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The sale of the New Balance cleats, Shohei Ohtani wore during the 2025 MLB Tokyo Series, his first major league games played in Japan, at just over 440,000. >> The space is on fire, setting an all-time record by nearly 5x. There's so much room to grow the category. For the first time, there's so much interest in the game where a sneaker category in sports has hit this amount. Before it was Michael Jordan, Kobe Bryant, and now Shohei Ohtani. What was funny, nearly immediately after the auction, we had people emailing, making significant offers over the sales price. And I was texting the the winner, asking if he would take a significant chunk of change to walk away and do nothing, and he laughed. He said, "Absolutely not." He thinks that these are million-dollar plus.
You'll have a world where it's content without borders, where AI will allow platforms to allow a consumer to watch the content in their native language. Live works. People want live events. They want live news, and they particularly want live sports. They want things that AI is not going to be able to replicate. Alex Sherman: Back in 2023, Lillian and I spoke to some of the biggest names in the media business. We wanted to know what they thought the television industry would look like in three years. Unknown: We heard a lot of predictions, some of which did happen, like media mergers and spinouts, expanded streaming bundles, and the growth of AI. Alex Sherman: Other predictions didn't age as well. We probably won't be watching TV in the metaverse anytime soon, and Apple still isn't making TV sets. Unknown: Now, three years later, we wanted to revisit this idea, talk to the top names in the media industry, some from last time and some new voices, to hear what they think the future of TV will look like three years from now. Alex Sherman: We asked the same five questions to 10 industry leaders to hear their takes on sports, cord cutting, streaming, mergers, and more. Unknown: Here's what they had to say. In three years, will we have hit a floor on cable TV subscribers, or will cable subs just keep going lower and lower each year? I don't think we'll have a floor. I think I do think it will continue to decline, and it'll probably do so every year until sports rights eventually disappear from cable, but I think that's a that's at least a decade off. Cost of free over the air retrans is now over $30 per customer for something that's essentially free. But what you're seeing already is all of that broadcast content and cable content is really all available inside of these apps, and it's available inside of big streaming bundles that I think will develop over time. Nothing truly goes to zero. So somewhere in America, there's probably someone paying for AOL dial-up or or renting a DVD from the last blockbuster, which by the way is in Bend, Oregon. But the direction of travel is unmistakable. I I think it's difficult to reverse the trend that we're seeing of consumers choosing to consume content on platforms other than linear television. I think that trend continues. How fast, frankly, we haven't been right as an industry to date. It hasn't been quite as fast and as aggressive as maybe we were forecasting even four or five years ago. In three years, what's one thing that will become a TV industry standard that doesn't exist today? Personalization exists today, but I'm going to say three years from now, you're going to see it pretty much everywhere. Meaning networks are providing the right content to the right user at the right time. I think you'll see ads get way more useful and relevant the same way they have on social media. If you think about the experience today on television, it still largely feels like the ads are not personalized, and you can imagine a world where you can see such hyper personalization that really it gets to a place where what you see as an ad doesn't even feel disruptive or like friction. It actually just feels like wow, that was really helpful and useful because you know me so well. Simultaneous day and date global releases to us seem to be a really important evolution in the television ecosystem. Of course, there's still going to be shows that premiere primarily in one market, one territory-North