A central discussion focuses on the “words of the year” that dominated market conversations in 2025. Tariffs, artificial intelligence, and DOGE drove both economic outcomes and investor sentiment, creating periods of volatility and hesitation across businesses and markets.
Noah and Chris break down how tariff uncertainty contributed to a “no-hire, no-fire” environment for employers and why upcoming legal and political decisions could influence corporate planning in 2026. While the long-term impact remains uncertain, policy clarity will play an important role in shaping future growth expectations.
The conversation turns to employment data, where job growth has slowed meaningfully compared to recent years. While overall employment remains stable, hiring momentum has softened and unemployment has begun to edge higher.
Noah and Chris discuss why this trend matters, particularly as labor force participation, replacement hiring needs, and demographic pressures come into focus. Slower job growth does not necessarily signal recession, but it does introduce uncertainty around consumer spending and economic momentum heading into 2026.
Despite economic crosscurrents, markets delivered strong returns in 2025. U.S. equities posted solid gains, while international and emerging markets outperformed, signaling a potential shift in leadership after years of U.S. dominance.
The episode highlights how market rotation has broadened participation beyond mega-cap technology, with industrials, materials, utilities, and international equities playing a larger role. Rather than signaling weakness, Noah and Chris emphasize that these rotations are often a healthy part of longer-term market cycles.
Artificial intelligence remained a defining force throughout 2025, but its impact has evolved. Companies continue to invest heavily in data centers, energy infrastructure, and advanced computing, placing pressure on capital spending and margins.
Noah and Chris explore why markets are becoming more selective about AI-related investments and why productivity gains may take longer to fully materialize across the broader economy. Execution, efficiency, and capital discipline are increasingly important as AI moves from hype to implementation.
Looking ahead, the discussion shifts to longer-term structural changes in the labor market. Automation, AI, and humanoid robotics raise questions about entry-level jobs and workforce participation, leading to renewed conversations around universal basic income (UBI).
While not an immediate policy outcome, Noah and Chris explain why UBI is likely to become a more common topic in economic and market discussions as technology reshapes how work is done.
The episode closes with a reminder that markets rarely move in straight lines. After multiple years of strong returns, periods of moderation, rotation, and volatility are normal.
As 2026 begins, Noah and Chris emphasize the importance of maintaining discipline, diversification, and long-term perspective. Innovation remains a powerful force, but emotional decision-making can derail otherwise sound strategies.
Hey, welcome back everybody to the market enthusiast and not just the market enthusiast, but the last market enthusiast of 2025.
Noah Brooks (00:22) Hey, welcome back everybody to the market enthusiast and not just the market enthusiast, but the last market enthusiast of 2025 with me as always Chris needs you did you drug us in here on the last day we were we were debating that last time out. You kind of here we are kind of do it on the last day of the year, right? Yes, sir. So obviously, end of the year 2025. Everybody’s talking about New Year’s Eve and resolutions are resolutions still like they used to be. Because like, yeah, you start out and don’t finish them. This is this coming up this week is probably the busiest week in all of the gyms. The public gyms for the entire year, right? Undoubtedly. And everybody that’s always there at the end of the year is all been out of shape because all the machines are being used and judging the new people judging the new people that they know aren’t going to be there next week or the following week, right? Someone using the machine wrong. yeah, there’s a lot of that. Yeah. there’s there’s a lot of policing of the machines. I don’t really have any 2026 resolutions. You know, I want to be profitable in the market in 2026. We don’t know what the market’s going to bring on that one. What about you? Do you have a personal or investment resolutions for 26? After three years of CFA life, I am going to try and prioritize my health a little bit. So I started playing basketball 5am. couple months ago playing basketball at 5am 5am in the morning. I’m doing any trying trying to do that two days a week and then if I could work in one day of lifting, I think that would fit my resolution for being a little bit more healthy. I’d like to go back to the gym. I’ve been out for about four or five months off the pallet time because I hurt my knee. I think I told everybody that so I’m gonna hop back on but I don’t know that I’m going to do a resolution other than try to be healthier. next year in 2026 than I was in 2025. don’t I don’t like those. I don’t like putting a line in the sand, simply because I don’t want to force myself to do it himself wiggle room. Yeah, I feel like I need to be specific when I do it. Okay, like two days of basketball minimum week, I can be vague. I’m just gonna say healthier. Yeah, I’m just gonna say healthier. But what a year, right 2025. And we’re not going to go through everything today. But I think there’s some some noticeable ⁓ topics that we should cover here. You said to me earlier about the word of the year. Let’s start with that one. So Merriam-Webster had theirs and I was kind of surprised. It’s a very basic word, slop. And then it’s in the context of like AI slop of, you put in something complex into like chat GPT and it gives you out. maybe a summary or maybe key points, but it’s just a little off. Yeah. You can tell when there’s videos, ⁓ that are AI generated that just don’t make any sense. And I see some boat videos. I see some ski videos. They’ve been on my feet a lot lately. I think, you know what, actually now that we’re talking about it, I think my resolution for 26 is going to be watching less on the internet. Okay. Yeah. More reading, less internet for me. That would actually be healthy. You were diving into the Dan Brown book. Yeah, trip home from Merkle. absolutely. Interesting. There’s a lot going on in his books. And I have not really gone down the rabbit hole with Dan Brown. I don’t know where he gets this stuff from though. Yeah, he’s great. He’s really intense. And the minutiae the details, they come through as as he’s writing high quality fiction writer blending in real world stuff. And you’ve been to Prague so I bet you it was extra cool for you to do to read that and see that. You know, I forget a lot. No, when we were listening to the book, ⁓ we spent about seven or eight hours in the car and we were listening to Dan Brown’s newest book ⁓ and obviously taking place in Prague and they kept mentioning little places. And I’d say to Ailish, was that where we were? No, no. yes. She showed me pictures of, yes, this part, this bridge. And she was showing me pictures. Well, the Charles Bridge in Prague. That’s kind of famous. The most famous, the most famous thing in Prague. If you’re if you go to Prague and you don’t go on that bridge or where you even there. Yeah, well, you even do it. Yeah. So economic wise, right? We’re here. Hold on. Wait, wait, wait. Don’t don’t ditch the word of the year. ⁓ give me your word of the year. ⁓ geez. I would have to say for 2012, maybe the multiple years, right? I multiple words. I think for 2025. It’s a toss up between AI and tariff. There’s just no question. mean, those are the two words I think that I’ve used the most this year. Right, wrong or indifferent. You say whatever you want about the tariffs. I talked about him a lot. ⁓ Advisors and I talked about him. Clients and I talked about him, talked about him with friends and family and random people I meet. And then the same goes for artificial intelligence. Now, if I’m not mistaken and I’m not. dictionary.com gave a Gentic the word of the year, which essentially is AI acting autonomously. And there was another one from Oxford, which was rage bait. Did you ever get rage baited? There’s a lot of that. Yeah, I’ve been on the receiving end the giving end, think. Oh, yeah. Yeah, you seem like one of those guys that would be on the giving end of the rate. What about 2026? Word of the year? forget 2025 we’ve been there we did it we talked about it what’s the what’s the 2026 word of the year gonna be oh no that’s a tough one I only had a 2025 word mine mine was doge for 2025 so that had such a visceral response both in support of and against going back to earlier in the year so your 2025 word of the year is doge yep okay yeah Elon Tesla got hit because of it Elon became public enemy number one for half the country. So that was my