Welcome back everyone to another episode of the meet kevin show today. Kevin meets kevin for the third time, and we've got a whole lot to talk about in this episode from obviously what's happening in ukraine with russia, we've got to talk about the potential uh inversion of the yield curve, leading to maybe a stagflationary recession, or are we Going in the other direction, we're going hyperinflation is demand actually going to stop we'll see and we've got to talk about crypto what's changing and how was it talking to the senate last week about crypto, let's find out welcome aboard kevin o'leary. Thank you. So much for being here, how do we start there's so much going on? I think we have to start with ukraine.

How do you handle this when you're investing you try to figure out likely outcomes and - and you know it's very difficult because obviously putin is unpredictable. Everybody understands that um i'm going to make a speculation about putin at this point because, usually, if you go back in other disputes over time, there's been a conflict between the soviet union, then russia and ukraine for a long time. It's you know: it's a non-nato buffer state and it's it's been well known, a long time that putin wanted to take control of it and exit essentially - and i think the assumption was, as he was, building up his troops that he would roll in there. Uh would not get a lot of resistance and then uh the world would just go on with its business and he would probably not attempt to cross into any nato states.

That's not what happened. Obviously, but there's one singular uh occurrence that i want you to think about in the context of likely outcomes the way i'm thinking about it for hundreds of years, the swiss have remained essentially that the swiss, even during the second world war war criminals, despots uh, you Know all kinds of different uh leaders from around the world that were dictators or who whomever strong men, you name it were able to keep their wealth under the streets of zurich and they had access to it liquid access to it always - and you know the swiss Were criticized for this quite a bit, particularly during conflicts like the second world war, et cetera, but they remained the swiss they never sequestered or closed those down or district restricted access to this capital, regardless who you were for the first time in modern times last week. They actually shut down the accounts of russian oligarchs. Now that has never happened before and the reason i want you to think a little bit about this is probably - and i'm speculating like anybody else, because the swiss aren't going to disclose this.

My guess is: there's probably about 2500 families that are oligarchs that were made wealthy through the transition of the communist regime to private, when they're granted for free, copper, mines and oil fields and gas fields and everything else. But there's also all the generals. The people that are in the military that have you know attained wealth through nefarious means they put it all in zurich. That's where it is because they knew with certainty that no matter what happened, but no matter what putin did they'd still have their family's wealth secured there in swiss francs.

Well, that's not what happened basically. Last week, the swiss shut it all down. They sequestered their shut down their their cash card shut down. Their credit cards gave them no access to it.

Now this is serious. I know they're taking away their yachts and everything else right, but that does not compare to what it's like to shut down. Our entire family's access to wealth - and that's what's occurring here, my guess, the outcome of this is putin - is going to have a hunting accident. That's what's going to happen because he has basically turned aside all of the support he has internally and those people don't want to.

After having all these years of wealth, lose it like that, or at least have never have access to it again. Some way somehow he'll probably drink radioactive tea, which she's been accused of doing to many other people that were his competitors or political enemies or he likes to go hunting. He probably may not come back. The boar may win this time, not putin, and i and i think that's the likely outcome um.

I i believe this is the beginning of the end of his uh political uh. You know career uh, it's over he's. He has isolated himself from everybody, and that was okay if it was just the rest of the world, but he's isolated himself from his own generals and the oligarchs and that they're not going to forgive him, for i think his time is short and that that's also Very interesting because you're not just talking about how the oligarchs are having their wealth, restricted but also military having their wealth restricted is. Is it possible that you could see a a larger coup in russia or is? Is that less likely than as you've mentioned? Maybe the more lindsey graham-esque, dare we say, uh disappearance of putin.

I i think either path ends up with him out of power, because within about 11 to 12 months, the full weight of the sanctions is going to put russia into a brutal recession, and people will not even have access to electronics, uh entertainment access to any other. Swift systems ach transfers of of capital, they have to use a chinese-based system, it's going to be really nasty in there and when you put that much suffering on a people in a very short period of time, they tend not to like it. And you don't have that base right now, he's actually quite popular in russia, but they haven't had any of the sanctions wait on them. Yet it's coming to a theater near you or more likely, no theater near you, there's they're, not even going to give you disney cartoons, so the rest of the world has basically shut them off, um, the the so that would be you know within 12 months.

I think uh riots in the streets etc when he starts shooting his own population. In addition to shooting the ukrainians, i think that gets nasty um, there's lots of precedence for this in in modern times, look at mussolini's. He ended up upside down dead in the town square. That's the kind of thing i think putin's on his way to or the shorter pathway is you just find some military leader that says? Well, i think this guy's um unstable he may be suffering from a disease.

We don't know about, he may have a long cove, but it's really hard to understand these irrational decisions and then the hunting accident scenario. But i'm pretty sure that um, mr putin is is not is not a long-term player and if he is he'll end up in jail in the head for war crimes, you got to remember all these generals they're also on their way to the hague. That's the thing about the international tribunal: when you become a war criminal, they don't care how long it takes. You end up at the end of your life in a cell and that's where a lot of these generals are going and this time they'll have no cash.

