What Does AI Mean For Your Future?

You should be saving every dollar that you possibly can. You should be reducing your spend as much as possible and you should live like a bug person for the next three to four years and shove all of your money into the markets because my take is this is where I differ from the doomers.

The doomers always go straight to AGI. The doomers go straight to if AI really takes off in the next two to three years then that means that unemployment is going to explode massively and things are going to get really bad and politically the environment is going to get horrible but my take is different. I think AGI might be.

AI, what's going on? We're streaming. We're streaming. We are absolutely streaming.

Why don't we wait a little bit for the people to roll in? Whenever I say we're streaming, I think of that scene in Old School, which is still my all-time number one favorite comedy, where Will Frell says, "We're streaking." And there's no one streaking. It's just him.

I have no idea what you're talking about.

No, you're kidding. I'm not that old, dude. You've never seen I have no clue what you're talking about, dude. I'm so jealous. I wish I could see Old School for the first time.

I remember the first time I saw Old School. It was 2003. I took my high school girlfriend to the movies and we went to see Old School and it was just like sidplitting crying hilarious laughter. It basically ushered in a new era of comedy that movie. It was like the whole frat pack Will Frell and Vince Vaughn. It was the first time they ever did that. And so it was totally fresh and new before Wedding Crashers, before that style of comedy took off at the 40-year-old virgin and This is the end. That was the OG hilarious comedy. It was incredible.

I mean, I remember that era of comedy. How have you not seen old like is this like a Jud Appetau type thing?

Jud Appatile is definitely inspired by this. This is Todd Phillips, the guy who eventually went on to direct Joker. But basically Todd Phillips's first movie was the first big comedy was Roadtrip. This is his second and this is where he just took it into the stratosphere. And then Hangover was like, you know, the series made.

Well, I obviously obviously I've seen The Hangover.

Yeah. But Todd Phillips is a comedic genius. He's basically the best director comedy director of our time.

You know what? The beginning of this podcast I think is going to go down as one of the most rifts that we've ever had.

I think it was good honestly. I think we are human beings after all. We do things outside of crypto like watch movies and take walks in the hills. It's normal.

You know what I did last night by the way as we're still getting people on. It seems like we should probably just another two minutes. Guess what I did last night.

Jonah, what did you do last night?

I went to my first Broadway musical.

That's really cute. Mine was back in 03. What What did What was your I Well, this I saw I saw The Book of Mormon as far as like genuinely.

So So I feel like you as a musical talent have been to your fair share, huh?

Yeah. I mean, my favorite play I've ever seen was in in London at the National Theater. It's the Lehman Brothers trilogy. That's highly recommended for anybody, especially the Leman Brothers trilogy. Best play of all time in my opinion. Doesn't get any better than that. Especially if you can catch one of the original actors in there. These guys are like they've been kned by the queen. They're that good.

The best musical like Broadway musical I've ever seen I think is the first act of Hamilton. This the rest of it is you can wait a second. The Lehman trilogy is about Lehman Brothers.

Yeah, there's a play about Lehman Brothers and it's the best play I've ever seen in my life. It's unbelievable. It is unbelievable. Avi, if you have a chance to see it, go see it. It blew my mind. I've never had such an emotional reaction to any sort of entertainment. It's like the fact that I work there is irrelevant. the the last minute of it is about the crash. The whole thing is more about like it's about like just Jewish immigrants starting a business in America and then of course it is.

I mean that's of of of course they're Jewish.

Of course they're Jewish. Well, we're never going to escape the allegations, Jonah.

No, we're not. So, let's just lean into them. So, let's let's lean into them. And speaking speaking of allegations, there have been a tremendous tremendous amount of allegations levied recently against this concept of AI d ai optimism. All the doomers, all the doomers have come out in force basically saying, "Hey guys, you have you have two years to escape the permanent underclass. And if you don't hyper gamble your way to success, everything is over for you." What do you think of that tape, Jo? Because this is this has been this has been like percolating through. There's a there's an article on Twitter that went super viral about how everything is going to change in in the next two years.

What's what's your take is is everything. Was this the Schumer thread or the mechanism capital guy thread?

This was the Schumer. Yeah, that one went super viral. I tell you my I thought it was AI slop.

