1 00:00:00,000 --> 00:00:05,860 Speaker 1: Three men built the company that the whole AI boom runs through. And since it went public, 2 00:00:05,860 --> 00:00:12,760 Speaker 1: listed in New York, they've sold $3 .3 billion of their own shares. And right now, 3 00:00:13,000 --> 00:00:19,380 Speaker 1: that company's debt trades like the debt of a business in some serious trouble. Share price 4 00:00:19,380 --> 00:00:26,240 Speaker 1: is down about 65 % from the top and the cost of insuring its debt against bankruptcy hit a 5 00:00:26,240 --> 00:00:32,280 Speaker 1: record high. And most of the stock market hasn't really noticed. Your index fund is still 6 00:00:32,280 --> 00:00:38,440 Speaker 1: full of the same AI names, but some people have noticed. Goldman Sachs' own trading desk 7 00:00:38,440 --> 00:00:43,680 Speaker 1: just told its institutional clients how it thinks this is going to play out. The hedge 8 00:00:43,680 --> 00:00:48,880 Speaker 1: funds and the big pension fund money, they've been told, not you. Now, I've read the 9 00:00:48,880 --> 00:00:53,940 Speaker 1: report. Winston's read the report. And there is one line in it that I believe you also 10 00:00:53,940 --> 00:01:00,300 Speaker 1: deserve to understand. because the last time the market fell in love with the companies 11 00:01:00,300 --> 00:01:06,220 Speaker 1: building the future and the money behind them started to crack and leave the building, the 12 00:01:06,220 --> 00:01:12,180 Speaker 1: global stock market reset. It took 15 years to come back. My name is Felix Nicholas Preen. 13 00:01:12,280 --> 00:01:15,980 Speaker 1: I'm an economist and former investment banker. And now, of course, down there is Winston. 14 00:01:16,200 --> 00:01:20,000 Speaker 1: We're also the founder of the Preen Institute where we publish research on how financial 15 00:01:20,000 --> 00:01:24,860 Speaker 1: markets operate and we also provide instruction on it. There's no sponsorship here. There 16 00:01:24,860 --> 00:01:30,340 Speaker 1: is no endorsement ever, and it means Winston and I can say whatever the heck we like. So 17 00:01:30,340 --> 00:01:36,600 Speaker 1: ask yourself this. Do they know something you don't? And by the end of this video, 18 00:01:36,820 --> 00:01:41,300 Speaker 1: you will know what they know. Stick around. Now, I'm going to go through quite a lot of 19 00:01:41,300 --> 00:01:45,560 Speaker 1: numbers today. So I put all of that into a short report, the filings, the charts, the 20 00:01:45,560 --> 00:01:51,140 Speaker 1: Goldman Sachs stuff, and the list of what I'm watching. It's completely free. There is 21 00:01:51,140 --> 00:01:56,280 Speaker 1: nothing to buy. The link is down below. FelixFriends .org. slash market reset. And if 22 00:01:56,280 --> 00:02:01,680 Speaker 1: you're watching this at all, you're already ahead of like 99 % of people because most of 23 00:02:01,680 --> 00:02:06,060 Speaker 1: them will hear about this from a headline about their pension or they'll look at their 24 00:02:06,060 --> 00:02:11,360 Speaker 1: portfolio in a while and they'll look at it long after they could do anything to help 25 00:02:11,360 --> 00:02:15,860 Speaker 1: themselves. So who are these three men and what have they built? Well, the company is 26 00:02:15,860 --> 00:02:20,380 Speaker 1: called CoreWeave and most people have never heard of it, made some headlines this week, but 27 00:02:20,380 --> 00:02:26,360 Speaker 1: the business is basically very simple. CoreWeave buys enormous numbers of NVIDIA chips, it 28 00:02:26,360 --> 00:02:31,620 Speaker 1: puts them in data centers, and it rents them out to AI companies by the hour. Think of it 29 00:02:31,620 --> 00:02:37,240 Speaker 1: as the prostitute of the AI world. I'm sure that's what the pitch deck said. All right, so 30 00:02:37,240 --> 00:02:40,360 Speaker 1: people know, they have a better name for it. They call it NeoCloud. It's a little bit more 31 00:02:40,360 --> 00:02:46,620 Speaker 1: attractive. And a NeoCloud company builds only for AI. And how does it pay for all those 32 00:02:46,620 --> 00:02:52,060 Speaker 1: chips? Well, with borrowed money. CNBC puts its debt of around 50 billion dollars let me 33 00:02:52,060 --> 00:02:57,000 Speaker 1: see where let me see where winston's has it well this is kind of interesting winston here 34 00:02:57,000 --> 00:03:00,620 