America or in Asia or Europe. But I think increasingly, what you're seeing is, you know, the biggest shows are premiering everywhere in the world at the same time. See more and more podcasters and live streaming shows being licensed to cable networks, perhaps even broadcast networks, and I think that that will become much more of a TV industry standard. I think we'll continue to see major advancements in language, right? And so I think you'll have a world where it's content without borders, where AI will allow platforms to allow a consumer to watch the content in their native language. Will there be a major government action, like a deal blocked or a forced breakup, that prevents a big tech company from getting bigger in the entertainment industry? Big tech has lost a lot of goodwill among the left and Democrats, and so I think that those big tech companies will be in for a lot of scrutiny and will find going much more difficult. But I think that depends what happens in the next two elections in 26 and 28, and who knows exactly what will happen. But I think that's the that's the danger for them. Goal isn't bigger and better, and so I think what we're going to see is a consumer. And a industry backlash to some of these deals that will then kind of change the course. I think we're starting to see some of that even recently with the letter that was submitted by 1000 professionals in Hollywood pushing back at the Paramount deal. I think we'll continue to see that kind of thing, and that will shape how decisions are made. The The convergence between Silicon Valley tech and Hollywood, it's already happened. You know, the shift has happened. I mean, if you look at the platforms that are taking the highest share of time spent attention, it's tech platforms. If you look at who has the highest share of television viewing in the living room. It's YouTube. Washington has a way of surprising everybody. What I do think is that scale alone won't guarantee success. The companies that'll win over the next decade will be the ones that consumers trust, that advertisers value, and really that creators actually want to partner with. Alex Sherman: Are we in a sports viewership ratings bubble? Will the big sports, NFL, NBA, MLB, will those ratings be lower in three years than they are today? Unknown: I believe the answer is a a fast no. First off, measurement is getting better and much more accurate, including, of course, out of home and and now streaming usage being accounted for. So so that's obviously very helpful. But but Alex, every time the industry expects a downturn, numbers continue up and to the right. It's really important to understand that Nielsen has made some methodological improvements that impact sports and everything in general. But in particular, sports, the number one thing there is we've expanded our out-of-home measurement. And with sports, it's really, really important because as we've added markets to measurement, home markets are super important to sports rate. So we have seen increases directly attributable to that enhancement that you know we we expect to continue, but we won't see a big year-to-year bump. I think we will get to a point of saturation again. Don't know if this is true. This is a slightly adjacent industry for me, but I think every industry has a ceiling and available audience. I think with the recent distribution deals that have broadened the number of platforms where this content is distributed, I think you get to a ceiling. I think You're going to continue to see ratings go up. Maybe that's a little bit of a mix of short-form content, long-form content, immersive capabilities of bringing you into the stadium, but I think it's the one area that's shown really isn't the same to be able to watch it after the fact, and I think it's going to continue to drive readings. I mean, the reality is that that live works. People want live events, they want live news, and they particularly want live sports. They want things that AI is not going to be able to replicate, and I think so. Live sports is going to continue to be very strong. Live sports remains one of the last true mass reach experiences in our culture. in In a fragmented world, sports still create communal moments. Families watch them together. Friends text each other in real time, and as we're seeing entire cities change moods based on outcomes. So, so I suspect premium sports remain incredibly valuable, perhaps even more than today. What is another streaming service, p ...[Transcript truncated for size]...