But I thought so too, but my views are the reason why I thought it was AI slop was because it was so woo woo. There was no conclusion. It was like AI will change everything and they're not telling you and you don't know what's going to change but they do. It's like well tell us the hell's going to change and he didn't say. So basically I my views on this are evolving rapidly. Basically well okay fine I was I'm not giving him enough credit. There were some takeaways. There were there were I think I think there were genuine takeaways like he he gave you he was like short short businesses that sell human time buy businesses that either own the means of AI production or the commodities that go into AI like power and GP you know compute and then you know that that was sort of like the takeaway and just and also the takeaway is everyone's screwed but basically my you know in a nutshell my views on AI have evolved.

At first, when I saw ChatGpt and all of the hype around AGI, I thought, "This is just a fundraising ploy. It's cool. It's a chatbot. We're not going to have technology that's replacing humans on mass anytime soon. And this is just like every other lite panic attack for the last 5,000 years of human history where it's like no, we shouldn't invent the the wheel because that will put human like uh chariot uh carriers out of out of work, right?" So I just kind of didn't I I sort of dismissed it.

Now the more I use AI the more I'm like I think there's kind of you know I subscribe to chat GPT and Gemini. And you know we use claude code for the thousandx terminal that that's the expensive one. Basically there's kind of no reason to hire entry level people who aren't utterly elite in some sort of intellectual or talent type capacity.

So, I think that's going to create social unrest and I I don't expect all knowledge work to be replaced by AI, but once humanoid robotics show up and put a whole bunch of bluecollar people out of work, drivers, cleaning ladies, whatever, uh, plus, you know, just a bunch of young young people who didn't go to maybe a top 5 to 10 university just having a much harder time getting a high quality job. I think there'll be some real problems and I think I think ultimately the conclusion is going to be that uh there's going to be redistribution voted into the political spectrum socialism.

I think so. So my my my take on this is sort of nuanced, but it it agrees with you. It agrees with you very far out, but I think the key is that I agree with you far out. I don't necessarily agree with what you're saying right now.

I think for the first overtime, let's take a step back. What does technology do? At the end of the day, technology provides leverage to a human. If you go back a hundred years and you wanted to start uh you know you you you wanted to start building a company that produced cars and you were Ford, you needed to hire tens of thousands of people to go assemble your cars, right? And as technology advances, becomes a lot easier to produce cars. And the number of people that you need shrinks and shrinks and shrinks and shrinks and shrinks because suddenly you're able to do with one person what took 10 people or 100 people decades ago.

And that's really what AI is doing right now. It's providing leverage and reducing the amount of people that it takes to produce the same amount of output. And over time, what we found and what we're seeing right now is that productivity is way like highlevel metrics of productivity are way up, right? Like the amount of apps launched on the on the Apple App Store, that metric has gone absolutely vertical. The amount of GitHub commits has gone absolutely absolutely vertical post what about the number of meme coins and shitcoins launched?

Just kidding. Keep going.

that's also gone totally totally vertical and and AI shitcoins and and things have gone completely vertical too, right? So, but what I'm trying to articulate very specifically is that we're actually only at the beginning stage of this process, but there are a lot of people that I speak to dayto-day because I'm I'm 30. The people that are going to be the most impacted by this are the ones with low-level skills. It's the people below the age of 25. It's the recent college graduates. Those are the most replaceable people by far. And so for them, the crisis is coming very quickly in my personal opinion. For you, the under 25year-old, your crisis is here. For me and you, Jonah, the 30 plus with skills, the crisis is much further out.

So when you have hard skills, you know, let's say let's say uh you know, you you built a you've built a career for yourself, you've built a network, you know, people, that's valuable in itself. And so obviously you're going to have an easier time navigating this world than somebody fresh out of college that just got their CS degree. Now, maybe you graduated college as an electrician, and that job is going to last for a really long time because there all these regulatory hurdles, and it's it's a it's a it's a physical job. But basically like the what we've referred to in the past as the laptop class bgeoisi they are in the most trouble. The people that would have graduated college and gone to work at Bane or BCG or McKenzie and then six years later try to start their own company. The people that were business analysts at Capital One, I was one of them for about three and a half seconds, but still.

What's in your wallet?

What's in what's in your They were always They're always so proud of the Jennifer Garner commercials. They're always Were you the Sorry, quick interjection. Were you the business analyst who decided that we're going to receive three pieces of spam snail mail per week at every home in America?

