March 14, 2025 • 23 mins
AI stocks have been on fire—but most investors don’t realize they’re walking into a trap. The entire market got a wake-up call when China’s DeepSeek released an open-source AI model that shocked everyone. Overnight, the way investors value AI stocks completely changed. If you’re holding AI stocks, you need to hear this—before it’s too late. But don’t panic—this isn’t the end of AI investing. In fact, there’s a massive opportunity… if you know where to look. In this video, I’ll break down: -Why the AI market is breaking down right now -How Deepseek is forcing a total rethink of AI stock valuations -Where the smart money is moving next -How to position yourself for the biggest gains in AI’s next wave Real quick—I’m Mark Moss. I’ve built and exited multiple tech companies, and invested through several booms and busts, and today I’m a partner at a leading Bitcoin Venture Fund. I also write the Quantum Wave Investment Report, where I help investors navigate the biggest shifts in Tech and Money—and I make these videos to give you insights we’re using so you can navigate and profit from these shifts as well.
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Episode Transcript
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Speaker 1 (00:00):
AI stocks have been on fire, but most investors don't
realize they're walking into a trap. Now, the entire market
got a wake up call when China's deep Seek released
an open source AI model that's shocked everyone overnight. The
way that investors value stocks, AI stocks, and even indexes
has completely changed. So if you're holding AI stocks, you
(00:21):
need to hear this before it's too late. But of
course don't panic. Look this isn't the end of AI investing.
In fact, there's a massive opportunity if you know where
to look. So in this video, I'm going to break
down why the AI market is breaking down right now,
how open source models light deep Seek is forcing a
total rethink of AI stocks and just stocks overall on
(00:42):
the valuations, and we're going to talk about where the
smart money is moving next and how to position yourself
for the biggest gains in the AI next wave real quick.
I'm Mark Moss. I've built and exited multiple tech companies.
I've invested through several boom and bus cycles. Today I'm
a partner at a leading bitcoin venture capital fund called
the Bitcoin Opportunity Fund. I also write the Quantum Wave
(01:03):
Investment Report or help investors navigate the biggest shifts in
tech and money, and I make these videos to give
you the insights that we're using so you can navigate
and profit from these shifts as well. So let's go
all right, we're jumping right into it. We're talking about
how AI investing is breaking down. Now listen, Look, this
is not a doom in gloom video. AI is massively transformative.
(01:25):
It is going to create massive efficiencies, and it is
changing the world. I use it every day. I'm making
money invest in it. But if you don't understand the
nuances of how this shifts, you could lose money. So
let's break this down. Okay, we know if you living
under rock that AI has completely skyrocketed really from about
twenty twenty two to twenty twenty three. It's not that old,
(01:46):
right open AI storm. The scene was that November of
twenty twenty two, So all twenty twenty three and twenty
twenty four, it has been blowing up. It's the darling.
Wall Street loves that. Every investment newsletter's talking about it,
and it's like all in right, except for the problem
is that the way technology works is it moves through
different cycles, and so what we're seeing is the AI
(02:09):
business model is changing really rapidly. Right, This technology is
moving so much faster than previous technology cycles in the past.
But if you understand that, which I'm going to break
down for you, you can see that the models shifting.
So if you're still investing like you were in twenty two,
twenty three, and twenty four, you're gonna be losing money.
And now that we'd be losing money, you'll be missing
out on the massive gains that we have. Now we
(02:29):
can look at historical parallels the dot com boom and bust,
we can look at the crypto sort of boom and bust,
and we can understand the fractals. We can understand how
those markets evolved. We'll compare it to history and technology
to understand that, and we can understand that the AI
stocks that most people think about today open AI being
(02:50):
the leader, of course Google with their Gemini and so forth,
they're not really monopolies. And really what it's highlighting is
that valuation is only a concern when the underl buying
fundamentals change, and that's the problem. Those fundamentals are changing. Okay,
so let's understand this so you know how to navigate
the cycles. Okay, first of all, we do want to
(03:11):
understand that this is not just about AI or tech
or stock. It's all the markets as we know them.
I'm talking about the S and P five hundred specifically,
I'm talking about the NASDAC. All right, So, right now,
a lot of people are with your four oh and k,
your mutual funds or financial advisors. Maybe you're just like
every two weeks investing and you're allocating to the Nasdaq.
You're passively investing. That's going to be super dangerous. I'll
(03:31):
show you why. So the market is highly concentrated. As
a matter of fact, concentration in the market is at
an all time high. If to sort of take a
look at this, looking at the Nasdaq again, the Nasdaq
one hundred here is this again represents the tech stocks,
which is where all the growth is. You've heard me
talk about the investing black hole and how basically only
bitcoin and the Nasdaq have been keeping up with the
(03:53):
real rate of inflation of debasement. And so we can
see the NASDAC right here. This goes back. This is
the two thousand dot com boom and bust right here,
and of course here we are today. Now this looks
pretty good if you would have just bought here and
held tell here he did pretty good. Of course, in
the dot com boom, we had an eighty one percent
draw down, pretty massive eighty one. Now, the one thing
(04:16):
to keep in mind about that eighty one percent draw
down is it took a decade or more just to
get back to even In the year two thousand and eight,
the Great Financial Crash, we had a fifty percent draw
down in the Nasdaq. In twenty twenty, during the pandemic,
we had a thirty six percent draw down. Now, one
thing you might notice is that these draw downs are
getting less and less, from eighty one to fifty to thirty.
