Ed and Scott open the show by discussing Klarna’s IPO, Google’s acquisition of cybersecurity startup Wiz, and Lip-Bu Tan’s new plan for Intel. Then Lyn Alden, independent analyst and the author of Broken Money, returns to the show to break down the latest stock market correction, explaining why it’s a natural part of the market cycle. She explores whether we’re about to see a rotation from U.S. markets to international ones, unpacks why she doesn’t think federal spending will come down under Trump, and gives her take on the national crypto reserve. Finally, Lyn shares an update on her portfolio and reveals the key investment themes she’s focused on for 2025. Subscribe to the Prof G Markets newsletter Order "The Algebra of Wealth," out now Subscribe to No Mercy / No Malice Follow the podcast across socials @profgpod: Instagram Threads X Reddit Follow Scott on Instagram Follow Ed on Instagram and X Learn more about your ad choices. Visit podcastchoices.com/adchoices
Chapter 1: What investment opportunities are discussed by Ed and Scott?
Welcome to Prop G Markets. Today, that's right, first job. Can you imagine what a great employer I was? Today, we're speaking with Lynn Alden, independent analyst and the author of Broken Money. But first, it's time for banter. Ed, did you have a pet rabbit? No, I did not have a pet rabbit.
And I just want to say- Did you have any pets? I did. I had a dog.
And I've told you about that. The dog you didn't like.
That's right.
Okay, you remember. Yeah, you're the first person I've ever met. It's like, yeah, I wasn't a big fan of my dog.
I wasn't a big fan of my dog. He was lame. And he bit other dogs. I think I've said this before. I just want to point out, I tweeted about this. On Twitter. You're still on Twitter. I also posted it on threads. Yeah. I'm going to cast a wide net. Okay. Sorry, go ahead. So I assume you watched White Lotus this weekend. I did, yeah.
So the scene that everyone's talking about where Sam Rockwell is talking about— Getting railed by other men as he's—yeah, right?
Yeah. Correct. I call that a Tuesday night.
Yeah. Okay, so the face that the other guy makes, that's me at the opening of every single show on this podcast.
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Chapter 2: Why is Klarna's IPO significant?
I did see that thread and people loved it.
Your reaction?
I've always thought a decent, a non-zero probability is my end is very similar to Kung Fu star Keith Carradine. There were several prostitutes involved in Thailand. And I thought, you know, if you're going to go, go out with all guns blazing. Did you ever see Kung Fu?
Then a white guy playing like a monk who could kick the shit out of like, it was kind of politically incorrect, but very kind of politically correct at the same time. And then next half hour, I'd be like, okay, Tonto, like smell the ground for other savages.
Right now, I feel like the guy on White Lotus. I'm like, oh, oh, really? Hmm. I didn't know that.
And then, and then you know what I'd watch? Let's go through. I mean, it would be impossible for me not to be like pretty fucked up based on the steady diet of media. I watched two hours a day, four episodes of I Dream of Jeannie. We were one of the first communities in Orange County to get cable TV and they had Jeannie on four times a day. I watched all four of them.
So I grew up, my formative years were, yes, master, or go to your bottle, Jeannie. Anyways, I'm like fucking Alan Alda. I've come a long way. Ed, what did you grow up on?
I grew up on SpongeBob SquarePants and Dexter's Laboratory.
That just means you should be abusing drugs. Claire, come in here. What did you grow up on?
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Chapter 3: How does Google's acquisition of Wiz impact its strategy?
Let's move on to this acquisition of Wiz by Google. This is very interesting because 10 months ago, you and I were discussing this same headline, except it was that they were acquiring Wiz for $23 billion. And we talked about how that was going to be a huge win. You warned Wiz employees, many of whom would have made millions off of this, not to get too excited.
because we believe that given the situation and from a regulatory perspective, maybe this wouldn't go through. And then a couple of weeks later, the deal was actually called off. Wiz said they were walking away from the deal and they said that they were gonna pursue an initial public offering instead. So here we are 10 months later, It's the same deal, except this time it's for $32 billion.
It's 40% higher than when we last discussed it. Scott, what do you make of this? And what do you think changed? They tried to do this 10 months ago. They said no, and then suddenly they're down to do it again. Trump.
Basically, Jonathan Cantor and Lena Conner are no longer there to threaten. I mean, if they get a good—if they're going to go public and they think they're going to get a great valuation and there's a chance that they'll go through six or nine months or 12 months of headache trying to battle the DOJ or the FTC and maybe end up with a negative decision— Let's go public.