>> "BLOOMBERG TECH" IS LIVE FROM THE HEART OF SILICON VALLEY, WITH ED LUDLOW IN SAN FRANCISCO. ED: THIS IS "BLOOMBERG TECH." ANTHROPIC'S SECOND-QUARTER REVENUE COMES TO $11.5 BILLION, 14 TIMES MORE COMPARED TO THE SAME PERIOD A YEAR AGO. FAMILY OFFICES AROUND THE WORLD HAVE BUILT UP BILLIONS OF DOLLARS OF EXPOSURE TO SPACEX. BEDROCK ROBOTICS LAUNCHES THE FIRST FULLY AUTONOMOUS EXCAVATOR IN THE U.S. WE WILL SIT DOWN WITH THE CEO TO DISCUSS HOW THE AI BUILDOUT IS SPERRY DEMAND FOR CONSTRUCTION, AND AI IS ANSWERING THE CALL. GOOD MORNING. THERE IS LOTS OF TECHNOLOGY NEWS THIS MONDAY, BUT OTHER THINGS ARE IMPACTING THE TECH SECTOR. THE PRESIDENT HAS MADE TWO STATEMENTS THIS MORNING. THE FIRST ON TRUTH SOCIAL THAT THE ABSOLUTE REDLINE FOR THE PRESIDENT IS IRAN MUST NOT HAVE A NUCLEAR WEAPON. HE ALSO WENT ON FOX NEWS AND SAID THAT OMAN GETS IN THE UNITED STATES' WAY, THEY WILL BE SUBJECT TO BOMBING. AS I SAID, THERE WAS A LOT OF TECHNOLOGY NEWS. LET'S LOOK AT TODAY'S BIG NUMBER, $11.5 BILLION, HOW MUCH ANTHROPIC IS REPORTING FOR THE SECOND-QUARTER 2026 REVENUE BASED ON DOCUMENTS SEEN BY BLOOMBERG, A 14X INCREASE FROM THE SAME PERIOD A YEAR AGO. LET'S GET INTO ALL THE NUMBERS. THESE ARE DATA POINTS PRESENTED IN DOCUMENTS SEEN BY BLOOMBERG AND SHOWN TO PROSPECTIVE INVESTORS. TAKE US THROUGH THE NUMBERS. >> YEAH, SO WE HAVE THIS REVENUE NUMBER WHICH IS MANY TIMES WHAT THE COMPANY HAD REPORTED JUST A YEAR EARLIER, WHICH INDICATES WHAT IS IT DOING, TRYING TO SOLVE SERVICES TO COMPANIES, BUT CONSUMERS ARE BUYING THEM AS WELL. IT'S WORKING. IT IS UP, GOSH, AT LEAST 14 FOLD FROM LAST TIME. IT ALSO IS CLEAR THAT THE COMPANY HAD THEIR ANNUALIZED REVENUE -- RUN RATE CROSSED 47 BILLION IN MAY. IT IS IMPORTANT TO REMEMBER THAT COMPANIES CAN'T DELAY THINGS DIFFERENTLY. ED: I WILL POKE-- CALCULATE THINGS TO FAMILY. ED: I WILL POINT OUT THAT POSITIVE ADJUSTED OPERATING INCOME, WHICH IN ANTHROPIC'S CASE IS MAKING EVERYONE FEEL GOOD THAT LOSSES WON'T BE INFINITE FOREVER. THE COMPARISON TO OPENAI IS REALLY INTERESTING BECAUSE WE PUT THIS IN THE CONTEXT OF TWO POTENTIAL IPO'S IF NOT THIS YEAR, THEN NEXT YEAR AS WELL. WHAT IS THE REPORTING ON THE TIMELINE FOR THAT? RACHEL: OOH. FOR ME, IT FEELS TRICKY TO PREDICT THAT ONE WHAT I WILL SAY IS THAT THESE TWO REPORTS THAT WE HAVE DONE RECENTLY -- THIS MOST RECENT ONE ON ANTHROPIC, AND THEN THE OTHER RECENT ONE ON OPENAI AND HOW THEIR REVENUE IS INCREASING -- IF WE LOOK AT THEM INDIVIDUALLY AND COMPARE THEM TO EACH OTHER -- WITH ARR, THEY ARE CALCULATING THEM IN DIFFERENT WAYS. CERTAINLY NOT AN APPLES TO APPLES COMPARISON. IT LOOKS LIKE EACH COMPANY IS SHOWING INVESTORS AND POTENTIAL INVESTORS BETTER INFORMATION THAN IT COULD HAVE JUST A MONTH OR TWO AGO. THAT COULD BE A POSITIVE SIGN FOR AN IPO. ED: WHAT ABOUT THE TECHNOLOGY SIDE? WHERE DO WE STAND WITH ANTHROPIC AND OPENAI, THE CADENCE OF THEM RELEASING FRONTIER MODELS AND WHERE THE BUSINESS FOCUSES ARE? RACHEL: YEAH, IT HAS BEEN INTERESTING TO WATCH THAT UNFOLD OVER THE LAST SIX MONTHS OR SO AS THESE COMPANIES MOVE CLOSER TO A POTENTIAL IPO. YOU ARE SEEING THEM SORT OF REFOCUS OR FOCUS MORE INTENTLY ON CERTAIN ASPECTS OF THE BUSINESS. WITH OPENAI WE ARE SEEING A CADENCE OF RELEASES, BUT WE ARE SEEING LESS OF AN ARRAY OF THINGS, WHICH IS INTERESTING. IT'LL BE EVEN MORE CLEAR AS WE GO FORWARD THIS YEAR, BUT WE WILL ALSO SEE THE COMPANY CONTINUE TO FOCUS ON THINGS THAT IT THINKS ARE IMPORTANT ON THE CONSUMER AND ENTERPRISE SIDE. THOSE ARE BOTH REALLY BIG BUSINESSES. WITH ANTHROPIC, I BET WE CAN EXPECT TO SEE A LOT MORE ON THE CODING SIDE, SCIENCE SIDE AS WELL. WE MAY SEE BOTH OF THOSE TWO THINGS. I THINK WE WILL SEE A LOT OF THAT STUFF HAPPENING, CODING, PERHAPS SCIENCE, OTHER WORK-RELATED APPLICATIONS WE HAVE NOT SEEN TOO MUCH OF YET FOR THESE CHATBOTS THERE HOPING TO SELL TO PEOPLE. ED: RACHEL METZ, WHO BROKE THE STORY ON ANTHROPIC'S SECOND-QUARTER REVENUE ON FRIDAY MOVING MARKETS THIS MONDAY. OUR NEXT GUEST BELIEVES MARKETS ARE DIGESTING THE LARGEST CAPEX SURGEON HISTORY, DRIVEN BY