(04:40):
You notice that. So this fits into why I continually
tell you that what we're seeing as a crash up,
not a crash down. The way that the government has
used debt, especially around this period right here, fiscal spending
has changed these markets. Anyway, we're not talking about that
in this video. But you can see that the Nasdaq
has gone up. But the thing that I want to
draw your attention to is the concentration that's happening in
(05:02):
the Nasdaq. So what this shows is the largest ten
percent of stocks as a percent of the total value
of stocks. And what this shows us is that over
the past five and a half decades there's only been
two previous peaks in market concentration. So we saw that
right here in the seventies, we saw it again in
(05:23):
the two thousand dot Com boom and bust, and now
we see it again here today. Now I've put this
red line on there, so again I like to show
you the charts. You can see the direction, the size
of the speed of the moves, and you can see
that the concentration keeps getting bigger and bigger and bigger.
Now why is this important, Well, if you're buying the
Nasdaq index or the S and P five hundred index
(05:45):
for that matter, you're buying the S and P five
hundred because of the mag seven. Right, there's seven stocks
that are driving most of that entire index. In the Nasdaq,
you're seeing about the same thing. The concentration of the
top ten is getting bigger. Now. The reason why this
is the problem is if you're passively invested into the
index and one or two of these companies, there's only seven,
and they have to be five hundred back seven. If
(06:06):
they drop, they bring the entire index down with them.
Super important to understand. Okay, so we can see that
concentration is at an all time high. Now what does
that mean? What are the historical parallels to this? Well,
we can see that historically speaking, high concentration equals high danger.
We can see that historically speaking, whenever we've reached these
(06:29):
levels of concentration, we've seen big crashes happen off the
back of that. Now we also have historical parallels to
where those happened, like the dot com boom, for example,
was when we had extreme tech optimism. Now I'm optimistic
about tech, but we had extreme tech optimism in the seventies.
Same thing that was when the microprocessor came out. You
might know from my quantum wave thesis the last one
(06:51):
started in nineteen seventy one, right at that peak. I'll
show you more than that in a second. We also
had a sudden change in the models. I'm going to
talk about that in a second. But this is pricing
the nasdak in gold. This is from my friend Luke
Grammanov at FFTT. Check him out. He's worth a follow.
But what we want to do is we want to
look at things if they're expensive or cheap priced in
(07:13):
other things, not just US dollars, because if we look
at US dollars, it's always manipulated. So here's the Nasdaq
priced in gold. Again, during the dot com boom got
really expensive, but we can see that it's basically been
breaking down ever since, and it's been in this range
right here, and so again if you're passively invested in
index and to be wary of that, and especially when
they're sudden changes in the technology, which is what happened
(07:35):
in nineteen seventy. In the year two thousand, all right,
so what are we talking about? How is AI changing
and what do we need to be aware of? Well,
what really happened. I made a video a few weeks ago.
I think it was talking about deep Seat. Deep Seat
was a new open source LLM, a new AI model
that was released from a company in China. But what
happened is when that was released, we saw the entire
(07:57):
market plunge. In video, Everyone's Darling plunged time, but the
entire market plunged, And I made a video. I'll link
to it down below. You should watch that to really understand.
But basically what it did is exposed that all our
models for evaluating these companies, the growth of these companies
and even the way that money goes into the index
of the NASDAC has completely changed. And so it highlighted
(08:18):
that everything that we thought we knew we don't know anymore. Now.
One of the things that we saw is that because
deep seek was an open source LLM, then what it
did is it's shone a light on all the AI
monopolies that we saw again Open Ai, Google, those types
of companies, Cloud, etc. It showed that their pricing is over.
(08:38):
How can any of those open AI or gym and
how could they be charging when we have open source
models that are better. And so that changed all that
we saw that AI's paywall is losing pricing power eventually
be priced out completely. And what that's showing is that
the entire AI stock market needs to be reevaluated. Now
(08:59):
It's not just this, there's all types of now AI gateways,
AI agents that are now bridging all of the aillms together.
So for example, now for like five bucks a month,
I could get access to all of them without having
to pay for them individually. So we're seeing this but
now again like these open source models are completely changing this.
So then the question is again is if lllms are free,
(09:19):
where does the value go? Well, good thing, I have
an answer for you, because history tells us that. And
of course I've been investing in technology for decades. So
let me show you how we look at this. So
open source shift. So it started where I think, right
where open ai hit the scene and they raised a
ton of money. Right they're the Wall Street Darland, They're
gaining all this momentum. And where I've really first started
(09:41):
noticing it is Meta. Facebook Meta launched Lama, which is
an open source LLM, a large language model an AI.
And when I saw that happen, it made me stop
and think, why would Facebook, who's changed their name to Meta,
who's rushing into the space, Why would they open up
a free, open source model when the apparent model seems
(10:02):
to be like open AI and try to raise a
bunch of money and be worth a lot of money.
