Why 3 Private Companies Are Worth 45 Years of Public Tech — And You're Locked Out

Key Takeaway

Audit your investments today for hidden concentration. List every fund, retirement account, and individual holding, then identify how much of your wealth depends on the same handful of large technology companies. Rather than reacting to scary headlines or chasing recent winners, learn the business economics behind each holding: Does it generate durable cash flow, provide an essential service, require heavy ongoing capital, or benefit when prices rise? Diversification starts with knowing what you already own.

Episode Overview

Tom Bilyeu reacts to Felix Prehn’s warning that rising government debt, inflation pressures, and highly concentrated public markets may create a difficult new investing regime. They argue that ordinary savers need economic literacy, exposure to productive assets, and a closer look at whether their portfolios are overly dependent on expensive technology stocks.

Full Transcript

Transcript of Why 3 Private Companies Are Worth 45 Years of Public Tech — And You're Locked Out from Impact Theory. Auto-generated from episode audio; may contain minor errors.

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For 26 weeks in a row, the US government has been quietly draining America's emergency oil reserve. Literally every single week. And it's now at the lowest level since 1982, which is a 44 year low and nobody seems to have noticed. Now listen, this is but one of the many things that people are going to need to be paying attention to in terms of what's going on in the economy right now. This is the wild west. We are watching the entire world order change. We are watching late stage investing change.

This is so many things that are coming together all at one time that is allowing basically people's savings to get completely obliterated in real time, completely nakedly above board. It's happening for everybody to see. But the real question is, what regime are we living in? Is this where we can just use the traditional playbook that you would use when you have inflation? Or is this something different? Ultimately, that's what everybody's trying to figure out. And I almost scroll past it myself, but I couldn't quite leave it alone.

Because this was never really about the oil. America pumps more oil than any country on the planet. It exports the stuff. So why would anyone empty the emergency tank week after week at the exact moment the country doesn't need to? Actually, a pretty good reason. I think I know why. And it's kept me up a couple of nights since because it lines up with two other things that turned up this month. And it's the three of them landing together at once that actually worries me. On their own, each one is just a thing.

You kind of go, okay, whatever, oil, you know. But together, they actually tell you what's being set up. And the last time I've seen this set up, ordinary savers got cleaned out, while a small group who saw it coming walked away, well, a heck of a lot better off than they'd been. And by the end of this video, if you give me a few minutes, you know exactly what the skilled money is doing right now. And you'll have seen the one number that made me move what I'm doing just a couple of days back.

All right, we're actually going to be talking about something very specific towards the end of the video in terms of what specifically you can do to protect yourself from what's happening right now. The reality is the average investor is going to be running a nice, traditional, simple path forward, get into assets, and avoid everything else. We're going to talk about whether that's going to work in this context. But the average person that's just saving money always gets obliterated. So that, unfortunately, regardless of whether we're going into a new regime or not, that person is going to be hurt.

And as we go, you're going to see that sort of a default stance isn't going to work, given how many different things are happening right now. So getting specific about, because I'm assuming everybody that can hear me right now, you guys are all invested. I'm not reaching somebody that's never considered investing before. So you guys are already invested. So the question is, what is going to survive as things begin to change? Where exactly in the investment stack do you want to be? Now, I appreciate I'm sitting in a hotel room here in Tokyo, and therefore this might be a little bit unstructured.

I apologize for that. But I'm going to put together a PDF report with everything that's happening here, what affects your money, what the big players are doing, and so on. And it's completely free. You can download it. It's zero-catch. Research Report. Just go to phoenixfriends.org. I think Research is the link. It's down below in the description. Just grab it. Read it alongside this. Or read it afterwards. And actually, the fact that you're even here and watching this is amazing, because you could be watching a cat video, let's face it.

It's a pretty tough competition. And that's why most people are going to find out about this in a year or two, when it's too late. So you're finding out about it early. So well done. Pack yourself on the shoulder. And if you're wondering who the heck I am, my name is Felix Prehn. I used to be an investment banker, an economist, and then I got out and I started teaching people about six, seven years ago or something. It's been really, really fun. And I'm sitting right now in, you can just about make it out, in Turkey, which is an interesting place to be with everything that's going on in the world right now.