DEMAND FOR-- SURGE IN HISTORY, DRIVEN BY DEMAND FOR AI COMPUTE. HE IS WITH US IN SAN FRANCISCO ON SET. I WANT TO START WITH THE SIGNAL THAT COMES FROM THE REPORT RACHEL JUST GAVE. ANTHROPIC HAS A REAL REVENUE NUMBER AND AN UPDATED ARR NUMBER, AND LOTS OF DIFFERENT NAMES MOVING THIS MORNING. CHIP NAMES, THOSE INVESTED IN OTHER SOFTWARE NAMES. WHERE DO YOU THINK THAT IS? >> 31 YEARS OF BEING IN BUSINESS, WE ARE AT A STAGE WHERE THE PHYSICAL WORLD CANNOT KEEP UP WITH THE DIGITAL WORLD AND THAT IS CREATING INCREDIBLE BOTTLENECKS, AND THAT IS WIDELY KNOWN. NOW YOU ARE SEEING THIS WAVE OF THE COORDINATING. WE SAW--THIS WAVE OF LIQUIDITY. ANTHROPIC, SPACEX, OPENAI. WE ARE HITTING THE STAGE WHERE A WAVE OF LIQUIDITY IS STOKING DEMAND INTO THESE SHORTAGES AND BOTTLENECKS, AND THAT IS CREATING INCREDIBLE EXCITEMENT. FOR INVESTORS, WE HAVE TO BE CAREFUL TO NOT GET TOO SWEPT UP IN THAT AND LOOK AT THE SECOND- AND THIRD-ORDER WINNERS DOWN THE ROAD TO MAKE SURE WE ARE BALANCED AND NOT GETTING AHEAD OF OUR SKIS ON BETA IN THE INVESTMENT LANDSCAPE. ED: I HAVE QUESTIONS ABOUT THE NVIDIA NEWS FROM LAST WEEK, $500 BILLION, WHERE SIX WALL STREET FIRMS GO AND FIND THE CAPITAL. WHAT I WROTE ABOUT IN MY COLUMN THIS MORNING IS THAT THERE IS A DIFFERENCE BETWEEN DEPRECIATION AND THE ECONOMIC LIFE OF A GPU. AS AN INVESTOR CAN HOW DO YOU MODEL THE ECONOMIC LIFE OF A GPU AND DESIGN HOW TO RAISE MONEY AGAINST THAT? TODD: CLEARLY THEY ARE CAUSING AN ASSET CLASS TO BE BUILT AND FINANCED -- ED: YOU DO BELIEVE THAT, IT CAN BE AN ASSET CLASS OF ITS OWN? TODD: I THINK IT CAN, BUT ONE OF THE THINGS WE THE DURATION OF THE INNOVATION. WE WILL SEE INCREDIBLE NEW ARCHITECTURES. WE KNOW THAT MEMORY IS AN INCREDIBLE BOTTLENECK RIGHT NOW. I BELIEVE THAT PEOPLE ARE RAISING SO HARD TODAY, IT IS HARD TO REENGINEER THESE NETWORKS. WE HAVE TO THINK ABOUT THREE, FOUR, FIVE YEARS FROM NOW CAN WE COULD BE REARCHITECTING AND COMPRESSING MEMORY AND NEW STRUCTURES. WHAT IS THE DURABILITY OF THESE ASSET CLASSES THE NEXT TWO TO THREE YEARS? IT IS POTENTIALLY IN THE BAG. FIVE TO 10 YEARS, THERE IS GOING TO BE TREMENDOUS CHANGE. I THINK WE HAVE TO BE A LITTLE CAREFUL ON THE RISK AND THE ADJUSTED RETURN YOU WILL NEED TO PARTICIPATE IN THESE MARKETS IF YOU ARE A LONGER-TERM INVESTOR. ED: ALPHABET HAS LOOKED TO THE BOND MARKET, AND SO FAR EVERYONE SEEMS PRETTY SANGUINE ABOUT THAT. HOW DO YOU FEEL ABOUT THE ACTIVITY, BUT ALSO WHAT YOU SEE IS BEING INVESTOR DEMAND AND RESPONSE? TODD: IT SHOWS WE ARE PUSHING INTO THE MORE RISKIER PART OF THE CYCLE. WHEN CASH FLOW WAS ALL ON HYPERSCALERS, YOU COULD CAPITALIZE THAT. NOW WE ARE GOING DEBT, EQUITY MARKETS. TALK ABOUT CROWDING OUT. WE HAVE A LARGE NATIONAL DEFICIT, HOMES TO FUND FOR THE POPULATION. WE ARE GETTING INTO THAT MORE RISKY PART OF THIS INFRASTRUCTURE INVESTMENT. IT DOESN'T MEAN THERE IS MONEY TO BE MADE. IT IS JUST WE ARE AT A STAGE WHERE IT IS RISKY. ED: IN THE CASE STUDY OF THE $500 BILLION WITH NVIDIA AND THE SIX U.S. INVESTMENT FIRMS, NVIDIA WOULD SAY THERE IS A DEGREE OF SEPARATION BECAUSE THOSE SIX FIRMS CHANNELING THIRD-PARTY CAPITAL. BUT THERE IS STILL THE CIRCULAR FINANCING DEBATE. FOR YOU AS THE COO, WHERE DOES THAT SHOW UP, THAT CONCERN? TODD: WHEN WE LOOK AT IT, WE WANT TO MAKE SURE WE ARE THINKING AHEAD OF THE GAME AND WHERE WE CAN PARTICIPATE AS INVESTORS AND THE TREND WITHOUT TAKING ALL THE LEVERAGE AND RISK. FOR US IN SHORT, IT IS THE SECOND- AND AND THIRD-ORDER WINNERS. IF YOU THINK OF A DATA CENTER, IT STARTS WITH A HOLE IN THE GROUND. WE OWN THESE PURIFIED NATURAL GASES -- THESE ARE 15-YEAR TAKE OR PAY AGREEMENTS. THEY SENT ROCKETS TO SPACE WITH GASES THAT ARE VERY PURE, 15-YEAR AGREEMENTS. THESE THINGS START WITH ATOMS TO A ELECTRONS TO ENERGY. WE START WITH FIVE-, 10-, 1 5-YEAR BOTTLENECKS. AS AN INVESTOR, IF YOU WANT TO SLEEP WELL AT NIGHT, YOU LOOK AHEAD TO WHERE THE INFRASTRUCTURE WILL GO AND THAT IS THE LONG-TERM BANKABLE ASSET CLASS -- ENERGY, POWER, ELECTRONS, INDUSTRIAL GASES, AG ...[Transcript truncated for size]...