Speaker 1: says they have three months cash left before they run out of money that's a little 35 00:03:00,620 --> 00:03:07,620 Speaker 1: concerning but either way it's pretty staggering for a company that only 36 00:03:07,620 --> 00:03:14,540 Speaker 1: listed like last march literally last march now the founders so when a director or a senior 37 00:03:14,540 --> 00:03:18,580 Speaker 1: executive in american company buys or sells shares the law says they have to tell the 38 00:03:18,580 --> 00:03:23,820 Speaker 1: regulators the SEC actually within two days, which is pretty decent, right? Politicians and 39 00:03:23,820 --> 00:03:29,080 Speaker 1: funds, it's like months. And it's called a form four and anybody can read it. So of course, 40 00:03:29,160 --> 00:03:33,740 Speaker 1: nobody reads it. But what we've done instead is that, again, in the Winston up here, 41 00:03:33,860 --> 00:03:37,780 Speaker 1: there's a link down below if you guys want to play around with it for free for a month. You 42 00:03:37,780 --> 00:03:42,500 Speaker 1: can see these little red arrows here, right? Well, these are insider cells and they're 43 00:03:42,500 --> 00:03:48,480 Speaker 1: pretty significant. We're talking $77 million dollars in the last, 44 00:03:48,960 --> 00:03:54,840 Speaker 1: since like September, right? Pretty crazy stuff. Now, if you own this company, you could 45 00:03:54,840 --> 00:03:58,860 Speaker 1: also get notifications on it and then it would just ping on your phone and then you'd know 46 00:03:58,860 --> 00:04:02,520 Speaker 1: about it. And I do that for the companies that I own because that way I'm informed that 47 00:04:02,520 --> 00:04:07,900 Speaker 1: these things happen before most people. But if you add up every sale by these three co 48 00:04:07,900 --> 00:04:10,520 Speaker 1: -founders, here's a screenshot. We actually did this work before. 49 00:04:12,040 --> 00:04:18,860 Speaker 1: Add them all up. CEO, 975 million, Brannon McBee, the co -founder, $1 .1 50 00:04:18,860 --> 00:04:24,380 Speaker 1: billion. And Brian Ventura, they all called Brian, $1 .2 billion. That one's called 51 00:04:24,380 --> 00:04:29,500 Speaker 1: Brannon. That's a funny name, isn't it? Parents couldn't spell much. Okay, I'm being mean 52 00:04:29,500 --> 00:04:33,880 Speaker 1: now. I take it back. I'm sorry. I mean, look at my name. Try spelling that. Good luck. So, 53 00:04:34,040 --> 00:04:40,940 Speaker 1: pretty significant. Why? Because, well, according to Bloomberg, the McBee chap sold 40 % of 54 00:04:40,940 --> 00:04:44,920 Speaker 1: its stake. Now, these guys still own about a fifth of the company, right? So there's 55 00:04:44,920 --> 00:04:50,040 Speaker 1: nothing illegal here, but you'd want to know, wouldn't you? The people who know a business 56 00:04:50,040 --> 00:04:56,640 Speaker 1: best keep selling, you at least want to ask why. Now, the debt. A bond is an IOU. 57 00:04:57,040 --> 00:05:02,460 Speaker 1: You lend a company $1 ,000, it pays you interest every year, and it gives you $1 ,000 back 58 00:05:02,460 --> 00:05:09,440 Speaker 1: on a set date. So Corweave has these bonds that pay just under 10 % interest, and 59 00:05:09,440 --> 00:05:16,360 Speaker 1: they get repaid in 2032. Now, you can now buy that bond for 76 cents. 60 00:05:16,780 --> 00:05:23,480 Speaker 1: So that means you are effectively going to get 15 % interest to lend these buggers money. 61 00:05:23,900 --> 00:05:28,940 Speaker 1: Now, when do you ask someone for 15 % interest? Well, when you're not sure you're going to 62 00:05:28,940 --> 00:05:34,720 Speaker 1: get your money back. And then, of course, it gets worse. There is an insurance market for 63 00:05:34,720 --> 00:05:40,780 Speaker 1: DEC. It's called credit default swaps, and you might remember them from 2008 because all 64 00:05:40,780 --> 00:05:46,540 Speaker 1: the mortgages were also insured that way. So if the company can't pay, this policy will pay 65 00:05:46,540 --> 00:05:49,940 Speaker 1: out. The riskier the company, the more the insurance costs. 