With them, so i think it's going to be a really brutal outcome, just brutal. Do you think it's possible that we're in this race of either zielinski dying or putin, potentially dying or one of them losing power? Somehow, personally, i believe, there's the morale of of ukrainians is being held together by zielinski and if something happened to him, he's already had three assassination attempts that that could be a win for russia and and what would happen in such a scenario. In your opinion, i actually think it's a loss for russia, because i think that just hardens the resolve the ukrainian people, those that remain to fight, there's a tremendous amount of munitions coming into the country now in the form of high-tech stingers anti-tank missiles, uh ground ordnance. Maybe aircraft - we don't know that yet, but what will be occurring if they do assassinate him that there'll be a another leader put in place.

Obviously nato is communicating with him daily. You can see that it's one of the remarkable things about the social media tracking this and the resolve will be hardened and then all of a sudden young western soldiers will be shot in the streets. Their tanks blown up their trucks blown up one at a time. It'll be a really nasty, grueling guerrilla warfare and generally, if you look over time, the motivation of people that want to be set that want to be free is significantly stronger than than subscripted uh russian soldiers that are in their 20s, and this has been well documented By many networks, a lot of them are were sent in there under false pretenses and and writing back to their parents.

Saying i don't know what i'm doing here, but i'm killing babies and i'm not okay with it, and so you have a lot of that to come and i think again it leads to the fact that the more of these atrocities occur and the more they come Out to the rest of the free world on a daily basis, it's just setting up for the liability of of criminal war crimes and the number of people that are going to be involved in that, if you're, a general right now reporting to putin you're, not feeling Too good you don't have any money and you're on your way to a jail cell. Eventually, wow wow now youtube twitter, facebook they've banned russian news outlets like russia today uh from from broadcasting outside of russia. What's your take on elon musk, saying i'm not going to censor even russia, even russia, today no censorship on starlink. Is that a pr move or does he have a point? He has a point.

I mean communicating the truth, which eventually gets out. I mean he'll provide and over time these startling connections will find their way into russia. Russia actually is quite a high-tech community of coders and software developers that are very sophisticated. That's one of the reasons they have cyber war as one of their weapons, because they're very good at this.

That truth will eventually make it into um into russia one way or the other uh. You know through downloads. So the rest of the world is seeing all this russians are going to eventually see it, but in the meantime, they're going to start to be deprived of all the things that they've enjoyed for the last 10 years as the right. The west just cuts them off.

To all of these supplies of financial services and goods and services, so i i they're going to start to figure out that they're getting isolated, not going to be very happy and again puts more pressure on putin. It's really hard to understand the upside end game for putin, which is why many people, including me speculate, he's ill yeah yeah. That makes sense. Uh do you.

I mean you had mentioned it earlier that this is uh. That ukraine is, is almost uh designed as a buffer zone, potentially in putin's mind kind of like uh. In my opinion, maybe in a weird way. North korea is between south korea and china for the united states, the sort of buffer zone here right uh.

What what's your take on a potential compromise where maybe they take the don bus? Let's say and the rest of ukraine goes back to being ukraine? Is that possible putin's calling for a full demo militarization? It's not going to happen every day. That possibility is lessened because of the number of civilians being basically murdered. It's hard to see a scenario where the rest of the world negotiates a peaceful outcome with putin in in leadership. I think every single day his value if he was a stock.

I'd short him. Okay got it now, speaking of a shorting, elon musk mentions that he believes their a recession is likely by 2023 uh. He had tweeted this in around november december of last year, a little bit of a warning, uh and, and maybe heads up for for the market drama that we've seen. We had one bottom on jan 24th, another bottom on feb 24th for let's say the nasdaq 100..

What's going on in the markets, is the market starting to price in a recession, especially with that flattening yield curve? It's a very interesting dynamic. I'm not sure i can agree with them on timing of the recession, because, right now the fed is going to be very, very timid. There was discussion on this first rate hike that it was going to be 50 basis points. We now know a certainty.

It's going to be 25 and then i think they're going to wait and see what happens here, because you know one of the reasons you raise rates is you're trying to slow down demand. But when you have hyper, not hyperinflation but very strong inflation and energy and food, you are starting to reduce demand because people are paying 120 bucks to fill up their pickup trucks in america. That's unheard of for decades, and so that will put some kind of damper on it and may, on the other hand, slow down the fed's rate increases the idea that they do six in a year. I don't think so.

I also don't think that you know it's going to be very material. Maybe they raise rates 150 basis points and historical rates. That's not that much, and yet the fundamental economy is quite strong right now, so usually, when you have rapid increases in fed rate hikes, you do end up in a recession when you have very high sustained oil prices. You end up in a recession, but i think because we simply don't know the outcome of the reason that the oil prices are high and that's ukraine.