In every major category of sport, we're always looking at the best and analyzing what they do and why are they so good at it. With Steph Curry, we're just wowed of how good he is at shooting three-point shots and fader shots. We're looking at LeBron James and his physical dominance over the court. With golf, we're looking at Scottie Scheffler and his ability to consistently drive it on the green or sink putts that are 20 ft out. When we watch the World Cup, we're wowed at Messi's ball control. How do these professionals do it? Now, unfortunately, in the category of sports, most of us are not able to replicate the success of these professionals. They possess inherent abilities and skills that aren't easily transferable from one person to the next. They are elite athletes. In the world of finance, we have a unique advantage. We can actually copy them and we can do it successfully. Not only can we learn and observe from their decision-making and judgment, but we can directly benefit from it. And this is where the 13F filings come into play. The 13F filing is a legal requirement that anybody managing over a hundred million dollars needs to disclose what they've been doing with their portfolios. And they do that every three months. A lot of investors have made aggressive changes, lots of buys and some big sells over just the past quarter. So, we have a lot to get into in this episode, plus we have a lot of news. For example, we have some big news for Meta and it's not good news for the company. Meta faces quote "Astronomical consequences" as legal fight reaches critical moments in California. We'll be diving into this news, breaking it down, and I'll be giving you what I believe investors should really be focused on. And then of course, we have today's fail of the week, which in this case is a guy that tried to trick a court by injecting a message into AI. We're going to be looking at all the details. Now, let's go ahead and jump right into the super investors and we'll kick things off with Valley Forge Capital, which is led by Dev Kantesaria. He's an investor that I really admire because of his strict discipline and his investing philosophy. He is a compounding machine investor. He buys a highly concentrated portfolio of incredibly high quality companies. He focuses on companies as he describes them as ones that have incredible efficiency, meaning that they don't need to reinvest a lot into their own business to get high returns. These are companies like FICO or MasterCard or Visa or S&P Global. They're many of the companies that you've heard about, but what's unique about Dev Kantesaria is that he has these companies and none others. He really is concentrated. He really walks the walk. He has the huge majority of his portfolio in only a handful of companies. And this is not a small portfolio, it's over $3 billion. Now, Dev Kantesaria had incredible performance for quite a streak. For 10-year period, he was outperforming soundly and his track record is still incredibly strong. But over the past year and a half, his performance has gone down. And Valley Forge Capital today has been going through their longest streak of underperformance in their fund's history. The situation with Valley Forge Capital today is that this is a hedge fund where their philosophy and what's worked in the past is not being rewarded in today's market. And that's a difficult situation. When you have your strategy not being rewarded for a year and a half while other people are making money, it puts a lot of pressure on your hedge fund because people invest in you to outperform. When you're underperforming the market for over a year, that puts immense pressure. So, this is a pressure test for Valley Forge Capital and we get to see what's going on. Now, let's go ahead and take a look at the activity of their recent trades and we'll zoom out a little bit here. I'll organize this by the changes in portfolio and we can look for the past couple of quarters to recognize patterns here. When I look at this, I'll first look at the most recent quarter and what I see here is that everything is reduction. They only sold. They're also selling companies that are at reduced prices. These are companies that have gone down in price recently, and they're at attractive valuations. So, immediately when I look at this, it becomes abundantly clear that they are not selling out of willingness. I don't think that Dev Kantesaria or his team believe that MasterCard or FICO or S&P Global or Visa are sells. I believe that they have redemptions. Anytime during