66 00:05:51,160 --> 00:05:58,120 Speaker 1: Insuring Corweave's debt for just five years now costs more than 11 % of the amount insured 67 00:05:58,120 --> 00:06:03,640 Speaker 1: every year. It's a record, not the good kind of record. Bloomberg says the price implies 68 00:06:03,640 --> 00:06:10,280 Speaker 1: roughly 60 % odds of default, i .e. bankrupts. So how does that happen to a company 69 00:06:10,280 --> 00:06:15,980 Speaker 1: with so many customers? Well, Deutsche Bank did the sums. Korweef brings in about 10 70 00:06:15,980 --> 00:06:21,360 Speaker 1: billion a year in cash from running the business. It plans to spend 45 billion on ships and 71 00:06:21,360 --> 00:06:26,600 Speaker 1: buildings, which leaves a gap of 35 billion dollars. And a gap like that gets filled with 72 00:06:26,600 --> 00:06:30,920 Speaker 1: more borrowing. Yeah, they've learned from the US government, I think. Now, in fairness, 73 00:06:31,460 --> 00:06:33,860 Speaker 1: Deutsche thinks the shares are still a buy. 74 00:06:35,480 --> 00:06:41,460 Speaker 1: Corweave has $104 billion of signed work waiting to be delivered. About two -thirds of that 75 00:06:41,460 --> 00:06:45,420 Speaker 1: is with customers who have very strong credit ratings. So the CEO called the sell -off 76 00:06:45,420 --> 00:06:50,980 Speaker 1: irrational. And maybe he's right. But think about what happens to your portfolio and your 77 00:06:50,980 --> 00:06:57,540 Speaker 1: pension and your ISAs and everything else if the lenders stop lending Corweave. That's the 78 00:06:57,540 --> 00:07:02,420 Speaker 1: question most people can't answer. And it isn't because they're not clever enough. Just 79 00:07:02,420 --> 00:07:07,860 Speaker 1: reading what the debt market is telling you before the share price catches up is a skill. 80 00:07:08,280 --> 00:07:12,600 Speaker 1: It's a skill you were never taught. You were taught a load of gibber and nonsense about 81 00:07:12,600 --> 00:07:18,660 Speaker 1: geography and everything else, but you weren't taught this. So it's not your fault, but it 82 00:07:18,660 --> 00:07:23,740 Speaker 1: is your responsibility to learn it if you want to keep what you've spent your whole working 83 00:07:23,740 --> 00:07:28,480 Speaker 1: life building. And you can learn it. You've learned plenty of skills already, right? You 84 00:07:28,480 --> 00:07:33,180 Speaker 1: know, walking, swimming, riding a bike, that sort of thing. Nobody was born knowing any of 85 00:07:33,180 --> 00:07:37,340 Speaker 1: that stuff, right? But it'll be crawling around on, you know what. So I'm going to teach it 86 00:07:37,340 --> 00:07:43,960 Speaker 1: to you for free in a live training. I'll show you how a reset in AI is going to reach your 87 00:07:43,960 --> 00:07:48,860 Speaker 1: portfolio and your pension, how to tell the companies that own scarce computing power from 88 00:07:48,860 --> 00:07:53,760 Speaker 1: the ones that are just borrowed to rent it out, and which warning lights in the debt market 89 00:07:53,760 --> 00:07:59,380 Speaker 1: I check first, and how the skilled money is actually positioning right now before any of 90 00:07:59,380 --> 00:08:05,700 Speaker 1: this lands in mainstream media. So most of you will prepare after a reset. And by then, the 91 00:08:05,700 --> 00:08:10,900 Speaker 1: prices have already moved. So the time to prepare is now, while the Nasdaq is still sitting 92 00:08:10,900 --> 00:08:15,520 Speaker 1: in the all -time highs and you still have choices. And it is completely free. It is 93 00:08:15,520 --> 00:08:19,280 Speaker 1: completely live. You can ask me questions. So how do you do that? Well, you go to 94 00:08:19,280 --> 00:08:25,340 Speaker 1: survivethebubble .com. The link is down below in the comments in the description. And then 95 00:08:25,340 --> 00:08:30,120 Speaker 1: you put the word ACT in the comments. so I know that you're coming. Just three letters. So 96 00:08:30,120 --> 00:08:35,740 Speaker 1: ask yourself, has this happened before? Well, it has. And the perils are a little 97 00:08:35,740 --> 00:08:40,640 Speaker 1: uncomfortable. Go back to the spring of 2000. This is not doom and gloom. This is a lesson. 