# The Last Time THIS Happened the Global Stock Market RESET | Felix Nikolas Prehn Source: [YouTube](https://www.youtube.com/watch?v=FDNoVCQeGls) ## The warning and introduction **Felix Nikolas Prehn (Speaker 1):** [00:00](https://www.youtube.com/watch?v=FDNoVCQeGls&t=0s) Three men built the company that the whole AI boom runs through. Since it went public, listed in New York, they've sold $3.3 billion of their own shares. Right now, that company's debt trades like the debt of a business in some serious trouble. Its share price is down about 65% from the top, and the cost of insuring its debt against bankruptcy hit a record high. Most of the stock market hasn't really noticed. Your index fund is still full of the same AI names, but some people have noticed. Goldman Sachs' own trading desk just told its institutional clients how it thinks this is going to play out. The hedge funds and the big pension fund money—they've been told, not you. [00:48](https://www.youtube.com/watch?v=FDNoVCQeGls&t=48s) I've read the report. Winston's read the report. There is one line in it that I believe you also deserve to understand, because the last time the market fell in love with the companies building the future and the money behind them started to crack and leave the building, the global stock market reset. It took 15 years to come back. My name is Felix Nikolas Prehn. I'm an economist and former investment banker. And down there is Winston. ## Research, CoreWeave, and insider disclosures [01:16](https://www.youtube.com/watch?v=FDNoVCQeGls&t=76s) We're also the founder of the Prehn Institute, where we publish research on how financial markets operate, and we also provide instruction on it. There's no sponsorship here. There is no endorsement ever, and it means Winston and I can say whatever the heck we like. Ask yourself this: do they know something you don't? By the end of this video, you will know what they know. Stick around. [01:41](https://www.youtube.com/watch?v=FDNoVCQeGls&t=101s) I'm going to go through quite a lot of numbers today, so I put all of that into a short report: the filings, the charts, the Goldman Sachs stuff, and the list of what I'm watching. It's completely free. There is nothing to buy. The link is down below: FelixFriends.org/marketreset. If you're watching this at all, you're already ahead of 99% of people, because most of them will hear about this from a headline about their pension, or they'll look at their portfolio in a while, long after they could do anything to help themselves. [02:11](https://www.youtube.com/watch?v=FDNoVCQeGls&t=131s) Who are these three men, and what have they built? The company is called CoreWeave, and most people have never heard of it. It made some headlines this week, but the business is basically very simple. CoreWeave buys enormous numbers of NVIDIA chips, puts them in data centers, and rents them out to AI companies by the hour. Think of it as the prostitute of the AI world. I'm sure that's what the pitch deck said. They have a better name for it: they call it neocloud. It's a little bit more attractive. A neocloud company builds only for AI. [02:46](https://www.youtube.com/watch?v=FDNoVCQeGls&t=166s) How does it pay for all those chips? With borrowed money. CNBC puts its debt at around $50 billion. Let me see where Winston has it. This is kind of interesting: Winston here says they have three months' cash left before they run out of money. That's a little concerning. Either way, it's pretty staggering for a company that only listed last March—literally last March. [03:07](https://www.youtube.com/watch?v=FDNoVCQeGls&t=187s) Now, the founders. When a director or a senior executive in an American company buys or sells shares, the law says they have to tell the regulators—the SEC—within two days, which is pretty decent, right? Politicians and funds, it's months. It's called a Form 4, and anybody can read it. So, of course, nobody reads it. What we've done instead is that, in Winston up here—there's a link down below if you guys want to play around with it for free for a month—you can see these little red arrows. These are insider sales, and they're pretty significant. We're talking $77 million since September. Pretty crazy stuff. [03:54](https://www.youtube.com/watch?v=FDNoVCQeGls&t=234s) If you own this company, you could also get notifications on it. It would ping on your phone, and then you'd know about it. I do that for the companies that I own, because