Brad Johnson: Jacob, welcome to the show.
Jacob Shapiro: It’s good to be with you, Brad. Thank you so much for having me. I appreciate it.
Brad Johnson: Well, we’ve got a mutual friend in Zach over at Vayner. He’s always an awesome guy when it’s like, let’s get some amazing people together for a conversation. So, shout out to Zach if you happen to catch this. But as I was diving into your background, Jacob, it’s almost hard to sum it up, so I don’t even know if I’m going to try. But, obviously, a very educated guy, studied at Oxford. We’re working in the Middle East for a while, which there’s a lot going on there right now when it comes to geopolitics and how those impact the economy. So, I’m just going to dive right in. We’ve got an hour or so. Your audience is a bunch of independent financial advisors. You study geopolitics for a living. You advise multifamily offices. You’ve done a lot of work in finance. If you were a financial advisor out there right now, what would you be looking at from a geopolitical perspective that you just want to get ahead of for your clients?
Jacob Shapiro: Man, Brad, you’re starting with the easiest questions, I see.
Brad Johnson: Just dive in, man. That’s how we got to do it.
Jacob Shapiro: Yeah, no, let’s go. Let’s dive in the deep end and see if I can swim. Well, look, the first way I’m going to answer that question, maybe this is our gateway into other parts of this conversation, is that there is so much noise out there all the time, and that the noise is only increasing. And it’s actually an inverse of the problem that we had 50, 70 years ago. Fifty, seventy years ago, if you’re an intelligence organization or you’re a researcher or you’re an advisor and you’re trying to gather information, the hard part is getting the information. That’s what the James Bond movies are all about. James Bond has to put on the tuxedo. He has to go to someplace really hard to get into, then he has to get out with the critical information, and that’s the whole story.
Now we have all the information. We have too much information. We’re completely inundated by it. More so than that, our brains like negative information. This is not the fault of the media companies that they are putting up the negative information. That’s what makes them money because we click on the negative articles. We linger on the negative articles longer. So, it’s very easy to get trapped into short-term thinking. It’s very easy to get trapped into sort of ideological silos if you have a particular political preference, only following the things that you think are correct. And it’s very easy to be very negative all the time.
I think also especially for our US-based advisors, you have multiple generations of advisors in the US who came of age when the United States was the undisputed military, economic, cultural, political, whatever adjective you want to put in there, power in the world, and that is shifting. We are shifting from a world dominated by the United States, what I would call a unipolar world, to a multipolar world with rising and falling great powers. This is not a statement about the decline of the United States. It just means that relative US performance, which, if you look at any performance or any investment instrument over the last 30 years, the best decision would be to park it in something in the US or related to the US and not worry about it.
Go play golf, go have lunch, go do something else. I think that’s going to change. I think the opportunity set is now shifting back to international. And again, that’s a statement about China rising, not the US declining. That’s a statement about Europe has been lazy for 40 years. What happens when they’re not lazy anymore? They don’t just disappear. They don’t just collapse in on themselves. It creates tremendous opportunities. So, if you remember one thing from what we’re talking about, I would say it’s really the combination of those two things. Don’t over-index on the headlines. Like, have a long-term view about what’s happening in the world, and then don’t just assume that because the United States has been the top dog for the last 40 years, that it will be for the next 40 years.
And think really seriously when you’re looking at client portfolios or your own positions, am I diversified away from the United States? Like, meaningfully, do I have hedges to exposure to the US dollar, to US-based investment, investment instruments? I can’t tell you how many times I talk to people who think they are, and then you look at the book, and it’s like, “Eh, not really. Like, that’s mostly all denominated in dollars. Like, that’s not going to work,” so.
Brad Johnson: Yeah, if you even just think about the domination of the US dollar, and with everything going on in Iran right now and them trying to switch how they trade oil, yeah, even the US dollar, which has dominated just currency worldwide, that could be evolving. So, on your point, just all the noise. I love that. I just was getting my morning update this morning in my email, kind of my debrief for the day, and one of the headlines was, “Is there a war in Iran going on right now or not?” as we record this July 10th, 2026. Back to misinformation, all of the noise coming from both sides. There’s a ceasefire. There’s not a ceasefire. So, how do you cut through the noise? How do you think about that from your side?
Jacob Shapiro: Well, let’s take the specific example, because you can over-index on, oh my God, we’re bombing them again, and the bridges and Kharg Island and the Iranian supreme leader, where is he? Like, we can go down this r- and those are fun rabbit holes to go down, by the way. Like I’m a geopolitical nerd, so I will talk to you about those things for literally hours if you let me to. But the signal here is very simple. What is the price of Brent crude, and how many ships are going through the Strait of Hormuz, period? Those are the only two things I care about in assessing this conflict right now. I am actively not reading anything President Trump says about Iran. If I see that he said something about Iran, I close the tab. I don’t want to read it. It is literally unhelpful for thinking about what’s going on.
There absolutely is a war on. It absolutely is escalating after a relative period of complacency. Could it go back to the complacency? Sure. Could it escalate from here? Absolutely. But even as we escalate, and even as we had an increase in oil prices this past week, we’re hovering around 70 a barrel right now. What that’s telling you is that even with a war between the United States and Iran, and even with ships not going through the Strait of Hormuz, Brent crude can’t get above 75 a barrel. That is the signal. And I think the signal is telling us a couple of different things. It’s telling us that the world is not as dependent on oil as it was in the ’70s and ’80s. I’m not saying the world can just get rid of oil tomorrow. It can’t. It’s critical.
But we are not nearly as dependent on oil as the historical analogy to the ’70s energy crisis that most people are making out there, and part of that is because of renewables, part of that is because of shale. Like, there’s just more supply out there in general. The second part of the story is the Chinese have not been importing, and the Chinese have cut their imports after filling up their supply in the 12 months before the war started, because prices were really low, and maybe because they had a sense that something was coming. Whether they knew specifically or not, I don’t know, but they have been keeping prices down in general, which also tells you something really interesting about the role that China is playing in the world.