word of the year, but you had a good word of the year for 2026. And I didn’t my my word for next year for 2026 is UBI, universal basic income. And there’s a few reasons that I think that’s going to be and maybe I’m a little bit early, maybe it’s going to be 2027. But I think we’re going to start utilizing that word more and more. in our normal vernacular because of the jobs that may or may not disappear. And I’m not being an alarmist on this, but we’ve been talking about a UBI or at least there’s been discussions on UBI for years within the economic community. And when you look at the jobs, specifically where the new jobs are going, there’s not a lot of entry level jobs that are out there. I mean, you can get a job at McDonald’s or you know, some fast food service place like that. But a lot of the jobs that normal people go to when you’re just, whether you’re in school, whether you’re in college, you need a side job or you’re not going to college and you need a part-time job or a full-time job. A lot of those starter jobs are going to disappear and whether that’s being taken over by a artificial, well, of course AI, but you know, artificial ordering. or automated ordering systems and fast food industry, or whether there’s just less and less people in a business that need to run. I think we’re going to get into a point where universal basic income is something that’s on the table because that leads to my, I, I, I will come up with a, with a word of the year optimist. Now I say optimist, is Tesla’s humanoid robot. But more so to say humanoid robots, optimus is just better than robot or humanoid. I just think optimus prime. Yeah. And that’s probably where he got it from, right? Probably. Yeah. So you your word of the year next year? Well, that’s related to yours. Yeah, I’m going with optimus. But you could say humanoid maybe also. You know, if you want unbrand what I’m saying humanoid robots, I think we’re going to see retail humanoid robots next year. And that will be 26. This is just by the end of 2020. A days. Yes. I think so. That’s my bold call for the year, but that’s related to your UBI word of year because that’s the ultimate reason why we will need UBI because in three, five years, a lot of these entry level jobs don’t need to be done by humans. Yeah, there’s, there’s no question that there’s going to be change ahead. and we talked about this last week, which was you know, total employment. And are we at, you know, an aggregate number of total employment that won’t get any higher? You said no. And I think you’re probably right. Total employment will go higher. But labor force participation rate may not. It’s certainly possible that it has. Now we have a jobs report coming up on the ninth, I think it is the next Friday after the beginning of the new year. And the the expectations are relatively low. I think the expectation is 56,000, maybe 52,000. When we look back over the last 11 months for all of 2025 for the data that we have, and they have filled in the data, depending on what you think of it, there’s been three months that were negative. June was negative 13,000. August was negative 26,000, meaning we lost 26 and 13 respectively. And October was negative. 105,000. You put all those together, you average it out. They were 56,000 a month over the last 11 months of 2025. For context and comparison, the prior year 2024 was 168,000 a month. Prior to that, 23 was 216,000. 22 was 380,000 a month. And after COVID 2021 was 6… I think 21 and 22 were definitely results of COVID numbers and I think maybe 23 and 24 were more normal numbers, regardless we are trending down. Yeah, well, so two things are happening. We’re trending down by the numbers that they provide to us. I should say more than two. I’ve said this on here a few different times. There’s this replacement rate. of about 70,000 a month that we need to keep up that that number of total employed. 56,000, you know, technically below that 70,000 and you know, 11 months doesn’t make a decade, right? So we don’t know what’s going to happen in 2026. But employers are still in this kind of, you know, hold pattern. They don’t know what no higher no fire, no higher, no fire. And I think some of that started with the other word of the year tariffs. right? They wanted to see where that plays out. That’s up for some debate here. It’s coming to the Supreme Court coming to a theater near you. right. That’ll be we were talking between you and I earlier about how this is going to play out. And you know, you try and game theory it out at the different things. It’s either it’s completely illegal to for the executive branch to just willy nilly decide tariffs, and they have to pay everything back. They could say you know, this was not defined and these are too broad to be powers. So henceforth, these are illegal. Henceforth. So that way they don’t have to pay back because as they you know, when they were having the questions, and the initial debates with the Supreme Court, they said, how are we going to pay this back? This is going to be a mess. So maybe that’s one way they get around it. Or, you know, B, they could just say, well, it sounds like these were probably too broad. But it’s not for us to decide which ones were and which ones weren’t. ⁓ We’ll have to receive further cases. That’s them punting. Or they could just say, yes, he does have broad powers. And I think that’s the least likely scenario. that doesn’t seem likely because that would cede all power to the executive branch and take it away from Congress, right? Like, that doesn’t seem to make any sense. But so if if one of those three happens, and let’s let’s say it’s not number three, let’s say it’s ⁓ that they rule that it that it’s illegal. ⁓ What about the return of the tariff money? Yeah, how does that work out? So as it goes back to the, I guess, importer who paid or the exporter who paid it to get it into the country, which in many of these cases may have been you know, a subsidiary of the same company, or it could be to a completely foreign company. Well, was it would be an interesting was it Costco that already filed the lawsuit? Yes. Or I’m not sure if it was Costco, but there definitely has been suits filed in advance of this. So does that mean it would be the responsibility of the importer to file a lawsuit to get a refund? Yeah, it’s providing they would probably have to provide proof of the amount basically they had to pay, then it would have to be remitted back. That seems like a cluster if I’ve ever that way put it on them rather than Yeah. But then the problem is everybody else paid slightly different prices. So they’re really making out then. All right, let me let me run with this for a little bit. So let’s say that the Supreme Court does rule that the tariffs in general were too broad. and the executive branch doesn’t have the power to do that. ⁓ So then the administration goes back to Congress. Do they have the votes in Congress in the legislative branch to re initiate tariffs? Yes, I think they do. Since, well, well, you know, maybe they don’t, I would bet there’s enough people not in favor that would not pass. It seems like in my mind, I wouldn’t vote for it if I were ⁓ a senator or a congressman, you know, to read. Yeah, that comes up on your permanent record. When the administration puts it on, you can say anything you want. But realistically, you didn’t personally vote for it. Yeah, you know, so you can kind of deflect in that way. And, you know, whether you’re being obtuse or not, you can say, well, the administration did this. And you know, this is kind of how I feel about it. But when that’s the that was the whole thing about ⁓ the document release, right, the big dump from Epstein is that they wanted the senators and the elected officials on record on having this vote. And so I think if you push forward and you move to tariffs, and you talk about it, I think your second opinion there is probably the one that is going to be ruled in favor is that most people most elected officials will not vote for new tariffs, because they saw what type of volatility that they caused in businesses within their own districts. I mean, just because it’s Trump, I don’t think you’d have any Democrats on board with it. And you have enough free trade Republicans that I don’t think would back it. Yeah. That’s a that’s a little bit nutty. So word of the year for me, Tariff, word of the year for you was Doge. Don’t yeah. All right. That’s that’s good stuff. ⁓ We were talking about jobs. We said we have another jobs report coming up. So 2026. Let’s lay it out on the line. I’m not a big prediction type of guy. I don’t know that me saying this is going to happen in the end means anything. I do feel like this slowdown that we’re seeing in the year over year jobs number might extend into 2000 and 26. And that by itself doesn’t necessarily mean anything for the overall, ⁓ stock market going up or down, but it does mean something for consumer spending and purchasing power. And that’s why I think UBI is probably a word that we’re going to