Why would Facebook do that? And one of my thoughts was, well,
Facebook is worth i don't know, ten times twenty times
more than open AI. Open AA is not really a
threat to them today, there's really small. If Facebook opens
up a open source LLM, they neutralize opening I how
(10:24):
can opening I be worth any money if now there's
all the free ones that are even better, And so
it seemed like it was like maybe Zuckerberg playing forty
chess when open AI and he's trying to kind of
play the old playbook. That was what I thought at first.
But it's changed a little bit, and I'm going to
show you where the real value is accruing. Now we
can see this other open source models, code gen, which
(10:45):
is Salesforce CRM, so the giant the CRM space. So
we're seeing like SaaS companies jumping into the space. Goose
which is an open it's an open source AI agent
project from Jack Dorsey, the founder of Twitter. Now he's
head a block deep Seek. Of course, since deep Sea
came how just a few weeks ago, we've seen like
half a dozen more come out of China. They're coming
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really what we want to do is we want to
look back to the dot and even crypto models to
really understand how this works. Where does the value accrue? Now,
you might have seen me use this chart. If you
watch my content, you see me use this chart all
the time. And you understand that in these quantum wave cycles,
(12:14):
we have about a fifty year cycle and they happen
in these four phases, and we need to understand that
the way that we invest through each phase changes. So
the way that I invested here is going to be
different than the way and the companies I invest in
here different here and so forth. All right, So right
now we are right here starting this second phase, and
(12:35):
so the old way of investing no longer works. So
let me break it down with some parallels. We think
about technology in layers, all right, Technology scales and layers
is what most people misunderstand, and so they think the
Internet was too slow, can't scale. Let's go spend a
billion dollars in intranets. Bitcoin is too slow, can't scale.
Let's go try all these crypto projects without understanding that
(12:55):
technology scales and layers, but also the way value accruise
happens in layers. So what do I mean by that?
If you think about the Internet, we have a base
layer of the Internet, right, so this would be like
TCP and IP, right, and then we want email, so
then we have like SMTP, and then we want security,
so we have like https. Right. You know what those
(13:17):
things are all right, but no value as a crude
at this base layer TCP, IP protocol, SMTPA, CTPS protocols,
they're not worth anything. They're just open source protocols. Where
all the value has accrued is on higher levels, so
on the applications. So for example, you have Google. Google
(13:38):
created Chrome and now you have all these Chrome plugins
right here that are worth a lot of money. You
can think about this like with the iPhone. You have
the iPhone, which obviously you create a lot of value,
but then think about the app store and think about
all the apps inside of that, all right, So this
is where the value is accrued, not on the base layer,
but on the stack, all right. We can think about
(13:59):
the same thing with bigcoin. Now, we had Bitcoin, which
is a protocol, It's a protocol that transfers data, right,
and obviously value is accruing there, but not so much
on the protocol, but the asset Bitcoin, the asset, not
the network. Now we have companies that are building layers
on top of the Bitcoin stack, and so certainly the
(14:20):
Bitcoin network has a crude value, but then we have
even more value being accrued up peer. That's what my
fund investment we invest into these. But back to the
topic that we're talking about right now, which is AI,
we're seeing the same thing. So what I would say
is these lms are like a base layer. So the
lms are now open source, the deep seek, the LAMA,
all those things, and there's no value accruing there. They're
(14:43):
all racing down to the bottom. They're all for free.
Where the value gets accrued is on higher levels. So
it's on the applications, the narrow specific use cases that
are being built on top of the open source model.
And so we can see right now today the smart
money isn't just betting on AI. That was the old way,
that was twenty three, twenty four. Now it's betting on
(15:04):
the right layer of AI. Which layer do we want
to invest and do the same way might fund investing
in to bitcoin? Which layer do we want to invest into?
Now I'll show you that. Don't worry. Now, I am
gonna break this down in greater detail and show you
what different types of projects and companies are being built there.
If you want to join me next week, we're gonna
go live deep into this. I got I don't know,
thirty forty charts or I'll break all of this down
(15:25):
and then I'll take questions, so we'll talk about it.
We'll discuss it, figure out the best way to find
these companies invest into them. I'll throw you a couple
of names that I like. If you want to come
join me, it's all for free. I'll put a link
down there down below. Come hang out. Let's have fun
talking about this. Let's discuss it all. Like I said, live,
Q and A and so much more. Join me for
free and the link down below. Okay, now, what we're
seeing because of this is a massive shift of capital.
(15:48):
And it's not just from AI based layer to a
higher level. Like I said, it's an entire index. It's
even an entire continent. So what I'm talking about, Well,
if China is now pushing these open source models, what
we're seeing is that the US has sort of been
competing more of a scarcity, right, we got to compete.
Let's keep China out of the game. But China is
(16:10):
trying to compete. Now it's not an even playing field.
This is the whole conversation about tariffs and so forth,
and you have a country that's subsidizing things, and that's
a whole other topic. We can make a video if
you want, drop me a comment down below. But what
we've seen is that China has been trying to outcompete us.