that way I'm informed that these things happen before most people. But if you add up every sale by these three co-founders—here's a screenshot. We actually did this work before. ## Founders' sales, bonds, and credit insurance [04:12](https://www.youtube.com/watch?v=FDNoVCQeGls&t=252s) Add them all up: CEO, $975 million; Brannin McBee, the co-founder, $1.1 billion; and Brian Venturo, $1.2 billion. They're all called Brian. That one's called Brannin. That's a funny name, isn't it? Parents couldn't spell much. I'm being mean now. I take it back. I'm sorry. Look at my name—try spelling that. Good luck. ![“The Founders' Sales” slide lists Michael Intrator, Brannin McBee, and Brian Venturo, their approximate sales, and the combined total (04:16).](figures/frame_0256000.png) [04:34](https://www.youtube.com/watch?v=FDNoVCQeGls&t=274s) Pretty significant. Why? Because, according to Bloomberg, the McBee chap sold 40% of his stake. These guys still own about a fifth of the company, so there's nothing illegal here. But you'd want to know, wouldn't you? The people who know a business best keep selling. You at least want to ask why. [04:50](https://www.youtube.com/watch?v=FDNoVCQeGls&t=290s) Now, the debt. A bond is an IOU. You lend a company $1,000, it pays you interest every year, and it gives you $1,000 back on a set date. CoreWeave has these bonds that pay just under 10% interest, and they get repaid in 2032. You can now buy that bond for 76 cents. That means you are effectively going to get 15% interest to lend these buggers money. When do you ask someone for 15% interest? When you're not sure you're going to get your money back. [05:28](https://www.youtube.com/watch?v=FDNoVCQeGls&t=328s) Then it gets worse. There is an insurance market for debt. It's called credit default swaps, and you might remember them from 2008, because all the mortgages were also insured that way. If the company can't pay, this policy will pay out. The riskier the company, the more the insurance costs. ## CoreWeave's funding gap and live training [05:51](https://www.youtube.com/watch?v=FDNoVCQeGls&t=351s) Insuring CoreWeave's debt for just five years now costs more than 11% of the amount insured every year. It's a record—not the good kind of record. Bloomberg says the price implies roughly 60% odds of default, i.e. bankruptcy. ![Credit-default-swap explanation and CoreWeave CDS chart; the slide states annual insurance costs above 11% and Bloomberg-implied default odds of roughly 60% (06:00).](figures/frame_0360000.png) [06:10](https://www.youtube.com/watch?v=FDNoVCQeGls&t=370s) How does that happen to a company with so many customers? Deutsche Bank did the sums. CoreWeave brings in about $10 billion a year in cash from running the business. It plans to spend $45 billion on chips and buildings, which leaves a gap of $35 billion. A gap like that gets filled with more borrowing. They've learned from the US government, I think. In fairness, Deutsche thinks the shares are still a buy. CoreWeave has $104 billion of signed work waiting to be delivered. About two-thirds of that is with customers who have very strong credit ratings. The CEO called the sell-off irrational, and maybe he's right. [06:45](https://www.youtube.com/watch?v=FDNoVCQeGls&t=405s) But think about what happens to your portfolio, your pension, your ISAs, and everything else if the lenders stop lending to CoreWeave. That's the question most people can't answer. It isn't because they're not clever enough. Reading what the debt market is telling you before the share price catches up is a skill. It's a skill you were never taught. You were taught a load of gibber and nonsense about geography and everything else, but you weren't taught this. It's not your fault, but it is your responsibility to learn it if you want to keep what you've spent your whole working life building. [07:23](https://www.youtube.com/watch?v=FDNoVCQeGls&t=443s) You can learn it. You've learned plenty of skills already: walking, swimming, riding a bike, that sort of thing. Nobody was born knowing any of that stuff, right? We'd all be crawling around on—you know what. I'm going to teach it to you for free in a live training. I'll show you how a reset in AI is going to reach your portfolio and your pension; how to tell the companies that own scarce computing power from the ones that have just borrowed to rent it out; which warning lights in the debt market I check first; and how the skilled money is