We don't know yet what that's going to look like and i think the market's going to take a wait-and-see attitude. There's going to be volatility obviously, and there is you see it every day, but i think at the end of the day, what really matters is earnings and i think earnings will be up eight percent this year, uh additional one percent, maybe in income through dividends. That's a nine percent return, which should be a normal year in the markets, a good a good year, and so i i'm i'm a little more um optimistic than uh musk predictions. But that's what the market is.

It's people making their own decisions every day in terms of where they think i'm still very constructive, constructive on equities i've bought more recently and i'm trying to average down and we'll just see what happens. Oh you. Last time we spoke, you were about 30 cash and we know that you're big on diversifying. I believe.

Last time we spoke, you were also uh. You have about 600 positions, but the reason you were 30 cash was because you you drew down some of your commercial real estate. Uh. Have any of your broader themes changed since then? Are you taking that 30? Allocating a little bit more to tech since we've seen this valuation compression any changes, yeah you're right.

I have started to nibble on tech again because a lot of the stocks have been crushed, yet their growth rates haven't changed, and so you can look at a name like zoom, which everybody thought was a you know: stay at home or work from home. It's really a work from anywhere platform and i use it more every day in the enterprise version i bought more licenses from them and the same with most of the tech companies and so going back into. I i use um, oh gig, which is an index. I had a hand in involved in through oh shares, but that's the internet giants and it's been a it's been volatile, of course, but the underlying growth for these companies - 20, 30, 40 50 a year has not changed.

It's just the pes that we're willing to pay have gone down, but as long as they're growing, i still want to own them, and that's it's one of the indexes i use and the same. For you know, i've moved into more quality names um in terms of what i own, i certainly uh. You know use ousa as my which is a subset of the s, p. 500.

I don't want to own names where the balance sheets upside down airlines, for example, have just been torn to pieces on their balance sheets. United airlines had 7 billion of debt pre-pandemic. Now it's over 20. don't own that i've used that as an example forever, but there's lots of good companies in the s p, that are pricing power in inflationary times and i own those and it's an index called ousa.

So you know i'm just deploying capital taking advantage of volatility and staying long um, trying to put that 30 cash to work, because right now i'm only getting 22 basis points on of interest and inflation's north of six percent. So i'm losing you know over six percent worth of buying power in 12 months. That's a horrible situation now kathy wood also is is obviously increasing. Her uh allocation to tech - what's your take with kathy, though did? Should she have taken a break from the market? Maybe sold some of these tech names and waited for some kind of move here, or is she right to stay with the strategy of innovation? Tech is on sale, keep doubling down yeah.

I think you know i'm i'm a fan of hers in the sense of the work she does and the opinions she has and positions she takes, but i can't own any of her funds because they breached the mandate that i live under diversification, no more than 20. In any one sector - and this is where she breaches it for me - no more than five percent in any one position - she takes huge bets, um and and uh way over five percent weightings in some of these funds. I can't do that and so that that to me just you know when, when things go south uh, which has happened to her, you really get killed and so she's seen that happen, um. No, you can't ever take away her tesla calls.

She got that one right, but putting in over five percent weightings in um in any one position. It just breaches every rule, i know of diversification, so i just can't touch these phones. Now you had mentioned move away. Well, you had mentioned move into quality, so implying move away from lower quality uh, and then you touched on american airlines so upside in balance sheets.

Are you also moving away from small caps or companies, maybe with decent balance sheets, but who don't have earnings yet like spanx? Well, i don't do specs, i mean that's, that's complicated. I don't like the time pressure of the capital being deployed it it. You get perverse incentives, you know these. What happens is the the spax sponsors will buy any piece of garbage just to make sure that they don't have to give all the money back? It gets redeemed anyways and a lot of garbage is being bought.

So i don't like that. I prefer uh reverse takeover strategies for taking small cap companies public and using the public markets to grow them uh. There are some areas that i'm very interested in centralized decentralized finance. I've recently made investments in uh, wonderful, canada, a canadian listed company where the regulator allows it to be listed.

It just bought an asset called bit buy, which was the first license ever granted to a dealer broker attached to a crypto exchange again a canadian asset, because the regulator allowed it there and there's other countries that are more advanced than the us. So i have to invest in those countries - united arab emirates, switzerland, um, france, germany, england, they have more liberal policies on crypto and canada is one of the most liberal allowing for these new crypto exchanges. So i invest there also immutable holdings uh, a new company that you'll hear about soon. They own nft.com and various of the nft space.

Uh, definitely um. You know what i'm doing in uh, we can talk about bitcoin mining. I've got some projects in northern norway partnership with sovereign funds that i'm building out um. Those are because i'm very concerned about esg and start engine where i'm a shareholder is, is really growing.

That is providing a you know: equity, crowdfunding now and um. The the the the feds of, or at least the regulators, raised the rules instead of just a limit of a million seventy thousand. We can now raise up to five million at a time for small startup companies, and i've used that for a lot of my uh. My uh shark tank portfolio, ah crowdfunding, has has been bumped, then uh.

What just that must have just been in the last year or two huh yeah, and it's really really taken off. I mean start engine has over. It's got hundreds of thousand investors on this platform. Now and hundreds of deals at any one time, so you can build a whole portfolio there, wow uh now crypto.