And then the last point I made about how many ships are going through the strait. Up until this recent escalation, it wasn’t normal traffic, but we were getting closer to normal traffic through the strait, and so we were getting some relief, size of relief, not just from oil markets, from natural gas, from fertilizer, from all these different inputs that are coming out. Ships aren’t going through again. So, if we’re here next week and that’s still true, okay, you’re going to start to see those prices creep up again. And I bet as soon as those prices at Brent crude start hitting 90 or 100, suddenly both the Iranians and the Americans will say, “Ah, ceasefire. We have an MOU. We’re going to go back to the ceasefire,” because the world is not going to tolerate oil as it gets that high.
So, in that particular instance, identify the two centers of gravity, focus on them, and then ignore the rest. That’s how I would approach that.
Brad Johnson: Yeah. What I’m taking from you, Jacob, you almost look at it like you’re solving a math problem. Start with the end in mind, what are the variables that matter, get rid of everything else. Is that kind of a mental framework to think about?
Jacob Shapiro: It is, although it’s like math with emotions, right? Because it’s easy to say that’s what we’re dealing with today. But then, okay, so we’ve got what we’re dealing with today. What about two years from now, Jacob? Okay, now we need to start putting ourselves in the shoes of US policymakers and Iranian policymakers and the average US consumer, and how they’re going to react to higher prices and what kind of political pressure they’re going to put back on the White House in general. So, yeah, on some level it’s mathematical, but this is one of the things that makes analyzing politics both hard and fun because if you just use math, it’s not going to work. And you can see this by the oil analysts who have been lighting their hair on fire since the war started saying, “Oh my God, we’re going to have Brent crude at 200.”
If it was just the math, they basically should be right. But something else is happening in the politics of this, in the way that markets are interpreting this behavior. So, it’s math, but it’s also something more. One of my mentors, who helped train me in geopolitics, he always said, “Look, you have to be really good at math, and you have to be really good at economics, and you have to be really good at all these other things but understand that when you’re crafting political forecasting or political scenarios, you’re basically doing something like pottery. There is an element of art to it.” So, you need all of these skills in order to actually do the thing, but the actual scenario, like there is an element of just feel and gut instinct to it. So, it’s math, but also there’s something a little more to it, if that makes sense.
Brad Johnson: And it’s interesting, I love the math with emotions concept. Tesla just announced they had one of their biggest quarters ever. Well, what drove that? Price of oil. All the people that were, “I’ll think about an electric car,” but “Oh, now it’s $4 a gallon, I’m going electric car,” right? The other thing as we’re talking about energy I want to get your take on, I saw some chart, you probably know all the stats on this, but as we look at AI and compute and this debate of data centers and what they’re going to do to these local communities they’re trying to put them up in, I saw a chart that basically showed China’s, basically how they had broken their dependence on oil and started generating a ton more energy from solar, from wind, from hydro, and how the US had actually lagged behind.
And I’ve got to think, as you predict the future dependence on energy, AI, the need for compute, which obviously consumes a ton of energy, how do you start to think if you look out three, five, ten years, how that starts to play in investing?
Jacob Shapiro: Yeah. There are two things that are related here, but that we have to disentangle to take apart in order to understand this. So, the first is the energy story. And the energy story, I think, is a deflationary story ultimately. I think when we’re talking five, seven years from now, energy is going to be cheaper. Now, one of the interesting things is the last real energy revolution we had in the world was when we switched from coal to oil, and that actually, it began with Winston Churchill saying that the British Navy needed to have oil-fired ships rather than coal-fired ships. So, you can find geopolitics at the core of any of these shifts if you dig far enough. We’re now switching from oil to something else. There’s no one-for-one substitute.
And so, you have different countries using different technologies all around the world, and that’s a meaningful change in how energy markets work because even now we’re all still competing for the same barrel of oil. Oil is fungible. Now, though, the Chinese are saying, “You know what? We don’t have the shale revolution like the United States has, so we have to throw everything at the wall.” If you’re a China bull, you look at China weaning itself off of oil, and you’re saying, “Wow, look at all the nuclear and the hydro and everything else that they’re doing.” If you’re a China bear, what you say is, “Well, yeah, they have to because they are a huge energy consumer, and they can’t produce enough for themselves. They have to get it any way they possibly can,” whereas the United States can just stick a straw into Texas and say, “Okay, we’re going to have some more,” or some of these other basins in general.
And as you go through the shift over the next five, seven years, I don’t think it’s going to be in one direction. I think you have to brace for volatility. We’ll have periods of uptrends. We’ll have periods of downtrends when it comes to energy prices. But I think the long-term view is pretty clear. We’re going to have more sources of energy, and it’s going to be cheaper in general. And the competition between nations and companies are going to be those that can get access to the cheapest energy. So, ironically, China’s weakness will become a strength in five to ten years because they will have all of these renewables.
They will no longer be hostage to oil markets, and maybe they’ll be able to drive down the cost. If China’s not importing that oil, though, maybe the price of oil goes down considerably, and maybe if you have oil, maybe you’re going to have a cheaper cost. This is why it makes relative sense to think about data centers in the deserts of the Middle East because they have super low price of oil, so maybe you can have really cheap energy there. So, that’s the energy story. Then there’s the technology story. And the technology story goes a little bit back to math and emotion because I think the AI story is very clearly a bubble, and I also believe in it wholeheartedly. Like, both of those things have to be true at the same time. And it’s a bubble in a psychological or an emotional sense.
You can tell that the market is high on its own supply here, and this happens every so often. It happened with crypto for a while. You get these kind of booms where everybody’s talking about these things. And then after a certain period of adoption, there’s a collapse, and then you get widespread adoption. That’s how technological revolutions work. I said at the beginning of the year, one of my higher conviction views was that by the end of the year, we’d be shifting the psychological argument from AI to robotics and automation and things like that. Like, I think that will be the next fad when it comes to markets.