The US has been trying to protect but it's basically
forced the shift in the market where now open source
(16:31):
projects are now superior to companies that are trying to
protect the mote. If you're trying to protect the mote,
you're just not going to make it the world is
open source. Jack Dorsy tweeted this so much the other
day on Twitter saying or on x saying that the
world is open source and that is the future. It's
why I talk about decentralization all the time. But the
question is if this is happening. We know that the
(16:53):
US has been the financial hub of the world. We
know that the US stock markets S and P five
hundred and the Nasdaq are the great investment markets in
the world. We know all that money is accrueing there,
all the businesses are listed there. But if China is
out competing US, does some of that money start leaving
the US and going to China. Well, I have a
chart to answer that question. What we can see right here,
(17:16):
as you know again if you watch my videos on
a regular basis the reason why, and I hinted too earlier,
the reason why we see the stock markets going up
so high is because the amount of money that they
continue to print right through the debasement. And what we
can see here is that. So what we have here
is on the red line, we have the Nasdaq one
hundred going up, that's right here. But what we have
on the green line is the US net investment position.
(17:42):
So this is the amount of money that went in,
which you can see is higher than the amount of
the Nasdaq itself. And what we have in the blue
line down here is the foreign direct investment in US equities,
mainly coming from China. So what happens is, just like you,
a country has surpluses, so they have trades, exports, they
have imports, they have surpluses, they have savings. What do
(18:03):
they do with that, Well, they put it somewhere and
in this case, a lot of that has been being recycled,
used to be recycled into US treasuries, still is a
lot of it is has been recycled into the NASDAK
and that's exactly what we've seen. So China has been
recycling a substantial portion of its surpluses into these US equities,
which is pushed the entire index up. But back to
(18:25):
the competing angle. Now, if China now is moving ahead
in tech, which they've already sort of outpaced the US
with evs and batteries and lots of things like that,
will a lot of that Chinese money, instead of going
to the Nasdaq start going to their own indexes. So
we're seeing a massive disruption here all over the place.
So the question or the thing we need to ponder
is not only is AI itself changing, but the global
(18:48):
flow of capital is shifting as well. If you have
to understand these things if you want to have success
with your portfolio, because the world is changing rapidly. It's
always technology that changes the world, and in these quantum
wave cycles like we're in right now, it's where all
the change happens. Okay, so what is this next phase
for AI? Well, the losers, the ones that are getting
(19:08):
left behind are the AI monopolies, the open ais, the Googles, right,
those are the ones that are trying to kind of
hold their LLM behind a paywall. They're going to be
the losers. Chip stocks Nvidia AMD why because they were
pricing in unlimited demand. But what Deepseak showed us is
that they're able to train these AIM models for way
(19:29):
cheaper with way less GPUs than we thought. So instead
of the demand for chips being like this, we find
out it's probably more like this, and as technology continues
to accelerate, it might even be more like this. So
those are ones we want to watch out for. We
also want to watch out for all the hype driven narratives. Right,
So all these companies that are trying to ride this
hype train we're talking about, like AI SaaS companies think
(19:51):
about Salesforce launching their open AM model or their LM model.
So hype driven AI SaaS companies with no moat again, right,
there is no mot This is all going down. It's
going to be a base layer and they're all going
to be basically competing as commodities. So who will the
winners be? Where will the real money go? Where will
the real money be made? Well, AI high value applications,
(20:12):
narrow niche use cases, high value applications on top of
the open source llms. Let me give you an example.
In twenty twenty two, when open ai released, you had
all the open APIs you could use. You could do anything.
You can create images, you could to create text, right, code, whatever. Well,
when people are faced with I could do anything, they
don't know what to do. So there was an app
(20:34):
you might remember created called lensa AI and all it
did was just use the APIs that open i had produced.
But with LENDSAI, I could take a picture of myself
and it would give me back ten avatars. A very
narrow use case of what the whole thing could do.
But it got so popular so fast. I believe in
like ninety days it was worth like a billion dollars
because it was a very narrow use case. And that's
(20:55):
what we're talking about, high value applications on top of
the base layer, the open source lms. Specifically, I'm looking
for where bitcoin, AI, and open source decentralization, where all
those things converge so we have a new set of
building blocks. What happens when we use these three together,
where they converge and build things that we can't even
(21:17):
imagine today. And AI infrastructure provides that it doesn't really
high on close sourced models. Again, it's all moving to
open source. That's the big theme. Hopefully you're catching onto that.
I've been talking about what I call the decentralized revolution
for about five years now. Okay, now, how do we
play this? What does this mean to us? Well, one,
we have to understand the game is changing, right and
(21:39):
we understand through historical parallels exactly how that changes. Number Two,
we have to understand that passive investing is super dangerous
right now, because, as I said, if we have this
over concentration, if one or two of these companies that
are at risk right now. If they drop, the entire
index can drop. On top of that, we realize that
maybe China could steal some of that capital, take their
(21:59):
capital back even to their own markets. We also know
that most likely there's this next four or five year
cycle we're going to see a massive amount of monetary debasement,
and so that also manipulates what we see in the
Nasdaq or the indexes. So I think in order to survive,
we need to be much more selective in the companies,
specifically looking for the ones that are in that convergence.
Right in those three those are the ones that's going
(22:21):
to be where the biggest gains, and they're going to
come again from the convergence of bitcoin, AI and open
source where those three things work together. Individually, yeah sure great,
but together is where the magic made. Where that convergence is. Now,
if you want to know more about these cycles and
these three things converging again, come hang out with me
next week. It's all live, it's all free. There's a
(22:42):
link down below. I'll break out, like I said, thirty
forty charts. We'll dig through this in great detail. Tell
you where I'm focusing where my fund's focusing, and then
we'll discuss it. It's all open life, Juneing so much.
