Chapter 1: What is the main topic discussed in this episode?
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That's the average amount American pet owners spent on their pets in a year. True story, my pet parrot died. Last thing he said, shit, I think my parrot's about to die. You have to think about it. That's what I like about that joke.
It's not a head scratcher, it's just a bad one.
It's not that deep, it's just bad.
Talk about the Pokemon card.
You didn't read this? Excuse me? This show's going really well so far. I just got to say, it's clicking. It is clicking. $16.5 million. That's how much Logan Paul sold a Pikachu Pokemon card for on Sunday, which is incredible. But... The more interesting thing was the buyer is Anthony Scaramucci's son.
I did see that. I thought it was pretty ridiculous, but I love Scaramucci. So, you know, I held my tongue on that one, but I'm not sure that was the best use of funds.
I immediately texted him because we're friends and I said, can you adopt me? Yeah.
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Chapter 2: What updates are there on the wealth tax debate?
And it's the companies that are very boring that have been doing the same thing they've been doing for decades that are so-called safe stocks. Those are the ones that are getting the real premiums right now. So the whole narrative has completely flipped on its head in literally like a month.
And I think that is a very interesting predicament for investors, especially if you were buying into these safer stocks at the beginning of the year, like we were talking about. Suddenly, you're holding these stocks that a month ago looked pretty cheap. Now they look kind of expensive. So what are you supposed to do about that?
Chapter 3: How do proposed wealth taxes address income inequality?
Are you going to hold? Are you going to diversify back into tech? I think these are the questions that... investors are now having to reckon with.
I think there's real opportunities in these fallen angels in the SaaS market, because who would have thought that these companies would look like a bargain as a multiple of their free cash flow and their price earnings ratios relative to, you know, Tide and Costco, I mean, and Walmart. So... I think that, I think the surprise, if you had a basket of these companies, I can imagine them doubling.
I can't imagine Procter & Gamble and Coca-Cola doubling in the next 12 months. So I think that this is, even though these companies are quote unquote, you know, good companies in their own right, what's driving their premium is essentially fears from AI that, A, you need to rotate out of AI, which is overvalued, and, B, fear of finding companies that are, quote-unquote, AI-immune.
And Goldman has this AI-immune index that they put together, and it's done really well. But I would argue that that probably means these stocks are a little bit rich right now.
It's really fascinating how quickly this happened. Because, I mean, literally what we're describing is basically the opposite of what we were talking about as recently as like last quarter. And it's sort of the perfect example of... You want to zig when others are zagging. And that is, yeah, software is getting absolutely demolished right now.
I mean, one of the things that I was looking at, I'm not one for technical analysis, but there is a technical indicator called the relative strength index. And it's basically this formula that captures how much buying pressure and selling pressure there is in a given stock or in a given sector.
When the software apocalypse, the SaaS apocalypse was happening just a few weeks ago, I was looking at that relative strength index, a score below 30, an RSI of 30 or below. Generally, that means that the stock or the sector is very oversold. There's huge amounts of selling pressure happening. And back then, when I was looking at it, the RSI for the software stocks was 18. It was below 20.
So just a cascade of of selling in what was the hottest sector. Now you look at the relative strength index for consumer staples as just kind of a stock counterpoint. The RSI on those stocks right now is north of 70 right now. So huge amounts of buying pressure going into some of the most boring stocks that you've ever known. And yes, those looked attractive a month ago.
But I think to your point, these narratives are cycling through so quickly and so aggressively that you now have to be balancing and really understanding what is the sentiment in the room, how has it changed, and what has it done to pricing? Because the price and the multiples on these stocks is just going haywire right now. To the software point, I mean, we've gone through...
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Chapter 4: How are billionaires reacting to wealth tax proposals?
And two, Amazon owns more than 16% of Anthropic. They're one of their largest and earliest investors. So again, if Claude comes out with something interesting, the idea of just going and selling your Amazon because Claude's gonna be a disruptor, it's like Amazon owns Claude. Amazon's one of the biggest investors.
So this idea that these older tech companies are on the other side of the AI trade, to me, it just doesn't really make sense. Like they are literally shareholders in the businesses, the largest shareholders. in the businesses that are supposedly going to disrupt their own industry.