But as for AI itself, I mean, we’re all guessing at how much compute we’re going to need, about how much energy it’s going to consume with the decrease in energy prices going forward, or with the increase in efficiency for some of these things, how much energy are we actually going to need to consume? And so, when you look at the build-out of these data centers, we’re probably going to overshoot the mark, and probably everybody is going to overshoot the mark. And when you even look at adoption of AI, like, yes, some people are adopting AI, and some companies are adopting AI, but a lot of these people are just in their mom’s basement telling ChatGPT to make cool images.
And eventually, that’s not going to work, and all of these AI companies are going to have to figure out how to actually monetize the thing that’s in front of them, and that’ll be part of the bubble popping. So, I would break those two things apart. We have a technological revolution, and the results of that are not clear. And if you are somebody who’s a financial advisor, that means you need to be on top of the technology. Like, if you’re a financial advisor and you’re not using Claude Code and you’re not reading every single paper that comes out about what advances are happening in AI or biotechnology or some of these places where at the forefront of technology, you’re not doing your job.
Like, I’m not expecting you to be an expert in these things and to know everything that’s in them, but you should be using them. You should have some awareness of where the frontier is and how quickly it moves. And then we also need to be thinking about volatile energy situation over the next five, seven years. But ultimately, what does a deflationary energy environment look like? What does it look like for energy companies? What does it look like for these AI companies? What does it look like for the consumer in general? And those are both related and also separate.
Brad Johnson: All right. Shifting gears here a bit. So, back to the financial advisors, primarily who’s watching or listening right now. Most of them, I’m sure, we’ve got some CIOs that are probably tuning in right now, but most are business owners that are dealing with clients. It’s more of a relationship-based business. They’re not going out and actually building the portfolios themselves. I mean, some of them lean on us here at Triad to help them. But back to math and emotions, those are really hard to separate when it comes to money, which is a very emotional topic, especially if you see your account go in the wrong direction with the market correction.
What advice would you give a financial advisor who is doing their best to build a financial plan? Obviously, it’s going to have some ups and downs along the way if the money’s in the market, to work with the emotions of clients when it comes to the math. How do you help them separate the noise? Are there certain frameworks, behavioral finance concepts that you believe in from your side?
Jacob Shapiro: It’s hard because the thing that makes a financial advisor or somebody who’s making these decisions good at what they do does not necessarily make them good at interacting with the client and making the client feel good about the things that are actually happening. I forget the name of the study, but I can send it to you afterwards. Somebody did a study once, that was about, you’re mad if you lose $20. If somebody loses you $20, you remember that, and you don’t want to trust that person anymore because they lost you $20. But if they found $20 and gave it to you, it’s like, “Oh, cool.” And then you don’t remember it a week later. What you remember is the person…
Brad Johnson: Remember the losses more than the gains, 100%. Yep.
Jacob Shapiro: Exactly. And so, in that sense, like, I don’t know of another industry, maybe others out there can help me, but financial advisors are in a rock and a hard place because it’s the only industry I can sort of think of where you are actually disincentivized to perform well because your clients, psychologically are going to react more negatively to you if you lose things than if you gain things. And so, so many financial advisors are small-C conservative. It’s about not losing the thing. It’s about keeping a certain baseline level of assets there, and we don’t want too much volatility. Whereas depending on your client’s goals, most clients want to grow what they have. So, oftentimes, people are asking me about geopolitical risk.
I actually care much more about geopolitical opportunity. I think there is so much upside in a volatile world. That’s what I want to talk about. And to have that kind of upside, you need to be working with a client who is either going to let you coach them into, “Hey, you’re going to see some dips, and you’re going to see things go up over time, and we will work with you with your time horizon to balance things appropriately.” But if you want the upside gains, you’re going to have to stomach a little bit of the risk. So, it goes back to what I said at the very beginning, like have your own framework. Turn off the noise, and then you just have to self-select your clients a little bit. If you have the type of client that calls you the day after the SpaceX IPO and says, “I want the SpaceX IPO.”
And you say, “Hey, I get it. Space, really interesting theme. Been thinking about it. Here’s a basket of instruments that we could use to go after this thing.” This is not a good time to… This is not investment advice, of course, but like hypothetical. Like, this is not a great time to like go after the SpaceX IPO. Let’s go for it. And if they ramrod you and say, “No, no, I want this. Everybody else has this. I want this. This is the thing that I want,” well, maybe that’s not the client for you. I think you have to self-select a little bit there, too, which means maybe leaving some things on the table, but also just aligning yourself with the type of clients that want to work with you. And that goes fundamentally to confidence. when a…
This is true of financial advisors, and it’s also true of analysts in my world. It’s not that I’m smarter than most other analysts out there. It’s that I combine two rare personality traits together. I am, on the one hand, extremely confident in myself, like borderline arrogant, and at the same time incredibly humble. And as soon as I think I’m wrong, I will completely shift my thinking, and I will say, “Hey, I was wrong. Now I’m supremely confident about this new scenario that I’m talking about, and I’ll bring it to you as well.” Nobody’s going to bat 100. If you’re batting 51% in this industry, you’re doing incredible. You’re in the hall of fame if you’re batting 51%.
So, it’s about having that confidence, having those frameworks, trusting yourself in the long run, and having people that trust you, like earning that trust, not committing to someone until they are willing to sort of ride with you through the times that go down, because those are the times that really, like, you’re going to have outsized performance. So, that’s the best I can say.
Brad Johnson: Strong opinions held loosely. Actually, I think, yeah, when I checked out your website, I think you had a quote that was kind of holding two different ideas at the same time. I forget who it was by, but. All right. Let’s hit on something you just said there. Going back to the very beginning, news sells negative news because guess what? We’re wired to survive as humans, so that’s why we stop and gawk at car wrecks and drive by rainbows, right? And so, you said, yeah, there’s a lot of noise about all the geopolitical, like, chaos going on out there, but there’s a lot of opportunity. So, where are some areas looking out into the future you see opportunity, if you were a financial advisor?
Jacob Shapiro: Yeah, here I think there are two buckets that I sort of put these under. There’s more my bread and butter, which is geographic, and then there’s also going to be sector-oriented. So, geographic, I don’t hate the United States. I just want to be relatively specific. But when I’m looking at countries that have the profile that I’m interested in, I want countries that are showing me cheap cost of energy and reliable access to energy and food. I’m looking for strength of political institutions. I’m looking for distance from geopolitical conflict, so I don’t really want to be in the heart of Eurasia right now. Like, there are just some geographic things you can do in general to separate yourself. And I want to see growth. I want to see GDP per capita growth.