Uh trying to get people, [laughter] but they were not about it. Too many obvious.

Exactly. Okay, keep going.

So, so, so, so the question is right. Uh what do you tell those people? Like what is an actionable thing? Let's say you're listening to this podcast and you're just hearing this dumerism and you're like what the do I do?

My take is that basically you should be saving every dollar that you possibly can. You should be reducing your spend as much as possible and you should live like a bug person for the next three to four years and shove all of your money into the markets because my take and this is this is where I differ from the doomers. The doomers always go straight to AGI. the doomers go straight to if AI really takes off in the next two to three years then that means that unemployment is going to explode massively and things are going to get really bad and politically the environment is going to get horrible but my take is different I think AGI might be let's say let's say it's even seven seven years out the next three years of our life which it's a long time even one year is a long time two years is a long the amount of productivity gains and the amount that these large businesses that are producing AI and selling and providing the infrastructure for AI and building data centers and the hard assets that are needed in order to provide this energy and build these uh build these monstrous warehouses. the amount of capital that they are going to accumulate until AGI is is is released and the political environment shifts is going to be astronomical.

I 100% agree with Andrew Andrew Kang's article in this case where we're reaching we're reaching a point of massive exponential growth and basically up until AGI really really really displaces a tremendous amount of people uh it's going to impact the lowest spending segment of society first anyway so it's not going to impact the bottom line I mean if you look at general spending 50% of all spending is done by people in the top 10% and the people in the top 10% are the people least likely to be impacted by AI. And so I don't buy the argument at all in any way, shape, or form that we're going to have a massive collapse in earnings because of high unemployment because the people that are going to start being unemployed over the next two to three years are the people that aren't spending money anyway.

Right. Right. And so my take on this is that you need to be invest as invested as possible in the markets. you need to be as invested as possible in hard assets. Uh otherwise, you're going to be left behind. That's and I and I hate to say it that way, but I I I do think it's true. And and this is it does require a bit of shift in shift in mentality and behavior which is why you know the the article uh that's going gigafiral I think was too long candidly for what it was but it did have some very good piece of advice in there which is that if you're young or if you're coming up make it your goal to know and learn as much about AI as possible so that you can leverage yourself in the next two to three years and make yourself so much more valuable to that company. Build that network. Get that coffee with that person. Become an indispensable part of your company so that when everyone's indispensable, at least you've proven yourself more competent than the rest and somehow maybe you you you'll get to stick around, right?

So, that's really what it is. I mean, I I'll I'll stop my I'll stop my monologue there.

No, no, no. It's a great monologue. I I mostly agree with your take. I have a few things. the make yourself indispensable thing is precedes AI. But yes, if you're not actively figuring out how to make how to use AI to make yourself indispensable now, somebody else will have that leverage and make you dispensable. So, I get that point. I think it's kind of a tired trope though.

The the beauty of being young like I guess my first year as a professional person out of college was at Leven Brothers. Leman Brothers went bankrupt. So, my second year was at Barclay's Capital because they bought Lehman Brothers assets, including me, out of bankruptcy. And then Barclays proceeded to fire 15,000 people. I'm going somewhere like this. Firing 15,000 people is a big job, right? So, they basically had the Bobs from Office Space like consultants reintering the entire workforce every Friday. So, I'd have to rein for my job every Friday. And my my quote was like, I'm young. I'm the most technically capable person on the, you know, credit trading floor. After you fire somebody, who would you rather have figuring out their spreadsheets? Like, the old guy or me? Like, obviously me. So, I'm indispensable. Oh, and by the way, I can do everything from answering the phone to doing actual trades and making you money because I'm young. I'm not going to be too good to go do back office work or answer the phone for people, but I can also make you money. Like, I it's a no-brainer to keep me and I'm the cheapest, right? So that making yourself indispensable was something that was ingrained into my mind early in my career. So when it's like the special advice for the era of AI is make yourself indispensable with AI, it's like I I kind of I kind of feel that preceded AI.