Yeah, but I think that their exposure to those companies or the belief that their exposure to those companies would be their growth vehicles and maybe the growth won't be as growthy as one had hoped. has maybe had a negative impact on sort of their parent companies being Microsoft or Amazon. But at the same time, there's a recognition that AI is a fundamental game changer.
And as you pointed out, has destroyed, you know, a trillion dollars in value in SaaS companies, despite the fact there's absolutely no evidence that their cash flows or their top line have been affected here. The other thing I would point out about quote unquote recession-proof stocks are that that they're safe.
I find that conventional wisdom or when wisdom becomes conventional, it's no longer wise. Now, what do I mean by that? There's a basic bull case or kind of this trope that with these types of staple companies that people will always need toothpaste and shampoo and that it's recession-proof. I think that is total bullshit. You know what I think is more recession-proof?
Enterprise software that runs mission-critical operations in a company. And what I would offer up just from a consumer level is that when a recession hits, consumers stop buying lattes, companies stop buying new office chairs, but companies don't stop using Salesforce to manage their customer pipeline.
So this notion that this group of companies is somehow shielded from a recession, A, they're not, and B, I would argue they may be less shielded from enterprise software. Demodern said it might hit their margins. But when you talk about CRM, ERP, cloud infrastructure, cybersecurity, these aren't discretionary spends. They're the nervous system of these companies.
And the switching costs are enormous. The churn rates are low. Salesforce's churn is sub-10%. You know what has higher churn? cable TV subscriptions.
People were saying that Netflix is a recession-proof trade. I mean, that was the idea at the beginning of last year. Everyone uses Netflix. Who cancels it? It's like a lot more people are canceling their Netflix than they're canceling their Salesforce, right?
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Chapter 5: Why are boring stocks outperforming big tech in 2026?
Then there's a question of like, if you're moving into safety, why are you going into toothpaste? Why aren't you going into fixed income? Why aren't you going into bonds? Maybe that means you're going into gold. I thought gold was the biggest safety play. So all of these stories are, are floating around right now.
And it seems like over the past two or three years, the story seems to be pretty anchored in consensus. People seem to agree on what the major market narratives were, where the trends were moving over time. But it seems like there's so much disagreement right now over who's winning and who's losing. I look at Amazon as another example.
Warren Buffett just dumped practically his entire Amazon stake. Meanwhile, Bill Ackman is going out and buying up Amazon more than ever before. That's a huge... disconnect on the narrative on who's going to actually win this. So all's to say, very interesting time to be in the markets, to be an investor.
The level of disagreement that I'm seeing, both by looking at the prices and also just looking at the conversation online, on CNBC, among Wall Street analysts, I mean, no one seems to agree on anything right now.
The net-net here, and I think we feel fairly confident around this, which is dangerous. The closer you get to certainty, the more likely you are to be wrong. But in sum, the market is paying a 50% plus premium multiple for low-growth, low-margin commoditized physical goods over high-growth, high-margin sticky digital products. So I would argue it's not a flight to safety.
It's, simply put, it's mispricing.
And I don't think that it would be a overconfidence statement to simply say that the risk-adjusted return on software stocks on the IGV basket right now is very, very high relative to anything else. You know, that's not saying that it's going to massively outperform, but based on the numbers, yeah, the risk-adjusted return is pretty awesome right now. Those stocks have been beaten down to death.
It's unlikely that they will fall that much further, but the possibility of them going up is very high, just on a multiple basis.
You know what else has been beaten to death? This. This story. What's the next story, Ed? It's like our listeners are like, all right, enough already. We get it. We get it. Ed loves Salesforce.
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Chapter 6: How is AI becoming a major political issue?
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Chapter 7: What are the real costs associated with AI technologies?
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Chapter 8: What future challenges might AI pose to the economy?
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We're back with ProfgMarkets. Wealth taxes are suddenly back in the spotlight and the proposals are piling up. Back in September, a French economist proposed a 2% tax on French residents with over 100 million euros in assets. In the Netherlands, lawmakers just approved a plan to tax unrealized gains on assets such as stocks, bonds, and crypto. And in California,
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