Market Report: The AI Bet, Wealth Taxes, and Jay-Z's Superbowl

Hi, it's Floma Faith, my podcast Mad Sad and Bad is back for season 4. I'm sitting down with some amazing people, including the Tisha Wright. When I'm really fearful of something, I just run towards it. Judy Love. I'm Sullivan. Out of choice. Yeah, that could get it any day. Grace Campbell, here we have Anita, who's a dog psychic. How eddy. Stop barking when I'm. She said you're too noisy. I'm plenty more. Mad Sad and Bad, with me. Floma Faith. Listen now wherever you get your podcast. This is Financial Tea. What is up, Sippers? Happy to say welcome to the marker report, which is where I give you the three stories you need to know to stay rich this week. But before we jump in, I have to add that I, like everyone else, of course, saw the Elizabeth Holmes documentary this weekend. The numbers are insane. It made $15 million its first weekend and $20 million this past weekend, which is honestly bizarre. Documentary is almost never hit consecutive eight-figure weekends. And the production budget was $7 million, so Nathan Fielder and A24, which is the production studio that made it, are absolutely caking. And one part of me was wondering what Nathan Fielder buys with his riches. Like, he seems so low-key, so sort of arcterics. I mean, I could maybe see him with a cool watch and a John Mayer sort of way, but I feel like he's more investing his earnings into his next project vibes. I mean, a true artist. But anyways, I also would think you about the doc from a financial perspective, obviously. I mean, my whole TikTok is filled with people's theories on the doc, which is like a really fun rabbit a little go down. But I would think you got from a money perspective. And a central part of the movie is about Elizabeth's partner, Billy, wanting a cut of the movie's profits, which he later forfeits. And I know, I know, for, you know, documentary ethical reasons, such as shouldn't get paid for documentaries. And this is the right thing to do. But by the way, it's a little crazy. This whole movie is built on Elizabeth Holmes' image and name, and she doesn't even get any piece of the pie. Like, I know it's not standard. And I know that she owes $452 million in restitution. So whatever she did make would just go right to that and be wiped out. But I don't know, I can't stop thinking about the irony of like a little Miss Holmes just building a billion dollar empire by selling this illusion to wealthy investors who are mostly old men, by the way, then losing everything. And now this indie-ass studio A24 and an old comedian are making tens of millions of dollars selling that same illusion right back to us. And I know she's a fraudster. And I feel bad for everyone that she defrauded. And I'm not on her side. I didn't like turn from the movie. But I just feel bad that everyone in the ecosystem gets this massive payday off of her name. Like executives, directors, distributors. But then the person who built the myth is just sitting in Brian, Texas in a federal prison cell, like watching the cultural stock price of Elizabeth Holmes hit this all-time high completely for free. Oh, I also made a record this weekend. Yes, it did take six hours. I did find the recipe on Instagram and you guys. It was not good. Like, my boyfriend kindly eat it. But it fully calls me $75 and groceries and took a million hours. And the juice was just not the squeeze. So I just wanted to let this be the warning to everyone. Do not comment recipe on a person's post even if it looks amazing. They are going to DM you the link to their sub-sac. You're going to spend way too much on ingredients. And you're going to take a tire after new making it. And then you're just going to be disappointed. So I don't know. I feel like this was sort of the culinary equivalent of like buying a random meme coin because a 22-year-old on TikTok said that it was going to the moon. Like, I was like, oh, is this gross sauce sort of a metaphor for how we consume and vice-on-line? Like, we're just living in this attention economy, designed to monetize your impulse whether, you know, it's a lifestyle crater, huddling a ragu recipe that they have barely tested, but then made the video just look really great. So you want to make it to or a fined influencer selling you a $400 course on stop buying or even Elizabeth Holmes pitching a blood testing miracle in a black turtleneck. I feel like the playbook is always identical where it's like the packaging is immaculate, the production value, basically cinematic. And then the underlying asset has no actual fundamentals, which brings me to why you need to be fiercely protective of where you get your advice and why I'm so glad that you were listening to the Financial T podcast because in a world full of algorithm-chasing hype, this really is the antidote. Like, I am not here to sell you smoke or mirrors or any sort of overcook promise. Like, we actually do the homework. We vet all of our facts, we cut through the noise and I'm just here to tell you the unburned truth about money. So yeah, do not comment recipe, but do comment T when I post a new episode so I could send you the link. Oh, and also, yeah, of course, make sure you