Now you're not wrong about the fact that AI is going to create wealth for asset holders. I actually tweeted this, right? I tweeted buy hard assets yield curve control is coming. The implication there is that AI is probably going to acrue value to, you know, a like AI native companies that are already running the S&P 500. That tweet went viral, right? Like it got 120,000 views. Not like crazy viral, but viral enough. So basically my point here is you like I during COVID when COVID first broke out once they started printing money I said the best thing you can do is take out leverage and buy hard assets buy I bought a house back then it was the best trade uh one of the best trades of my life were not for the fact that you know somebody who maybe is America's biggest unconvicted white collar criminal became my tenant but other than that um the asset value it was great bought bought it with leverage I took out more leverage and bought Bitcoin. I bought S&P at $2,400. Uh, you know, the index, and it's just it's all been an amazing trade. Everything's like tripled.

But the thing is, we're in another one of those times, except there hasn't been a the the market psychology of this is that there hasn't been a huge crash that gives you the dip to buy. Instead, there's just like some Tinder has that has been dowsed in gasoline and lit on fire in the form of this new technology. And so now's kind of the last I if you could even call it a plateau before I think assets go really parabolic and labor goes south. Now the ultimate impact of that as we've seen through you know name your historical revolution that creates inequality is socialism redistribution of wealth. But I I actually take your point that that's going to be a knock-on effect of the trade, the clear and present trade, which is borrow money, buy stuff, right? Like if if you don't, you know, if you don't I mean, you're you're not supposed to I don't think you're supposed to take out too much leverage. But right now, money is cheap relative to the amount of capital that's going to be consolidated by the things that are building our future. And when I say buy the things that are building our future, I mean very specifically energy because the demand for energy is going to go through the roof. Be careful buying energ physical commodity energy though because there's a ton of supply. There's there's there's a ton of supply, but energy usage is going to go through the roof and companies that benefit from energy usage going through the roof, I think, are going to do well.

Personally, I just I got to say something on this. I'm commodities guy. The worst thing you can do as a trader, especially a commodities trader, is ha is be right and make no money or lose money. Like if your thesis.

Well, I think I think that's Yeah, just just it's like a like as traders in general, right? Like would you rather be right or would you rather make money, right? Being wrong and losing money is actually way better than being right and losing money because if you're wrong and you lose money, it's like it's because my thesis was invalidated somehow and I I learned from that and move on. If you're right and you lose money, like shame on you. And there are so many opportunities in this market to be dead right about AI, dead right about energy consumption and lose money. So if you're like energy consumption's going up, I'm going to buy natural gas on the highs and then like the cold snap ends and natural gas plummets. Like shame on you. So basically what I'm saying here is like the way you express the energy trade, some of these trades are extremely hard to express. Like oh demand for compute is going up. How do I put that on? Right? maybe Bitcoin, you know, like you have to really think through these things. So my point here is like be like expression of the trade is so critical.

Go on, Obby. I'm sorry I interrupted you.

I I agree. So I guess the question is let's say so so my expression of the trade personally uh is I want to buy I want to buy assets that are as close to that fire hose as possible. And I also at the same time have held thesis for for months and months and months and months months now that at the same time that we have this AI massive productivity boom that's going on and this massive capex spending uh that's that that's about that's about to happen from from all these from all these uh you know companies like Meta and Amazon and Google. They're spending a ton of money on building out these data centers, data centers in house. We're have we have a fundamental shift in geopolitics away from the unipolar world of the US to the multipolar world of today, right? To the China sphere of influence, the Russia sphere of influence, the European sphere of influence, and the American sphere of influence, right? And that's really why, like, if you just take a step back for a second, that's really why we're spending so much time on our hemisphere is because we've decided to give up on the rest of the hemisph on on the rest of the world. We're spending all of our time on the Americas now, right? I think I think that's why, you know, may maybe that's even why Bad Bunny was the performer at at the Super Bowl. We're trying to think about that. We we'll get we'll get there. But we're trying to appeal to the.

But you're the Puerto Rican on the podcast. What did you think as the Puerto Rican?

I am no longer Puerto Rican. I have I have left my Puerto Rican days behind. But uh I do I do I do go back there and I do love it and I do love my fellow former Puerto Ricans. But as as of as of today, I am a I am a happy and proud East Coast Jew in New York. I wish I wish I wish I was there during the Super Bowl. That would have been that would have been awesome. to go back I thought you were dancing around at halftime and we're doing we're doing the weave we're doing the we're doing the little Trump weave here.

