Speculation And Parlays Replaces Booze as Entertainment...and AI Is Here To Expand Our Entertainment Time

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Good morning everyone…

I am in New York for the next week working. I am staying in Tribeca for the first time just to get a different feel for the city. I like it.

I like to do most of my meetings in Soho, so it is easy to walk over and at night much quieter in Tribeca.

I am eating as though every meal is my last which must stop soon.

Because of my focus on Stocktwits and wealthtech (Social Leverage), I am completely focused on the public markets these days, listening to CEO podcasts, earnings calls and also immersing myself in AI and the software sector meltdown (SAASpocalypse).

NOBODY that has been investing since COVID, let alone since the 2008 financial crisis can deny that we live in a world obsessed with and dominated by technology companies. One look at the chart below depicts the obsession and dominance of the Nasdaq 100 (purple) and even more amazing since 2023 and Open AI’s launch… semiconductor companies ( in green $SMH ( ▼ 3.8% ) ):

The public markets are fascinating right now. As mostly an indexer to technology, specifically direct indexing with FREC.com (we are investors in our fund 4), I am enjoying fantastic gains the last 24 months. I know it can’t continue at this rate, so I am trying to position for what’s next. Right now, weird things are happening as AI and semiconductor stocks surge. Last week, we had a day with the most new lows for stocks on a day where the index closed at an all-time high.

Also on Friday, long term interest rates surged to their highest level in a few years. ZIRP is but a magical distant memory. The same is happening with rates globally. With oil still above $100 a barrel and inflation on the rise, rate cuts are unlikely, no matter which FED chair is kissing Trump’s ass. The public markets will have to pay attention to these massive macro issues at some point soon.

The private market world of Venture Capital, sovereign wealth, AI, Space, Robots and war machines is a long way from the streets or the macro fundamentals. The total focus of the technology overlords, JP Morgan, Goldman Sachs and the White House is on one thing….get Open AI, Anthropic and Space X public before rates and inflation matter enough to create a panic. They will not be stopped. We are but pawns in their game of carving up the new world order.

In the streets I am walking every day, most consumers are anxious, buying now and paying never, vaping and making parlay bets. Maybe worst of all, our youth are comparing themselves to their peers more than at any moment in history - a terrible waste of time and energy. They have stopped drinking because prices have driven them to sobriety! The most lucky few are waiting for the money to be passed down from their parents. The one hitch is that these parents have never had a better chance to live to 100 (hint - be nice to your parents)…

The ‘degenerate economy’ seems to grow no matter what the macro or micro news of the day is. Last week Kalshi closed on a $1 billion investment at a $23 billion valuation. For context, the CBOE, a 53 year old company that I believe benefits the most from a growing ‘degenerate economy’ and does over $5 billion in revenue is valued at $38 billion. (Disclosure - I own Kalshi though some fund investments and I own $CBOE as a large position in my ‘degenerate economy’ index.)

Kalshi and Polymarket are not alone anymore. They have a huge competitor in the markets with them now as the $100 billion Interactive Brokers ( $IBKR ( ▼ 1.45% ) home to the institutions and hedge fund traders) launched it’s own unified prediction markets. On the next dip I will add this stock to ‘degenerate economy index’.

As for links this week….

My friend OM wrote three fantastic pieces this year that have helped me understand the trend of AI as an investor in the space…

The UPLOAD Nation 

AI is the new Netflix (no wonder Google and Amazon have been ripping)

Say Hello to the Internet of AI

Keep it simple right now as the world seems to be changing faster than ever.

By the way, I love Wispr which I use now daily for voice dictation. See the ad below… and have a great rest of your Sunday

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