But if it's Google showing up and saying, why would you even risk it? We're back. We're going to close in 30 days. The Trump administration is very friendly. They've fired the FTC and DOJ people. We have pretty decent certainty of close. and we'll up our price. Why take the risk and why put up with earnings calls?
And every senior manager here is about to be worth a shit ton of money, and they don't have to digest their stomach and go on CNBC and put up with pesky analysts. So this was Trump, and it sounds like they increased the valuation, and boom, we're off to the races. I think they're smart to do this. I mean, if you can get... Basically, a public filing is a few things.
One, it's a disclosure of certain data, but it can also serve as basically a... kind of a whistle or what I would call speak now, forever hold your peace to any company trying to acquire them. Because once a company is public, acquiring it is really difficult. And you got to get shareholder approval. And there's a media class action suit saying you're buying us for too little.
And there's all sorts of SEC issues around acquiring a public company. It's pretty clean and pretty easy to acquire a private company as long as the FTC and the DOJ aren't going to get in the way. So what changed here? Trump changed.
I'm in agreement with you that that's why they did this. Where we might disagree, I think they are misassessing the positions of the DOJ and the FTC under Trump. Because as we discussed with Jonathan Cantor, who used to lead the antitrust division at the DOJ, these new heads at both the DOJ and the FTC... These people are not soft on antitrust.
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Chapter 4: What changes are happening at Intel under new leadership?
So I'd like to start with your reaction to this sell-off that we've seen in the stock market. So the S&P 500, it's down around 10% off of its high. It's officially entered correction territory. We're seeing all of this anxiety around tariffs and...
geopolitics and you know people talking about recessions again um i'd like to just start with your initial reaction to the drawdown any thoughts on this correction and perhaps any thoughts on how this compares to previous corrections in in stock market history sure so you know there's been a pretty good uh couple years in the market so 2023 2024 were both good for the market um
One of the things I emphasized was the size of fiscal deficits during that time, which were generally stimulative and all else being equal positive for markets in a nominal sense, as well as GDP running nominally on the hot side. And when we enter this year, some of that is slowly changing.
So there's potentially fewer upside surprises in store, more downside uncertainty, things like tariffs, things like... you know, attempting to tackle the fiscal deficit in pretty kind of shock and awe ways at kind of the start of the administration. And so I think it's natural, especially because equities were priced at a pretty high valuation.
Now, in this whole kind of decade-long period, they've been on average a little bit, you know, more highly priced than like very long-term averages. But even given this kind of cyclical ebb and flow of valuations, equity markets were a lot more highly valued than, for example, they were in the beginning of Trump's first term, if you use like a comparable baseline.
So the combination of pretty high valuations, a lot of global capital all stuffed into U.S. markets, overweight U.S. and especially overweight U.S. large cap growth has been very much the consensus play that keeps winning. And I think for the first time in a while, there are some challenges to that. And And so I think the sell-off is natural.
Partly how deep it has to go will depend on policy decisions. There tends to be a somewhat feedback loop there. So don't really mind 5% corrections. We start getting into 10% and people aren't really sure where the end game is. They start making noise and you see kind of rhetoric shift around that. And I think one of the ways to mitigate it was to have a fairly diversified portfolio.
So for a long time, having international exposure was kind of an anchor on a portfolio. Whereas in this particular sell-off, international equities on average did better. It's kind of early rotation potential, as well as owning other types of assets. I mean, gold's poking around its all-time highs.
And so it's kind of funny because when I look at a portfolio, it's like nothing to write home about, like a kind of a week, month-long period or more. But the sentiment on social media, from what I've seen, has been pretty kind of surprised. And I think it's mainly because the things that underperform the most tend to be the consensus.
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Chapter 5: What insights does Lyn Alden provide on the stock market correction?
I'm always a little bit cautious to say, okay, this is the big rotation because I'm mindful of the difficulty of making that call. But I do continue to hold the view that it's more likely than not that this is early sign of a rotation because now there are a number of things there. There's the initial rate-cutting period. Then there's all the tariff uncertainty.
Then there's the fact that I've been emphasizing China because They've been in a balance sheet recession for a while. They're trying to deflate their property market. It kind of deflates bubbles there at kind of a gradual pace. But last year, they started to hit certain pain points on Chinese social media.
It was starting to come up and then they were starting to hit red lines in the equity market where their kind of priorities shifted. Thank you. Thank you. Thank you.
Thank you.
Thank you. Thank you.
Thank you. Thank you. Thank you.
Thank you. Thank you. Thank you. Thank you.
Thank you.
Thank you.
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