hear more. Do you think that the 2026 the employment unemployment rate at the end of 2026 is higher or lower than it is right now. And for context, I think we’re at 4.6 and the last report we are at 4.6 the Fed in the December projections had us at 4.35 % for the end of 2026. So they think we’re going down. I the old Fed, I’m gonna bet against the Fed. Yeah, I would say that rate is going to go higher. personal for the long term historical average for the record on the unemployment rate is 5.7%. Now, how many years is that? Since at least 1950. Yeah, so 75 years right around there. Okay. Maybe 48. I forget the data set. But yeah, my thoughts are, you know, this year we went up point 6%. I think we’ll go up a little bit less than that this year. But I definitely see us higher from 4.6%, maybe think in the 5 % range. if this number I mean, if these numbers hold, they certainly will. Right? Because we really do need that 70,000 just to maintain the numbers. And as more people are coming of age, that’s that 70,000 a month just to maintain those numbers. So yeah, I think I would put money on on your bet. Is there a is there a betting market for that? I’m sure there is somewhere right? I’m sure cal she or polymarket has it for sure. Somewhere in there. Oh, I’m I’m I’m positive of that positive of that. So but I mean, here we are the end of the year. Last last day trading day of the year. Yes, it’d be 500 is up over 16%. Mid sized companies are up close to 8 % small caps up over six depending on which index you look at the rest of 2000 is up over 12 emerging markets have killed it in 2025. They’re up over 33%. Develop International is up over 31 % for the year. I mean, to me, this is the start of maybe a longer term trend where international may, I say may write, I’m gonna hedge it may continue to outperform and not just for a singular year, but really for a few more years. I liked your little hedge there. Well, you know, I mean, I mean, I don’t necessarily disagree. Certainly, we’re coming off 20 % gains and 23 20 % gains in 24. And just a shade under 20 % this year on the S &P 500. And it’s even higher than that if you look at the NASDAQ composite or NASDAQ 100. So if you look at historically the average returns after a three year period above 80 % of total cumulative return, the average is 2.1 % for that. fourth year after that set. A lot of those are grouped together. So for example, you’ll have several in the dot com boom roped in there. I think three of those of the 14 instances that we’ve seen are in that little late 90s, mid to late 90s area. ⁓ But the three year subsequent return is only 0.6%. Now it’s a wide range. So this isn’t predictive. This isn’t crystal ball stuff. That’s the average, but the range is very wide. ⁓ so I would say it’s definitely a time where I would expect a slightly lower return than average, especially coming into a midterm year, which is the highest volatility in the four year election cycle, as well as the lowest returns in the four year election cycle. Okay. I mean, that’s definitely data worth, worth noting. There is no question that you have to be cognizant of that type of information. going forward, you have really big returns over a three year period. And then historically speaking, they moderate after that. I hedge mine my bet now? So when I say that, let me hedge it here. Okay, because I was talking to you about profit margins, the forward profit margins are at the highest level ever. So technically on the S &P 500, those companies are going to be if everything pans out as forecasted, more profitable than they’ve ever been in terms of percentage. of their revenue. So I could also see a scenario where we extended another year. And I argue we’ve debated this. We’re not even in bubble territory yet, despite those returns ⁓ that we mentioned. So is it possible for another great year? Maybe doubts go away and we start seeing the non-AI companies benefit from AI type productivity. in which case, you we could be off to the races and you’ll still maybe see value participate then. ⁓ The narrative this year has been, Mag-7, the hyperscalers, only two of the seven Mag-7 outperform the S &P 500 index. So it’s not necessarily true. We did have better breath this year. We absolutely did. I think in my mind, I go back to old playbooks that we’ve ran in the past. And obviously after the dot-com bubble, you know, it’s kind of the one that sticks in my mind, ⁓ because of the technology buildup in the late nineties and early two thousands. And, know, broadly speaking after the dot com bubble, we real estate performed really well. Now we know how that ended pretty darn poorly. ⁓ in 2000 and, well we topped out in 07 top and troughed in, in nine. ⁓ but you know, transports industrials did really well. Small value did really well in 2001 and 2002, but real estate did really well. And you have to think that the productivity gains generated through these efficiencies are going to filter down into all of these non-technology companies. And they matter. have the higher profitability has to matter when you’re looking at valuation. Yeah. So your point on the margins is that a lot of these margins are from technological companies where everything is scalable in the business. And that’s the thing with, you know, the Fords of the world. We talked about them cutting back the electric program and a lot of the manufacturing firms, whether you’re talking about widgets or you’re talking about a car is it doesn’t really matter. ⁓ A lot of those things aren’t nearly as scalable as software, but as those efficiencies and as those productivities, filter down into every aspect of the economy. That’s really where you get that rotation into industrials, into manufacturing, into things that aren’t generally thought of as electronics manufacturing or software or hyperscalers. And to me, that’s an opportunity that we really have not seen in a long time. And that doesn’t mean that one has to happen. And the other one has to go down. It just means that maybe, you know, you’re not going to have another massive three year number. I suspect you’re not. It’s all edge and like anything’s possible, right? The market can stay irrational longer than I can stay solvent. So certainly not going to bet a bet on it. But I think it’s time that we’re really starting to see some of that rotation happen. And I think you’re going to have names pop up that we haven’t heard of before in 2026 or have been ⁓ not necessary in the forefront. And yeah, the mag seven is going to be around and they’re going to be profitable. But I think the the law of large numbers is starting to come into play. And as you’ve said many times before, they’re priced for perfection. And what we’ve seen what happened anytime that there’s a little bit of a stumble in there. we haven’t mentioned this, we don’t really talk about these things much but look at gold and silver certainly has applications and usage when you’re talking about some electronics and things like that. Look at the year they had silver was up over 150 % gold was up above 60%. ⁓ You look at what utilities did ⁓ uranium was on a big run and sort of those nuclear plays and they sort of ran into issues when the valuation concern came in in November. But this AI trade, look what it’s doing to industrials and materials and commodities. ⁓ It’s lifting a lot of boats. Let’s put it that way. Yeah, no, no question about it. And you know, 2026 is going to be a year just like others, except it’s a quarter century, right? We’ve just went through the first quarter century ⁓ of the 2000s. And we have a lot to look forward to. I mean, what else is happening in 2026? it’s the 250th anniversary of our country. Right. And here we are pretty close to Philadelphia, ⁓ inside Pennsylvania. And I gotta say, I’m pretty excited. Now, I’m not gonna go down for the parade and all of that stuff. But the idea that it is the 250th anniversary of the country, I mean, there’s some there’s some big happenings out there. Yeah, we for World Cups coming to the US. Yeah, well, I guess North America kind of is that lacrosse? That’s not lacrosse ball. Oh, football. Okay. Okay. I was like, is he joking? I’m not. I’m not a yeah. I’m not a soccer guy either, but I mean, FIFA World Cup is really cool. Okay. Uh, there’s also what? Winter Olympics, right? Yeah. Winter Olympics in Italy, I think. Yeah. Kind of exciting stuff. Um, today actually one other thing that’s noteworthy is the, last day for Warren Buffett. to be the CEO cheers to Warren last day in the office last you think he’s there right now? Oh, for sure. They’re gonna throw him a banger of a party. All exactly all of Berkshire’s in a yeah, however much a 95 or whatever can party. Yeah, they’re all in there. Do you think Berkshire is gonna have a massive change? Because it seems like they’ve been setting this up for years and and probably not right? A change that is no I don’t I think you know, the laments may be like, Oh, Warren’s gone. Let me get out. I think that’s first level basic thinking. I think Greg