Now this video is also never sponsored. There is nobody who's sending me anything for it, which is brilliant, which means I can say exactly what I want to say, and that's exactly how I like it. Now I'm not going to run you through how big the debt is or any of that, because you basically know that if you don't watch one of the debt videos we've done. But what matters for this video is one thing everybody already accepts. The debt's enormous, and it only gets more expensive over time, right?

Fine. Okay. Not to blow past that, because basically as we're recording this, the bond markets everywhere are blowing up. Interest rates are getting higher and higher. This is part of what's creating the urgency right now is when the U.S. was in a low interest rate environment, it could survive a lot of the debt that we were stacking up. I think the debt was always immoral, it was always irresponsible, but it was something that we could deal with when your interest rates were at or near zero.

But now we're, as of recording this, we're north of 5% on the 10-year, way above that on the 30-year. So obviously that's putting the government in a fiscal crisis where they're going to get eaten alive by the interest unless they do something about it. Now there's a background play that's being run by Besson that we're going to talk about as we go along here. I don't think Felix really gets into it, but I think it's important to understand, so I'll be sure to pepper it in.

But there is a very conscious movement of capital right now. You can take a conspiratorial look at this, and you can say the global banking elite are pulling a fast one on us, and they're strip mining the West, and they're just going to move on to the next place on Earth that is going to generate a tremendous amount of wealth, and then as we get late stage there, we're going to strip mine that as well. Or you can look at it as this is just purely mechanistic, and the way the politicians work to get the vote, they're going to have to convince people that they're going to give them something for free.

It is the time-tested method of making sure that you get re-elected. No matter how you look at this, whether we're being strip mined or whether politicians are just trying to get elected and whether culturally we're just moving more towards social programs, socialism, it doesn't matter. There is a mechanism by which the theft happens, and as you begin to understand the mechanism by which it happens, that is going to inform the way that you actually move your capital. But understanding the gun to our head right now is what's going on with interest rates.

Basically, the backdrop is what this is about. Now, the one thing worth holding onto is, however, this. When a government is trapped like this, there is only one way out, and that one way out doesn't involve paying for politicians, which is really what their motivation is. So what do they do? They push the interest rate back down, and you keep inflation higher. So here's the wild thing. We actually don't only have one way out. It's just what Felix knows, which unfortunately is true, is that it's the most likely path that we're going to take out.

But the reality is that we do have other options. So namely, we could do what we should be doing, which is austerity. We need to stop deficit spending. The only path forward that I consider moral at all is to actually get in a position where we have a balanced budget. If you look at what's going on in Argentina, that's exactly what you see there. You've got over a hundred years of asinine socialist policies that have turned them into an economic backwater. They go from being one of the most vibrant, thriving economies on planet Earth, a place in the 20s that the US was losing to in terms of getting immigrants the world over to come to because people saw more opportunity in Argentina than they saw in the US.

Sit with that for a second. But then they end up imploding their own economy by, because things were going so well, getting into redistributive policies that end up breaking the back of the functional economy, and their engine of growth stalls out, and then everybody can feel that they're fighting for a shrinking pie, and they start fighting dirty at the level of politics. You get into ever-escalating redistributive methods, and because there are fewer dollars being generated in terms of taxable revenue, you start upping the tax to try to get back where you were.

But then the only politicians that can get elected are the ones that are promising to give free things. So you get into this loop where you're exacerbating the problem. So recognizing austerity is precisely what we should be doing. So yes, we're going to get to what you guys should be doing with your money, but at the same time, for the love of God, we've got to get out of this madness. And the other option, maybe even more traumatizing, which is that if we wanted to get out of this without changing the amount of money that we're spending, we would have to get into socialism levels of taxation.

Now, if you're hate-watching this, I will just tell you that when you start talking about that, you're not talking about taxing the wealthy. You're never going to be able to tax the wealthy enough in order to cover it. You're going to have to do what the Nordic countries do, which is a gigantic broad-based tax system that taxes everybody a massive amount. Then the third option is growth. So we could try and grow our way out of this. That of course is the drumbeat that you're going to hear from Trump, but the reality is that hasn't manifested yet, and it is very hard to grow your economy enough to get out from under the kind of debts that we have now.

We did it after World War II, but we would need AI to deliver massively, and we're going to talk about why there are risks there that I think people are being way too optimistic about. Don't worry about the debt, and worry about what they're willing to break to make it cheaper. Japan has been doing this for the last 20 years quite successfully, I must say. It depends on what you call success. They have been stagnant for nearly 30 years. People working at one company their whole life, which might sound good, but that absolutely robs the dynamism from the corporate ecosystem.