Is this a 20 sector for you or do you lump this in with tech? No, i did end up um recently, at 20 i have uh taken some big positions. I've invested in various, you know the thing to understand about crypto and i try and when i talk to. In fact, when i spoke to the senate last week, i spoke in this in this fashion, they're very fortunate to be invited there to a bipartisan uh committee to talk about uh policy on crypto and here's. Here's what i said - and i believe this bitcoin is not a coin.

It's software ethereum is not a blockchain, it's software. These are software projects written by coders and they develop these technologies for enhancing economic value, and you have to make your own decision on which ones you want to invest in i'm very fortunate. I get to see most of these projects very early on. I'm a well-known investor in crypto i get invited into these rounds and most of the time i participate, and so i look at it that way.

But again i am applying the rule and i really believe this and i've said it multiple times over the next decade. Crypto and blockchain and these technologies will end up being the 12th sector of the s p, and so for me in in my rules of diversification, um, i'm going to own up to 20 in crypto and in fact i do now and i have no more than 5 weighting in any blockchain like ethereum or bitcoin, or polygon, or hbar or helium, some of the ones i own avalanche, serum. All of these different projects, which you know it's, it's very fortunate that i'm able to meet these developers and what's fantastic about them. These are the hottest hands over keyboards around the world.

I mean these are the smartest developers that are coming out of computer engineering and you know working on these projects because they want to and they're young in their 20s, in some cases, building remarkably valuable technologies. And so you have to make a bet. You have to decide how you're going to invest and that's how i've decided to do it. I'm very very diversified, but at the end of the day this to me and it's a personal opinion - will be the 12th sector of the s p and i certainly told the senate that now, with with 11 sectors already and this being the 12th, then you're.

Building that in already obviously, you can't do 20 in all of them. So what are you underweight in? Is it consumer discretionaries? Where are you underweight? You know there are some sectors right now that um i've been very fortunate to own, but i'm starting to you, know, underweight a little bit. Esg concerns are starting to starve off uh oil and gas and until we get policy change there, i'm quite concerned the fact that rates haven't gone up as fast. I've underweighted financial banks, money center banks, i'm not out of it, but they're, certainly not a 20 waiting and they've disappointed of late in terms of stock performance, for obvious reasons, um and - and you know the the the sectors that i have full weighting in healthcare 20.

I'm very very optimistic: what happens there? It's you know, there's been a lot of value created there and biotech's getting beaten up, so i've bought some more of those as well. Modern is a big holding of mine and recently averaged down um, and so a lot of these opportunities have been presented because of volatility. But you got to think ahead that the sectors that you want to um you want to overweight, or at least have 20 weightings in are ones that are going to be absolutely necessary in the next three years and healthcare is definitely one of those infrastructure. Uh very interesting because you know you've got a trillion dollar bill.

It's going to be spent no question about that, and some of these areas of the technology that have been really beaten up, that i've decided to bring their weighting back up to 20. And you know some of these stocks went down uh, 50 and so they're still growing at 50 in some cases. So it's it's uh. It's a really remarkable time in the market and you've got to be nimble yeah.

Absolutely. If would you care to disclose? Are you 20 cash now or where would you put it i'm about eighteen percent cash um and i've and i've started to uh buy in into real estate again, but not commercial, real estate residential real estate? Um i've been very active in the uh miami market. I've been watching this market now for six years. I've continued to invest in it.

Residential has been very strong. Rents have been very strong, the condominium market, the multi-family all very strong and i'm putting more dollars to work there um. You know i live here, so i'm very into the concept of of local um, but i'm also very aware of which pockets are advancing faster than others, and in this city uh. We have a really progressive mayor in the sense that is making it very easy for technology companies to come here.

Taxes are very attractive. Most of the investment i'm making in real estate are in texas and in florida and uh removing uh assets out of um. Well, i won't call them if well, they are inefficient states, massachusetts and new york and new jersey, it's just brutal, to see how inefficiently they're operated and how high their taxes are. There's a competition between states that can do a good job and others that don't do as well.

You just turn off my phone here. It's really been it you're, starting to see um you're starting to see the have, and the have-nots appear in terms of where the momentum of growth is particularly in all sectors but real estate for all of the people. Moving here from new york and other states where taxes have just gotten too high um it, it really boils my investment thesis for real estate in in texas and and florida yeah yeah. Absolutely i mean we don't even have to start on the california transition.

Oh look. I love to visit california, but i wouldn't invest a dime there. That place is a disaster. I mean my goodness.

You can't say enough bad stuff about how they operate that place, and you know i do. I shoot shark tank in la and i love it, but i would never live there. I would never invest there. I wouldn't put a dime there and i have moved lots of companies out of there wow wow.