I want to see that people are making more money and that there is something underneath the hood that there are good things happening in the economy itself. Now, no economy is going to check all of these boxes, but examples of countries that check some of these boxes are Mexico, Chile, Saudi Arabia, India, Indonesia. These are countries that we forget about, I think, a lot of the time, but where I think the biggest stepwise growth is probably going to happen over the next 10, 15 years. One of the things I do every morning I have a list of hundreds of different news sites on a bookmark page, and I’ll pick five or ten of them. Google Translate is great. It’ll get you 70% of the way there. And I’ll pick the newspaper of record for maybe four of those countries.
So, let’s say Indonesia, Mexico, India, and Turkey. I’ll start my day with that, and I’ll Google Translate my way through the front pages of the newspaper for that country. Do that for a bunch of different countries over a couple of different weeks, you’ll already be smarter than 99% of people that you’re talking about, and you’ll start to see how the world is reacting to things differently and where opportunities are sort of hiding in plain sight. So, I think there’s geographic opportunity. And then I think there is sector-oriented opportunity. And here some of it is about the tech revolution that we’re going through.
So, artificial intelligence, got to be on top of it. Biotechnology, and also the relationship between biotechnology and robotics that I mentioned, got to be on top of it. New energy technologies. Everything from how are you going to extend the life of old oil wells to geothermal to hydrogen. Like, you got to be on top of all of it and seeing the opportunities that are there in general. So, I want to be in geographies that I think just from a macro point of view, no matter what happens politically or geopolitically in the world, that are going to do well. And then I want sectors that I know are going to be at the forefront of innovation, that I know people are focusing on and throwing massive amounts of money at.
Ten, fifteen years ago, the trick is that you want to be able to call out, okay, these were the names that are going to seem obvious 15 years from now. Like today, it’s easy to say, “Oh yeah, Google, Microsoft, Amazon.” The hard part is, okay, like that’s done. Find me the Google, Microsoft, Amazon of the next 15 years, and I guarantee you it won’t be in the same sector. It’s going to be in a sector that is completely different, and I think you’ll find that sector in those emerging technologies and where those technological revolutions are happening.
Brad Johnson: All right. I want to get your take on this. You brought up kind of, I don’t know if you said biohacking. Basically, it’s medicine and AI and how it’s all going to come together in the future. Ray Kurzweil, who’s a fairly well-known futurist, he made a pretty bold statement the other day that within, I think he said by 2030, I could be off by a year or two, it might’ve been 2032. It’s like the next five years. He said, “Live the next five years, there will be a pill,” I don’t know, peptides, whatever, “that is a one-to-one chemical base based on your individual DNA and genetics that will start to actually take your life, basically take months and add them to your life expectancy.” And so, being a guy that grew up in insurance, life insurance, there’s obviously a ton of actuaries saying how long people will live. Annuities, how long does this income stream need to last?
Immediately, I saw that I was like, “That happens, that’s going to impact a lot of insurance policies out there.” So, what’s your take on that? Is that complete science fiction? I’m not asking you to be a doctor here, but how do you start to think about that stuff?
Jacob Shapiro: Yeah. No, I’m guilty of like sort of being part of the biohacking trend. I’ve stopped wearing my Oura Ring for the first time in three years, like in the last week or two. I was giving myself a break. But like I’m deeply embedded here. I’m attached to the notion of biohacking.
Brad Johnson: Well, I’m a WHOOP guy, if you can see here, so about same thing worn differently.
Jacob Shapiro: Yeah. I mean, I’m going Garmin now.
Brad Johnson: Oh, there you go. Okay, cool.
Jacob Shapiro: I’m checking out Garmin. So, I’m switching from Oura to Garmin for a second. I can’t, like the peptide thing, who knows? That sounds a little pie in the sky to me. I remember I was at a conference, oh, maybe 10 years ago, and I was supposed to speak the next day, and there was this guy at my table the evening before, and he was hawking his wares. He was telling me about this new pill that they had that prevented hangovers, that if you just take these pills, and you can drink as much as you want. You’re good the next day. I saw him the next morning. I don’t think the pills worked that much. I was like, “Okay, I’m good. I get it.” So, like, there is some level of that to some of these things.
But let’s just look at a current thing that’s happening in the world right now. There’s an Ebola outbreak in East Africa centered around the DRC, Uganda, some of these other places. It’s going to be the worst Ebola outbreak we’ve ever had in history. It’ll probably surpass the previous one, I think, from 2014, 2015, in terms of deaths and everything else. And it’s not getting more coverage because it’s in sub-Saharan Africa, and to be blunt, people don’t care about sub-Saharan Africa. If this was in Dallas, Texas, like, people would be writing nonstop about this. I bring it up because we actually have an Ebola vaccine now. It’s just that we don’t have that is very effective.
We just don’t have a vaccine for this particular strain because this strain was the rarest of the Ebola strains out there, and the dollars went to the strains that they thought were going to be responsible for the next epidemic, rather than this rare one that had never really broken out before. So, you have breakdown in tracking, and there’s this epidemic happening, and the WHO came out a couple of weeks, maybe a month ago now, and said, “Okay, like, we think that we can have a vaccine for this strain in six to nine months.” Six to nine months. Like 15 years ago, Ebola would have been a death sentence, and we wouldn’t have been talking about vaccines at all. It’s only going to take six to nine months to develop a vaccine for a terrible disease that has a high mortality rate.
Or go back to COVID. I mean, so much of our political infighting about COVID has obscured the fact that Moderna had a vaccine prototype ready within two to three weeks after they had their hands on the virus itself. Like, I don’t want to get into masks, and should you take the shot? I’m just saying they had a prototype, and it took our regulatory apparatus literally months to get through. But they had the thing off the shelf, sort of ready to go. All of which is to say, like, that’s incredible. We have never been better at curing diseases, at understanding our bodies, at fighting aging than we have before. And I think that’s only going to increase over time. I also just think when you look at healthcare is not doing great in the United States. It’s not doing great in many parts of the world.
