Key Insights

The AI Paradox: A Powerful Tool with a Hidden Cognitive Cost

Attribution: Mark Meldrum

"The bigger threat to humanity is in using this stuff and saying, hey, it does all this stuff. I no longer need to do all this stuff... imagine if we stop thinking for ourselves and we let the machines think. A whole generation... of people not able to think."

Mark Meldrum argues that the popular fear of AI becoming sentient is misplaced. He frames large language models (LLMs) as highly refined search engines for language, not nascent consciousness. The real danger, he posits, is far more insidious: the risk of mass "cognitive crippling." By outsourcing critical thinking and problem-solving to LLMs, society risks losing the very skills required for innovation and progress. He draws a parallel to how modern society has lost basic survival skills, like foraging for food, by becoming completely reliant on the food supply chain.

The threat is twofold. First, in the hands of bad actors, AI becomes an incredibly powerful weapon without the ethical guardrails that responsible developers try to implement. Second, and more broadly, is the danger of cognitive laziness. If an entire generation grows up using AI not as a tool for research but as a replacement for thinking, it will stunt the development of higher-order cognitive skills like analysis, evaluation, and creation—the top tiers of Bloom's Taxonomy. This could lead to a future with fewer creators and innovators, as the foundational skills will have atrophied.

Actionable Takeaway: Investors and professionals should leverage AI as a powerful assistant for "legwork"—such as surveying hundreds of research sources—but never abdicate the core task of thinking, forming a thesis, and structuring an argument. The value is in using AI to enhance human intellect, not replace it.

The Russell 2000's Hidden Value: Buying Profitability and Getting Speculation for Free

Attribution: Mark Meldrum

"You'll pay 17 times earnings for these 1100 companies and I'm going to give you 700 lottery tickets for free. Scratch and win lottery tickets. If you scratch them and there's nothing there, well, didn't matter."

Meldrum presents a compelling, contrarian valuation case for the small-cap Russell 2000 index (IWM). He argues that the index's overall P/E multiple is misleadingly high due to the large number of unprofitable companies it contains. Of the roughly 1,830 companies in the index, approximately 1,100 are profitable while 700 are not. His thesis is that the current market price for IWM effectively represents a fair valuation—he suggests a 17x P/E multiple for illustrative purposes—for only the profitable constituents.

This framing means an investor buying IWM is essentially paying for a portfolio of profitable small-cap businesses and receiving the other 700 unprofitable companies for free. These unprofitable firms are "lottery tickets"—many will likely go to zero, which is already priced in. However, a few may turn around, achieve profitability, or get acquired, providing significant upside that is not currently reflected in the price. This structure offers a unique asymmetric risk profile: the downside of the unprofitable companies is limited (they're already valued at zero in this framework), while their potential upside is substantial.

Actionable Takeaway: View IWM not just as a macro bet on lower interest rates, but as a deep value play. The current structure allows investors to acquire a basket of profitable companies at a reasonable price with hundreds of free, embedded call options on corporate turnarounds.

Bitcoin's Existential Flaw: A Solution in Desperate Search of a Problem

Attribution: Mark Meldrum

"The problem that was solved with Bitcoin was an academic problem... how would you transfer value in the absence of a trusted third party... Commercially, guess what? I got trusted third parties all over the place."

Meldrum delivers a scathing critique of Bitcoin and the broader crypto ecosystem, asserting that it remains a technology without a meaningful commercial application. He argues that Bitcoin was created to solve a purely academic problem: enabling peer-to-peer value transfer in a hypothetical world without trusted intermediaries. In the real world, however, society is built upon a vast infrastructure of trusted third parties, from banks and brokers to legal systems and contracts, which render Bitcoin's primary use case largely redundant for most people.

He challenges proponents to identify any part of their daily lives, beyond speculating on the price of the coins themselves, that is genuinely improved or enabled by the blockchain. Vehicle registrations, bank transactions, and brokerage settlements all continue to function efficiently without it. The technology, in his view, is "walking around the world saying, 'I'm useful, pay attention to me,'" constantly trying to retrofit itself to problems that are already solved more efficiently by existing systems. He dismisses the narrative that it's needed for illicit, no-questions-asked transfers as a niche case irrelevant to the broader economy.

Actionable Takeaway: Until the crypto space can demonstrate a clear, non-speculative use case that solves a real-world problem for the average person more effectively than current solutions, it should be viewed as a purely speculative asset class with no fundamental anchor.