That's incredible. Uh now rates, obviously trending up clearly you're buying real estate, and you did mention earlier that you think there's going to be a limit to how much the fed's going to be able to raise rates. Is this? Why maybe you're not so worried, potentially about mortgage rates hitting, say five five and a half percent uh and then maybe dragging real estate prices down a little bit because you don't believe the fed's actually gon na be able to make it past uh a hundred basis Points or 1.5 well, even even if they do raise it 200 basis points it would put mortgages still at the low end of historical rates long term, and you know, generally speaking, they would only do that if the economic activity continued to increase to demand they're fighting Inflation with these rate hikes, but inflation right now be some portion of it - may be temporary, not all of it, but certainly energy prices. The reason you don't see a lot of oil companies saying they're going to change their capex percentage is they've.

Seen this movie before you get a big spike in oil because of a geopolitical event like the one we're having now and then all of a sudden, a lot of it comes on the market and prices collapse again so they've been in the penalty box oil companies For decades as they lost so much money over extending themselves on development and now they're, more balanced and their mandates are more about return of capital to shareholders, and so you know that's one of the reasons. Buffett made another big investment um recently in oil, and i think he believes that it's going to be run with more adult supervision and give a decent return, but at the same time it's volatile. And so, at the end of the day, i like business models that have a little less volatility, where i'm not really betting on the price of a commodity, and you know that's one of the issues you've got with energy got it, and now you had mentioned the Condo market uh south florida, are you doing any single families in texas? Not yet i'm looking at two projects, there um very interested there's a lot of good developers there um here in south beach, a lot of the buildings were built in the early 2000s, and so the model here is uh, it's very, very desirable. Now to be.

You know on the beach on the 12 mile beach and these condo prices have, you know, been increasing on rentals up to 40 percent a year, and so there is development work to be done. You have to go in buy units, basically gut them to the studs right down to the cement, rebuild them out and put them on the rental markets, and there are rules et cetera, but the demand is insatiable. It's just insatiable, and so um - and i you know, i've seen this movie before in other markets and it's there should be price sensitivity, uh, based on the cost of capital. We haven't seen that yet um, because uh miami is turning into an international city uh for germans and french americans, cubans, south americans and when i look at the rental pools on these units, which i do a fair amount of studying of.

I can see these trends and how they occur. What about keystone pipeline should biden have kept that going? It would have been the fourth phase of it. We've got the other three. Do we really need it? Any changes expected yeah.

I think it's clear now that the market thinks that's. That was a mistake um. You know when biden took his mandate and and went into the direction of green, which was you know, that was his mandate from his voter base. Uh we hadn't gone through the risks of energy security which we've gone through now, and so we had amnesia to that and all of a sudden, it's been brought to the fore through what's happening in the ukraine most americans today.

My bet is that they would vote for some kind of more realistic phasing out of hydrocarbons to assure energy security over the next 20 years, while we take the profits from that and deploy it to finding other cleaner ways of powering our economy um, i i might Bet again, every incumbent president loses seats at the midterms, but what you're going to see in this midterm election is going to be brutal. Um i'm predicting and even the senate may go the other way. So it's it's! It's it's really ugly out there. You know you, you don't want to get into politics in a discussion like this, you want to understand policy and, i think um.

My guess is that uh, the midterms are going to favor a more uh energy security mandate. A lot of these um senators and congressmen who have gone too far out on a limb on green mandates, are going to feel it in their local jurisdictions. It won't be pretty um, so that's why i think you know buildback better as a bill. Uh will never happen.

My assumption as an investor - and i don't want to speak about the pros and cons of this. It's just that washington now going forward is in total gridlock and will be after the midterms as well. There won't be any significant policy coming out of there to the general election, which is good for investors. We've spent a lot of money.

We printed three trillion dollars plus. I think the market thinks that's enough. It's just that all of the things that biden wanted to do. He won't be able to yeah yeah, so potentially, a double flip is what you're thinking of both house and senate to potentially report.

Well, i i'm investing that way, and so i'm thinking that is probably uh. What's going to happen, um, i you know, i i don't want to talk about the merits of of you know that other than i have to make decisions and i deploy capital um. You know i i see what's happening, i'm you know i it's ugly, it's ugly for the democrats and if they don't figure out a way to get energy prices down and food down it, voters will take it out on them in about 10 months. Yeah.

What's been your take on the buy now pay later sector so, for example, a firm? They think that they can become the next visa or mx, and we haven't seen anybody get into that top four space of the top four credit card processors uh. You know with discover and mastercard they think they can squeeze in by using buy now pay later and these contracts with merchants. Obviously, there's klarna after pay there's, so many other companies square bought one. What's your take is this? Is this just a gimmick? No, i i think, there's merit in these ideas, but you look at most of these business models is that the customer acquisition cost is significantly higher than the lifetime value of the customer, and so i don't know how many of them are going to survive.

But there's lots of these ideas out there, but the ability to raise capital to continue acquiring customers is the only metric you should care about, and so a lot of these new iterations of existing businesses like robinhood or sofi. I think you know robin hood stocks down something like 80 percent and i'm not saying it's following the model you're discussing, but it gives you an idea that new new entrants can can ride away for a while. But in the end you have to start making money. That's that's and i think growth itself without profitability is not sustainable, and so it doesn't mean that there won't be value created in a robin hood.

