I argue this
18:05
Speaker 1: with our research team all the time. But there is
18:08
Speaker 1: an opportunity here. And one of the things that Zuckerberg said,
18:11
Speaker 1: he was on record saying this, well, we've we've got
18:13
Speaker 1: a couple of clips on this, but he basically said
18:15
Speaker 1: to the Nvidia CEO that he didn't like being in
18:20
Speaker 1: these other ecosystems and that he felt the open network
18:24
Speaker 1: model a true you know, open access was the future.
18:28
Speaker 2: Now.
18:28
Speaker 1: I don't know if he's, you know, all of a
18:30
Speaker 1: sudden excepted religion and he's gone away from the idea
18:33
Speaker 1: of wallgardens or what that might look like. But would
18:35
Speaker 1: that change your opinion of how Meta goes forward If
18:38
Speaker 1: they start to open things up such as Lama, which
18:41
Speaker 1: is essentially free to build on right now.
18:44
Speaker 3: The thought of them letting that out in the wild, yeah,
18:49
Speaker 3: I don't know why.
18:49
Speaker 2: They would do that.
18:50
Speaker 3: I don't understand why they we take all the stuff
18:52
Speaker 3: they know and all of the stuff. The else is
18:55
Speaker 3: to kill everybody else. Well, but if they keep it
18:57
Speaker 3: to themselves, they'll kill everybody else. I mean, if they
18:59
Speaker 3: put it out there, I get the data, I don't
19:01
Speaker 3: know I.
19:02
Speaker 1: Would I would argue because I think, you know, if
19:04
Speaker 1: you look at the revenue models, his revenue model, I
19:06
Speaker 1: don't think is based on a I think he's building
19:09
Speaker 1: his revenue based on these headsides the ecosystem they're going
19:12
Speaker 1: to be dealing with v r AR, you know, down
19:14
Speaker 1: the road. This is just a vehicle engine. It's just
19:17
Speaker 1: like anything else, almost like social media to a certain extent.
19:20
Speaker 1: And if you have open Ai and Google and Microsoft
19:24
Speaker 1: and all of these different large language models that are
19:26
Speaker 1: building and trying to figure out a business model, and
19:30
Speaker 1: then you have the one of the biggest beasts in
19:32
Speaker 1: the game say you know, we're just going to drop
19:34
Speaker 1: on it. It's kind of like the deal with Google
19:36
Speaker 1: and Whiz, where if Google says, hey, we're going to
19:39
Speaker 1: try to build something on our own and try to
19:42
Speaker 1: kill Wiz because Wiz an emerging cloud security product, which
19:45
Speaker 1: I think is going to be huge. But I think
19:48
Speaker 1: that's the game. It's figure out how to do this
19:51
Speaker 1: because what's the old terminology in these early startups like this,
19:54
Speaker 1: You either pay too much because you know you've overvalued it,
19:59
Speaker 1: or you know the innovator has sold too early.
20:02
Speaker 2: I love it.
20:03
Speaker 1: Let's talk about rates. The FOMC was this week. Chair
20:07
Speaker 1: Palell looked like he was giving us a little bit
20:09
Speaker 1: of some cat nip there that was saying, yeah, we
20:14
Speaker 1: could see something coming in September. Yeah, what's your play
20:18
Speaker 1: on this? Do you like September is the month?
20:21
Speaker 2: I do not.
20:21
Speaker 3: I think he is the ultimate carrot pusher, always has
20:24
Speaker 3: the carrot in front of the nose of the markets
20:26
Speaker 3: all the time. I think it would be a very
20:27
Speaker 3: big mistake of theirs to do so. I know the
20:29
Speaker 3: Bank of England drop rates for the first time, I
20:32
Speaker 3: think it was this morning, But I still don't think
20:35
Speaker 3: we're out of the wood from an inflationary standpoint. I
20:37
Speaker 3: know they're talking about they're making a little bit of pivot.