actually positioning right now, before any of this lands in mainstream media. [07:59](https://www.youtube.com/watch?v=FDNoVCQeGls&t=479s) Most of you will prepare after a reset. By then, the prices have already moved. The time to prepare is now, while the Nasdaq is still sitting at the all-time highs and you still have choices. It is completely free. It is completely live. You can ask me questions. How do you do that? Go to survivethebubble.com. The link is down below, in the comments and the description. Then put the word ACT in the comments so I know that you're coming. Just three letters. ## The dot-com boom and its casualties [08:30](https://www.youtube.com/watch?v=FDNoVCQeGls&t=510s) Ask yourself: has this happened before? It has, and the parallels are a little uncomfortable. Go back to the spring of 2000. This is not doom and gloom. This is a lesson. The internet was going to change everything, and it did. That part was genuinely true. The company everybody wanted to own was called Cisco. Cisco made routers—not the “Thong Song” guy, the router guy, or routers, I guess you might say. They made the switches that carried internet traffic: the plumbing. If you believed in the internet, you bought the plumbing, which sounds a little familiar. [09:03](https://www.youtube.com/watch?v=FDNoVCQeGls&t=543s) In March 2000, Cisco became the most valuable company in the world, worth about half a trillion dollars. Its shares traded around 200 times its profits. For every dollar of profit Cisco made in a year, buyers were paying $200 for the shares. The Nasdaq is the American stock index packed with tech companies. On 10 March 2000, it closed at 5,048 points. That was the top. Then the money changed its mind. [09:39](https://www.youtube.com/watch?v=FDNoVCQeGls&t=579s) What does that actually mean? A boom like this runs on other people's money. Shareholders buy new shares. Banks and bond buyers lend. The companies spend it building things. As long as the money keeps coming in, everything looks wonderful. But what happens when the lenders get a little bit nervous, or the cost of borrowing goes up? Some companies can't borrow at all, so they cut their spending. The companies that were selling to them suddenly have fewer orders. That's how a boom turns. It's not with one big announcement. It's with a lot of quiet decisions to stop lending. [10:13](https://www.youtube.com/watch?v=FDNoVCQeGls&t=613s) Pets.com is the one everybody remembers. It sold pet food online. It listed its shares in February, $2011. It spent $1.2 million on a Super Bowl advert with a sock puppet. Then the cash ran out. Two hundred and sixty-eight days after listing, it announced it was shutting down. The shares ended at 19 cents. Pets.com was a silly business. You'd expect it to fail. The harder lesson is what happens to the good ones. Amazon was a real company with real customers buying real things every day, in a business that would go on to change how the whole world shops. Its shares fell 94% from the peak. If you put $10,000 in at the top, you'd have $600 left. [10:53](https://www.youtube.com/watch?v=FDNoVCQeGls&t=653s) Cisco—the plumbing, with the genuine profits—didn't make a new closing high until December 2025. That's 25 years later. ## The reset, its consequences, and financial contagion [11:06](https://www.youtube.com/watch?v=FDNoVCQeGls&t=666s) Even if you picked the best company of the whole era and paid the wrong price, you waited 25 years just to get your money back. You would have missed out on 25 years of rally, so you were massively poorer. But the company was actually fine. It was just that the price you paid was the problem. The Nasdaq kept falling for 31 months. It finally hit bottom on 9 October 2002, 78% below the peak. We didn't get a record high again until April 2015—15 years. ![Nasdaq drawdown-and-recovery slide with a long-term market chart and highlighted peak, bottom, and recovery milestones (11:44).](figures/frame_0704000.png) [11:45](https://www.youtube.com/watch?v=FDNoVCQeGls&t=705s) It didn't fall in a straight line. There were big rallies on the way down. Every one of them convinced people that the worst was over. People bought the dip, and then they bought it again. That's what made it so painful. Hope kept pulling them back in. What does a 78% fall feel like? Say you were 55 in 2000, and you had $200,000 in tech stocks. Two and a half years later, you had $44,000, and you were 70 by the time it was back