I like what they've done in democratizing investing but um. There comes a time when you have to figure out how to acquire a customer. So all of these ideas are interesting in the sense that they explore new ways of doing old things, but that doesn't mean the incumbents aren't going to keep hold of the markets. For a very long time - and i think you're going to see some innovation in the visas in the mastercards, certainly uh, there's an innovation coming in a mastercard in a product called built bilt, i'm an investor in that project, they're, providing credit cards to millennials and gen Zers that pay their rent on their credit card to offset the downside of credit ratings.

So all of a sudden when your biggest expense each month is your rent and you start paying it. Each month successfully. Your credit rate goes through the roof, and so built was the car that did that and um. It's growing like a weed, but it's basically a branded mastercard infrastructure product and so there's a new innovation on top of an existing platform, which is what built is, and i think that's very strategic in that sense now.

Do you think that uh i mean you look at visa and mastercard? I think they bring like 40 to the bottom line and they're growing. You know five to 12 percent a year and so they're bringing so much profitability to the bottom line. Do you think that essentially just makes it impossible for somebody else to compete like why bother or do you think these larger companies will just swallow up and maybe acquire so far say say their price falls another 50 and they just get gobbled up yeah. I think that's more likely, i i don't.

I think that you know it's jury's still out on so far, they've got to continue providing all kinds of products and services, but where is the profitability in those products and services we'll see? But you know it's recently got its bank status, which is great and maybe they'll become a significant competitor or they'll be acquired by somebody else. It's hard to know, but at least they've got scale. At least they've got a lot of customers which you can do a lot of things with. If you can figure out how to service them profitably and a lot of these innovations will be experimented with um.

I i'm also, but you know i own all the credit card companies, because the business model is very successful and they're a big part of my portfolio. Many of them are strong in terms of redistributing capital, and so and i watch these markets like anybody else. I love innovation, but at the end of the day, customer acquisition. The reason that 70 to 80 percent of startups in america go bankrupt after 36 months is that they're never able to solve for customer acquisition.

The lifetime value is just not you know, is a lot less than the cost of acquiring the customer and that's a fancy way of saying they go bankrupt advertising and they do, and so you have to keep looking at that as the metric that you measure. But what i'm hearing is short ggpi, polestar and lucid and all in on tesla yeah. I don't think that's right. I think the market's going to give a lot of flexibility, but you've got to realize something for all of the hype about ev the only company.

That's mass producing is tesla, so you may not like the price point, but if you want exposure to that industry, that's the stock. You know for ge all the talk and everything, but they basically made less than 100 units. I mean it's irrelevant. Ford has a lot of opportunity in the f-150 lightning, but they haven't delivered on that yet uh.

Meanwhile, tesla is miles ahead of them on so many different advances in technology. It's hard not to when you want to wait that sector not put the majority of it into tesla and then just hold your nose at the volatility i mean, i'm i'm not interested in buying cars that haven't been road tested by you know some time in the Market and the only company that has that right now is tesla nice uh, so you mentioned you're pulling away from financials. We talked a little bit about like the sofa and the smaller ones. Does that also include square and paypal? Are you kind of shying away from those i do own some square and some paypal um they're, the largest in their space? I i think they have the most opportunity in terms of scale, and so i keep them weighted, but they're they're not full weightings.

The full weighting is five percent. These are sort of one and a half percent position. So i'm i'm not. That means i'm not 100 committed, but i am exposed because they provide important services um.

It's a wait and see for me to take them up to a full waiting, got it uh, palantir, a lot of social media. Talk about this stock uh kathy wood just sold her entire position essentially and palantir. What's your take on this one, is it too, too undeveloped uh any thoughts on this? No, i do i've remained an owner of palantir um. It provides it's what that company does.

Very few companies can provide the same service, and so when you, when you start to understand how important it is to be able to manage data and do it effectively and do it cost, you know in a way that's cost beneficial and the analysis can be done. I mean you think about any company wants to know what their customers buy when they use the product. What price point they do it their size and taste preferences if it happens to be consumer, good or service and then, of course, to be able to speculate using ai? All of these are within the purvey of helen tier, and i don't know of another company. Does it quite the same way so for me again, it's a one and a half percent waiting um.

I'm not you know i'm not 100 there yet, but it's volatile and controversial and of course, kathy tends to do more concentrated positions. That's not what i do in maintaining diversification, and you know um. The remarkable thing is: you can take both approaches and get to the same place. I'm pretty happy with my performance and um.

I don't need to take oversized bets on anything yeah good point, uh. What about i wan na i wan na pull us now back to the that r word that recession word for a moment. Uh, i just pulled it up. The 10-2 right now is at a 22 basis, point spread.

We last had the inversion in 19.. If we invert again here is this just because of uncertainty because of war or what would you put the odds of a recession at i? I think the odds of a recession are less than 50 50.. I you know, i'm more, maybe it's six, maybe 70 30 uh. You know i get it, but i mean i just don't know the outcome or how long it's going to take to get rid of putin.