So, the more you can be proactive about these things, the more you can do the Peter Attia stuff, where it’s not about going and treating something that’s already there, but rather treating things before they even get to that point. Like, that’s a really compelling argument in societies where healthcare is really not keeping up, especially as we have aging demographics and there’s going to be all this strain, as well. So, I don’t know if I buy the peptides, I just need to live five more years, and then it’s Tuck Everlasting. But I completely buy that we are going to see huge advances in biotech in the coming 5, 10, 15 years. And the diseases that are problems today, and hopefully diseases like cancer are not a problem 10 and 15 years from now.
And to your point, what does that mean downstream? What does that mean for healthcare? What does that mean for insurance? What does that mean for individuals themselves? To go back to the AI story for a second. I had a guy on my podcast a couple of months ago. His name is Dror Poleg. He thinks about AI in general. And one of the points that he made to me was AI is a tech revolution, but it’s not a revolution like the internet or chips or any of these other things that we’ve experienced lately. It’s more like containerization in the ’60s and ’70s. Now, if you don’t know about containerization in the ’60s and ’70s, the reason that we can go on Amazon and buy anything for super cheap is because they invented this ability to put super large containers on really large ships, and they all fit together, and suddenly you could ship things all around the world.
And if you had invested in the containerization companies, and there was a huge bubble in them, you wouldn’t have made any money. They basically all went belly up because there was a huge bunch of CapEx, and they didn’t go anywhere, and it was fine. But what it did do downstream was that it both destroyed and created businesses. So, before containerization, North Carolina furniture makers were some of the best furniture makers in the entire world. There was a whole industry of furniture in North Carolina that was being produced. Comes along containerization, and there’s a little company called IKEA, perhaps you’ve heard of it, that says, “You know what? We can be really good at fitting things together and being efficient in space. We’re going to make furniture now, and we’re going to open up new markets with these new containers.”
And you fast-forward 30 years, IKEA is IKEA, and they don’t really make furniture in North Carolina anymore. So, the story was not invest in the containerization company. The story was, okay, what did that do downstream for the companies that were able to maximize the gains that were created by the technology itself? And that’s also a biotech story. Who is going to create gains because you can live another 15 years? Or what does it mean if some types of cancer no longer matter anymore? What are the downstream effects of that? It might not be the actual company that makes the vaccine or the cure. It might actually be something else, some kind of second or third derivative. So, I’m with you, but I think we have to think about it a little more complicated than that.
Brad Johnson: Definitely rabbit holes. Let’s go back to robotics. You mentioned that. I would say if some of the people I admire most on this world are the entrepreneurs that build things that people didn’t think they could build. Obviously, Elon Musk is one of those guys. You cannot debate he has changed the game when it comes to business, and the things that he’s building that people didn’t think he could do, regardless of your politics on him. Tesla’s now becoming a robotics company. And you combine that with AI, which is kind of like the operating system for a robot now. How do you see that changing the game over the next three, five, ten years?
Jacob Shapiro: Yeah. And there’s a word of… I want to bookmark the thing about Elon being controversial because I actually think it’s important just from an objective basis. But let’s talk about Tesla for a second. If you were an equity research analyst, even 30, 40 years ago, what you were looking at was what a company owned. And now, when you’re looking at it, it’s much more about brand and intellectual property and some of these other things, and that’s a huge shift that we need to think about. So, a lot of folks are looking at, say, Tesla or some of these other companies and saying, “This doesn’t make any sense because their P/E ratio is this,” and okay, like you’re analyzing a stock like it’s the 1970s and 1980s, and it’s no longer about how much real estate you own or how many factories you own and things like that.
It’s about what intellectual property you have, what are you developing that people think they’re going to need, and also that sort of attachment to it. And in that sense, Tesla has been wonderfully successful, and a lot of Elon’s companies have been wonderfully successful because, to your point, that intellectual property, that branding, the story that they’re telling, that is all incredibly valuable. And how do you put a P/E ratio on that, or how do you understand that in relation to other things? And that’s true of markets in general. Those companies that you’re just thinking about what they own and physical picks and shovels have been left behind, which makes them an interesting opportunity.
But Elon is also an example of where politics can sort of emerge as a risk, because he has put himself in the conversation a little bit. And he aligned himself with the second Trump administration, even participated in the second Trump administration, did some things that were politically controversial. I’m not going to tell you whether they were right or wrong, like, people listening can decide whether they were right or wrong. But when an administration of different policy comes in, they will look at him differently, and they will look at his company differently, and they will look at his government contracts differently. And for some people who admired that story that you’re talking about, they now look at the story differently.
Like, sometimes I see Teslas out there, and there are now bumper stickers that say, “I bought this before Elon went crazy.” Okay, like it’s funny. It’s also serious for Elon. So, if you’re the leader of a business, part of the discipline of being a leader in a business is you don’t get the luxury of political opinions. You don’t get to cozy up to different administrations and say, “Aha, I agree with this one, so I’m going to double down. You focus on the business.” And ironically, like Elon was so good at that for most of his career, and I think it’s a bit of a misstep to have gotten himself involved in politics because I think that will come back to him on his companies or potentially could come back to him.
Like, that’s one of the biggest risks out there I see. But you’re absolutely right in terms of the way he got to where he got to was, “Hey, we’re going to throw ourselves at things that are hard, that nobody else is talking about, that don’t look pretty on a six-month, twelve-month time horizon, but that I know the world needs five to ten years from now. And as long as I can keep it going, until the world realizes it needs me, that’s what I’m going to do. And I’m going to make a lot of money, and I’m going to improve the world by doing it.” Like that, I think is a very powerful way of thinking about how to build businesses in the long run.