Able will do a great job. We were joking earlier. It’s like, if you put his picture in front of me, though, I wouldn’t know who he is. Greg. Yeah. But if Warren trusts him, he I mean, he’s been in the wings for a long time. If Warren trusts on my trust, I’ll go with that. go with that. So we we obviously talked about the word of the year, and I don’t want to beat a dead horse here. But I want to go back to the deep seek moment that we had in January. And what I mean is we’ve had open AI and we’ve had video would not like to go back to that. they They would not. They got walloped on that news. Right. So the deep seek was essentially this Chinese large language model that came out and they said they did it in ⁓ a quarter of the processing power that it took to do it. And it didn’t use all this energy. And there was this big sell off. They didn’t need the high end chip and they didn’t need the high end chips, right? So we don’t know if that’s, you know, we don’t know how true it is. ⁓ I have been reading some information on deep seek and apparently one of the major issues is a trust factor with deep seek because essentially it’s run by the Communist Party of China and they will tell it, you know, mandate what it can say and what it can’t say. One of those things that I’ve read was I did not try it for myself was we tell me about what happened in Tiananmen Square. And it simply said that it wasn’t allowed to, right? It couldn’t really discuss it. My favorite was when it was prompted. What is your name? And it responded in the early days was chat GBT version three. It’s like, Oh, gotcha. Yeah. Well, you know, what is, what is the name now? We should, we should find out. But the reason I bring it up is because obviously large language models have burst onto the scene in the late 2022 with open and AI. And recently there’s, you know, we’ve been talking about the need to spend and to capitalize this spending through debt, right? Through bonds ⁓ and capital being raised through bond issuance of these companies. And you’re starting to get a little bit, I mean, there’s, no issues currently, but open AI has, ⁓ I don’t know, $1.4 trillion ⁓ worth of spending that they proposed on the books and have signed contracts for, and they have very limited revenue. And so I’m curious sitting here at the end of 2025. I went through a list of companies that were around in 2000, in the beginning of 2000 that are no longer with us. And some of them, probably know some of them you don’t, but like AOL, right? That’s, that’s not really a thing anymore. Yahoo, even though a lot of people use Yahoo finance, that’s not really a thing over anymore and Netscape. And there’s a whole list of them. And I’m just curious your thoughts on open AI. you know, they’re they obviously they want to go public where they’re looking at a 2026 IPO. is, is open AI just a flash in a pan that ignited the large language model for the rest of the world or will they actually be able to capitalize on their own product? So my first thought is remember start of the year consensus was chat GPT is going to destroy Google search. Google is in big trouble. Their cash cow is, is going by the wayside. Yeah. And by the end of the year, I think it was September, October Gemini had passed them out and Sam Altman in November put out that internal memo of code red. Like we need to get back focused on the LLM. We need the experience to be better, stronger, faster. And I don’t know if there’s a flash in the pan. They definitely changed the world. But like you said, 1.4 trillion in contract obligations with the little revenue they have. I think that’s swimming, swimming upstream. think it’s a little suspect. And especially when you had the big boys like Google and Amazon in here. I don’t know if I my bet is they will not be able to meet the full 1.4 trillion. And this isn’t like a debt obligation that they have. It’s just it’s basically gonna be a screw you guys. You know, how about half of what we said? Yeah. And someone like an Oracle will be like, well, we built out for $300 billion worth of computing power. And like, well, we can only afford 100. Yeah, find some other customers. And what are gonna do about it? So I mean, I think downline that’s probably not a 2026 story, but 2027 or 2028. I just think Google Gemini and you think about Grok perplexity, all these different people running their own LLMs that are probably gaining. I just, I don’t think they will be able to garner enough revenue to meet all these obligations that they have proposed. you think that ⁓ chat GPT is any better? than any of the other ones. You just mentioned Sam Altman putting out that code red. Now I personally have not used all of them. I’ve used some of them and I pay for one of them. But I don’t know how different they all are. It’s just a matter of this is the one that I use because it’s the easiest for me. I think they have their own little niches. They’re very similar, but each has their own little specialties. And I think that the true value of them is going to be specialized. We had kicked around. If lawyers have a really well-trained set on any one of these, how productive they’ll make them. They’ll need 1 10th the clerks that they formally use where you’re reading and you’re underlining and highlighting things for this very important case. If you have in two seconds when you have a well-trained model. So. whoever starts applying these in the more specialized cases like that, which I’m sure is already happening. I think they’re going to be the winners. I don’t think I don’t think there’s going to be just one. So you’re saying paralegals are going to be out of a job. I think there’s going to be far fewer, far fewer, amongst other jobs, you know, not to pick on them. So I’ll go back to my word of the year for 2026 then. UBI, UBI, UBI. Well, listen, we we are going to celebrate the 250th anniversary, which I am told that is not that is not the bicentennial. Yeah. So he’s joking there is chat GPT or maybe it was Google. One of them said the bicentennial. We’re like, no, that’s 200 years. It’s like we’re at 250. 250. No, there’s a name for it. Yeah, there is. I looked it up. I don’t remember what it is. But we are celebrating the 250th anniversary coming up. I think it’s worth noting. mean, the economy, the United States, the markets, you know, we don’t have 250 years of market data, but we certainly have 250 years of historical data on the markets. We’ve had 250 years of innovation and 250 years of opportunity. And I suspect that we’ll have another 250 years of innovation opportunity and there’ll be trials and tribulations and there’ll be volatility. And the U S will come out and we will be as strong as we are today in another 250 years, probably in my mind, a lot stronger. God knows where we’re going to be in 250 years. Um, we have Warren Buffett stepping down, uh, which has been, um, you know, he’s obviously been one of the world renowned investors. Uh, and I quote him fairly often on here when I say don’t bet against America. That is a quote from Mr. Buffett. I certainly didn’t come up with myself. But I will simply say it today, you know, as we exit here, we have we’re going into 2026. There’s a lot of reasons to be optimistic this year. We have a lot of opportunity. We have a lot of innovation happening. ⁓ Not everything is exactly as you know, you would want it if you could wager wager, wave your magic wand. But I would tell you, you know, don’t bet against American innovation. Don’t bet against American opportunity. ⁓ and as we head into 2026, you know, there may be more volatility in 2026 than there was in 2025. Don’t let your emotions, make the decisions for you, right? Whether they’re political decisions, whether they’re market decisions, ⁓ you know, base, base your decisions on the facts at hand, ⁓ not, your emotions. And as Mr. Buffett says, never bet against America. So, Hey, thank you so much for listening. to the market enthusiasts for all of 2025. We will see you next year in 2026 and we hope you have a wonderful new year. Happy new year.
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The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you consult the appropriate qualified professional prior to making a decision. Economic forecast set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
In Episode 52 of The Market Enthusiast, Noah Brooks and Chris Needs close out 2025 by reflecting on the themes that defined the year and discussing what may shape markets in 2026. From tariffs and labor trends to artificial intelligence and shifting market leadership, they examine how economic data, policy uncertainty, and rapid innovation are influencing investor expectations as the calendar turns.
Words of the Year, Tariffs, and Policy Uncertainty
A central discussion focuses on the “words of the year” that dominated market conversations in 2025. Tariffs, artificial intelligence, and DOGE drove both economic outcomes and investor sentiment, creating periods of volatility and hesitation across businesses and markets.
