Larry McDonald

So the bottom line for everybody watching us right now, in that kind of higher interest rate regime, companies that control assets are worth more, whereas software companies and companies that control intellectual property, the Netflix of the world, all the software companies in that new inflation regime, those companies are worth less.

Well, if you think about the last like 50, 60 years, especially the last 20, we were in a certain deflation regime from 1990 to 2020.

And so what that does over time

is in Wall Street models for when you value companies, if deflation is very certain, and it really climaxed in 2021, like 2021, because we hit COVID, and we were in this deflationary spiral, and then the Fed and Treasury went all in to get us out with massive fiscal.

But in that deflationary regime, if you look at that, we talk about this in the book, How to Listen to Market Speak.

We look at the discount model, right?

DCF, discounted cash flows.

All that means is if rates are zero with low inflation, certain companies like software are tremendously more valuable.

So imagine if you have a billion dollars of cash flow, right?

Just one billion over 10 years in a certain deflation regime.

that billion dollars is worth a lot more over 10 years, right?

Now, say you have another billion dollars in a certain inflation regime.

It's worth less.

Worth less over time.

So what happens is,

When you go into a new regime like this with a multipolar world, global conflicts, big deficit spending, I mean, we're supposed to do a trillion dollars on defense and now Trump wants more, right?

So that's 6% fiscal deficits versus three the past 50 years on average.

So the bottom line for everybody watching us right now, in that kind of higher interest rate regime, companies that control assets are worth more

Whereas software companies and companies that control intellectual property, the Netflix of the world, all the software companies, in that new inflation regime, those companies are worth less.

Anthony, I was in San Francisco in July.