Brad Johnson: I heard a quote. I think it’s accurate. I heard Michael Jordan basically said, “Both Republicans and Democrats buy my shoes.” So, you’ll notice Michael Jordan doesn’t have a lot of political opinions out there, and he makes a lot of money by doing that. And he stayed pretty popular in all parties. Back to robotics, and maybe you’ve geeked out on this, maybe you haven’t Do you think we’re looking at a future where, whether it’s Tesla making the robots, whether it’s some other company that pops up, where AI and robotics are advancing that quickly, where there’ll be a robot folding our laundry in five years? What are your thoughts there?
Jacob Shapiro: I mean, that would be great, but it’s probably not going to happen in the United States. Although I mean, there have been some huge advances lately. So, this is something I’ve started geeking out on. So, I know enough to be dangerous, but I’m going to say some things with the proviso that I’m still sort of working my way through the research here. But the simple answer to your question, Brad, is that we’re behind here, and Tesla can do whatever it wants, but the center of robotics in the world is China. We talk a lot about US manufacturing workers losing their jobs to China. Chinese manufacturing workers are also losing their jobs right now, and they are losing their jobs to robots.
One out of every two industrial robots installed in the world today is installed in China. They’re lapping everybody when it comes to these things. And you have these “dark factories” in China that are completely automated, that are robots. They’re running 24/7. They call them dark factories because they operate in the dark. They don’t need light because they’re…
Brad Johnson: For light. Yeah. It’s wasted energy.
Jacob Shapiro: And they’re just churning. And so, China actually has a big political problem in all these workers who are losing their jobs. What are they going to do with these people, because the robots are replacing them? Other countries that are ahead of us here are countries like Japan or South Korea, and they’re ahead of us in part because, number one, they’re older than us, so they have a greater need for automation and robotics than we do. And number two…
Brad Johnson: Their demographics is what you mean by that, older workforce?
Jacob Shapiro: Yeah. Exactly. But number two, they couldn’t attract immigrants. The great superpower of the United States is that we attract the best and brightest from all over the world, and then we make them American. This is an old Ronald Reagan quote, where somebody asked, “What is the great thing about being an American?” Well, you can come to America, and within a generation, you can be an American. That doesn’t happen in China. That doesn’t happen in Japan. That doesn’t even happen in most European nations. And we’re now having an internal squabble with ourselves about whether that’s a virtue or whether that’s a strength, and how to integrate those immigrants into the country as well.
If we’re not going to be open to immigration, and if we’re not going to reform our immigration policy, we’re going to have to get up to robots really, really quick because we’re not aging as quickly as China and Japan, but we are aging. And fertility rate in the United States, just like across the world, is declining meaningfully, and we’re getting to the first point in our history, where population is starting to decline. And if we’re not going to do immigration, like robots is really your only way out of that. You can either attract migrants or you can build robots. So, that’s one of the reasons I think we’re going to need to focus on it more, but clearly, like, we’re well behind, and that most of this innovation is happening in East Asia, not here in North America.
Brad Johnson: Well, I don’t know if futurist is in your description, but I think you’re doing a pretty good job of chopping it up on that front. Anything else before we get off, kind of where the world is going, in your opinion? Any other topics of interest if you’re an advisor?
Jacob Shapiro: I think we covered some of the big ones. Maybe we just round it up by this way to distill some of what I said from the rabbit holes that we went down. We’re moving from a unipolar world to a multipolar world. We’re at the biggest energy revolution since the 1920s, and we’re at the biggest tech revolution since the 1990s. And those three things are all happening at the same time. Lastly, and this is one we kind of just flirted with at the end, and I don’t use demographics as a crystal ball, and I don’t think the world is going to collapse because population is declining. You look back 40 years ago, they said the world was going to collapse because population was exploding. Like, we go through these cycles.
But I will say that for the first time in the history of modernity, since we started using factories and things like that, we’re having to think about how do we maintain or increase our quality of life, while population declines. And all of our political ideologies, all of the isms that we use to describe ourselves, capitalism, communism, these are all ideologies that are meant to express how do we produce more in a world that is growing. And now we need to figure out how to maintain our quality of life while population is declining, while we actually need less. Like, we have fewer mouths that we’re going to… That’s not going to happen tomorrow. It’s not even going to happen 10 years from now, but it will happen 30 years from now, 40 years from now, and it could accelerate.
And thinking through the implications of that, both positive and negative, that’s another one. So, I would put four things in their mind: the shift to multipolarity, energy, tech, and demographics. Like, that’s your big, your four horsemen, if you will.
Brad Johnson: A lot of people, a lot of “experts” I’d say, they look into the future and they say, “Okay. Well, with AI, robotics, the potential to replace future human jobs,” and to your point on population not growing but declining in the future, and they bring up the topic of universal income and how especially some of these large companies, where they’re getting very top-heavy, the bigger getting much bigger, the Amazons of the world, the AI, I mean, you can go down the list. But what’s your thoughts on universal basic income kind of to address topics like that?
Jacob Shapiro: Yeah. I mean, that’s a policy question and an ideological question in some sense. And so, I’m going to punt a little bit because I try and focus on what is going to happen rather than what should happen, and that’s really a question about what should happen. But what I think is clear is that we have increasing inequality, and I mean that both at a domestic level in the United States, and I also mean that internationally. The countries that are richer are getting richer, and the countries that are poorer are also getting poorer, and that’s a trend that’s going to increase, too.
And if you don’t, from a policy perspective, figure out how to take care of those who are left behind or make the system a little bit more fair, what you’re going to get is political populism. And it’s why in the United States, political populists are everywhere. There are no fiscal conservatives. There are no true liberals that we’ve had on the ticket here for multiple campaign cycles. Donald Trump is a populist. Bernie Sanders was a populist. Mamdani is a populist. AOC is a populist. And for me, political ideology is a circle. You go far enough one direction, you are going to run into each other. It’s why Mamdani and Trump actually have much more in common with each other than, say, somebody who would be holding the line in the center.