What you end up getting is all these zombie companies that are able to overcome the hurdle of debt because to borrow, the prices are so low, but the company is subject to true market forces would fold. That's why Japan went from basically a very Chinese-like position now where they were contending with us for the number one economy in the world, and then literally overnight poof, they're gone and effectively haven't been heard from for almost 30 years. So yes, Japan is lovely, yes, Tokyo is lovely, but if you talk to people about their quality of life, it's going in the wrong direction.

Working man, the salary man, has been paying for it, and it's going to be the same for you in the US and in Europe and the UK and pretty much everywhere else in the world. So let me run you through the three things that have just broken and why that matters, but they're all happening together. One, oil reserve. Okay. The American Strategic Petroleum Reserve is basically the backup, right? So if a hurricane takes out the Gulf, if a war shuts down the shipping lane or something, that's the tank you open so that things get sort of moving, and it's at the lowest level since 1982, and the president just released another 400,000 barrels last week, 26th week in a row of it declining.

No one's adding to it. It's just declining. And that reserve about a decade ago was almost three times as big. So they've been running this tank down for quite some time, but very, very rapidly the last year. Now, the president said 22 days ago that he'd start refilling it with Venezuelan oil, right? So where is the Venezuelan oil? Well, Venezuela pumps about a million barrels a day. Tankers take about 30 days to load it and just get it out of there. And even when it does load, the Venezuelan stuff is heavy, sulfur-rich stuff that doesn't meet the reserve specifications.

It's just the wrong kind of oil. It doesn't refill the tank. So it's just politics. The Venezuelan oil industry has also been falling apart for the last 20 years. The fields are neglected. The refineries barely run. The crude that does come out, as I say, it's that really, really thick stuff. He's right about that. It's definitely not going to be a very simple fix. You can't just pour that on top of the sweet crude that we're used to dealing with. However, having a strategic relationship with Venezuela I think is going to be extremely advantageous to the U.S., whether it was moral or not is a totally different question.

But will it be advantageous to the West if we find that everything in the Middle East just continues to be a quagmire? We're not able to get out of that. Being able to make the sort of greater America project where if we can get a deal with Alberta plus what the U.S. already does plus Venezuela, now you're talking about the biggest energy block on planet Earth by a lot. This is going to be important in about 10 to 20 years. That's the time scale to really, really get Venezuela up to speed.

Again, even right now, Venezuela is a major player on the international stage. He's right. It's going to take a long time to scale that up to where we know that it could be, which is another vote against socialism and communism, which is exactly how they ended up breaking all of their industry because the US was in there. US companies were there helping them build that, scale it up. And when socialists took over, it just went down and down and down for reasons I won't talk about right now.

This isn't a short-term solution. It's just a headline they put out to kind of, you know, fugazi you a little bit. So ask yourself the obvious question, why do you empty your emergency tank when you produce more oil than anybody on earth? Well, it's simple. They're using it to hold down the oil price because if oil spikes even further, and to talk about everything else, the inflation number goes from awkward to unmanageable just in a night. And a bad inflation number is the one thing that stops them doing what they need to do, which is print money.

Okay. So an interesting bit of context here, what I find fascinating about this is if we were trying to actually build that stockpile up now during a disruption, we would essentially be competing with people that are trying to buy the oil and put it into their car or to their business or their house to heat it, whatever. So to build up our strategic reserves right now isn't because, oh, we don't care about the strategic reserves. It isn't, oh, we don't have access to the oil. It's simply, we don't want to compete with other customers.

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Let's get right back into the action. It's a trap because the only way to hold down the price is letting the oil out of a tank, but the tank is almost empty. What happens when it finally runs dry or when a real shock returns, like we could get another hurricane? We haven't had one all summer, which is very unusual. First time in 22 years. The world is ending crowd, hasn't mentioned that one, I know. Middle East war could get a lot worse. What happens then? The price then spikes and diesel jumps first, which is already done because that's what we used to move freight.

And then the second diesel jump, everything that travels on a lorry gets a lot more expensive, which is basically everything that you buy, food, building materials, everything. That's a big one I don't think people are taking into consideration is what have we already locked in in terms of the next year? Even if we're able to get rates down very quickly for whatever period of time that they were elevated, either companies are going to have to absorb all of that increase in cost, which is very unlikely, or it is going to find its way into the system.