Come hang out with me, but that's what I got.
Let me know what you think about this. Hopefully you're
shifting your portfolio, and of course that's always give me
thumbs up if you like it. If you don't give
me the was down that it's okay. At least tell
me why. And that's what I got. All right, to
(23:03):
your success, I'm out,
AI stocks have been on fire, but most investors don't
realize they're walking into a trap. Now, the entire market
got a wake up call when China's deep Seek released
an open source AI model that's shocked everyone overnight. The
way that investors value stocks, AI stocks, and even indexes
has completely changed. So if you're holding AI stocks, you
(00:21):
need to hear this before it's too late. But of
course don't panic. Look this isn't the end of AI investing.
In fact, there's a massive opportunity if you know where
to look. So in this video, I'm going to break
down why the AI market is breaking down right now,
how open source models light deep Seek is forcing a
total rethink of AI stocks and just stocks overall on
(00:42):
the valuations, and we're going to talk about where the
smart money is moving next and how to position yourself
for the biggest gains in the AI next wave real quick.
I'm Mark Moss. I've built and exited multiple tech companies.
I've invested through several boom and bus cycles. Today I'm
a partner at a leading bitcoin venture capital fund called
the Bitcoin Opportunity Fund. I also write the Quantum Wave
(01:03):
Investment Report or help investors navigate the biggest shifts in
tech and money, and I make these videos to give
you the insights that we're using so you can navigate
and profit from these shifts as well. So let's go
all right, we're jumping right into it. We're talking about
how AI investing is breaking down. Now listen, Look, this
is not a doom in gloom video. AI is massively transformative.
(01:25):
It is going to create massive efficiencies, and it is
changing the world. I use it every day. I'm making
money invest in it. But if you don't understand the
nuances of how this shifts, you could lose money. So
let's break this down. Okay, we know if you living
under rock that AI has completely skyrocketed really from about
twenty twenty two to twenty twenty three. It's not that old,
(01:46):
right open AI storm. The scene was that November of
twenty twenty two, So all twenty twenty three and twenty
twenty four, it has been blowing up. It's the darling.
Wall Street loves that. Every investment newsletter's talking about it,
and it's like all in right, except for the problem
is that the way technology works is it moves through
different cycles, and so what we're seeing is the AI
(02:09):
business model is changing really rapidly. Right, This technology is
moving so much faster than previous technology cycles in the past.
But if you understand that, which I'm going to break
down for you, you can see that the models shifting.
So if you're still investing like you were in twenty two,
twenty three, and twenty four, you're gonna be losing money.
And now that we'd be losing money, you'll be missing
out on the massive gains that we have. Now we
(02:29):
can look at historical parallels the dot com boom and bust,
we can look at the crypto sort of boom and bust,
and we can understand the fractals. We can understand how
those markets evolved. We'll compare it to history and technology
to understand that, and we can understand that the AI
stocks that most people think about today open AI being
(02:50):
the leader, of course Google with their Gemini and so forth,
they're not really monopolies. And really what it's highlighting is
that valuation is only a concern when the underl buying
fundamentals change, and that's the problem. Those fundamentals are changing. Okay,
so let's understand this so you know how to navigate
the cycles. Okay, first of all, we do want to
(03:11):
understand that this is not just about AI or tech
or stock. It's all the markets as we know them.
I'm talking about the S and P five hundred specifically,
I'm talking about the NASDAC. All right, So, right now,
a lot of people are with your four oh and k,
your mutual funds or financial advisors. Maybe you're just like
every two weeks investing and you're allocating to the Nasdaq.
You're passively investing. That's going to be super dangerous. I'll
(03:31):
show you why. So the market is highly concentrated. As
a matter of fact, concentration in the market is at
an all time high. If to sort of take a
look at this, looking at the Nasdaq again, the Nasdaq
one hundred here is this again represents the tech stocks,
which is where all the growth is. You've heard me
talk about the investing black hole and how basically only
bitcoin and the Nasdaq have been keeping up with the
(03:53):
real rate of inflation of debasement. And so we can
see the NASDAC right here. This goes back. This is
the two thousand dot com boom and bust right here,
and of course here we are today. Now this looks
pretty good if you would have just bought here and
held tell here he did pretty good. Of course, in
the dot com boom, we had an eighty one percent
draw down, pretty massive eighty one. Now, the one thing
(04:16):
to keep in mind about that eighty one percent draw
down is it took a decade or more just to
get back to even In the year two thousand and eight,
the Great Financial Crash, we had a fifty percent draw
down in the Nasdaq. In twenty twenty, during the pandemic,
we had a thirty six percent draw down. Now, one
thing you might notice is that these draw downs are
getting less and less, from eighty one to fifty to thirty.