20:40
Speaker 3: That was a big news. Hey, you know what, I
20:41
Speaker 3: think we've done a lot for inflation, but we're probably
20:43
Speaker 3: going to move to employment issues. We got to focus
20:45
Speaker 3: on that. We saw initial claims come out about two
20:48
Speaker 3: hundred and forty nine thousand recently, And the thing that's
20:54
Speaker 3: going to be interesting about this is if, in fact
20:59
Speaker 3: Powell does reduce rates in September. By the way, who
21:01
Speaker 3: wants rates down in September?
21:02
Speaker 2: The markets. The markets are pushing.
21:03
Speaker 3: They've been pushing him forever, right, He's not budging if
21:08
Speaker 3: rates go down in September with one of the I
21:10
Speaker 3: think few times that before an election, which is just
21:13
Speaker 3: a couple months away, that the Fed would actually step
21:16
Speaker 3: in and do something. I think it would really a
21:17
Speaker 3: big mistake because I think Trump would be pissed off.
21:20
Speaker 3: I don't know if this really has any impact on
21:23
Speaker 3: election issues, like, oh, because we dropped rates during the
21:28
Speaker 3: tenure of the Democrats, that was better for something. I'm
21:31
Speaker 3: not exactly sure what the deal is with that, but
21:34
Speaker 3: I know that is not usually something that the FED
21:36
Speaker 3: likes to do because it does become a political mess.
21:40
Speaker 3: And I think that the listeners here and the viewers
21:43
Speaker 3: need to understand something. If you've only been around investing
21:47
Speaker 3: for ten or fifteen, twenty years, you know that, wow,
21:49
Speaker 3: dropping rates is great for the markets. The fact is
21:53
Speaker 3: that the reason that ates drop is this something wrong.
21:57
Speaker 3: There's a need to actually stimulate the economy. Something is
22:01
Speaker 3: out of line, and that's usually not the best when
22:05
Speaker 3: it comes to investing after a rate cut, just to
22:08
Speaker 3: let you know, so just keep that in mind.
22:10
Speaker 1: Yeah, I mean, we've talked about this before. If you
22:11
Speaker 1: look at the historical analysis, most mostly Wall Street goes
22:14
Speaker 1: down when rates go down with it correct though, that
22:18
Speaker 1: is a factor that plays into this. I think some
22:20
Speaker 1: of the risk stocks, you know, you could look at
22:21
Speaker 1: some things like that, some of the risk plays in crypto.
22:23
Speaker 1: Many people would say, okay, maybe one prediction for twenty
22:28
Speaker 1: twenty five, give us one prediction for twenty twenty five.
22:33
Speaker 3: Utilities will continue to do well. I think that you
22:36
Speaker 3: have multitude of issues. You have lower rates, stability, and
22:40
Speaker 3: the big factor that I think people are not looking at,
22:43
Speaker 3: and you can look at it as an AI play,
22:45
Speaker 3: is that the power consumption requirements from all this stuff
22:47
Speaker 3: going on. Whether that works out or not. By the way,
22:50
Speaker 3: whether any of this works out or not, it doesn't work,
22:52
Speaker 3: it's a good way ahead work. Yeah, it's great. So exactly,
22:55
Speaker 3: so if you have a need for more power consumption
23:01
Speaker 3: for let's say generative AI, or for even for cloud
23:08
Speaker 3: right for servers, YEP and rack storage farms and all this,
23:14
Speaker 3: I think utilities are going to be an interesting play
23:17
Speaker 3: moving forward.
23:18
Speaker 1: All right, I like it. Andrew Horwitz coming over from
23:21
Speaker 1: Horowitz and Company. Make sure and check him out over there.
23:23
Speaker 1: Thank you always, Andrew for coming on the show. We
23:26
Speaker 1: appreciate your.
23:27
Speaker 2: Time all you're the best. Thank you so much.
23:29
Speaker 1: You bet all right, So maybe guys aren't not in
23:32
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23:34
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23:38
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23:46
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