98 00:08:40,960 --> 00:08:47,260 Speaker 1: The internet was going to change everything, and it did. That part was genuinely true. The 99 00:08:47,260 --> 00:08:53,120 Speaker 1: company everybody wanted to own was called Cisco. Cisco made routers, not the thong song 100 00:08:53,120 --> 00:08:58,040 Speaker 1: guy, the router guy, or routers, I guess you might say. And they made the switches that 101 00:08:58,040 --> 00:09:03,520 Speaker 1: carried internet traffic the plumbing. And if you believed in the internet, you bought the 102 00:09:03,520 --> 00:09:09,240 Speaker 1: plumbing, which sounds a little familiar. So in March 2000, Cisco became the most valuable 103 00:09:09,240 --> 00:09:14,060 Speaker 1: company in the world, worth about half a trillion dollars. Its shares traded around 200 104 00:09:14,060 --> 00:09:19,060 Speaker 1: times its profits. So for every dollar of profit Cisco made in a year, buyers were paying 105 00:09:19,060 --> 00:09:25,460 Speaker 1: $200 for the shares. Now, the Nasdaq is the American stock index packed with tech 106 00:09:25,460 --> 00:09:32,200 Speaker 1: companies. And on the 10th of March 2000, it closed at 5 ,048 points. 107 00:09:32,620 --> 00:09:39,600 Speaker 1: That was the top. And then the money changed its mind. So what does that actually mean? A 108 00:09:39,600 --> 00:09:45,580 Speaker 1: boom like this runs on other people's money. Shareholders buy new shares. Banks and bond 109 00:09:45,580 --> 00:09:50,600 Speaker 1: buyers lend. And the company spend it building things. As long as the money keeps coming 110 00:09:50,600 --> 00:09:55,820 Speaker 1: in, everything looks wonderful. But what happens when the lenders get a little bit nervous? 111 00:09:55,980 --> 00:10:02,360 Speaker 1: or the cost of borrowing goes up. Some companies can't borrow at all, so they cut their 112 00:10:02,360 --> 00:10:08,220 Speaker 1: spending. And the companies that were selling to them suddenly have fewer orders. That's 113 00:10:08,220 --> 00:10:13,060 Speaker 1: how a boom turns. It's not with one big announcement. It's with a lot of quiet decisions to 114 00:10:13,060 --> 00:10:18,140 Speaker 1: stop lending. Pets .com is the one everybody remembers. It sold pet food online. It listed 115 00:10:18,140 --> 00:10:24,420 Speaker 1: its shares in February, $2011. It spent $1 .2 million in a Super Bowl advert with a sock 116 00:10:24,420 --> 00:10:30,420 Speaker 1: puppet. And then the cash ran out. 268 days after listing, it announced it was shutting 117 00:10:30,420 --> 00:10:37,340 Speaker 1: down. The shares ended at 19 cents. Now, Pets .com was a silly business. You'd expect it to 118 00:10:37,340 --> 00:10:42,540 Speaker 1: fail. The harder lesson is what happens to the good ones. Amazon was a real company with 119 00:10:42,540 --> 00:10:46,820 Speaker 1: real customers buying real things every day in a business that would go on to change how 120 00:10:46,820 --> 00:10:53,780 Speaker 1: the whole world shops. Its shares fell 94 % from the peak. So if you put a $10 ,000 at 121 00:10:53,780 --> 00:11:00,020 Speaker 1: the top, you'd have $600 left. In Cisco, the plumbing, with the genuine profits, its shares 122 00:11:00,020 --> 00:11:06,660 Speaker 1: didn't make a new closing high until December 2025. That's 25 years later. 123 00:11:06,860 --> 00:11:11,520 Speaker 1: So even if you picked the best company of the whole era and you paid the wrong price, you 124 00:11:11,520 --> 00:11:16,880 Speaker 1: waited 25 years just to get your money back. And of course, you would have missed out on 25 125 00:11:16,880 --> 00:11:21,720 Speaker 1: years of rally, so you were massively poorer. But the company was actually fine. It was 126 00:11:21,720 --> 00:11:27,900 Speaker 1: just that the price you paid was the problem. The Nasdaq kept falling for 31 months and it 127 00:11:27,900 --> 00:11:31,340 Speaker 1: finally hit bottom on the 9th of October, 2002. 128 00:11:32,840 --> 00:11:39,400 Speaker 1: 78 % below the peak. And again, we didn't get a record high again until April 129 00:11:39,400 --> 00:11:45,200 Speaker 1: 2015. 15 years. Now, it didn't fall on a straight line. There were big rallies on the way 130 00:11:45,200 --> 00:11:49,800 Speaker 1: down. Every one of them convinced people that the worst was over. People bought the dip and 131 00:11:49,800 --> 00:11:54,820 Speaker 1: then they bought it again. And that's what made it so painful. Hope kept pulling them back 132 00:11:54,820 --> 00:12:01,660 Speaker 1: in. So what does a 78 % fall feel like? Well, say you were 55 in 2000 and you had $200 ,000 133 00:12:01,660 --> 00:12:07,840 Speaker 1: in tech stocks. Well, two and a half years later, you had $44 ,000 and 134 00:12:07,840 --> 00:12:14,480 Speaker 1: you were 70 by the time it's back to where you started. That's what a stock market reset 135 00:12:14,480 --> 00:12:20,000 Speaker 1: really looks like. The technology carried on. The number of people online kept growing 136 00:12:20,000 --> 00:12:24,100 Speaker 1: every single year, and things like email and shopping online went from a novelty to just 137 00:12:24,100 --> 00:12:30,580 Speaker 1: normality, yet the share prices kept collapsing. But the prices people had paid for it had 138 00:12:30,580 --> 00:12:35,800 Speaker 1: come back to earth, and the companies that had run out of other people's money just 139 00:12:35,800 --> 00:12:41,140 Speaker 1: disappeared. So why does this matter? Because the shape is the same. The technology that 140 00:12:41,140 --> 00:12:46,100 Speaker 1: really is changing the world, sitting on top of a small group of plumbing companies that 141 00:12:46,100 --> 00:12:51,580 Speaker 1: everyone feels they have to own. In 2000, the plumbing was routers and fiber optic cables. 142 00:12:51,740 --> 00:12:58,060 Speaker 1: Today, the plumbing is AI chips and data centers. And CoreWeave is about as pure a plumbing 143 00:12:58,060 --> 00:13:03,020 Speaker 1: company as you can buy. It doesn't make the chips. It doesn't write the AI. It borrows 144 00:13:03,020 --> 00:13:08,060 Speaker 1: money. It buys the chips. It rents them out. And that works brilliantly while the lenders 145 00:13:08,060 --> 00:13:14,240 Speaker 1: are happy to lend. Now, it gets very hard, very, very fast when they're not. And you might 146 00:13:14,240 --> 00:13:18,940 Speaker 1: say, Felix, Corweave is one company, who cares? Well, Corweave doesn't own every building 147 00:13:18,940 --> 00:13:23,460 Speaker 1: it uses. It rents a lot of its data centers on other companies. Some of those companies 148 00:13:23,460 --> 00:13:29,740 Speaker 1: raised money by selling bonds. And the thing that pays those bonds is Corweave's rent. So 149 00:13:29,740 --> 00:13:35,240 Speaker 1: if Corweave struggles, their lenders have a problem too. And Deutsche Bank says Corweave 150 00:13:35,240 --> 00:13:41,380 Speaker 1: will need to raise more money over the next 12 to 18 months just to deliver the work it has 151 00:13:41,380 --> 00:13:46,100 Speaker 1: already signed contracts for. So where does that money come from if the lenders are already 152 00:13:46,100 --> 00:13:52,860 Speaker 1: demanding 15 % interest? See, the money that lent CoreWeave, the money that lent to 153 00:13:52,860 --> 00:13:57,140 Speaker 1: CoreWeave doesn't live in a box on its own. It comes from the same funds, the same banks, 154 00:13:57,200 --> 00:14:01,820 Speaker 1: and in some cases, the same pension schemes that are in the rest of the market. So when one 155 00:14:01,820 --> 00:14:07,280 Speaker 1: big borrower wobbles, the lenders start asking harder questions of everyone else who 156 00:14:07,280 --> 00:14:12,060 Speaker 1: borrowed to build AI. And it isn't only CoreWeave either. A measure of what it costs to 157 00:14:12,060 --> 00:14:16,720 Speaker 1: ensure the debt of tech companies has been rising. The last time that measure spiked, the 158 00:14:16,720 --> 00:14:23,720 Speaker 1: Nasdaq shrugged and kept climbing. This time, the Nasdaq is falling alongside it. So 159 00:14:23,720 --> 00:14:28,300 Speaker 1: when the lenders and the shareholders get nervous at the same moment, you should pay 160 00:14:28,300 --> 00:14:33,520 Speaker 1: attention. And that's how a problem in just one little corner becomes a problem for the 161 00:14:33,520 --> 00:14:40,340 Speaker 1: whole index and everybody else. But if you go back, the story didn't end in 2002. And the 162 00:14:40,340 --> 00:14:46,360 Speaker 1: next part is the reason I'm not panicking. While everybody was selling the future, which 163 00:14:46,360 --> 00:14:53,000 Speaker 1: was being built at bargain prices, well, guess what? Google IPO'd in 2004 at $85. 164 00:14:53,600 --> 00:14:59,200 Speaker 1: That was less than two years after the bottom. In March 2006, Amazon launched a service 165 00:14:59,200 --> 00:15:05,980 Speaker 1: called S3. It let any business rent storage on Amazon's computers instead of buying its 166 00:15:05,980 --> 00:15:12,120 Speaker 1: own. And that was the start of what people call the cloud. And it's exactly the business 167 00:15:12,120 --> 00:15:17,580 Speaker 1: call weaves in today, only with AI chips instead of hard drives. Apple launched the iPhone 168 00:15:17,580 --> 00:15:22,740 Speaker 1: in 2007, and by 2009, Amazon's shares were back above their old peak and on the way to 169 00:15:22,740 --> 00:15:29,460 Speaker 1: becoming one of the biggest companies on Earth. So the reset didn't kill the technology. 