So, I don’t know if universal basic income is the answer to that problem. My reflexive instinct is no. That seems to me to assume a world in which people don’t need to work anymore, or we don’t need to have people to do jobs anymore. I don’t think that’s true. I think AI is going to change the type of work that we need humans to do, but I don’t think it’s going to get rid of the need for humans to do work. So, it’s really, I would think more about making sure that younger generations, or even older generations who are losing their job because their skills are being replaced, I would focus all of my money on education. Instead of spending a trillion and a half on the defense budget to lose a war with Iran, why don’t we fight a war against the increasing ignorance in US society and say, “We should be the best educated, most advanced, most motivated cohort of people in the world”?
If we can invest in that human capital, the rest of it should figure itself out. So, like that’s where I would spend it, but something does have to be done because if you don’t do it, then you’re going to have this extreme bifurcation of society. And ironically, you’re going to have something that, one, I forget the name of the scholar, too, but he called it the Brazilianization of politics. We assumed that as countries got wealthier, they would become more like us. And actually, what’s happening is that as we get wealthier, we become more like them, where our societies are more bifurcated, where you have wealthy elites and then lots of other workers in the gig economy who are running around just trying to get scraps from the table from the elites.
And because there’s so much competition and AI is enabling that competition, that gulf gets deeper and deeper. And that will create political outcomes that are not going to be very savory. So, I deflected your question a little bit, but I think it is a question that we have to consider, and if we don’t consider it, like it’ll create political problems in the future.
Brad Johnson: Well, it’s interesting. And I threw that out there because I just wanted to hear your take, but universal basic income to me is a solution to what I would say is, “Hey, AI’s going to take all of our jobs,” or the future of technology, or whatever. I wish I could reference the YouTube channel because it’s a great one. But there was a very data-intensive breakdown of will AI replace our jobs, and this guy went all the way back to all the technology that was going to take our jobs, and I think he said since 1960, and this was all based on statistics off of census data where they report, “This is my job. There has only been one job in America that no longer exists since 1960.” Have you heard of this one?
Jacob Shapiro: No, what is it?
Brad Johnson: Do you want to take any random guesses just to throw something out there? One job that no longer exists?
Jacob Shapiro: I don’t know. I would go like something really niche like a…
Brad Johnson: It is very.
Jacob Shapiro: Like a phone operator, like in the offices where they had to put the plugs in.
Brad Johnson: You’re dang close. It’s like an elevator operator, like the ones that used to ride in the elevator and start and stop it. That’s the only job based on census data that no longer exists since 1960, at least according to this video.
Jacob Shapiro: That’s so fun. I spoke at a conference a couple of weeks ago in New York. It was at the Pierre Hotel in New York, right off of Central Park, and they had elevator attendants. And I was like, “This is so weird.” Like, why are we…
Brad Johnson: So, maybe they’re coming back.
Jacob Shapiro: I don’t think so. It felt like they were doing something…
Brad Johnson: Was it just like a retro make it feel cool thing is why they were in there?
Jacob Shapiro: No, it didn’t feel cool at all. It actually felt annoying because you had to wait for someone in order to ride the elevator up. And they were there, like when I was up at 7:00 in the morning to get my cup of coffee, they were there. Different person was there when I got in at 9:00 PM that night.
Brad Johnson: So, literally, running the lever that made it go up and down? Was it an antique? Was it an antique elevator?
Jacob Shapiro: No, I’m sorry. Not running the lever, but, like, pushing the button. Like, they had to ride the elevator up with you and push the button.
Brad Johnson: The only place that I’ve ever seen it is if you go to, like, a football game and there’s a suite, and you have to have special access, then they’ve got, like, a little card to let you in or something. But I thought it was interesting.
Jacob Shapiro: Yeah. Also, I want to say one more thing that what you said just kind of prompted in me, because when you think about universal basic income, like, you can think about that as, oh, just transferring X amount of money to somebody’s bank account every month. I think it’s pretty clear from studies that that doesn’t work. That just makes people lazy. But another way to…
Brad Johnson: It’s like winning the lottery. The statistics show you just blow it.
Jacob Shapiro: Yeah.
Brad Johnson: Yeah.
Jacob Shapiro: But another way to accomplish the same thing is to make the things that you need in society not so costly and not so hard. So, I referenced education, childcare, infrastructure. Like, if you can improve those things and let everybody access them and make them work for everyone, you actually sort of accomplish the same thing without necessarily making them lazy. To go back to our data center conversation, this is from the guys at FreightWaves, this data, we’ve spent more on building data centers in the United States than we’ve spent building the Interstate Highway System during the Eisenhower administration, which is literally the way that we get around in general.
Imagine a US government that is thinking about, “You know what? Some issues are too big for the market. We’re going to come in, and we’re going to make sure that our roads and bridges are fixed. We’re going to make sure that there’s high-speed rail between certain urban centers so that people can move from point A to point B. We’re going to make sure that the border with Mexico and with Canada is open and flowing, so we can take advantage of all the different things that happen with that.” So, like, that’s another way to accomplish the same thing. And, I mean, it’s not really… It’s part of the Chinese model. Like, the Chinese model has accomplished some of that. They also savor in some more top-down things that we wouldn’t necessarily want. But that’s another way to accomplish the same thing, and it’s not something that we’re really doing right now.
Brad Johnson: Well, since we’re getting in towards the end of the interview here, now I’m just going to kind of freestyle, and I’m going to be selfish with this interview and just ask you about interesting things I found in your background in research. You did a podcast on something, just speaking of random stats and facts that completely blew me away. It was the Florida Orange podcast. Does that ring a bell?
Jacob Shapiro: Yeah, it was a great one.
Brad Johnson: So, I remember. I’m a kid of the ’80s. I remember you’re growing up, you’re seeing these orange juice commercials. Oh, Florida Oranges. They were like a brand like pistachio is these days. And apparently, Florida doesn’t produce oranges anymore, like statistically. Like, break down kind of the concept of that because I just thought it was super interesting.
Jacob Shapiro: It’s crazy, and it goes back to what I said. If you scratch hard enough, everything is ultimately about geopolitics, which is why, financial advisors, you have to be a geopolitical analyst in the world today. And if you can’t be a geopolitical analyst yourself, you need to find someone to help you be a geopolitical analyst. That’s a self-serving sentence, but there are plenty of others besides me out there, or research-like tools you can use in order to do that. But you can’t not be a geopolitical analyst. You’re either going to be a good one or a bad one. And this Florida orange story is a perfect example of why. Yeah, oranges didn’t grow in Florida originally. They’re actually from China originally.