So that's one variable, uh inverted uh. Yield curve has to stay inverted for a lengthy period of time for to really be the canary in the coal mine signal just because it inverts can be because of again geopolitical or some other strain on the system. But if you really want to use it as a measure for recession, you've got to have multiple quarters of inversion and then you go back and so we're not there. Yet um, and you know we just don't know how fast i think the fed will be muted.

I said that earlier and i think it's much a wait and see the outcome of putin's next move in terms of of just how that would affect and right now, sadly, you know ukraine is less than one percent of gdp. It's not a major factor with the exception of commodities like wheat, which are spiking, um and we'll see what happens on the russian oil embargo. My guess is that goes ahead. I i just feel sorry for both the ukrainian people and i feel sorry for the russian people.

Their lives are going to change for the worse in a really big way. Now, if uh there's some research out that, if oil hits 150 per barrel, will easily see an additional 2 to cpi now bloomberg's projecting 7.9 to 8 for the next print, that means we could see double-digit cpi within the next couple months. What's your take on the potential of the fed, pull vulcaring us and shocking us with larger hikes, it sounds like, even if we get large prints, you're leaning towards no, but but i really want to hammer on that if we get consistently high large prints at what Point do they you turn on us. Well, you said it consistently.

In other words, a big print, a single data set, doesn't doesn't change anything because you get a lot of variance these days, and so, but if you're going to have, you know very, very strong prints. I'd say four in a row, then you might get some acceleration on rates. I don't think shock and awe is part of uh. The plan of the fed here, there's just too much of that happening in the real world.

You don't need that in terms of rates, and so i you know, i'm i'm more constructive on fed. I think fed - will be air on the side of slowing rate hikes, as opposed to accelerating them waiting to see the effect of long-term oil prices over 100 etc. But um you know it's it's it's really. You know the news is volatile.

The vix is volatile, but at the end of the day, um i'm very constructive on on the economy uh. I i think vladimir putin has set his own end game. It's not a good one. I said that earlier and we'll move on to more rational leadership in russia.

Um at some point. I don't know how fast that will take, but you know before he invaded, i would have said he could could remain um. You know if his goal was to keep ukraine out of out of nato. Just you know, threatening the invasion was all he needed to do, but something else clicked in his head and that's probably disease.

In my view, yikes yikes. Do you think uh sort of last question here that i want to wrap up with you? Do you think this emboldens china, with with taiwan at all, not immediately, there's a leadership rally over the next year? I think china is all of a sudden, not the bad guy in the news. That's now russia, they're, probably enjoying a respite to that which is interesting for them and um. There's still lots of china policy to deal with uh.

China could be in a strange bedfellow sense, an ally to united states. I don't know how long they're gon na watch this um this mass murder going on in ukraine, but it must be getting uncomfortable for them to be endorsing, essentially a madman and um and on the world stage where they really want to take a position. As a a major economic force, it's an uncomfortable place to be, and - and they would have preferred i'm sure not to see this invasion uh, but now they have to live with it, and they've got to be very, very careful in how they communicate. You know if they come out and say we endorse this, that's a very bad place for them.

They wouldn't want the same levels of sanctions that uh russia is getting right now or any move towards sanctions. They already got terrorists. I i think it's playing itself out in a lot of different places and may, in the long run, start to support uh digital currencies and and uh digital payment systems to be more efficient. That's what the outcome of this whole ukrainian thing may end up.

Being oh, and that reminds me, uh uh miners, uh esg changes are you making big shifts on the miners yeah? I am um. This is relatively new information, but um. You know i do a lot of work in indexing and most institute for all of the excitement about bitcoin, no institutions own it no sovereign zone, that they don't do it, because it's not a regulated asset. So the reason there's so much volatility in bitcoin is that there's no bid from an institution to hold a one or three percent waiting in it.

It's just owned by high net worth individuals, it's a respectable asset. It's still under a trillion in value. You know versus almost 12 trillion in gold, so it's not it's. It hasn't proven to be.

You know, repository for for for value yet, but there's a new problem emerging and it's coming fast, um many uh jurisdictions. Many geographies are looking at bitcoin mining and the way that, in the way that an institution or sovereign up till recently could get exposure to bitcoin volatility, whether they thought it was going up or down, was to simply buy the public shares of the bitcoin miners. Because, over the last few years, one of the strategies of the bitcoin miners was not to sell their awarded coin um. They would keep it on the balance sheet so that basically their asset base would grow and grow in the balance sheet and the shareholder would own those coins, but not directly through the shares of the company.