Noah and Chris break down how tariff uncertainty contributed to a “no-hire, no-fire” environment for employers and why upcoming legal and political decisions could influence corporate planning in 2026. While the long-term impact remains uncertain, policy clarity will play an important role in shaping future growth expectations.
Labor Trends, Employment, and Economic Momentum
The conversation turns to employment data, where job growth has slowed meaningfully compared to recent years. While overall employment remains stable, hiring momentum has softened and unemployment has begun to edge higher.
Noah and Chris discuss why this trend matters, particularly as labor force participation, replacement hiring needs, and demographic pressures come into focus. Slower job growth does not necessarily signal recession, but it does introduce uncertainty around consumer spending and economic momentum heading into 2026.
Market Performance, Rotation, and Global Leadership
Despite economic crosscurrents, markets delivered strong returns in 2025. U.S. equities posted solid gains, while international and emerging markets outperformed, signaling a potential shift in leadership after years of U.S. dominance.
The episode highlights how market rotation has broadened participation beyond mega-cap technology, with industrials, materials, utilities, and international equities playing a larger role. Rather than signaling weakness, Noah and Chris emphasize that these rotations are often a healthy part of longer-term market cycles.
Artificial Intelligence, Productivity, and Capital Investment
Artificial intelligence remained a defining force throughout 2025, but its impact has evolved. Companies continue to invest heavily in data centers, energy infrastructure, and advanced computing, placing pressure on capital spending and margins.
Noah and Chris explore why markets are becoming more selective about AI-related investments and why productivity gains may take longer to fully materialize across the broader economy. Execution, efficiency, and capital discipline are increasingly important as AI moves from hype to implementation.
UBI, Automation, and the Future of Work
Looking ahead, the discussion shifts to longer-term structural changes in the labor market. Automation, AI, and humanoid robotics raise questions about entry-level jobs and workforce participation, leading to renewed conversations around universal basic income (UBI).
While not an immediate policy outcome, Noah and Chris explain why UBI is likely to become a more common topic in economic and market discussions as technology reshapes how work is done.
Perspective, Discipline, and Entering 2026
The episode closes with a reminder that markets rarely move in straight lines. After multiple years of strong returns, periods of moderation, rotation, and volatility are normal.
As 2026 begins, Noah and Chris emphasize the importance of maintaining discipline, diversification, and long-term perspective. Innovation remains a powerful force, but emotional decision-making can derail otherwise sound strategies.
Key Topics Covered in This Episode
• Tariffs, policy uncertainty, and business hesitation
• Slowing job growth and rising unemployment trends
• Market rotation and international outperformance
• AI investment, productivity, and capital discipline
• Automation, UBI, and the future of work
• Managing expectations after strong multi-year returns
Investor Takeaways
Policy Matters: Tariffs and regulation continue to influence hiring and investment decisions.
Rotation Is Normal: Leadership changes can support long-term market health.
Labor Trends Bear Watching: Slower hiring adds uncertainty but not necessarily recession risk.
AI Is Evolving: Execution and profitability matter more than hype.
Perspective Wins: Long-term discipline remains essential as markets transition into 2026.
Listen to the Full Episode
Full Episode Transcript
Hey, welcome back everybody to the market enthusiast and not just the market enthusiast, but the last market enthusiast of 2025.
Noah Brooks (00:22) Hey, welcome back everybody to the market enthusiast and not just the market enthusiast, but the last market enthusiast of 2025 with me as always Chris needs you did you drug us in here on the last day we were we were debating that last time out. You kind of here we are kind of do it on the last day of the year, right? Yes, sir. So obviously, end of the year 2025. Everybody’s talking about New Year’s Eve and resolutions are resolutions still like they used to be. Because like, yeah, you start out and don’t finish them. This is this coming up this week is probably the busiest week in all of the gyms. The public gyms for the entire year, right? Undoubtedly. And everybody that’s always there at the end of the year is all been out of shape because all the machines are being used and judging the new people judging the new people that they know aren’t going to be there next week or the following week, right? Someone using the machine wrong. yeah, there’s a lot of that. Yeah. there’s there’s a lot of policing of the machines. I don’t really have any 2026 resolutions. You know, I want to be profitable in the market in 2026. We don’t know what the market’s going to bring on that one. What about you? Do you have a personal or investment resolutions for 26? After three years of CFA life, I am going to try and prioritize my health a little bit. So I started playing basketball 5am. couple months ago playing basketball at 5am 5am in the morning. I’m doing any trying trying to do that two days a week and then if I could work in one day of lifting, I think that would fit my resolution for being a little bit more healthy. I’d like to go back to the gym. I’ve been out for about four or five months off the pallet time because I hurt my knee. I think I told everybody that so I’m gonna hop back on but I don’t know that I’m going to do a resolution other than try to be healthier. next year in 2026 than I was in 2025. don’t I don’t like those. I don’t like putting a line in the sand, simply because I don’t want to force myself to do it himself wiggle room. Yeah, I feel like I need to be specific when I do it. Okay, like two days of basketball minimum week, I can be vague. I’m just gonna say healthier. Yeah, I’m just gonna say healthier. But what a year, right 2025. And we’re not going to go through everything today. But I think there’s some some noticeable ⁓ topics that we should cover here. You said to me earlier about the word of the year. Let’s start with that one. So Merriam-Webster had theirs and I was kind of surprised. It’s a very basic word, slop. And then it’s in the context of like AI slop of, you put in something complex into like chat GPT and it gives you out. maybe a summary or maybe key points, but it’s just a little off. Yeah. You can tell when there’s videos, ⁓ that are AI generated that just don’t make any sense. And I see some boat videos. I see some ski videos. They’ve been on my feet a lot lately. I think, you know what, actually now that we’re talking about it, I think my resolution for 26 is going to be watching less on the internet. Okay. Yeah. More reading, less internet for me. That would actually be healthy. You were diving into the Dan Brown book. Yeah, trip home from Merkle. absolutely. Interesting. There’s a lot going on in his books. And I have not really gone down the rabbit hole with Dan Brown. I don’t know where he gets this stuff from though. Yeah, he’s great. He’s really intense. And the minutiae the details, they come through as as he’s writing high quality fiction writer blending in real world stuff. And you’ve been to Prague so I bet you it was extra cool for you to do to read that and see that. You know, I forget a lot. No, when we were listening to the book, ⁓ we spent about seven or eight hours in the car and we were listening to Dan Brown’s newest book ⁓ and obviously taking place in Prague and they kept mentioning little places. And I’d say to Ailish, was that where we were? No, no. yes. She showed me pictures of, yes, this part, this bridge. And she was showing me pictures. Well, the Charles Bridge in Prague. That’s kind of famous. The most famous, the most famous thing in Prague. If you’re if you go to Prague and you don’t go on that bridge or where you even there. Yeah, well, you even do it. Yeah. So economic wise, right? We’re here. Hold on. Wait, wait, wait. Don’t don’t ditch the word of the year. ⁓ give me your word of the year. ⁓ geez. I would have to say for 2012, maybe the multiple years, right? I multiple words. I think for 2025. It’s a toss up between AI and tariff. There’s just no question. mean, those are the two words I think that I’ve used the most this year. Right, wrong or indifferent. You say whatever you want about the tariffs. I talked about him a lot. ⁓ Advisors and I talked about him. Clients and I talked about him, talked about him with friends and family and random people I meet. And then the same goes for artificial intelligence. Now, if I’m not mistaken and I’m not. dictionary.com gave a Gentic the word of the year, which essentially