(04:40):
You notice that. So this fits into why I continually
tell you that what we're seeing as a crash up,
not a crash down. The way that the government has
used debt, especially around this period right here, fiscal spending
has changed these markets. Anyway, we're not talking about that
in this video. But you can see that the Nasdaq
has gone up. But the thing that I want to
draw your attention to is the concentration that's happening in
(05:02):
the Nasdaq. So what this shows is the largest ten
percent of stocks as a percent of the total value
of stocks. And what this shows us is that over
the past five and a half decades there's only been
two previous peaks in market concentration. So we saw that
right here in the seventies, we saw it again in
(05:23):
the two thousand dot Com boom and bust, and now
we see it again here today. Now I've put this
red line on there, so again I like to show
you the charts. You can see the direction, the size
of the speed of the moves, and you can see
that the concentration keeps getting bigger and bigger and bigger.
Now why is this important, Well, if you're buying the
Nasdaq index or the S and P five hundred index
(05:45):
for that matter, you're buying the S and P five
hundred because of the mag seven. Right, there's seven stocks
that are driving most of that entire index. In the Nasdaq,
you're seeing about the same thing. The concentration of the
top ten is getting bigger. Now. The reason why this
is the problem is if you're passively invested into the
index and one or two of these companies, there's only seven,
and they have to be five hundred back seven. If
(06:06):
they drop, they bring the entire index down with them.
Super important to understand. Okay, so we can see that
concentration is at an all time high. Now what does
that mean? What are the historical parallels to this? Well,
we can see that historically speaking, high concentration equals high danger.
We can see that historically speaking, whenever we've reached these
(06:29):
levels of concentration, we've seen big crashes happen off the
back of that. Now we also have historical parallels to
where those happened, like the dot com boom, for example,
was when we had extreme tech optimism. Now I'm optimistic
about tech, but we had extreme tech optimism in the seventies.
Same thing that was when the microprocessor came out. You
might know from my quantum wave thesis the last one
(06:51):
started in nineteen seventy one, right at that peak. I'll
show you more than that in a second. We also
had a sudden change in the models. I'm going to
talk about that in a second. But this is pricing
the nasdak in gold. This is from my friend Luke
Grammanov at FFTT. Check him out. He's worth a follow.
But what we want to do is we want to
look at things if they're expensive or cheap priced in
(07:13):
other things, not just US dollars, because if we look
at US dollars, it's always manipulated. So here's the Nasdaq
priced in gold. Again, during the dot com boom got
really expensive, but we can see that it's basically been
breaking down ever since, and it's been in this range
right here, and so again if you're passively invested in
index and to be wary of that, and especially when
they're sudden changes in the technology, which is what happened
(07:35):
in nineteen seventy. In the year two thousand, all right,
so what are we talking about? How is AI changing
and what do we need to be aware of? Well,
what really happened. I made a video a few weeks ago.
I think it was talking about deep Seat. Deep Seat
was a new open source LLM, a new AI model
that was released from a company in China. But what
happened is when that was released, we saw the entire
(07:57):
market plunge. In video, Everyone's Darling plunged time, but the
entire market plunged, And I made a video. I'll link
to it down below. You should watch that to really understand.
But basically what it did is exposed that all our
models for evaluating these companies, the growth of these companies
and even the way that money goes into the index
of the NASDAC has completely changed. And so it highlighted
(08:18):
that everything that we thought we knew we don't know anymore. Now.
One of the things that we saw is that because
deep seek was an open source LLM, then what it
did is it's shone a light on all the AI
monopolies that we saw again Open Ai, Google, those types
of companies, Cloud, etc. It showed that their pricing is over.
(08:38):
How can any of those open AI or gym and
how could they be charging when we have open source
models that are better. And so that changed all that
we saw that AI's paywall is losing pricing power eventually
be priced out completely. And what that's showing is that
the entire AI stock market needs to be reevaluated. Now
(08:59):
It's not just this, there's all types of now AI gateways,
AI agents that are now bridging all of the aillms together.
So for example, now for like five bucks a month,
I could get access to all of them without having
to pay for them individually. So we're seeing this but
now again like these open source models are completely changing this.
So then the question is again is if lllms are free,
(09:19):
where does the value go? Well, good thing, I have
an answer for you, because history tells us that. And
of course I've been investing in technology for decades. So
let me show you how we look at this. So
open source shift. So it started where I think, right
where open ai hit the scene and they raised a
ton of money. Right they're the Wall Street Darland, They're
gaining all this momentum. And where I've really first started
(09:41):
noticing it is Meta. Facebook Meta launched Lama, which is
an open source LLM, a large language model an AI.
And when I saw that happen, it made me stop
and think, why would Facebook, who's changed their name to Meta,
who's rushing into the space, Why would they open up
a free, open source model when the apparent model seems
(10:02):
to be like open AI and try to raise a
bunch of money and be worth a lot of money.
Why would Facebook do that? And one of my thoughts was, well,
Facebook is worth i don't know, ten times twenty times
more than open AI. Open AA is not really a
threat to them today, there's really small. If Facebook opens
up a open source LLM, they neutralize opening I how
(10:24):
can opening I be worth any money if now there's
all the free ones that are even better, And so
it seemed like it was like maybe Zuckerberg playing forty
chess when open AI and he's trying to kind of
play the old playbook. That was what I thought at first.