Some of this is going to come down to exactly how much oil we're able to sort of sneak out through the Strait of Hormuz right now. So that true disruption is very limited. We're right now is at the time of recording this, we're at rough parity with where we were before the war. So if we stay there and the disruption is over, it's just very dicey in terms of getting it out, then it's going to have a much smaller impact. But if we were to have another crop growing season, for instance, that doesn't get what it needs from a fertilizer perspective, you could really be in rough shape with the cost of food, for instance.

So they're borrowing calm from tomorrow to make today's inflation number look a little bit more socially acceptable, possibly before the election. I mean, I don't want to imply anything here, but you know what I'm saying. You can apply. You can state it nakedly. And therefore the calm, the relative calm is manufactured. The emergency tank is almost gone. So now, you know, it's actually a lot worse than it should be. Oil and diesel prices. So what do you do about it? Well, they tell you and it costs you nothing.

Inflation is going to eat you alive and it's going to be pretty, pretty harsh. And literally come to Japan and talk to someone who's worked in a corporation for 20 years for a salary, and they'll tell you exactly that, that they are much, much worse off than they were expecting to be. Whereas the top 1% of the country is living an absolutely wonderful life because it doesn't affect. All right. There's a mechanism for this. And man, if you're in the West, especially if you're in America, you've got to understand exactly why the top 1% does well.

And then everybody else ends up getting hammered. The reason is that when you invest in assets, which I know you guys already understand, but the part that I think people often miss is as your assets go up in value, you then sell some of those assets. Now when you sell it, you've got post-inflation dollars. And so that becomes the big thing. You're basically hiding wealth from inflation. And then as that goes up in value, you sell that off. And now compared to people that were getting eaten alive, you've got a way bigger pool of post-inflation dollars than they have anything.

So that is the mechanism that people are so often blind to. This is why one of the drums that I beat to death is that the asset class is available to everybody and becoming more available by the day. It's just that people don't avail themselves of it because we don't teach any economic literacy. And so a big part of my hope is that people will start spending the time to understand that you're basically just stepping outside of the inflatable system into something that is not inflatable.

This is why they talk about in times of trouble, people escape to what can't be printed. This is why precious metals become so sought after in high periods of turmoil where they know, all right, they're going to deal with all of this disruption by printing money. So I've got to step outside of that system. And then when you step back in, you get the advantage of the inflation. You get to be advantaged by the inflation. It's very unfair, but that's the system. And that's the system being deployed once again in the US and it's going to affect you.

So I'm going to run something for you this weekend, live here from Japan. For two hours, we're going to sit down together. We're going to go through exactly how to build a plan for this, for your money, for your retirement, before the calm breaks rather than after, because then it's too late. So I'm not going to give you a PDF for it or something that you're going to skim through and then forget. No, we're going to do it live, the two of us, probably a few thousand other people, but live.

And we're going to walk you through what the big players are doing right now and how you can copy the sensible parts of it around your own life. And you can grab yourself a free ticket for that at InflationTrap.com. Go and grab a seat while you're thinking about it, because there'll be no replay. It's just going to be live. If you're there, you're there. And if you're doing that, write Thrive in the comments down below, because that's my goal for you, that you come out of this thriving like the top will.

The top will come out of this absolutely wonderful. Politicians will come out of this absolutely wonderful. But honestly, most people, they're going to suffer some real pain, not in six months, but a little bit further down the road. And therefore, they're not going to notice it quick. Here's the bad news. They're already suffering it. It's already happening. It happens every day. We are billions of dollars every month inflating the currency. And let me show you the second major issue you need to understand. And it's the one that made me sit up and improve my posture.

It's the treasury. The US treasury just announced it's doubling the amount of debt it buys back, $4 billion each time now. And it's called liquidity support because it sounds sort of vague and fluffy and like kittens and nobody knows what it means. So what does it actually mean? The government borrows by selling bonds, so IOUs. Now not enough people want to lend the US at a reasonable price that the US can afford. So the government now buys its own debt. That's wild, by the way. That sounds weird, right?

Because normally it's foreign governments that have been buying it, Japan, the Gulf States, the big pension funds, and so on, and they're happy to park their money there. But the problem is not that people don't want to buy US debt. It's just there is a lot more US debt being sold every week and there's not enough buyers. Unfortunately, it's both. We have done dastardly things that really kicked off properly when we froze the assets of Russia and people realized, uh-oh, the US is not only printing money and inflating it to high heaven, but they will freeze the assets of people.

