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Today I want to answer a lot of questions you guys have sent in.
My primary job the past month-plus has been navigating us through President Trump’s Liberation Day tariffs.
With that in our rearview, I wanted to answer some of the questions that have piled up in my inbox.
Q: “Arizona lawmakers approve a state crypto reserve. What do you think, Dylan?”
A: I think that’s absurd.
I don’t understand why they would do that.
I think all this talk of crypto diminishes the dominance of the U.S. dollar as a reserve currency.
It seems self-defeating, very political, and I don’t think politics should get messed up with monetary policy.
So I am not a fan.
Q: “The budget came out this week. How do you think the bond market will react?”
A: This is something I’ve talked a lot about.
We are running deficits like no time in history, even bigger than during recessions.
This country cannot seem to get over its Covid-era spending, which is not good for us.
And bond market vigilantes really are a thing…
Look what they did to Liz Truss in the United Kingdom.
She came out with a budget that did a lot of spending without appropriate cuts.
The bond market in England spiked interest rates and sent investors running for the hills.
It basically cost her her job as Prime Minister.
And I think right now the bond market is sending us a warning.
When President Trump focused on tariffs, the 10-year yields were going down, because everyone pretty much knew that was going to be recessionary.
But now we’re seeing the budget come out and we’re seeing this “big, beautiful deficit.”
You’re starting to see 10-year yields really go up.
And I’ll tell you something – those yields are going to determine what stocks do.
So investors are starting to pivot back to the yield on the 10-year, because the Fed’s not lowering rates.
So everybody’s going to be focused on the 10-year, and that is going to act as a ceiling for how high the stock market can go.
The 10-year yield is 4.4% now. But if it goes above 4.5%… or, God forbid, it touches 5%…
This market’s going to have a hard time.
It’s going to get its head cut off every time that yield goes up.
These yields are very important.
The question is, what kind of deficits would we accept with 5% yields?
Because our annual interest cost would be insane – they’re already over a trillion dollars.
Look, let us hope that President Trump and the people we elected on Capitol Hill steer a more fiscally responsible bill through Congress.
It’s still early innings.
Q: “Stable coins are backed by U.S. dollars. Why don’t you like them?”
A: If they’re backed by U.S. dollars and U.S. bonds, why not just buy U.S. dollars and U.S. bonds?
What’s the benefit?
Just get the middleman out of the way and go for the dollar.
What happens is, these crypto companies are out there making a ton of money just off fees on these stable coins.
So, basically I just don’t understand it, and I don’t invest in things I don’t understand.
Q: “President Trump has a plan to cut drug prices by 30% to 80%. How will that impact big pharma stocks?”
Trump’s executive order is a statement of intent, and yes, those of you who’ve written in to talk about that, calling it “price controls,” are 100% right.
Republicans went bonkers when Biden’s “inflation reduction act” added price controls to big pharma drugs.
So yeah, this is good old fashioned price controls.
There’s no two ways about it.
This is a plan, an executive order, there’s really some debate on how far he can go and how this will impact pharmaceutical stocks.
It’s going to be good and bad.
Bad because if we control the price, it lowers profits.
The stock market has already priced that into the biotech sector.
[And we have a biotech investing service so we are painfully aware of what has happened with the biotech sector since President Trump has gotten elected.]
But here’s the good side of it – it will really force consolidation in the biotech and pharmaceutical sectors.
It’s going to incentivize companies to merge to keep their profits up in a world where even the Republican party is pushing price controls.
What we’re talking about here is President Trump’s executive order that talks about “most favored nation status.”
It basically says Americans should pay the same price for drugs that other countries pay.
Basically, the prices companies charge for drugs are based on the per capita income of a country.
So pharmaceutical companies charge Americans a certain price based on our per capita income, which is very high at $75,000 a year.
A country with per capita income of $50,000 a year gets charged less, but the same percentage of their income.
So if they charge us $7,500 for a drug, 10% of our annual average income, they’d charge the people of that country $5,000.
That’s the bottom line on how drug prices are decided. Country by country.
That we pay more than anybody else is politics.
Q: “What do you think of Trump’s crypto project?”
As I always say, I will not comment on politics – only policy.
Q: Buffett’s retirement – I got a bunch of questions on Buffett’s retirement.
I will talk about this next week, but just to give you an idea how important he’s been to me, he’s the single greatest business teacher I’ve ever had in my life.
I’m very sad, but also grateful.
I went to BerkshireHathaway.com in the nineties and started reading all those annual reports.
I urge you to do the same.
They have such important lessons.
Forget business books – if you want your kids and grandkids to understand business and investing at a high level, I urge you to tell them to go to BerkshireHathaway.com and start reading those annual reports from Buffett.
The first one in 1977, I’ll never forget.
Nobody knew this guy.
He’s just a former hedge fund manager, basically.
And I’m reading it and he’s saying, “when you’re buying a stock, these are the things that matter:
“Operating earnings to equity investment…”
He’s breaking it down.
It’s the ultimate playbook.
It’s why we were so cool when the market crashed.
Because we understand what companies are worth.
That’s what allows us to keep our cool and do so well… not get shaken out of good stocks… we even picked up a couple of great stocks at cheap prices.
You have to understand the game if you want to play at a high level.
If you want your kids and grandkids to play at a high level, I urge you to do that.
Anyway, I wanted to answer these questions for you today.
I hope you have a wonderful weekend.
I’m a daddy-driver-Uber-taxi this weekend, driving my daughter around to practice tests for upcoming exams.
See you Monday.
“The Buck Stops Here,”
P.S. If you didn’t get my #1 AI Takeover Trade for 2025, I highly recommend doing it right now.
This stock could jump hundreds of percent in a day – starting as soon as today.
My last takeover pick this urgent I recommended on a Friday, it got taken over Monday for a 148% gain.
That’s what’s at stake here. But that was biotech – the last AI takeover I saw like this one, jumped 600% in a day.
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