subscribe and leave us a rating as I told you, we are up for a renewal as real cippers know. So this is very important right now because we're trying to keep making the show and, you know, numbers still blind, check the scoreboard. Anyways, let's jump into our three stories, because I know you're not here just to hear about my failed sauce. So our first story is about index funds because yours and mine is secretly dating big tech and you know index funds as this like holy grail. I always tell you to buy them. Don't buy individual stocks by index funds. It's one ticker. You get access to hundreds of companies. You don't have to like be a day trader. You can have this amazing portfolio just in one go and then just let compound interest do the heavy lifting and go enjoy your life. And by the way, that still is the gospel. I love index funds, Warren Buffett famously advises everyone to own them for a reason. And it's really because active managers of funds charge fat fees, but with the index, it's cheaper and they always beat that. The tea that nobody is talking about is that index funds are currently making ultra expensive bets on AI, whether you as the person who bought index fund swiped right on it or not. So like, if you own S&P 500 fund, which I own so many of like VLO or SPY or maybe your 401k target date fund, you might think that you own a diverse slice of American businesses. Oh, I own a piece of banks and airlines and laundry to church it. But in reality, the S&P 500, those funds are weighted by company size. So basically, the bigger that the company is, the more of your money will go right into its stock. So right now in S&P, just 10 companies are making up roughly 40% at the entire index. And I just want to be clear that at the peak of the dot com bubble, and I'm not saying that we're going to bubble, but I just want to share this. That number was 27%. So that means that one out of every $10 you invest for our writing on just 10 tickers. And right now, those companies are all making the exact same all or nothing but an AI. And this week is earnings, which means that companies report like how they're doing. And around 160 companies are going to report earnings. But we're really holding our breath for are the earnings of Microsoft, Alphabet and Amazon. Because alongside meta, these companies are spending billions, like historic billions on chips at data centers and AI. And now the market just wants to know, like, is all of this AI spending actually driving profit? Or are we just sort of burning cash to keep up with each other? Like, is it this dick measuring contest of who can spend the most of AI? And look, you did not hear me say dumb your index funds. Like, I am fully basically invested in index funds. This is where I keep my money. And by the way, this concentration is why you're 401k and your portfolio has crushed it over the last five years because these stocks are doing so well. But I just really believe that being a smart investor means knowing what you will might talk so much about S&P 500 funds that they want to talk about it. And look, if you're 10 plus years from retirement, like I am, you can chill, like dollar cost average, tune out the daily earnings drama and just let the market naturally cycle and rebalance it totally will. But if you're someone who thinks like 10 boardrooms controlling 40% of your wealth is nerve-wracking, you can also check out an equal weight S&P 500 ETF like RSP. So that means that every company will get an equal quite 2% slice, which means that you will drop your top 10 company exposure from 40% down to 2%. And then, you know, you can buy some international funds or small caps and you're going to get true diversification, which is why, which is what you really thought you bought in the first place. But I don't want you to get me wrong. Index fund investing is still the best while building tool in history. I just want to be clear that right now you aren't just betting on America. You are betting on AI and bake rolling that build out. And I am too. But like I said, I'm 10 plus years away, so I can go to let it ride. But, you know, if you're closer to retirement or you have more of an issue with this morally, I just want to flag it because I talk so much about these funds. I don't want you to think that I'm like pulling one out over on you. Okay. And then our second story, speaking of AI, is about Mark Zuckerberg. Oh, he can't see you guys. And sort of about the taxes to mid-America, because I feel like there's two. There's one that like regular W2 workers deal with. And then there is is this like custom set up built for billionaires. And we're in this really interesting time that on November 3rd, Californians are voting on a one time 5% wealth tax on billionaires. And I want you to notice that I said wealth tax, not income tax because this tax will target an entire network. So like for Mark Zuckerberg, who's worth roughly $240 billion, that means a $12 billion tax bill if it passes. But here's the catch. Zuckerberg has taken a $1 annual salary since 2013. So as wealth is not sitting in a savings account, it is almost entirely locked up in Metastalk. So having to sell his voting shares to then pay the C, could