So if you're, a sovereign, you could buy the shares of hud-8 or you could buy marathon or riot or hive and and what these companies did, because they didn't really have sources of clean energy. That was a concern of esg, is they buy carbon, offset carbon credits and for a while that worked? Unfortunately, that's not going to work because, remarkably out of the private sector, it started with blackrock. A lot of institutions are starting to insist on audits of this strategy to prove that you're really offsetting your carbon and everybody knows these carbon offsets are are so um such a such a wide margin of error and there's there's impossible to audit and it's impossible to Know where your source of energy really came from on a percentage basis, so they're going to fail those audits and what i've done and and i'm you know, i don't know how early i am in this, but i'm sure there's going to be others following me: i've Sold all my hive, i've sold all my marathon, i've sold all of my uh riot um, wow and all of those stocks. They are essentially dirty miners and there's no way that they can prove they're not and what i've done is taken that capital and invested in the new mining model, the new mining model and there's an example of it in northern norway.

The largest shareholder of that one is a sovereign. A lot of people don't realize that sovereign wealth funds decades ago were very, very forward-thinking and ended up taking very large positions in the semiconductor industry. So they are some of the largest shareholders of samsung and taiwan. Semi and others, and they have access to chips in a way that no one else does and so in in norway.

Uh, when i was approached by a group that was doing a private investment, they have formed a partnership with the norwegian government in a small northern village and they're building out a massive facility. Bitcoin mining 100 of the energy is from hydroelectric at a very low cost. Currently under two cents, and they could lock it in at under four and so there's no uh risk of a carbon audit, because there's no carbon footprint there. In addition, what they've done is built a hydroponics facility that is powered by the heat of the stacks and they have a giant tomato producing facility beside a canning operation, to make canned tomatoes for that northern community and the stakeholders, or many of them are the villagers.

There's 3 000 people in the village, and so the problem was, if you talk about you, know, building a new mining facility in in america right now, your biggest constraint is you can't get any equipment? You can't get any chips. That was not the case in this facility. They got their machines in two weeks because their largest shareholder was a sovereign fund. I'm an investor in that, in addition, something else to know that they will be making an announcement of shortly.

They have found a way through software to strip the network award. So when you awarded a bitcoin, even though you've mined it with hydro you're, still awarded a network reward that you don't know where it came from, it probably came from a chinese operator, or maybe one that used coal burning. They can strip that out of the actual coin and they call it the slag. They separate the slag from the awarded coin and now the sovereign and the institutions that own that norwegian mine have no risk of a carbon audit, and so now they can own completely clean coin.

So in an industry where you can have miners that are clean, esg, compliant and miners that are dirty, the capital is going to go to the one where there's no risk of audit and so the what's going to happen to the pe values of these dirty miners. I listed them earlier, in my view. It's a personal opinion. Their ps are going to get compressed, their access to capital is going to go down.

If you own a company that is using carbon credits to offset. You should seriously consider this problem. I i would exit stage left which i've got yeah yeah and then just to be clear for for anyone, who's not familiar essentially, if you're a dirty operator and you're using natural gas to to fuel your operation, essentially but you're, buying carbon credits to say: hey we're Carbon neutral you're still a dirty company, you're filthy, because there's no way you can prove that your carbon offsets offset what you've done. Uh with the you know, either coal or net gas, the only sources of energy that are going to be uh that are going to pass right now that actually functionally work are hydrated, nuclear, hydro and nuclear power.

Those are the only two, so i i'm not investing in anything in bitcoin mining that isn't sourced from there. That means that states like montana, potentially upstate new york, are tremendous opportunities for large infrastructure build-outs and i have when i went to the senate last week. I made sure that i stopped in the senator from montana to make myself an acquaintance, because i plan on investing a lot of money in his state. Wow wow.

That's big! Okay! Well, thank you for that. So uh! Well, i've! I've taken you uh! I've had you here longer than you promised to stay, so thank you for that uh any last things that you want to say. I have linked down below. Of course, your youtube channel twitter, uh kevin o'leary, tv everybody go, follow kevin he's, got a youtube channel as well anything else you'd like to leave off on i'm just very optimistic about.

You know the next two to three years. I know it's a tough time to be optimistic, but i do get to see what my companies are doing that are private over 30 of them right now and we're having the best quarter we've ever had, and so you know sales are strong. Uh, there's a bounce back out of the pandemic. I know we've got issues but there's nothing more.

You know inspiring than watching the american entrepreneur pivot the way they have through this pandemic to the new digital 2.0 economy. I see it every day and i'm very excited about the work i'm doing in indexing with sovereign wealth funds around this bitcoin mining um very excited about these companies. I'll do a shout out to the investments i've made recently. Since i last talked to you um.

You know definitely excited about what's going on with wonderfuy and decentralized finance and centralized finance, since they bought that canadian exchange bit by uh wonderful things coming out of jordan, freight and immunible holdings watch for announcements there that he keeps talking about if you're, watching his social Media feed, i think it's very exciting in the nft market and, of course, this project in norway. This new model called bit zero. I'm re i'll be talking a lot about that, because i'm invested recently a lot more money in it. I think it's the new way.

We're going to mine bitcoin all around the world, wow wow, well kevin o'leary! Thank you! So very much uh kevin stand by for one moment, uh if you as a viewer, enjoyed this video. Consider sharing the video. Thank you so very much for being here and we'll see you in the next one. Hopefully, we'll have kevin o'leary back for a fourth all right, thanks so much goodbye.