So what do they do? They sell the debt to themselves. Yeah. That's kind of like me saying, oh, Felix, could you lend me $1,000? And I'm going, sure, Felix, here's $1,000. I just printed it. And I go, oh, wonderful. Thank you very much. I mean, that's literally what it is. It is quite literally legalized counterfeit. An absolutely bizarre system. Exactly what they've done here in Japan for the last 20 years. And once a country becomes the main buyer of its own debt, it crosses a line.

And history is not that kind about what usually comes next. It's a pattern. You can see it again and again and again. It's a desperation move. It puts you into the situation that we're living in now, or you can have Japan's flavor. So our situation is that we've got so much debt. It's compounding every year and interest rates are ridiculously high. And so now the interest is eating you alive. Japan spent nearly 30 years keeping interest rates effectively zero. And so they could do it forever.

But you're not going anywhere as an economy. And you're now subject to the problems coming from the outside, which is exactly what finally broke the back of it, which is precisely why interest rates are going up in Japan now. They had so much inflation that built up via COVID outside of Japan. And it just could not be kept out. And so you had them for decades. You would get a job. And literally for 20 years, you'd get paid the same salary. But that was no big deal because everything in the grocery store costs the same amount.

So you were stagnant. But at least you weren't inflating. Then they started getting to the point where they had inflation. And you were going to have to address that. And so the entire structure of the economy in Japan is breaking. Interest rates are going up. People are expecting raises at work. They're actually getting raises at work. Things are getting more expensive in the stores. And if that had been from innovation, if companies had been going crazy and building and innovating and people were getting richer and spending more money, and that created the inflation, what I call innovation-led inflation, you'd be in great shape.

Unfortunately, it's crisis-led inflation, which is a problem. And now they're having to react. And the average person that doesn't understand assets is now about to get beaten about the head, neck, and chest with the inflation stick. So not good. So follow the money, because this is the whole trick in this case. So the Fed prints new money. It buys the government's debt. And the debt is then used. So the cash... This is confusing, isn't it? So here's the... I bet he just cut out a mess of there.

It is so hard to keep this stuff straight because it is absolutely retarded. The Fed prints money. And with that money, it buys short-term debt from the U.S. government. And the U.S. government therefore has cash, right? They then use that cash to buy its own longer-term debt. The stuff that... Okay, if you think about how this really functions behind the scenes, so if you want to buy long-term debt from the U.S., you can't just be an average person off the street. This is going to banks and institutional buyers.

And there's very little liquidity at the long end. And so if you see that rates are going up, which is exactly what Besson is doing, despite Druckenmiller, his mentor, telling him it's a terrible idea, but you're going to look at that and you're going to say, okay, I've got to calm the market. This is what Felix is talking about. This column is manufactured. And one of the ways you manufacture it is you create liquidity on the long end by issuing new debt, but on the short end.

And so with the... new debt issued on the short end, then you're able to start attracting buyers for that short-term debt to help get the long-term debt guys out. But if you become the primary buyer of that short-term debt, you're back in the just counterfeiting your own money scenario. It's absolutely ridiculous. And this is how empires die and certainly how people go broke unless they own things that can't be printed. It's 10, 20, 30 years long. And that does one thing. It lowers interest rates artificially.

So we create new money at one end, and it comes out the other end, holding down the government's own borrowing cost. It is just money printing. That's really all it is. It doesn't matter what they call it. It doesn't matter how complex it seems. It is just money printing. And you will remember last time they printed money, which was during COVID, right? They added 40% more money in just a couple of years. And what happened? Inflation went through the freaking roof, didn't it? Officially 11%, which of course was a number they made up entirely, and it is actually way, way, way worse.

Ask me. I think it was a couple of hundred percent, but we don't need to get into that. Yeah, the numbers that I see are 30%. I think that's the probably most cited number. Absolutely brutal. So it's a magic trick. It's the same rabbit. It's a different hat. They called it something else. And it means that every dollar you are holding, every dollar you're getting paid is going to get watered down just a little bit more. And if you're waiting to notice that, it will be too late.