Yeah. Let's let's weave it let's weave it back to the original point which was you have these two mega trends that are occurring right now. You have this AI mega trend and this geopolitical mega trend. And then the question is like how do you fit your how do you fit your allocation in there and how do you make as much as as as as much as much money as possible. And I think one thing is to have, you know, 12 to 18 month time horizons on a lot of these trades and be able to stomach some of the volatility around those trades is very important. Uh, and maybe you can even find things that are crossovers. Like I've I've talked about uranium. I've talked about rare earth minerals, but and those those are good crossovers because uranium I think is going to be very critical to powering the next stage of energy production, especially especially in Europe. Uh, and then you also have things like who's going to consolidate all the power and I think people like Google, Amazon, maybe probably not, but probably not Facebook, but maybe maybe just Google and Amazon candidly uh because they're they're they're at the forefront. And then if you can uh potentially get some private investments in, you know, robotics companies or maybe maybe you can take a chunk of uh take a chunk of anthropic if you can get an SPV in it. But really, I think most of the opportunities here are are in the public markets. And then you want to say, well, what else benefits? And it's it's energy, um, industrials, I think, as well. And that's and that's really my portfolio right now. That that's that that's really it is is who's who's who's gonna be needed, right? If if you're building if you're spending if you're spending $500 billion on building data centers, you're you're going to need some people to build those data centers for you and those those people are going to benefit massively.

Yeah. I mean, I think I I disagree with one I agree with everything you said except for the fact that most of the alphas in the public markets, I think I think the trade expression needs to be a little bit more elegant than that, frankly. Um I think if you you know If you want to like let's say you're a young person and you're looking for a way to benefit from this trade with zero effort and maybe make 50 to 100% over a two-year time frame, which is would be an awesome return. Yeah, I agree with you. Public markets, but I think if you're trying to turn this into like the kind of wealth creation event that crypto was maybe in 2017 or, you know, 2021, I think you got to go private. And what I mean by that is like okay so how does a commodity how does a so data centers need energy let's just examine that thesis and break it apart for a second okay so you know there's a big spend coming you know that spend is kind of fragmented right because a data center being built in Virginia isn't going to impact the price of gas in Vermont so you know let's let's just break it down how does it there are three kinds of commodities there are commodities that are mined from the earth literally dug out of the ground with holes like oil and gas. Then there are sort of manufactured commodities. Uh like when you take oil and put it through a manufacturing plant called a refinery and you create gasoline. There's no gasoline buried underground. You have to make it. You have to manufacture it. Then neither oil nor gasoline is particularly useful in and of itself, right? Oil you, you know, Native Americans used it as tar to put together canoes, but other than that, there's really no use case. You have to manufacture it into gasoline. And what what are you going to do with gasoline? Light it on fire? That doesn't help. You have to put it through another refining process, another manufacturing process in a portable manufacturing refinery system called an internal combustion engine to turn gasoline into the useful commodity called locomotion. All right. So, data centers need the useful commodity. They drink that up. It's called, you know, electricity. Um I think you know I don't necessarily think that the right trade is to invest in the mind commodity which is natural gas which is powering most of this stuff because natural gas is largely driven by other factors. I think you want to focus for most of this AI I think you want to focus on the manufactured commodity node in that system that I just described. So, like maybe it's public utilities in the locations where there's a big data center build or maybe it's um maybe it's literally you you go you go out and buy shares in construction companies, larger construction companies that do data center builds. Or maybe if you're an entrepreneurial young person who didn't go to college and you want to make a bunch of money off of AI, maybe you go and start a construction company in one of these places, right? and hire a bunch of local technicians and organize that and become a general contractor.

You know, there's all kinds of different ways to to work at the manual. There there are that's true. There there are a lot of different ways to and in my tweet what I said specifically is own the machine. I think just the easiest way uh for for the vast majority of people is probably not going to be starting a construction company. Although that's a great idea. If you have resources, maybe that's maybe that's I mean I actually know like there's there's a startup uh that I'm invested in through through through a fund that I uh put money into and what they do specifically it's run by a former Anderil guy and what they do specifically is they provide physical security to data centers because data centers are filled with extremely valuable objects. They're filled with a lot of things a lot of criminals would love to get their hands on and sell on secondary markets. And so physical security for data centers is actually a hugely underrated part of all this. And he sort of tapped into that. He's like, "Okay, this is this is going to be very important and built an entire company around it. Went to VCs, raised a ton of money, and now he's actually has like a pretty pretty phenomenal pretty phenomenal product." And so if you can provide a service to the machine, that's also huge. And so maybe you should be thinking about that as well.