170 00:15:29,680 --> 00:15:36,040 Speaker 1: It just moved the money away from the companies that needed endless borrowing and towards 171 00:15:36,040 --> 00:15:40,600 Speaker 1: the ones that could stand on their own feet. So if you understood that in 2002, it was the 172 00:15:40,600 --> 00:15:45,100 Speaker 1: opportunity of a lifetime. If you didn't, it was the end of your retirement plan. So today, 173 00:15:45,340 --> 00:15:50,220 Speaker 1: is it the same? Well, not exactly. And you need to hear both sides of this. First, the 174 00:15:50,220 --> 00:15:54,580 Speaker 1: press. Analysts use something called price to earnings ratio, which I think is actually 175 00:15:54,580 --> 00:15:58,540 Speaker 1: fairly useless. But essentially, you take the share price and you divide it by the profits 176 00:15:58,540 --> 00:16:05,300 Speaker 1: per share. So it tells you how many years of today's profits are you paying for. Now in 177 00:16:05,300 --> 00:16:10,840 Speaker 1: 2000, Cisco was trading at 200 times earnings. Today, the Nasdaq 100, the 100 biggest tech 178 00:16:10,840 --> 00:16:16,180 Speaker 1: companies, traded about 21 times the profit analysts expect next year. That's from 179 00:16:16,180 --> 00:16:22,560 Speaker 1: Bloomberg. And it's back near the lowest level since the AI boom took off in 2023. So is it 180 00:16:22,560 --> 00:16:28,700 Speaker 1: expensive? Well, yes, but it's a long way from the crazy numbers of 2000. And second, the 181 00:16:28,700 --> 00:16:33,240 Speaker 1: demand is real. The price to rent the most advanced NVIDIA chips by the hour is still 182 00:16:33,240 --> 00:16:38,260 Speaker 1: strong. Even older chips still rank out at good prices. So computing power is still scarce. 183 00:16:38,440 --> 00:16:43,040 Speaker 1: And when something is scarce, the people who already own it tend to do well. And then 184 00:16:43,040 --> 00:16:48,820 Speaker 1: third, look at who's paying for most of the building. The biggest tech companies, the ones 185 00:16:48,820 --> 00:16:53,980 Speaker 1: that run their own giant clouds, pay for a lot of their AI spending out of the profits from 186 00:16:53,980 --> 00:17:00,080 Speaker 1: businesses that they already have. Search adverts, office software, online shopping. So 187 00:17:00,080 --> 00:17:04,200 Speaker 1: CoreWeave doesn't have a business like that underneath it. it has rental contracts and a 188 00:17:04,200 --> 00:17:09,680 Speaker 1: lot of debt. In 2000, far more of the boom was running on borrowed money, though, and just 189 00:17:09,680 --> 00:17:16,380 Speaker 1: hope than today. So if we go back to what Goldman Sachs said, one of its senior traders 190 00:17:16,380 --> 00:17:21,520 Speaker 1: told clients just how brutal the last few days have been for hedge funds. These are the 191 00:17:21,520 --> 00:17:26,100 Speaker 1: funds that bet on some shares going up and others going down at the same time. And a 192 00:17:26,100 --> 00:17:32,520 Speaker 1: systematic version of that strategy fell 1 .4 % in a day. And that sounds small. 193 00:17:32,700 --> 00:17:39,700 Speaker 1: But that move is something that statistically almost never happens. Funds were selling 194 00:17:39,700 --> 00:17:44,100 Speaker 1: the shares they owned and buying back the shares they'd bet against all at once because 195 00:17:44,100 --> 00:17:48,420 Speaker 1: they had to, rather than because they wanted to. It was forced selling. Funds that tracked 196 00:17:48,420 --> 00:17:54,680 Speaker 1: chip companies traded their biggest volumes for a long time. And Goldman Sachs suspects 197 00:17:54,680 --> 00:18:00,780 Speaker 1: that day may turn out to have been a local bottom, a short -term low. He thinks the fear 198 00:18:00,780 --> 00:18:07,520 Speaker 1: about debt had gotten ahead of itself for now and that's worth hearing not every scare city 199 00:18:07,520 --> 00:18:12,940 Speaker 1: so not every scare becomes a crash plenty of sell -offs in the last two years looked 200 00:18:12,940 --> 00:18:17,840 Speaker 1: frightening and then simply stopped and we kept going up but then he wrote the