So really come and learn with us. It's free on Saturday at inflationtrap.com, because this is the thing that's going to really set people apart for a lifetime. Seriously, this is a big one. It's certainly true that if you don't know what's coming, you're going to get clobbered by it. That's for sure. And this is what tells you where the money is actually going. This month it was reported that SpaceX, Anthropic, and OpenAI, three private companies, are worth more than every single U.S. company that went public in the last 45 years combined.

Dude, that is so crazy. So one, we have to talk about how this is actually happening. This is such a big deal. So this is another way that the average, even investor, is getting screwed over. Previously, the whole way that things worked is you had investors that would come in early stage, get a company going, and then they would help them IPO pretty early on in their life cycle compared to what we're doing now. Now they're holding these companies private for 10 or 15 years so that all the private investors can basically get the vast, vast, vast majority of the value.

And then, this is me speaking, not everybody's going to agree with what I'm about to say, but you basically turn people into the exit liquidity, and that is dastardly. Now do I still, am I glad that people have access to these companies? Yes, of course I am. It's better than not having access, but it increases the number of people that are going to buy at the wrong price and end up getting hurt by this. So yeah, it's wild. I'll say that again. Just three companies that you and I cannot buy, well, one you cannot buy, SpaceX, the other two I'm planning to list, they're worth more than 45 years of public tech listings put together.

So every tech company you've ever heard of that you have ever owned a stock in, these three companies are worth more than all of them together. To give you an idea of scale, when Microsoft IPO-ed it, IPO-ed for less, its valuation was less than $100 million. That's crazy. Microsoft. So there's a huge wealth pile being created behind a door that most investors are locked out of. So even the upside, the good bit, the growth is being funneled to people who are already, well, behind the very special platinum door.

And where does that leave the money that you can reach? I mean, the money in the public stock market. Well, it's more crowded than it's ever been. American households have never in history been more exposed to the stock market than they are right now. About a quarter of all US net worth is tied up in stocks. But even with that, 10% own 93% of the assets. That's the bad news. It's higher than during the dot-com peak. That's higher than in 2008. It's the highest ever recorded.

And it's piled into just a couple of names because the five largest names in the S&P are now 30% of the whole index. So if you have that safe index fund, which you definitely do because it's in your pension fund or your 401k or something, it's basically riding on just five tech stocks who are all pretty much in the same thing. So people think there is this safety in an index fund. And I love an index fund. It's a, I mean, don't stop investing. Do buy index funds, but you need to understand how concentrated that is and how that impacts everything else that you could then possibly be doing.

Because this bubble is going to crack. Not this week, not this month, not next year, maybe, but it's going to crack at some point because every bubble always has. That's the bad news. And when you start looking at the valuations, the difference between what they used to be and what they are now, it is really pretty crazy. There's something called the CAPE index or the CAPE ratio, where you look at basically the average of, I think it's a 10 year stretch of the earnings that the company got compared to what they're being valued at.

And that traditionally runs, I think the number is like 16, 16X. We're now over 40. And every time that we've crossed over 40, there has been catastrophe. So yeah, this is, you never want to try to time a bubble, but the thought that this is a bubble is I think pretty self-evident, given that we have completely broken from any traditional metric of value investing that people have historically looked at, leveraged as a way to know, are we hot? Are things undervalued? Where are we at? Things just keep getting more and more valued.

And I think a big part of the problem is there's just nowhere else to put your money. And so we've got this inflationary flywheel that's absolutely running riot. And people understand they have to be somewhere. And all of the gains that we've been getting for the last decade have just been tech companies, tech companies, tech companies. And so when investors have just gotten so used to having an only up phenomenon somewhere, massively. The internet, social media, software, and now AI, it's like they need to believe it and they're trying to escape from something.

And so the valuations are just crazy. Now I will say that it's true that historically a company like Microsoft has done 99, literally 99% of its value post IPO. And so people are like, hey, I've been able to get massive wins. And so this is only a good thing. But given what we've talked about, you've got the double whammy. These companies are being held private for much longer. So odds that 99% of their value comes after IPO-ing is racing towards zero. And then two, you've got the, what price do you buy in at to take into consideration?

And so if the valuations are just absolutely insane, again, the odds that you get 99% of the value post IPO is going down, down, down, which makes people look more and more like the exit liquidity. So this is where you have to be insanely careful with what you guys are doing with your money. Dotcom, which is when I started investing, took 15 years to get back to where it was. 15 years. So for a normal family, that means the pot that's meant to be safe, sensible, boring part of the plan, the retirement money, is just really just tied up in this tech market more than ever in American history, more than in 1929, I'm serious, more than in the dotcom mania.