periods of underperformance, there's going to be some of your clients, some of your customers that say, "Look, I can't go through this period of underperformance. I need some liquidity. Can you please give me back some of my money?" And they have to raise that money somewhere. Dev has also been on the record saying that they hold almost no cash. So, if they hold almost no cash, and there's a client that wants some of their money back, they have to raise that money by selling some shares. But, I also notice he has not sold the same amount from each holding. So, I believe that Dev Kantesaria had a list of redemptions, people that were pulling some money out of his fund. This is something that happens frequently. And when he got these redemptions, he used it as an opportunity to shape his portfolio. Now, when I look at the reductions that he did, this is where I get into some level of disagreement. For example, when we look at FICO, I'm okay with him reducing FICO. It's a huge holding. I think that that was likely an intelligent decision. He could pull some money out of FICO if he had to. But, we also look at S&P Global and Moody's. These are the duopoly, the credit rating agencies. And he chose to reduce S&P Global and not not Moody's. I would have done just the opposite. I would have reduced uh part of my waiting out of Moody's, and I would have kept S&P Global. The reason why is because right now, Moody's stock is holding up better than S&P Global. It's at a higher valuation, but I believe he likely thinks that Moody's is a higher quality company than S&P Global because it has more of a concentration into the credit rating business. So, in any case, I probably would have kept a little bit more S&P Global and reduced Moody's, but that's not a big deal. He also reduced MasterCard and he reduced Visa a big amount, 28% and 22% respectively. And these ones really sting. I hate seeing that he reduced MasterCard and Visa last quarter. I hate seeing that because the quarter ended right before these companies went up. The actual quarter of this trade happened before this time period right here. So, he reduced them at some point along here right before the stock went upwards. So, unfortunate timing on those reductions. Now, notably there's one company in his portfolio that he refuses to reduce and that is ASML, which is by far his best performing holding this year. In fact, I believe it's the only company that he owns that is in the green by any meaningful amount this year. The rest of the portfolios in the red and overall this has been a a deeply red year for Dev Kantesaria. When we look at ASML, he started the position in Q1 and then he added more to it in Q2. So, he's been adding to it this year and ASML's up around 62% year-to-date. Even though ASML's doing really well and it's at a very high valuation, he chose to keep it in the portfolio. And I believe there's a specific reason why. When I look at Dev Kantesaria's portfolio, one of my major criticisms for it for a long period of time is single concentrated risk factors. For example, we have FICO, which is a credit company in that financial arena. It offers financial data and it's a company that's highly sensitive to interest rates because as interest rates go up, homes become more expensive, fewer people need their FICO score. We have S&P Global, a credit rating business. It's one that's rating the debt of c ...[Transcript truncated for size]...
Berkshire with Greg Abel is back to buybacks. Does that mean that Berkshire stock is undervalued or something changed within Berkshire? Because Berkshire didn't do buybacks in 2023-2024 when the stock price was almost half of what it is now and they are now back to buybacks. Cash peaked in March at 397 billion. Now it is 365, which means that with the 10 billion they made, Greg Abel spent 40 billion. He bought Google etc. And as they said on the shareholder conference, the legacy continues. Yes, but there might be a small tweak to the legacy. Charlie Munger and Warren Buffett always looked for investments that have a cash flow return of 8 to 10% plus, let's say, some other bonuses. 8% was the yield on the loan to Goldman Sachs, Bank of America, Occidental, things like that. Plus a warrant plus that plus upside. I think that Greg is much more a relative investor now and he just looks 3% Treasuries, give me 6% buybacks and I'll do that. At least on these cash levels. So, it is a thing of size. However, Warren would never be able to buy something yielding 6% or slightly overvalued because that's the nature of Warren. For example, one of his last buys was OxyChem from Occidental. They paid 10 billion, 9.8 and bought 1 billion in pre-tax income with the future growth. Check my full Berkshire Hathaway analysis video intrinsic value and see whether Berkshire now is fit for your portfolio.