have slashed his control in Meta down towards 50%. So Zuckerberg was like, OK, I'm going to just lead California. We've seen a lot of founders do this. Google founders Larry Page and Sergey Brande already did before the January 1st residency cut off. But to keep him around, Meta signed a founder alignment agreement. So that means that they're issuing him a brand new class of non-voting class C shares. And he can immediately sell 20% of them to cover the tax bill without surrendering a single vote or losing any of his power on the company. And in exchange, he commits to stay in California for eight years or per the fine print wherever Meta is headquartered, which means he and the company could still be together later. And you might be like, why does this matter? Why are we talking about this in the market report? I have a normal paycheck. Why would I care? And I want to talk about it because I think that it is a master class in how geography can really dictate your wealth. This is obviously set from New York where they take all my money in taxes, but high costal living areas really drain you invisibly. State taxes are super obvious. But I think that the real tax is in the daily friction, like the $18 salads and the normalization of a $12 coffee and the $5 grocery run markups, which I definitely face in Brooklyn. And then the housing prices that just force you to keep way more cash on hand just to tread water. So I don't know. liquidity is definitely freedom. And Zuckerberg got squeezed because paper networks doesn't pay bills. Like when an unexpected tax hit or financial emergency arrives and you have zero liquid cash, you're going to be forced to sell assets when you don't want to. And obviously Zuckerberg got a corporate board to engineer a custom cash for him before a tax even passes. But most of us don't have that opportunity. So I would just say be intentional about where you live, audit your costal living, and keep your cash, because you're ready. So just moved to Nashville, and she's like, living her best damn financial like, because there's no income tax in like every day so it's cheaper off jealous. OK, and our final story is really fast. But I just want to tell you that Jay-Z is in charge of who performs at the Super Bowl. And he put himself, like he has chosen the headliner for the 2027 Super Bowl. And he was like, yeah, I think that we should do Sean Carter. I mean, guys have heard his Sean Carter. He was fully chosen between Miley Cyrus, Justin Bieber. They were the other finalists that I just was laughing that he got Bieber, like sitting by his phone waiting for the call. And then Jay-Z, like looked in the mirror. I was like, you know, maybe me though. I've ever heard of me. But it's really cool that Jay-Z's company, Rock Nation, has produced the halftime show for the NFL since 2019. They have this $5 million a year deal. And then when they did Kendrick Lamar, it got a historic 133.5 million viewers. And Bad Bunny has got 128 million viewers in 2006. So it's become this insane thought. Or I feel like because of Rock Nation, they really kicked it up a notch. And so I feel like Jay was like, OK, maybe it's my time to cash in. This is too good to give to someone else. And so beyond sort of the sheer comedy of hiring yourself, I just feel like this is the ultimate wealth rule where stop auditioning for the gig and just own the production company. Even Sylvester Salon put his daughter in a movie this week and was like, yeah, it's nepotism. When you only trade your personal time for a paycheck, you're just the talent waiting to be picked. You're at the mercy of the buyer. You're at the mercy of Uncle Sam, because every single dollar hits maximum personal taxes. But this is not the case of Jay-Z, because he also didn't pitch the NFL as a performer. Like Rock Nation LLC bought the platform that decides who performs at the Super Bowl. Then they take the fees, they write off the expenses, and they control the rule. So it's really smart. It's very vertically integrated. Yeah, I don't know. Jay-Z really is not a businessman. He is a business man. And I'm excited for this, too, because I know that Blue ID is going to perform with him. And you know how much that needs to be from the perspective of someone who loves seeing celebrity children put to work, because then they can have custodial raw IRAs. OK, well, I will see you Thursday. I'm doing an episode, a solo episode on Thursday about my boyfriend moving in with me, which I'm really excited about, being very financialite transparent. So I hope that you love it. And yes, they rich. And let me know in the comments what you want more of. We're going to do more international stories next week. Love you guys. [MUSIC PLAYING] I'm Catherine Nicolai, and I help millions of people around the world sleep better, rest their nervous systems, and shut their brains off when they won't stop spinning. On my podcast, "Nothing Much Happens," I tell cozy calming stories where nothing dramatic ever happens, just soft narration, sensory detail, and gentle repetition designed to lull you to sleep. There's no plot to follow. Nothing to figure out. Just peace. Listen to "Nothing Much Happens," wherever you get your podcasts.