one line i 201 00:18:17,840 --> 00:18:24,240 Speaker 1: mentioned at the start he said too much capital is chasing too little investable power 202 00:18:24,240 --> 00:18:30,640 Speaker 1: -ready compute capacity and he said the repricing could happen gradually or through a 203 00:18:30,640 --> 00:18:36,840 Speaker 1: violent dislocation that spills into broader markets. Now, broader markets is your index 204 00:18:36,840 --> 00:18:42,320 Speaker 1: fund. It's your retirement. And what does violent dislocation mean? Well, it looks like a 205 00:18:42,320 --> 00:18:48,920 Speaker 1: share falling 15 % in a day. Cool, we've did roughly that this week. Now, think 206 00:18:48,920 --> 00:18:55,800 Speaker 1: what that would do to one of the giant AI names that 207 00:18:55,800 --> 00:19:00,280 Speaker 1: sits in almost every index fund and pension. So what have we learned? Well, the chips are 208 00:19:00,280 --> 00:19:04,560 Speaker 1: scarce. The power to run them is scarce. But the money borrowed to buy them is enormous. 209 00:19:05,060 --> 00:19:09,500 Speaker 1: Somebody gets paid in that squeeze and somebody gets left holding the debt. There's a 210 00:19:09,500 --> 00:19:15,580 Speaker 1: research firm called Gardner and they expect more than 80 % of these neocloud companies to 211 00:19:15,580 --> 00:19:22,340 Speaker 1: stop operating independently by 2030. Some will be bought, some will fail. And being bought 212 00:19:22,340 --> 00:19:27,060 Speaker 1: in a downturn usually means bought cheaply, which is great for the buyer. It's great if 213 00:19:27,060 --> 00:19:31,920 Speaker 1: you're Amazon, but it's rarely good for the shareholder who paid the full price. They also 214 00:19:31,920 --> 00:19:36,520 Speaker 1: reckon that three and a half trillion of AI infrastructure is at risk of being written down 215 00:19:36,520 --> 00:19:43,360 Speaker 1: in value, written off. And there is one more signal that I don't like. Since September, the 216 00:19:43,360 --> 00:19:49,080 Speaker 1: Nasdaq and the interest rate on America's debt have moved together. 217 00:19:49,860 --> 00:19:55,140 Speaker 1: Falling rates would normally help tech shares. This time, both are falling. Now, when 218 00:19:55,140 --> 00:20:00,320 Speaker 1: people expect growth to slow, they pile into government bonds for safety. And that pushes 219 00:20:00,320 --> 00:20:05,040 Speaker 1: the interest rate down. So it usually means the market is worried about growth, not about 220 00:20:05,040 --> 00:20:09,560 Speaker 1: interest rates. So there are two ways this goes. Either the Nasdaq holds its line, the 221 00:20:09,560 --> 00:20:15,260 Speaker 1: profits come in, and this turns out to be just a scam. Or the most indebted part of AI gets 222 00:20:15,260 --> 00:20:21,840 Speaker 1: repriced the way the dot -com plumbing got repriced. And my view is that it's 223 00:20:21,840 --> 00:20:28,380 Speaker 1: a reset of the borrowed layer, not the end of AI. But my view doesn't pay your bills. 224 00:20:28,580 --> 00:20:35,420 Speaker 1: So you need a plan for both outcomes. So what am I watching? Well, first, the Nasdaq line. 225 00:20:35,580 --> 00:20:42,300 Speaker 1: The Nasdaq 100 has a rising trend line that has held since the lows in April. It's 100 -day 226 00:20:42,300 --> 00:20:46,040 Speaker 1: moving average. The average closing price of the last 100 days has climbed up to meet it. 227 00:20:46,600 --> 00:20:51,180 Speaker 1: In the last sell -off, the index dropped to that level and then bounced hard. Traders call 228 00:20:51,180 --> 00:20:57,260 Speaker 1: it a sort of a hammer pattern. Now, if that level holds, the scale may be over for now. If 229 00:20:57,260 --> 00:21:03,500 Speaker 1: it breaks and stays broken, I'd expect the selling to speed up. Forced selling. The second 230 00:21:03,500 --> 00:21:08,420 Speaker 1: thing is Corweave's bonds and its insurance price. If the cost of insuring its debt keeps 231 00:21:08,420 --> 00:21:13,340 Speaker 1: climbing, lenders are getting more nervous, whatever the share price does. If it falls 232 00:21:13,340 --> 00:21:18,520 Speaker 1: back, the panic is easing. So the debt market usually tells you first they're a little bit 233 00:21:18,520 --> 00:21:23,700 Speaker 1: smarter than us share people, stock people. And then there is something that's third, and 234 00:21:23,700 --> 00:21:30,000 