is AI acting autonomously. And there was another one from Oxford, which was rage bait. Did you ever get rage baited? There’s a lot of that. Yeah, I’ve been on the receiving end the giving end, think. Oh, yeah. Yeah, you seem like one of those guys that would be on the giving end of the rate. What about 2026? Word of the year? forget 2025 we’ve been there we did it we talked about it what’s the what’s the 2026 word of the year gonna be oh no that’s a tough one I only had a 2025 word mine mine was doge for 2025 so that had such a visceral response both in support of and against going back to earlier in the year so your 2025 word of the year is doge yep okay yeah Elon Tesla got hit because of it Elon became public enemy number one for half the country. So that was my word of the year, but you had a good word of the year for 2026. And I didn’t my my word for next year for 2026 is UBI, universal basic income. And there’s a few reasons that I think that’s going to be and maybe I’m a little bit early, maybe it’s going to be 2027. But I think we’re going to start utilizing that word more and more. in our normal vernacular because of the jobs that may or may not disappear. And I’m not being an alarmist on this, but we’ve been talking about a UBI or at least there’s been discussions on UBI for years within the economic community. And when you look at the jobs, specifically where the new jobs are going, there’s not a lot of entry level jobs that are out there. I mean, you can get a job at McDonald’s or you know, some fast food service place like that. But a lot of the jobs that normal people go to when you’re just, whether you’re in school, whether you’re in college, you need a side job or you’re not going to college and you need a part-time job or a full-time job. A lot of those starter jobs are going to disappear and whether that’s being taken over by a artificial, well, of course AI, but you know, artificial ordering. or automated ordering systems and fast food industry, or whether there’s just less and less people in a business that need to run. I think we’re going to get into a point where universal basic income is something that’s on the table because that leads to my, I, I, I will come up with a, with a word of the year optimist. Now I say optimist, is Tesla’s humanoid robot. But more so to say humanoid robots, optimus is just better than robot or humanoid. I just think optimus prime. Yeah. And that’s probably where he got it from, right? Probably. Yeah. So you your word of the year next year? Well, that’s related to yours. Yeah, I’m going with optimus. But you could say humanoid maybe also. You know, if you want unbrand what I’m saying humanoid robots, I think we’re going to see retail humanoid robots next year. And that will be 26. This is just by the end of 2020. A days. Yes. I think so. That’s my bold call for the year, but that’s related to your UBI word of year because that’s the ultimate reason why we will need UBI because in three, five years, a lot of these entry level jobs don’t need to be done by humans. Yeah, there’s, there’s no question that there’s going to be change ahead. and we talked about this last week, which was you know, total employment. And are we at, you know, an aggregate number of total employment that won’t get any higher? You said no. And I think you’re probably right. Total employment will go higher. But labor force participation rate may not. It’s certainly possible that it has. Now we have a jobs report coming up on the ninth, I think it is the next Friday after the beginning of the new year. And the the expectations are relatively low. I think the expectation is 56,000, maybe 52,000. When we look back over the last 11 months for all of 2025 for the data that we have, and they have filled in the data, depending on what you think of it, there’s been three months that were negative. June was negative 13,000. August was negative 26,000, meaning we lost 26 and 13 respectively. And October was negative. 105,000. You put all those together, you average it out. They were 56,000 a month over the last 11 months of 2025. For context and comparison, the prior year 2024 was 168,000 a month. Prior to that, 23 was 216,000. 22 was 380,000 a month. And after COVID 2021 was 6… I think 21 and 22 were definitely results of COVID numbers and I think maybe 23 and 24 were more normal numbers, regardless we are trending down. Yeah, well, so two things are happening. We’re trending down by the numbers that they provide to us. I should say more than two. I’ve said this on here a few different times. There’s this replacement rate. of about 70,000 a month that we need to keep up that that number of total employed. 56,000, you know, technically below that 70,000 and you know, 11 months doesn’t make a decade, right? So we don’t know what’s going to happen in 2026. But employers are still in this kind of, you know, hold pattern. They don’t know what no higher no fire, no higher, no fire. And I think some of that started with the other word of the year tariffs. right? They wanted to see where that plays out. That’s up for some debate here. It’s coming to the Supreme Court coming to a theater near you. right. That’ll be we were talking between you and I earlier about how this is going to play out. And you know, you try and game theory it out at the different things. It’s either it’s completely illegal to for the executive branch to just willy nilly decide tariffs, and they have to pay everything back. They could say you know, this was not defined and these are too broad to be powers. So henceforth, these are illegal. Henceforth. So that way they don’t have to pay back because as they you know, when they were having the questions, and the initial debates with the Supreme Court, they said, how are we going to pay this back? This is going to be a mess. So maybe that’s one way they get around it. Or, you know, B, they could just say, well, it sounds like these were probably too broad. But it’s not for us to decide which ones were and which ones weren’t. ⁓ We’ll have to receive further cases. That’s them punting. Or they could just say, yes, he does have broad powers. And I think that’s the least likely scenario. that doesn’t seem likely because that would cede all power to the executive branch and take it away from Congress, right? Like, that doesn’t seem to make any sense. But so if if one of those three happens, and let’s let’s say it’s not number three, let’s say it’s ⁓ that they rule that it that it’s illegal. ⁓ What about the return of the tariff money? Yeah, how does that work out? So as it goes back to the, I guess, importer who paid or the exporter who paid it to get it into the country, which in many of these cases may have been you know, a subsidiary of the same company, or it could be to a completely foreign company. Well, was it would be an interesting was it Costco that already filed the lawsuit? Yes. Or I’m not sure if it was Costco, but there definitely has been suits filed in advance of this. So does that mean it would be the responsibility of the importer to file a lawsuit to get a refund? Yeah, it’s providing they would probably have to provide proof of the amount basically they had to pay, then it would have to be remitted back. That seems like a cluster if I’ve ever that way put it on them rather than Yeah. But then the problem is everybody else paid slightly different prices. So they’re really making out then. All right, let me let me run with this for a little bit. So let’s say that the Supreme Court does rule that the tariffs in general were too broad. and the executive branch doesn’t have the power to do that. ⁓ So then the administration goes back to Congress. Do they have the votes in Congress in the legislative branch to re initiate tariffs? Yes, I think they do. Since, well, well, you know, maybe they don’t, I would bet there’s enough people not in favor that would not pass. It seems like in my mind, I wouldn’t vote for it if I were ⁓ a senator or a congressman, you know, to read. Yeah, that comes up on your permanent record. When the administration puts it on, you can say anything you want. But realistically, you didn’t personally vote for it. Yeah, you know, so you can kind of deflect in that way. And, you know, whether you’re being obtuse or not, you can say, well, the administration did this. And you know, this is kind of how I feel about it. But when that’s the that was the whole thing about ⁓ the document release, right, the big dump from Epstein is that they wanted the senators and the elected officials on record on having this vote. And so I think if you push forward and you move to tariffs, and you talk about it, I think your second opinion there is probably the one that is going to be ruled in favor is that most people most elected officials will not vote for new tariffs, because they saw what type of volatility that they caused in businesses within their own districts. I mean, just because it’s Trump, I don’t think you’d have any Democrats on board with it. And you have enough free trade Republicans that I don’t think would back