to where you started. That's what a stock market reset really looks like. [12:14](https://www.youtube.com/watch?v=FDNoVCQeGls&t=734s) The technology carried on. The number of people online kept growing every single year. Things like email and shopping online went from a novelty to normality, yet the share prices kept collapsing. The prices people had paid for it had come back to earth, and the companies that had run out of other people's money just disappeared. Why does this matter? Because the shape is the same: technology that really is changing the world, sitting on top of a small group of plumbing companies that everyone feels they have to own. In 2000, the plumbing was routers and fiber-optic cables. Today, the plumbing is AI chips and data centers. [12:51](https://www.youtube.com/watch?v=FDNoVCQeGls&t=771s) CoreWeave is about as pure a plumbing company as you can buy. It doesn't make the chips. It doesn't write the AI. It borrows money, buys the chips, and rents them out. That works brilliantly while the lenders are happy to lend. It gets very hard, very fast when they're not. You might say, “Felix, CoreWeave is one company. Who cares?” CoreWeave doesn't own every building it uses. It rents a lot of its data centers from other companies. Some of those companies raised money by selling bonds, and the thing that pays those bonds is CoreWeave's rent. If CoreWeave struggles, their lenders have a problem too. [13:35](https://www.youtube.com/watch?v=FDNoVCQeGls&t=815s) Deutsche Bank says CoreWeave will need to raise more money over the next 12 to 18 months just to deliver the work it has already signed contracts for. Where does that money come from if the lenders are already demanding 15% interest? The money that lent to CoreWeave doesn't live in a box on its own. It comes from the same funds, the same banks, and, in some cases, the same pension schemes that are in the rest of the market. When one big borrower wobbles, the lenders start asking harder questions of everyone else who borrowed to build AI. [14:07](https://www.youtube.com/watch?v=FDNoVCQeGls&t=847s) It isn't only CoreWeave either. A measure of what it costs to insure the debt of tech companies has been rising. The last time that measure spiked, the Nasdaq shrugged and kept climbing. This time, the Nasdaq is falling alongside it. When the lenders and the shareholders get nervous at the same moment, you should pay attention. That's how a problem in just one little corner becomes a problem for the whole index and everybody else. [14:40](https://www.youtube.com/watch?v=FDNoVCQeGls&t=880s) But if you go back, the story didn't end in 2002. The next part is the reason I'm not panicking. While everybody was selling, the future was being built at bargain prices. Guess what? Google IPO'd in 2004 at $85. ## What followed the reset, and what is different today [14:53](https://www.youtube.com/watch?v=FDNoVCQeGls&t=893s) That was less than two years after the bottom. In March 2006, Amazon launched a service called S3. It let any business rent storage on Amazon's computers instead of buying its own. That was the start of what people call the cloud. It's exactly the business CoreWeave's in today, only with AI chips instead of hard drives. Apple launched the iPhone in 2007. By 2009, Amazon's shares were back above their old peak and on the way to becoming one of the biggest companies on Earth. [15:29](https://www.youtube.com/watch?v=FDNoVCQeGls&t=929s) The reset didn't kill the technology. It just moved the money away from the companies that needed endless borrowing and towards the ones that could stand on their own feet. If you understood that in 2002, it was the opportunity of a lifetime. If you didn't, it was the end of your retirement plan. Today, is it the same? Not exactly, and you need to hear both sides of this. [15:50](https://www.youtube.com/watch?v=FDNoVCQeGls&t=950s) First, the price. Analysts use something called price-to-earnings ratio, which I think is actually fairly useless. Essentially, you take the share price and divide it by the profits per share. It tells you how many years of today's profits you're paying for. In 2000, Cisco was trading at 200 times earnings. Today, the Nasdaq 100—the 100 biggest tech companies—trades at about 21 times the profit analysts expect next year. That's from Bloomberg. It's back near the lowest level since the AI boom took off in 2023. Is it expensive? Yes, but it's a long way from the crazy numbers