And when everybody owns the same five things, there is nobody left to sell to when it turns sour, you see. And that's why these bubbles burst so quickly, because you try to sell, everyone else tries to sell at the same time. And there isn't a soul on the planet who doesn't already own it, and they probably want to sell too. And when you're not tied to fundamentals, you're tied to narrative. And narratives can flip in an instant. That's where you get these big drawdowns. So yes, they're printing money, and it keeps interest rates low.

It makes inflation, they make inflation look artificially low because they fudge the numbers when they're giving out oil. But the gains from all that printing are being steered away from ordinary people before it even lands. So we haven't got three things happening here. We've got that reset quietly being switched on. And what do you actually do about it? Well, you do what I always tell you to, follow the money, not what people are saying. What's what the people with the best information are actually doing with their own cash, not what they say on telly or social media, right?

It starts with the filings. Donald Trump files his own trades, right? You can look them up. You get a live notification for them in the Winston app. That's one of the reasons I build it. Go to the link down below for the Winston app. You get a month free trial, like a whole month. You get all the alerts. If you don't like it, you cancel it. Boy, do I wish. Like, if we can't get politicians to stop investing, I want a real-time trade-like ticket. I want to see what they're doing in real time.

I am just going to trade whatever Trump trades, but I've got to be able to do it the instant he does it. And the problem is there's such a huge delay that there's going to be a massive gap, and that's going to create very big problems. And you can see what he was buying. What was he buying? Berkshire Hathaway, which is basically a great big insurance company. He bought Visa and MasterCard, which is just like a toll booth for everybody living. And when prices go up, which they will, well, they get a percentage of every bit of spend, so actually they get a little bit more.

It helps them, right? Bought Home Depot, Tractor Supply, Republic Services. That's a waste management company, I believe. Real businesses, cash machines. And what did he sell? Meta, Palantir, Netflix, the stuff that everybody else is chasing. So on the way in, boring toll booths that love inflation, and on the way out, all the crowded tech stuff. I'm not saying you should follow the president's mad trading, but notice the pattern of what the skilled money is doing. It's waste collection, it's home improvement, dull essential businesses. And then I look at everybody else's portfolios, and we see thousands of portfolios because my mentors teach, or taught like 25,000 people the last six years.

And the portfolios are basically 99% tech, because that's what's in the news. It's not just that that's what's in the news. It's actually where the gains are coming from. Okay, so as we look at this strategy that he's putting forward in terms of what you're going to want to think through as you decide what to do with your money, it is very important that you understand this is not financial advice. First of all, everything is different for everybody. You guys have to figure out what your risk appetite is, how long you can sit in the markets, etc.

But to give you the gist behind what he's getting across, because I love Felix, but to say boring is what survives is the wrong takeaway. So one, I want to give the devil his due. So when you look at technology, technology has actually been winning. So when you look at cash flows versus the dot-com era, like Pets.com and stuff like that, unlike the 2000 dot-com era where tech firms burned cash with all of zero earnings, they were literally just lighting money on fire, this is very different.

Anthropic is bringing on revenue at a pace that is unparalleled, I think, in history. I mean, it is legitimately a sight to behold to see how rapidly they've been able to start making money and absolutely extraordinary quantities of money. So tech has been the place that's winning. People are over-indexed on tech precisely because it has been the thing that has returned extraordinary returns now for an extended period of time. Remember, the real question is, are we moving into a new regime? And I think the answer is obviously yes.

So first of all, from an investment standpoint, we really are getting into a late stage. Everything is investable. There's so much gambling going on. People are doing everything on margin. We've moved away from sensible valuations. We are inflating into a crisis, first of all, so it's only going to get worse. Plus, we're trying to raise rates to break the back of that inflation. But alas, the inflation isn't created by an overheated economy. It's created by a crisis, and there are no number of rate hikes that are going to open the Strait of Hormuz.

So you've got all of that drama playing out. And on top of that, we're in a position where the rates are just high on the debt that we already have. So not only are we bringing on new debt and refinancing old debt at the higher rates, it's already the number one line item in our budget. So you're in this sort of death spiral of, you know that there's going to have to be more and more money printing, but all while the typical place that people would go hide a nice, safe index fund, or even debt for that matter, but we'll get to that in a second, the nice, quote unquote, safe index fund, which is in bubble territory for sure.