In today's video, I want to go over the CPI inflation report with you. And I just want to say that Okay, if I if I look agitated making these videos about government reports, it's because like how do you expect me to feel? Because my opinion is that these government reports, they're just gobbledygook. It's just sheer nonsense. Like I don't know how you feel, but that's my opinion. Okay, but if I say that, then why am I even covering these reports? It's because well, my opinion is that it's still very important to know the government's narrative and how to try and trick the American people. And basically well, using that, how can we make money off this? So, because what's the government trying to do? They're trying to suppress us financially. So, I'm not I'm not down with that. Okay, with that being said, me just speaking sincerely, here we go. The government is now reporting to the American people that the rate of inflation has fallen to 3.4%. So, that's great news, right? Just awesome. Like you should be thrilled just like me. So, here's a historical chart of the rate of inflation. It was at 3.5% in June. In July, it's fallen to 3.4%. All right, now here's the bad news and I hope you're ready because I have more than one. So, first the government's saying that the rate of inflation is now fallen to 3.4% for July, right? But, if you remember my video for Monday, which I talked about the jobs reports, the government said that wages are growing at a rate of 3.2%. So, that means the government is saying that prices or the cost of living is going up faster than wages because you have 3.4% inflation and 3.2% wage growth. So, this means that the average American is seeing a pay cut in terms of real purchasing power, which means of course, a lower standard of living. And do you see the trend? I mean, look at the chart. Do you see the trends with wage growth? Like it doesn't look good to me. Okay, now let me share some more bad news with you. The government's CPI inflation report says that inflation is occurring at a rate of 3.4% right? However, when we take a look at the Federal Reserve's numbers, it tells a different story. According to the M2 money supply, which is basically how much money is out there. It's expanding at a rate of 7.2% in 2026. So, I'd say that that is much closer to the true rate of inflation right now, around 7.2% based on the Federal Reserve's stats. But, the government is saying 3.4%. So, if wages are growing at a rate of 3.2% and inflation is really around 7.2% since I mean, the average American household is taking a financial beating. And I'm not done yet. More bad news. Did you know that for Social Security recipients, they calculate the cost of living adjustment for next year? So, we're talking about how much additional money Social Security recipients are going to get for 2027 by using the inflation rates from the third quarter. Just the third quarter. So, we're talking about July, August, and September. July came in lower at 3.4% like oh, how convenient. If the government used the April and May figures like inflation rates for those months, then the cost of living adjustment would have been higher for next year. But, nope, like those months, they completely don't count. And the way things are going, the cola adjustment for next year, in my opinion, it's going to be around 3% while the true rate of inflation is going to be around 7 to 8% in my opinion. So, Social Security recipients, like I'm telling you, they should be prepared for a more difficult year next year in 2027. And just so you know, 75 million Americans receive Social Security benefits. So, I'm just going to say this, if the governments used the true rate of inflation, then they had to pay