of 2000. [16:28](https://www.youtube.com/watch?v=FDNoVCQeGls&t=988s) Second, the demand is real. The price to rent the most advanced NVIDIA chips by the hour is still strong. Even older chips still rent out at good prices. Computing power is still scarce. When something is scarce, the people who already own it tend to do well. ## Funding and Goldman Sachs' warning [16:43](https://www.youtube.com/watch?v=FDNoVCQeGls&t=1003s) Third, look at who's paying for most of the building. The biggest tech companies, the ones that run their own giant clouds, pay for a lot of their AI spending out of the profits from businesses they already have: search adverts, office software, online shopping. CoreWeave doesn't have a business like that underneath it. It has rental contracts and a lot of debt. In 2000, far more of the boom was running on borrowed money and just hope than today. [17:09](https://www.youtube.com/watch?v=FDNoVCQeGls&t=1029s) If we go back to what Goldman Sachs said, one of its senior traders told clients just how brutal the last few days have been for hedge funds. These are the funds that bet on some shares going up and others going down at the same time. A systematic version of that strategy fell 1.4% in a day. That sounds small, but that move is something that statistically almost never happens. Funds were selling the shares they owned and buying back the shares they'd bet against, all at once, because they had to rather than because they wanted to. It was forced selling. [17:48](https://www.youtube.com/watch?v=FDNoVCQeGls&t=1068s) Funds that tracked chip companies traded their biggest volumes for a long time. Goldman Sachs suspects that day may turn out to have been a local bottom, a short-term low. He thinks the fear about debt had gotten ahead of itself for now, and that's worth hearing. Not every scare becomes a crash. Plenty of sell-offs in the last two years looked frightening and then simply stopped, and we kept going up. [18:12](https://www.youtube.com/watch?v=FDNoVCQeGls&t=1092s) But then he wrote the one line I mentioned at the start. He said, “Too much capital is chasing too little investable, power-ready compute capacity.” He said the repricing could happen gradually or through a “violent dislocation that spills into broader markets.” ![Slide displaying the quoted warning about capital chasing power-ready compute capacity and possible spillover into broader markets (18:25).](figures/frame_1105000.png) ## Consolidation, growth concerns, and two possible outcomes [18:36](https://www.youtube.com/watch?v=FDNoVCQeGls&t=1116s) “Broader markets” is your index fund. It's your retirement. What does “violent dislocation” mean? It looks like a share falling 15% in a day. CoreWeave did roughly that this week. Think what that would do to one of the giant AI names that sits in almost every index fund and pension. What have we learned? The chips are scarce. The power to run them is scarce. But the money borrowed to buy them is enormous. Somebody gets paid in that squeeze, and somebody gets left holding the debt. [19:09](https://www.youtube.com/watch?v=FDNoVCQeGls&t=1149s) There's a research firm called Gardner, and they expect more than 80% of these neocloud companies to stop operating independently by 2030. Some will be bought; some will fail. Being bought in a downturn usually means bought cheaply, which is great for the buyer. It's great if you're Amazon, but it's rarely good for the shareholder who paid the full price. They also reckon that $3.5 trillion of AI infrastructure is at risk of being written down in value—written off. [19:36](https://www.youtube.com/watch?v=FDNoVCQeGls&t=1176s) There is one more signal that I don't like. Since September, the Nasdaq and the interest rate on America's debt have moved together. Falling rates would normally help tech shares. This time, both are falling. ![Nasdaq and US 10-year interest-rate comparison chart; the slide attributes their joint decline to growth concerns (19:53).](figures/frame_1193000.png) [19:55](https://www.youtube.com/watch?v=FDNoVCQeGls&t=1195s) When people expect growth to slow, they pile into government bonds for safety, and that pushes the interest rate down. It usually means the market is worried about growth, not about interest rates. There are two ways this goes. Either the Nasdaq holds its line, the profits come in, and this turns out to be just a scare, or the most indebted part of AI gets repriced the way the dot-com plumbing