But it's changed a little bit, and I'm going to
show you where the real value is accruing. Now we
can see this other open source models, code gen, which
(10:45):
is Salesforce CRM, so the giant the CRM space. So
we're seeing like SaaS companies jumping into the space. Goose
which is an open it's an open source AI agent
project from Jack Dorsey, the founder of Twitter. Now he's
head a block deep Seek. Of course, since deep Sea
came how just a few weeks ago, we've seen like
half a dozen more come out of China. They're coming
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really what we want to do is we want to
look back to the dot and even crypto models to
really understand how this works. Where does the value accrue? Now,
you might have seen me use this chart. If you
watch my content, you see me use this chart all
the time. And you understand that in these quantum wave cycles,
(12:14):
we have about a fifty year cycle and they happen
in these four phases, and we need to understand that
the way that we invest through each phase changes. So
the way that I invested here is going to be
different than the way and the companies I invest in
here different here and so forth. All right, So right
now we are right here starting this second phase, and
(12:35):
so the old way of investing no longer works. So
let me break it down with some parallels. We think
about technology in layers, all right, Technology scales and layers
is what most people misunderstand, and so they think the
Internet was too slow, can't scale. Let's go spend a
billion dollars in intranets. Bitcoin is too slow, can't scale.
Let's go try all these crypto projects without understanding that
(12:55):
technology scales and layers, but also the way value accruise
happens in layers. So what do I mean by that?
If you think about the Internet, we have a base
layer of the Internet, right, so this would be like
TCP and IP, right, and then we want email, so
then we have like SMTP, and then we want security,
so we have like https. Right. You know what those
(13:17):
things are all right, but no value as a crude
at this base layer TCP, IP protocol, SMTPA, CTPS protocols,
they're not worth anything. They're just open source protocols. Where
all the value has accrued is on higher levels, so
on the applications. So for example, you have Google. Google
(13:38):
created Chrome and now you have all these Chrome plugins
right here that are worth a lot of money. You
can think about this like with the iPhone. You have
the iPhone, which obviously you create a lot of value,
but then think about the app store and think about
all the apps inside of that, all right, So this
is where the value is accrued, not on the base layer,
but on the stack, all right. We can think about
(13:59):
the same thing with bigcoin. Now, we had Bitcoin, which
is a protocol, It's a protocol that transfers data, right,
and obviously value is accruing there, but not so much
on the protocol, but the asset Bitcoin, the asset, not
the network. Now we have companies that are building layers
on top of the Bitcoin stack, and so certainly the
(14:20):
Bitcoin network has a crude value, but then we have
even more value being accrued up peer. That's what my
fund investment we invest into these. But back to the
topic that we're talking about right now, which is AI,
we're seeing the same thing. So what I would say
is these lms are like a base layer. So the
lms are now open source, the deep seek, the LAMA,
all those things, and there's no value accruing there. They're
(14:43):
all racing down to the bottom. They're all for free.
Where the value gets accrued is on higher levels. So
it's on the applications, the narrow specific use cases that
are being built on top of the open source model.
And so we can see right now today the smart
money isn't just betting on AI. That was the old way,
that was twenty three, twenty four. Now it's betting on
(15:04):
the right layer of AI. Which layer do we want
to invest and do the same way might fund investing
in to bitcoin? Which layer do we want to invest into?
Now I'll show you that. Don't worry. Now, I am
gonna break this down in greater detail and show you
what different types of projects and companies are being built there.
If you want to join me next week, we're gonna
go live deep into this. I got I don't know,
thirty forty charts or I'll break all of this down
(15:25):
and then I'll take questions, so we'll talk about it.
We'll discuss it, figure out the best way to find
these companies invest into them. I'll throw you a couple
of names that I like. If you want to come
join me, it's all for free. I'll put a link
down there down below. Come hang out. Let's have fun
talking about this. Let's discuss it all. Like I said, live,
Q and A and so much more. Join me for
free and the link down below. Okay, now, what we're
seeing because of this is a massive shift of capital.
(15:48):
And it's not just from AI based layer to a
higher level. Like I said, it's an entire index. It's
even an entire continent. So what I'm talking about, Well,
if China is now pushing these open source models, what
we're seeing is that the US has sort of been
competing more of a scarcity, right, we got to compete.
Let's keep China out of the game. But China is
(16:10):
trying to compete. Now it's not an even playing field.
This is the whole conversation about tariffs and so forth,
and you have a country that's subsidizing things, and that's
a whole other topic. We can make a video if
you want, drop me a comment down below. But what
we've seen is that China has been trying to outcompete us.
The US has been trying to protect but it's basically
forced the shift in the market where now open source
(16:31):
projects are now superior to companies that are trying to
protect the mote. If you're trying to protect the mote,
you're just not going to make it the world is
open source. Jack Dorsy tweeted this so much the other
day on Twitter saying or on x saying that the
world is open source and that is the future. It's
why I talk about decentralization all the time. But the
question is if this is happening. We know that the
(16:53):
US has been the financial hub of the world. We
know that the US stock markets S and P five
hundred and the Nasdaq are the great investment markets in
the world. We know all that money is accrueing there,
all the businesses are listed there. But if China is
out competing US, does some of that money start leaving
the US and going to China. Well, I have a
chart to answer that question. What we can see right here,
(17:16):
as you know again if you watch my videos on
a regular basis the reason why, and I hinted too earlier,
the reason why we see the stock markets going up
so high is because the amount of money that they
continue to print right through the debasement. And what we
can see here is that. So what we have here
is on the red line, we have the Nasdaq one
hundred going up, that's right here. But what we have
on the green line is the US net investment position.