Speaker 1: that is the profit reports. Goldman Sachs makes the point that at 21 times profits, 235 00:21:30,340 --> 00:21:35,520 Speaker 1: the earnings could do some of the hefty lifting. The profits arrive, and they're bigger 236 00:21:35,520 --> 00:21:41,740 Speaker 1: than we thought, the valuations look more reasonable. But if they don't, well, they're in 237 00:21:41,740 --> 00:21:48,520 Speaker 1: trouble. Now, there was a fourth thing. who's selling so i keep the insider hub thing 238 00:21:48,520 --> 00:21:52,940 Speaker 1: open on some of the most important stocks out there and i simply set myself an alert show 239 00:21:52,940 --> 00:21:56,860 Speaker 1: you how you do that so i just click on the little save thing here at the top add to my 240 00:21:56,860 --> 00:22:00,420 Speaker 1: stocks done and then i'm going to get alerts on those 241 00:22:01,700 --> 00:22:05,080 Speaker 1: including you know the insider selling and the insider buying and everything else so here 242 00:22:05,080 --> 00:22:10,220 Speaker 1: it says it's on your watch list and you can simply do that with some of the you know ai 243 00:22:10,220 --> 00:22:15,320 Speaker 1: infrastructure companies here you could add a bunch of these there doesn't have to be all 244 00:22:15,320 --> 00:22:19,380 Speaker 1: of them but just a couple of the major ones and just see if there's anything could be you 245 00:22:19,380 --> 00:22:22,580 Speaker 1: know interesting happening to those guys and then you're going to get those notifications 246 00:22:22,580 --> 00:22:27,120 Speaker 1: and you're going to be informed so start making a plan for yourself and that plan starts 247 00:22:27,120 --> 00:22:32,020 Speaker 1: with understanding what you're looking at what you own i mean in 2002 people sold amazon at 248 00:22:32,020 --> 00:22:35,560 Speaker 1: six dollars because the headlines told them the internet was finished and the whole thing 249 00:22:35,560 --> 00:22:41,260 Speaker 1: was a giant mistake and of course it wasn't the internet was just getting started, it was 250 00:22:41,260 --> 00:22:45,780 Speaker 1: the share prices that had gone too far. The people who could tell the difference are the 251 00:22:45,780 --> 00:22:51,440 Speaker 1: ones who came out of this very, very well. Because a reset is when wealth changes hands. It 252 00:22:51,440 --> 00:22:56,120 Speaker 1: moves from the people who didn't understand what they earned to the people who did. And 253 00:22:56,120 --> 00:23:02,920 Speaker 1: which side of that you ended up on comes down to what you do in the next few weeks. Not in 254 00:23:02,920 --> 00:23:08,240 Speaker 1: the next few years, you haven't got that luxury. So in the live training next saturday i'll 255 00:23:08,240 --> 00:23:14,560 Speaker 1: take you through all of this step by step how a reset an ai will reach your portfolio 256 00:23:14,560 --> 00:23:20,260 Speaker 1: and your pension how to read a bond price and the insurance price so you hear the warning 257 00:23:20,260 --> 00:23:25,220 Speaker 1: before everybody else how to sort the owners from the borrowers and how the smart money is 258 00:23:25,220 --> 00:23:30,780 Speaker 1: positioning right now before any of this lands in mainstream media news and no you don't 259 00:23:30,780 --> 00:23:35,460 Speaker 1: need to be a trader for this. You don't need to have a finance degree. You just need to be 260 00:23:35,460 --> 00:23:42,180 Speaker 1: willing to learn a skill nobody ever taught you. And most people won't look at this until 261 00:23:42,180 --> 00:23:46,380 Speaker 1: it's too late. So you can prepare for it before. It's completely free. It's completely 262 00:23:46,380 --> 00:23:50,520 Speaker 1: live. You can ask me anything. So grab your seat. That's about the bubble .com links down 263 00:23:50,520 --> 00:23:55,020 Speaker 1: below. And if you've got some value out of this, share this with somebody who might get 264 00:23:55,020 --> 00:23:57,560 Speaker 1: some benefit from this. I wish you all the best. 265 00:23:57,640 --> 00:24:03,000 Speaker 2: Right now, I think we're going through some sort of weird phase transition. And normally, 266 00:24:03,260 --> 00:24:07,960 Speaker 2: when you get bad economic news or you get bad jobs data, that people are going to fly to 267 00:24:07,960 --> 00:24:09,380 Speaker 2: safety into the bond market.