Sorry, re-explain what the product is exactly.

It's providing physical. So they have they basically set up a system to they'll set up special cameras. Uh they'll set up special security systems. It's like imagine imagine you're you're get you're trying to steal something from a lou and they have laser like laser wires kind of stuff like I just set one of those up in my house. I have likei sci-fi level security mechanisms um to basically make sure that if anything even the smallest thing goes a little bit haywire you you see maybe a wolf runs past your data center uh you'll know exactly what happened right it'll tell you exactly what's going on at any moment and so it makes it very difficult for people to come in there and steal that set up in my house the AI can differentiate humans from cats when it's a human.

I I guess I don't have the automated AI machine gun turret that in the James Cameron movie Aliens 2 that kills all the aliens, but like short of actual like AI, you know, death bots, I've got I've got all that. I got it installed last week. It's pretty that's a good business actually. It's a really it's a really good business and he's securing he's securing a ton of value and it's in an area that people don't necessarily think about. So maybe you the listener can try to think what are some areas that aren't being served right now that we can come up with that maybe we can we can provide for your local local data center.

I mean, one of my friends, another example, uh, he made he made it he made a killing, uh, absolute killing what he did hired a bunch of college students and he basically got them to research random warehouses on like the outskirts of cities of like De Mo, Iowa, and basically call up the owners of these warehouses who very frequently happen to be 65 5-year-old guys who used to use this warehouse to store corn and negotiate buyouts for it without telling them what they're buying it out for, buy it out, retrofit it for it to be like a Amazon warehouse or or a data center and then go basically flip it for like a 5 to 10x after after the retrofitting, right? And so there all these little things that I think you can do that people don't necessarily think about to try to take advantage of the of of of the boom. But the reality is that for the for the vast majority of people, the best use of your time is to get the highest paying job that you possibly can right now. Utilize AI tools in your day-to-day uh in in your day-to-day to be able to actually get to that next level and get some respect in your in in your workplace because I think AI tools are underutilized. Three, make sure that you're investing in the markets. Like do not do while the money you make in your job market.

I think I think this is where it sort of separates out a little bit. Like passive investing right now I'm not sure is the like passive investing in the index funds I'm not sure is the right approach because the capital concentration will continue. And I know this has been happening for a long time and everyone gets in everyone gets up in in in your grill and they say, "Uh, well, no, Max 7 has been driving returns for the last four years. So like you're just repeating something that's already happening." And what I'm saying to you is you could have said that two years ago, buddy. It was true two years ago. It was true. It was true one year ago. It was true six days ago. And yet still it keeps happening. And the reason that it keeps happening is because it's a unfightable mega trend. It's like trying to fight the ocean right now. Capital concentration is the name of the game right now. Uh this this is going to continue. You can scream at the top of your lungs that Mag 7 is is going to underperform and they might underperform for you know 3 to 6 months but they're going to outperform all other tech companies like tech tech might tech might rerate a little bit but the the companies that are at the top of the game are going to continue to accumulate and there and that's that's just the unfortunately the reality of the situation. The other the other point that I'll we got to pivot to crypto at some point.

All right, we got we do have to pivot to crypto after break and then and then we'll pivot pivot to crypto and talk about crypto a little bit. It's just this was sort of the this was sort of the topic of the week that I think everyone was everyone was thinking of. Uh, everyone everyone right now is actually quite bearish on Mag 7 and and and they're all citing capex issues, but it's like it's like people can't differentiate between downstream effects that aren't going to rerate immediately. So for example, spend on other companies for future buildout often doesn't rewrite the companies that are being spent on, but it will rewrite the company that's doing the spending pretty quickly. So like every like every hedge fund now knows and every hedge fund pays attention to to to Mag 7. Everyone now knows that they're spending a tremendous amount of money on on build on building out. And so I think that their underperformance is a reflection of that, but should not necessarily like that has already played out, right? Like their underperformance has already already played out. Like you you're going to