(17:42):
So this is the amount of money that went in,
which you can see is higher than the amount of
the Nasdaq itself. And what we have in the blue
line down here is the foreign direct investment in US equities,
mainly coming from China. So what happens is, just like you,
a country has surpluses, so they have trades, exports, they
have imports, they have surpluses, they have savings. What do
(18:03):
they do with that, Well, they put it somewhere and
in this case, a lot of that has been being recycled,
used to be recycled into US treasuries, still is a
lot of it is has been recycled into the NASDAK
and that's exactly what we've seen. So China has been
recycling a substantial portion of its surpluses into these US equities,
which is pushed the entire index up. But back to
(18:25):
the competing angle. Now, if China now is moving ahead
in tech, which they've already sort of outpaced the US
with evs and batteries and lots of things like that,
will a lot of that Chinese money, instead of going
to the Nasdaq start going to their own indexes. So
we're seeing a massive disruption here all over the place.
So the question or the thing we need to ponder
is not only is AI itself changing, but the global
(18:48):
flow of capital is shifting as well. If you have
to understand these things if you want to have success
with your portfolio, because the world is changing rapidly. It's
always technology that changes the world, and in these quantum
wave cycles like we're in right now, it's where all
the change happens. Okay, so what is this next phase
for AI? Well, the losers, the ones that are getting
(19:08):
left behind are the AI monopolies, the open ais, the Googles, right,
those are the ones that are trying to kind of
hold their LLM behind a paywall. They're going to be
the losers. Chip stocks Nvidia AMD why because they were
pricing in unlimited demand. But what Deepseak showed us is
that they're able to train these AIM models for way
(19:29):
cheaper with way less GPUs than we thought. So instead
of the demand for chips being like this, we find
out it's probably more like this, and as technology continues
to accelerate, it might even be more like this. So
those are ones we want to watch out for. We
also want to watch out for all the hype driven narratives. Right,
So all these companies that are trying to ride this
hype train we're talking about, like AI SaaS companies think
(19:51):
about Salesforce launching their open AM model or their LM model.
So hype driven AI SaaS companies with no moat again, right,
there is no mot This is all going down. It's
going to be a base layer and they're all going
to be basically competing as commodities. So who will the
winners be? Where will the real money go? Where will
the real money be made? Well, AI high value applications,
(20:12):
narrow niche use cases, high value applications on top of
the open source llms. Let me give you an example.
In twenty twenty two, when open ai released, you had
all the open APIs you could use. You could do anything.
You can create images, you could to create text, right, code, whatever. Well,
when people are faced with I could do anything, they
don't know what to do. So there was an app
(20:34):
you might remember created called lensa AI and all it
did was just use the APIs that open i had produced.
But with LENDSAI, I could take a picture of myself
and it would give me back ten avatars. A very
narrow use case of what the whole thing could do.
But it got so popular so fast. I believe in
like ninety days it was worth like a billion dollars
because it was a very narrow use case. And that's
(20:55):
what we're talking about, high value applications on top of
the base layer, the open source lms. Specifically, I'm looking
for where bitcoin, AI, and open source decentralization, where all
those things converge so we have a new set of
building blocks. What happens when we use these three together,
where they converge and build things that we can't even
(21:17):
imagine today. And AI infrastructure provides that it doesn't really
high on close sourced models. Again, it's all moving to
open source. That's the big theme. Hopefully you're catching onto that.
I've been talking about what I call the decentralized revolution
for about five years now. Okay, now, how do we
play this? What does this mean to us? Well, one,
we have to understand the game is changing, right and
(21:39):
we understand through historical parallels exactly how that changes. Number Two,
we have to understand that passive investing is super dangerous
right now, because, as I said, if we have this
over concentration, if one or two of these companies that
are at risk right now. If they drop, the entire
index can drop. On top of that, we realize that
maybe China could steal some of that capital, take their
(21:59):
capital back even to their own markets. We also know
that most likely there's this next four or five year
cycle we're going to see a massive amount of monetary debasement,
and so that also manipulates what we see in the
Nasdaq or the indexes. So I think in order to survive,
we need to be much more selective in the companies,
specifically looking for the ones that are in that convergence.
Right in those three those are the ones that's going
(22:21):
to be where the biggest gains, and they're going to
come again from the convergence of bitcoin, AI and open
source where those three things work together. Individually, yeah sure great,
but together is where the magic made. Where that convergence is. Now,
if you want to know more about these cycles and
these three things converging again, come hang out with me
next week. It's all live, it's all free. There's a
(22:42):
link down below. I'll break out, like I said, thirty
forty charts. We'll dig through this in great detail. Tell
you where I'm focusing where my fund's focusing, and then
we'll discuss it. It's all open life, Juneing so much.
Come hang out with me, but that's what I got.
Let me know what you think about this. Hopefully you're
shifting your portfolio, and of course that's always give me
thumbs up if you like it. If you don't give
me the was down that it's okay. At least tell
me why. And that's what I got. All right, to
(23:03):
your success, I'm out,
Host
Mark Moss
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