The Copper Conundrum: Exploiting Volatility from "Boneheaded" Tariff Policies

Attribution: Mark Meldrum

"It's a dumb, stupid policy, but, you know, the administration is dumb and stupid... I don't know that you could find a stupider tariff than copper."

A proposed tariff on copper has created a significant, albeit artificial, dislocation in the market. Meldrum explains that the policy is "boneheaded" because the U.S. lacks the domestic smelting and refining capacity to meet its needs, especially given the massive buildout required for AI data centers. The tariff makes this critical industrial metal far more expensive in the U.S. while leaving it cheaper for competitors like China. This has created a "stressed spot market" as importers rush to secure supply before the tariff hits, driving the spot price up and pushing the futures curve into backwardation.

This policy-induced panic has caused implied volatility on copper options to skyrocket to over 40%. While he believes the long-term trend for copper is positive, he is wary of the short-term, tariff-driven price spike. Instead of chasing the rally, he sees a clear opportunity to sell volatility. The "absolutely incredible" premium available in the options market provides a compelling way to gain bullish exposure with a margin of safety.

Actionable Takeaway: Rather than buying copper futures or ETFs at inflated prices, sophisticated investors should consider selling out-of-the-money puts to capitalize on the extremely high implied volatility. Meldrum notes he is actively selling puts with strikes at $5.00, $4.90, and $4.80, collecting rich premiums while setting a lower potential entry point on a strategic commodity.

Deconstructing the Jobs Report: Why Government Hiring Is a Wealth Transfer, Not Growth

Attribution: Mark Meldrum

"It does not create any value, it just redistributes income... instead of you building a deck on your house, they build a deck on their house with your money. That's how it works."

Meldrum advises investors to look beyond the headline non-farm payrolls (NFP) number and scrutinize its composition. He argues that job growth driven by government hiring—which he notes made up 50% of a recent report—is not a sign of genuine economic strength. Unlike a private-sector job where an employee's output can generate value far exceeding their salary, a government job is a direct wealth transfer funded by taxpayers.

The government pays its employees with tax revenue collected from the private sector. This action does not increase the total aggregate demand in the economy; it merely redistributes it. Money is taken from a taxpayer's disposable income (preventing them from spending or investing it) and given to a government employee to spend. The net effect on the economy is a wash. Therefore, a jobs report heavily skewed towards government hiring indicates a less dynamic and productive economy than a report showing robust private-sector job creation.

Actionable Takeaway: When analyzing labor market data, dissect the NFP report to distinguish between private and public sector job creation. Over-reliance on government hiring can mask underlying weakness in the productive, value-creating part of the economy.

Insightful Quotes

On Bitcoin's utility: "I would challenge any of the coiners out there to truly answer this question. Other than trading the coins, what part of your life is on the blockchain? ... There's probably zero activity you do during the day that requires the blockchain. But you trade the coin." - Mark Meldrum

On Tesla's profitability: "If you remove from Tesla's income statement and equity all the EV credits and all of the credits that it can sell. This is not a profitable company. It hasn't been a profitable company ever." - Mark Meldrum

On finding value: "Wouldn't looking for growth at reasonable valuations be the name of the game...? You and 20 million other people. Yep... Imagine going blueberry picking in April and saying isn't the goal to look for blueberries? Yeah, but it's April. You're not going to find any." - Mark Meldrum

Market Implications

The market of mid-2025 is defined by a powerful narrative—the AI revolution—layered on top of significant macro-level distortions from fiscal and trade policy. This creates a complex environment that Mark Meldrum describes as warranting a "defensively long" posture.

Investment strategies should be multi-faceted to navigate these cross-currents:

• Core AI Exposure: Maintain exposure to the primary AI trend, likely through broad market indices like the Nasdaq 100 (QQQ), but remain aware that the market is in a hype cycle and could correct sharply.
• Targeted Value Hunting: Actively look for value in areas the market has overlooked. The valuation case for IWM stands out as a prime example of finding mispriced assets with asymmetric upside potential, disconnected from the mega-cap tech narrative.
• Volatility Harvesting: Policy mistakes, such as the copper tariff, create predictable spikes in volatility. This presents opportunities for options sellers to generate income by taking a calculated, contrarian view against panic-driven price moves. Selling puts on copper is a specific, actionable strategy to monetize this dislocation.
• Skeptical Macro Analysis: Do not take headline economic data at face value. A deeper analysis of reports like the NFP is crucial to understanding the true health of the economy and avoiding being misled by figures inflated by non-productive government activity.