it. Yeah. That’s a that’s a little bit nutty. So word of the year for me, Tariff, word of the year for you was Doge. Don’t yeah. All right. That’s that’s good stuff. ⁓ We were talking about jobs. We said we have another jobs report coming up. So 2026. Let’s lay it out on the line. I’m not a big prediction type of guy. I don’t know that me saying this is going to happen in the end means anything. I do feel like this slowdown that we’re seeing in the year over year jobs number might extend into 2000 and 26. And that by itself doesn’t necessarily mean anything for the overall, ⁓ stock market going up or down, but it does mean something for consumer spending and purchasing power. And that’s why I think UBI is probably a word that we’re going to hear more. Do you think that the 2026 the employment unemployment rate at the end of 2026 is higher or lower than it is right now. And for context, I think we’re at 4.6 and the last report we are at 4.6 the Fed in the December projections had us at 4.35 % for the end of 2026. So they think we’re going down. I the old Fed, I’m gonna bet against the Fed. Yeah, I would say that rate is going to go higher. personal for the long term historical average for the record on the unemployment rate is 5.7%. Now, how many years is that? Since at least 1950. Yeah, so 75 years right around there. Okay. Maybe 48. I forget the data set. But yeah, my thoughts are, you know, this year we went up point 6%. I think we’ll go up a little bit less than that this year. But I definitely see us higher from 4.6%, maybe think in the 5 % range. if this number I mean, if these numbers hold, they certainly will. Right? Because we really do need that 70,000 just to maintain the numbers. And as more people are coming of age, that’s that 70,000 a month just to maintain those numbers. So yeah, I think I would put money on on your bet. Is there a is there a betting market for that? I’m sure there is somewhere right? I’m sure cal she or polymarket has it for sure. Somewhere in there. Oh, I’m I’m I’m positive of that positive of that. So but I mean, here we are the end of the year. Last last day trading day of the year. Yes, it’d be 500 is up over 16%. Mid sized companies are up close to 8 % small caps up over six depending on which index you look at the rest of 2000 is up over 12 emerging markets have killed it in 2025. They’re up over 33%. Develop International is up over 31 % for the year. I mean, to me, this is the start of maybe a longer term trend where international may, I say may write, I’m gonna hedge it may continue to outperform and not just for a singular year, but really for a few more years. I liked your little hedge there. Well, you know, I mean, I mean, I don’t necessarily disagree. Certainly, we’re coming off 20 % gains and 23 20 % gains in 24. And just a shade under 20 % this year on the S &P 500. And it’s even higher than that if you look at the NASDAQ composite or NASDAQ 100. So if you look at historically the average returns after a three year period above 80 % of total cumulative return, the average is 2.1 % for that. fourth year after that set. A lot of those are grouped together. So for example, you’ll have several in the dot com boom roped in there. I think three of those of the 14 instances that we’ve seen are in that little late 90s, mid to late 90s area. ⁓ But the three year subsequent return is only 0.6%. Now it’s a wide range. So this isn’t predictive. This isn’t crystal ball stuff. That’s the average, but the range is very wide. ⁓ so I would say it’s definitely a time where I would expect a slightly lower return than average, especially coming into a midterm year, which is the highest volatility in the four year election cycle, as well as the lowest returns in the four year election cycle. Okay. I mean, that’s definitely data worth, worth noting. There is no question that you have to be cognizant of that type of information. going forward, you have really big returns over a three year period. And then historically speaking, they moderate after that. I hedge mine my bet now? So when I say that, let me hedge it here. Okay, because I was talking to you about profit margins, the forward profit margins are at the highest level ever. So technically on the S &P 500, those companies are going to be if everything pans out as forecasted, more profitable than they’ve ever been in terms of percentage. of their revenue. So I could also see a scenario where we extended another year. And I argue we’ve debated this. We’re not even in bubble territory yet, despite those returns ⁓ that we mentioned. So is it possible for another great year? Maybe doubts go away and we start seeing the non-AI companies benefit from AI type productivity. in which case, you we could be off to the races and you’ll still maybe see value participate then. ⁓ The narrative this year has been, Mag-7, the hyperscalers, only two of the seven Mag-7 outperform the S &P 500 index. So it’s not necessarily true. We did have better breath this year. We absolutely did. I think in my mind, I go back to old playbooks that we’ve ran in the past. And obviously after the dot-com bubble, you know, it’s kind of the one that sticks in my mind, ⁓ because of the technology buildup in the late nineties and early two thousands. And, know, broadly speaking after the dot com bubble, we real estate performed really well. Now we know how that ended pretty darn poorly. ⁓ in 2000 and, well we topped out in 07 top and troughed in, in nine. ⁓ but you know, transports industrials did really well. Small value did really well in 2001 and 2002, but real estate did really well. And you have to think that the productivity gains generated through these efficiencies are going to filter down into all of these non-technology companies. And they matter. have the higher profitability has to matter when you’re looking at valuation. Yeah. So your point on the margins is that a lot of these margins are from technological companies where everything is scalable in the business. And that’s the thing with, you know, the Fords of the world. We talked about them cutting back the electric program and a lot of the manufacturing firms, whether you’re talking about widgets or you’re talking about a car is it doesn’t really matter. ⁓ A lot of those things aren’t nearly as scalable as software, but as those efficiencies and as those productivities, filter down into every aspect of the economy. That’s really where you get that rotation into industrials, into manufacturing, into things that aren’t generally thought of as electronics manufacturing or software or hyperscalers. And to me, that’s an opportunity that we really have not seen in a long time. And that doesn’t mean that one has to happen. And the other one has to go down. It just means that maybe, you know, you’re not going to have another massive three year number. I suspect you’re not. It’s all edge and like anything’s possible, right? The market can stay irrational longer than I can stay solvent. So certainly not going to bet a bet on it. But I think it’s time that we’re really starting to see some of that rotation happen. And I think you’re going to have names pop up that we haven’t heard of before in 2026 or have been ⁓ not necessary in the forefront. And yeah, the mag seven is going to be around and they’re going to be profitable. But I think the the law of large numbers is starting to come into play. And as you’ve said many times before, they’re priced for perfection. And what we’ve seen what happened anytime that there’s a little bit of a stumble in there. we haven’t mentioned this, we don’t really talk about these things much but look at gold and silver certainly has applications and usage when you’re talking about some electronics and things like that. Look at the year they had silver was up over 150 % gold was up above 60%. ⁓ You look at what utilities did ⁓ uranium was on a big run and sort of those nuclear plays and they sort of ran into issues when the valuation concern came in in November. But this AI trade, look what it’s doing to industrials and materials and commodities. ⁓ It’s lifting a lot of boats. Let’s put it that way. Yeah, no, no question about it. And you know, 2026 is going to be a year just like others, except it’s a quarter century, right? We’ve just went through the first quarter century ⁓ of the 2000s. And we have a lot to look forward to. I mean, what else is happening in 2026? it’s the 250th anniversary of our country. Right. And here we are pretty close to Philadelphia, ⁓ inside Pennsylvania. And I gotta say, I’m pretty excited. Now, I’m not gonna go down for the parade and all of that stuff. But the idea that it is the 250th anniversary of the country, I mean, there’s some there’s some big happenings out there. Yeah, we for World Cups coming to the US. Yeah, well, I guess North America kind of is that lacrosse? That’s not lacrosse ball. Oh, football. Okay. Okay. I was like, is he joking? I’m not. I’m not a yeah. I’m not a soccer guy either, but I mean, FIFA World Cup is really cool. Okay. Uh, there’s also what? Winter Olympics, right? Yeah. Winter Olympics