more money to 75 million Americans, then that That be quite expensive for the governments. And of course the government's broke. The government is in debt $39.9 trillion. So listen, I understand that most people that are watching this video, they understand the situation and what the government's doing. But in reality, like you know this, most Americans are clueless. Like they don't understand that the government doesn't show their work on how they came up with inflationary rates of 3.4%. Sure, they can show the formula, but they don't show the source data. And of course if you talk to an average American, they they have no idea what the money supply is. They don't understand the government's fiscal problems. They don't understand that the Federal Reserve is not even a part of the US government. The Federal Reserve is not federal. The Federal Reserve have they have no reserves. Like it's a misnomer. So listen, that's the bad news and yeah, I mean it was it was pretty bad news. But the thing is that there's good news too and I want to share that with you. So the good news is that the wager that I made that the Federal Reserve won't raise interest rates in September, like that wager is now up 50%. Like I'm at a 50% profit. So definitely a silver lining there, you know, at least for me. So now I want to tell you what's going on with the Federal Reserve and interest rates. The next Federal Reserve meeting's going to be on September 16th. A month ago, there was a 69% chance that the Federal Reserve would raise interest rates at that September meeting. And then the jobs report came in bad. The labor market lost jobs. So there's now less incentive for the Federal Reserve to raise interest rates because they don't want to raise interest rates and further damage the labor markets. So after the bad jobs reports, the odds of an interest rate increase fell from 69% to 48%. And now because the CPI inflation report came in decent at 3.4% per the government, there's less urgency for the Federal Reserve to raise interest rates to fight inflation. So now the odds of an interest rate increase in September have fallen from 69% to 48% to now 40.1%. So, if inflation came in blazing hot in the reports, then the Federal Reserve would be more inclined to raise interest rates to fight inflation, but that didn't happen. Okay, but how are they going to Like this is my question. How are they going to How is the government going to write a high inflation figure for July if that's going to cause the government to pay more more money to social security recipients next year and also hurt the stock market right before the midterm elections? Like come on, let's be real. Like this is politics. Like you know how this game works. But listen, if you made that bet with me, which I told everyone in my investing community on Patreon and you're up 50%, then feel free to take money off the table to de-risk, but I'm going to continue to hold the wager. And listen, I just want to go off topic for a few seconds because a lot of stuff is going on in the news and I really don't care. So, I just want to hecklers that have been giving me grief for the past few months about my investments that I am now beating the S&P 500 year-to-date. I'm beating the performance. In 2025, I crushed the S&P 500's performance by about six times over. So, I just want to stare at you for dramatic effect and say "Haha in your face." And to everyone else that supported me, thank you so much. I appreciate it. And if you want to join my investing community, I'm going to leave a link for you down below. Thank you. Now, going back to the CPI inflation report, why did the rate of inflation decrease from June to July? It's because energy prices fell another 1.5% in July and gasoline fell 2.9% in July. And the government is saying that food prices fell by 0.1%. And they're saying that shelter increased at only a rate of 1.2%, which helped bring down the overall inflation figure. And I just want you to know that shelter is a huge component of the overall inflation figure like the headline prints. Unfortunately, a lot of a lot of the figures for shelter, they're computed with surveys rather than actual figures. So, again, very questionable. Okay, to conclude, t ...[Transcript truncated for size]...