got repriced. My view is that it's a reset of the borrowed layer, not the end of AI. But my view doesn't pay your bills. ## What to watch, setting alerts, and preparing a plan [20:28](https://www.youtube.com/watch?v=FDNoVCQeGls&t=1228s) You need a plan for both outcomes. What am I watching? First, the Nasdaq line. The Nasdaq 100 has a rising trend line that has held since the lows in April. Its 100-day moving average—the average closing price of the last 100 days—has climbed up to meet it. In the last sell-off, the index dropped to that level and then bounced hard. Traders call it a sort of hammer pattern. If that level holds, the scare may be over for now. If it breaks and stays broken, I'd expect the selling to speed up: forced selling. [21:03](https://www.youtube.com/watch?v=FDNoVCQeGls&t=1263s) The second thing is CoreWeave's bonds and its insurance price. If the cost of insuring its debt keeps climbing, lenders are getting more nervous, whatever the share price does. If it falls back, the panic is easing. The debt market usually tells you first. They're a little bit smarter than us share people—stock people. Third is the profit reports. Goldman Sachs makes the point that, at 21 times profits, the earnings could do some of the heavy lifting. If the profits arrive and they're bigger than we thought, the valuations look more reasonable. But if they don't, they're in trouble. [21:41](https://www.youtube.com/watch?v=FDNoVCQeGls&t=1301s) There was a fourth thing: who's selling? I keep the insider hub thing open on some of the most important stocks out there, and I simply set myself an alert. I'll show you how you do that. I click on the little save thing here at the top, add to my stocks, done. Then I'm going to get alerts on those, including the insider selling, the insider buying, and everything else. ![Winston's CoreWeave company page during the watchlist and alert demonstration (21:55).](figures/frame_1315000.png) [22:05](https://www.youtube.com/watch?v=FDNoVCQeGls&t=1325s) Here it says it's on your watchlist. You can simply do that with some of the AI infrastructure companies here. You could add a bunch of these. It doesn't have to be all of them, but just a couple of the major ones, and see if there's anything interesting happening to those guys. Then you're going to get those notifications, and you're going to be informed. [22:22](https://www.youtube.com/watch?v=FDNoVCQeGls&t=1342s) Start making a plan for yourself. That plan starts with understanding what you're looking at—what you own. In 2002, people sold Amazon at $6 because the headlines told them the internet was finished and the whole thing was a giant mistake. Of course it wasn't. The internet was just getting started. It was the share prices that had gone too far. The people who could tell the difference are the ones who came out of this very well, because a reset is when wealth changes hands. It moves from the people who didn't understand what they owned to the people who did. Which side of that you ended up on comes down to what you do in the next few weeks, not in the next few years. You haven't got that luxury. [23:02](https://www.youtube.com/watch?v=FDNoVCQeGls&t=1382s) In the live training next Saturday, I'll take you through all of this step by step: how a reset in AI will reach your portfolio and your pension; how to read a bond price and the insurance price so you hear the warning before everybody else; how to sort the owners from the borrowers; and how the smart money is positioning right now, before any of this lands in mainstream media news. No, you don't need to be a trader for this. You don't need to have a finance degree. You just need to be willing to learn a skill nobody ever taught you. Most people won't look at this until it's too late, so you can prepare for it before. [23:42](https://www.youtube.com/watch?v=FDNoVCQeGls&t=1422s) It's completely free. It's completely live. You can ask me anything. Grab your seat. That's about the bubble.com—link's down below. If you've got some value out of this, share this with somebody who might get some benefit from this. I wish you all the best. ## Closing excerpt: economic news and the bond market **Speaker 2:** [23:57.64](https://www.youtube.com/watch?v=FDNoVCQeGls&t=1437.64s) Right now, I think we're going through some sort of weird phase transition. Normally, when you get bad economic news or you get bad jobs data, people are going to fly to safety into the bond market.