in Italy, I think. Yeah. Kind of exciting stuff. Um, today actually one other thing that’s noteworthy is the, last day for Warren Buffett. to be the CEO cheers to Warren last day in the office last you think he’s there right now? Oh, for sure. They’re gonna throw him a banger of a party. All exactly all of Berkshire’s in a yeah, however much a 95 or whatever can party. Yeah, they’re all in there. Do you think Berkshire is gonna have a massive change? Because it seems like they’ve been setting this up for years and and probably not right? A change that is no I don’t I think you know, the laments may be like, Oh, Warren’s gone. Let me get out. I think that’s first level basic thinking. I think Greg Able will do a great job. We were joking earlier. It’s like, if you put his picture in front of me, though, I wouldn’t know who he is. Greg. Yeah. But if Warren trusts him, he I mean, he’s been in the wings for a long time. If Warren trusts on my trust, I’ll go with that. go with that. So we we obviously talked about the word of the year, and I don’t want to beat a dead horse here. But I want to go back to the deep seek moment that we had in January. And what I mean is we’ve had open AI and we’ve had video would not like to go back to that. they They would not. They got walloped on that news. Right. So the deep seek was essentially this Chinese large language model that came out and they said they did it in ⁓ a quarter of the processing power that it took to do it. And it didn’t use all this energy. And there was this big sell off. They didn’t need the high end chip and they didn’t need the high end chips, right? So we don’t know if that’s, you know, we don’t know how true it is. ⁓ I have been reading some information on deep seek and apparently one of the major issues is a trust factor with deep seek because essentially it’s run by the Communist Party of China and they will tell it, you know, mandate what it can say and what it can’t say. One of those things that I’ve read was I did not try it for myself was we tell me about what happened in Tiananmen Square. And it simply said that it wasn’t allowed to, right? It couldn’t really discuss it. My favorite was when it was prompted. What is your name? And it responded in the early days was chat GBT version three. It’s like, Oh, gotcha. Yeah. Well, you know, what is, what is the name now? We should, we should find out. But the reason I bring it up is because obviously large language models have burst onto the scene in the late 2022 with open and AI. And recently there’s, you know, we’ve been talking about the need to spend and to capitalize this spending through debt, right? Through bonds ⁓ and capital being raised through bond issuance of these companies. And you’re starting to get a little bit, I mean, there’s, no issues currently, but open AI has, ⁓ I don’t know, $1.4 trillion ⁓ worth of spending that they proposed on the books and have signed contracts for, and they have very limited revenue. And so I’m curious sitting here at the end of 2025. I went through a list of companies that were around in 2000, in the beginning of 2000 that are no longer with us. And some of them, probably know some of them you don’t, but like AOL, right? That’s, that’s not really a thing anymore. Yahoo, even though a lot of people use Yahoo finance, that’s not really a thing over anymore and Netscape. And there’s a whole list of them. And I’m just curious your thoughts on open AI. you know, they’re they obviously they want to go public where they’re looking at a 2026 IPO. is, is open AI just a flash in a pan that ignited the large language model for the rest of the world or will they actually be able to capitalize on their own product? So my first thought is remember start of the year consensus was chat GPT is going to destroy Google search. Google is in big trouble. Their cash cow is, is going by the wayside. Yeah. And by the end of the year, I think it was September, October Gemini had passed them out and Sam Altman in November put out that internal memo of code red. Like we need to get back focused on the LLM. We need the experience to be better, stronger, faster. And I don’t know if there’s a flash in the pan. They definitely changed the world. But like you said, 1.4 trillion in contract obligations with the little revenue they have. I think that’s swimming, swimming upstream. think it’s a little suspect. And especially when you had the big boys like Google and Amazon in here. I don’t know if I my bet is they will not be able to meet the full 1.4 trillion. And this isn’t like a debt obligation that they have. It’s just it’s basically gonna be a screw you guys. You know, how about half of what we said? Yeah. And someone like an Oracle will be like, well, we built out for $300 billion worth of computing power. And like, well, we can only afford 100. Yeah, find some other customers. And what are gonna do about it? So I mean, I think downline that’s probably not a 2026 story, but 2027 or 2028. I just think Google Gemini and you think about Grok perplexity, all these different people running their own LLMs that are probably gaining. I just, I don’t think they will be able to garner enough revenue to meet all these obligations that they have proposed. you think that ⁓ chat GPT is any better? than any of the other ones. You just mentioned Sam Altman putting out that code red. Now I personally have not used all of them. I’ve used some of them and I pay for one of them. But I don’t know how different they all are. It’s just a matter of this is the one that I use because it’s the easiest for me. I think they have their own little niches. They’re very similar, but each has their own little specialties. And I think that the true value of them is going to be specialized. We had kicked around. If lawyers have a really well-trained set on any one of these, how productive they’ll make them. They’ll need 1 10th the clerks that they formally use where you’re reading and you’re underlining and highlighting things for this very important case. If you have in two seconds when you have a well-trained model. So. whoever starts applying these in the more specialized cases like that, which I’m sure is already happening. I think they’re going to be the winners. I don’t think I don’t think there’s going to be just one. So you’re saying paralegals are going to be out of a job. I think there’s going to be far fewer, far fewer, amongst other jobs, you know, not to pick on them. So I’ll go back to my word of the year for 2026 then. UBI, UBI, UBI. Well, listen, we we are going to celebrate the 250th anniversary, which I am told that is not that is not the bicentennial. Yeah. So he’s joking there is chat GPT or maybe it was Google. One of them said the bicentennial. We’re like, no, that’s 200 years. It’s like we’re at 250. 250. No, there’s a name for it. Yeah, there is. I looked it up. I don’t remember what it is. But we are celebrating the 250th anniversary coming up. I think it’s worth noting. mean, the economy, the United States, the markets, you know, we don’t have 250 years of market data, but we certainly have 250 years of historical data on the markets. We’ve had 250 years of innovation and 250 years of opportunity. And I suspect that we’ll have another 250 years of innovation opportunity and there’ll be trials and tribulations and there’ll be volatility. And the U S will come out and we will be as strong as we are today in another 250 years, probably in my mind, a lot stronger. God knows where we’re going to be in 250 years. Um, we have Warren Buffett stepping down, uh, which has been, um, you know, he’s obviously been one of the world renowned investors. Uh, and I quote him fairly often on here when I say don’t bet against America. That is a quote from Mr. Buffett. I certainly didn’t come up with myself. But I will simply say it today, you know, as we exit here, we have we’re going into 2026. There’s a lot of reasons to be optimistic this year. We have a lot of opportunity. We have a lot of innovation happening. ⁓ Not everything is exactly as you know, you would want it if you could wager wager, wave your magic wand. But I would tell you, you know, don’t bet against American innovation. Don’t bet against American opportunity. ⁓ and as we head into 2026, you know, there may be more volatility in 2026 than there was in 2025. Don’t let your emotions, make the decisions for you, right? Whether they’re political decisions, whether they’re market decisions, ⁓ you know, base, base your decisions on the facts at hand, ⁓ not, your emotions. And as Mr. Buffett says, never bet against America. So, Hey, thank you so much for listening. to the market enthusiasts for all of 2025. We will see you next year in 2026 and we hope you have a wonderful new year. Happy new year.
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The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you consult the appropriate qualified professional prior to making a decision. Economic forecast set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
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