When it's going to pop, nobody knows. And then on the debt side, you've got the U.S. looking more and more questionable because it is in that death spiral of having these rates that are high and having over $40 trillion you're in debt and your interest payments already being the number one line item of your federal spending. It is a recipe that has to be navigated in a new way. Now when you start being more thoughtful about when we say what is boring survives, what do we mean?

One of the things that we mean is you're looking for things that don't require a lot of cash flow to function. So when you look at a cash heavy business versus cash light businesses, you start to understand why something like the credit card networks are so attractive is it's something that has basically a fixed cost. There isn't a ton of infrastructure that's going to have to be built out when you compare that to something like AI. The difference is absolutely mind boggling. So you've got that going for it.

And then the other thing that supercharges something like that is it's a toll. So he keeps calling it a toll booth. But to explain what he means by that, what you're looking at is something where as inflation goes up and everything just. gets more expensive the credit card companies are just taking a percentage off the top so as that number gets bigger their take gets bigger so it naturally keeps up with inflation and so as you're assessing what kind of businesses do i want to be in if i think that the tech story is you know a little bubbly and maybe i want to start to diversify away from some of that sure i'm going to do gold maybe i'm going to do a bit of silver but i don't want to put all my eggs in that basket so i want to look at the companies that are going to do well in an inflationary environment and so beginning to understand things like the card companies being a toll charging company that will benefit scandalously in some ways but benefit in some ways from the inflationary environment so you're looking for that then you're looking for businesses that are going to survive so waste management doesn't matter people are still going to be creating garbage good environment bad environment it doesn't matter you're looking for cash cows things that make a lot of money without needing to invest in new infrastructure so when you have a cash light business that generates a lot of revenue that's a great place to be if you have something like waste management that's going to survive no matter what happens to the economy that's a great place to be if you have something that's charging a toll that's a great place to be so these are the kinds of things as we transition into an unknown quite frankly because again ai is doing something very unique you can't just count out that oh this is gonna burst and it's gonna die you can't look at ai and go you certainly can't say that the technology isn't there it certainly is you can't even say that the revenue is not there it certainly is but you can say that right now the debt accumulation is still out stripping the revenue accumulation and that is a problem it means that the companies are still default dead and so that's a terrifying place to have all of your capital sitting in but when you look at a valuation that's let's say 45 times where you would expect uh 45 times revenue which is way above where you'd expect it to be and you start asking yourself is it really possible for that thing to get to that in a reasonable period of time the reality is with ai maybe i'm not gonna over index i'll tell you that but it is certainly possible that the level of productivity gains that come out of ai when it is fully distributed through the economy become unlike anything we've ever seen now that's certainly a big part of the bet that trump's making best since making wars is making wars talk very publicly about this so you don't want to count it out but you have to be very careful about having everything put in on that so look at what's working now look at what has worked historically look at the vulnerabilities that we've had historically and figure out what are the companies that are likely to thrive moving into the future all right shout out to felix i'm so glad that he puts his stuff together i watch a lot of his content he puts a lot of great stuff together and when you start making contact with what are the kinds of companies that are likely to do well in the future because you still must be in assets because inflation is not going anywhere the odds that it ramps up are extremely high you start to get a much clearer picture of how you thrive and do well on the other side of this all right guys keep paying attention to this kind of stuff uh very specifically things that talk about where is the economy going what do you need to do in response to it it is going to be some of the most individually consequential uh content that you can encounter so with me or somebody else this really isn't a plug for you watching my content this is me being absolutely terrified that people are going to get devastated as the economy re-orients itself to something new so uh i thank you for paying attention to this because i think it is so so so important uh and we'll keep bringing you content just like this again shout out to felix much love to you guys if you haven't already be sure to subscribe and until next time my friends be legendary take care peace let's talk about a pattern that is guaranteed to be killing your progress you know what you need to do you need consistent nutrition we all do you need vitamins probiotics greens we all know that we should be doing more of it when your morning gets chaotic you skip it when you travel you skip it when your routine breaks everything tends to break and that inconsistency compounds against you every single day ag1 is designed to solve the execution problem one scoop eight ounces of water and you're done you're getting 75 plus ingredients vitamins and minerals pre and probiotics nutrient dense superfoods everything that used to require six seven different 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