And the reason that Florida becomes the Orange State is because in World War II, the United States government is worried about its soldiers getting scurvy. And so, it basically requisitions a bunch of land and throws out huge incentives to plant orange trees in Florida so that the troops can actually fight, so that they can have their vitamin C. We win the war, and then they have all these orange trees in Florida. What do you do with them? Well, you create an orange juice industry, and you tell the American consumer that you need to drink oranges. And for literally generations, there are generations of Florida farmers whose entire livelihoods is Florida oranges.
Now, it’s not a native plant, so eventually, a disease, I forget the exact name of the disease, but there’s a disease that has infected Florida orange trees, and production is down something like 90%. And in a couple of years, there just won’t be oranges that are grown in Florida anymore. Besides that, and this is a thing that is true across American agriculture, we’re no longer the low-cost producer for lots of things that we used to be. Brazil is stealing our lunch money on that, and they’ve become the low-cost producer, for this in general. So, what was a burgeoning industry in Florida is now being taken away, and nobody did anything wrong. Like, you can’t prevent this disease from attacking the oranges itself, but that’s what happened, and so it completely changes everything.
And it just goes to show you that, like, there are these long cycles, and things begin with politics, and then you think the market is just working the way that it’s supposed to. The market’s not working the way it’s supposed to. Like, somebody was, like, putting their finger on the weight there in general, but that’s that story.
Brad Johnson: I think there’s a similar story with, like, dehydrated cheese in America because they created it for World War II to be able to pack these things, these meals that would last. The war ends. There are all these factories, and I think that’s, like, where Cheetos and mac and cheese came from and all that. Am I completely making that up? Or I thought I heard that somewhere.
Jacob Shapiro: No, that sounds right, and there are so many of these things. Like Teflon, non-stick pans, that came out of research for when they were racing to make the atomic bomb. It turns out that the material that’s in Teflon is somehow critical to some of the chain reactions that are happening there. Or on a more serious basis, the computer chips in the computers and phones that you and I are using to record this right now are because the US semiconductor industry created chips in the 1950s. The only reason those industries survived was because the US government bought 50%, 60% of everything they were producing. Because when you put chips on missiles, they become more accurate.
And they wanted to win the Cold War against the Soviets, and they wanted precision-guided munitions. And out of that decision comes iPhones and the internet and computers and everything else. So, again, like, you scratch hard enough, like, we think that, oh, the free market is going to work. Capitalism just works. I’m not anti-capitalist, for the record. I’m just saying, if the United States was not a little bit sort of state planning about the semiconductor industry in the 1950s, you and I are probably not having this pleasant conversation over screens right now. That all had to go to making missiles. So, another way to think about when you’re thinking about where tech innovation is happening in the next 10, 15 years, go to DARPA, go to where the United States government is showing you what tech they’re investing in, and the public-private partnerships that are emerging out of that. That’s a pretty good indicator of where the puck is going in terms of tech innovation, because it may start in that, but it’s going to go out into the broader population.
Brad Johnson: Well, like from straight up investing and the success of a company, like government contracts, that’s like a safety net for a company. It’s like guaranteed revenue, so that makes a lot of sense. What are your thoughts? Because there’s one thing for the government to buy a lot of products that a company manufactures. I think we’ve started to see this trend where the government is actually, “We’re going to purchase a stake in this company,” like a major shareholder. Is that a new thing? Has that been around forever, just while we’re on that kind of trend and topic?
Jacob Shapiro: It is a new thing, and I confess I don’t really understand the point of it. I understand it if the goal is to build, say, a sovereign wealth fund, and you want the government to invest stakes in businesses that are going to grow over time so that the government is wealthy, but that’s not what we’re doing. If you look at the companies that the US government has bought stakes in, it’s not companies that I would advise in most people’s portfolios. Like, they look like actual bad bets to me, and businesses that I’m not sure are going to return a lot. It’s more on things like critical minerals or semiconductors or some of these others.
In the past, what we would’ve done was we would’ve just taxed those companies and redistributed the income. Like, why is it good for the US to be a 10% shareholder of one of these companies? Just increase the taxes, and then the US government uses those taxes to build trains or to fund healthcare and things like that. So, I confess, I don’t really get why the US government thinks it’s a good idea to invest in companies like that. Or to your point, like guarantee them government purchase contracts if you really think that they’re that important. Like, help them innovate in that way, but don’t insert the government directly into the management of the business.
Don’t make the government a shareholder in the business. That feels very, I don’t want to say un-American. It feels very un-capitalist. It feels like that’s how the state-planned communist countries were doing this. I don’t know why we’re taking that page out of that book. Maybe I’m not smart enough to see it, but I found it confusing.
Brad Johnson: Yeah. Well, Jacob, dude, an hour flew by. We covered a lot of ground on this one. I’m just rapid-firing random questions at you on all topics, and I see why you’re so good at what you do and why so many people depend on your advice. So, thanks for the time. I just have one final question. I also know you’re a dad, I believe two daughters, correct?
Jacob Shapiro: Yeah.
Brad Johnson: So, I’m a dad, have three kiddos as well. So, one of the things that’s core to the belief here at Triad is we want to, for ourselves and for our members, the advisors we serve, help them build businesses that both they build, they basically are built to do business, do life, which is building businesses that bless their life, don’t necessarily become their life, which isn’t always easy in business. So, I’d love to hear your take. I know sometimes you’re tweeting at 4:00 AM with stuff happening on the other side of the world, but what’s your definition of doing business, doing life? How’s that play out for you?
Jacob Shapiro: Man, what a great question. It’s funny, I approached fatherhood with some trepidation, and none of it was warranted. It’s by far the best thing in my life. So, I would go so far as to say that my job is my second gig. Like, my primary gig is being a dad. It is the most important thing. It has become the most important thing. I used to be a workaholic. Not anymore. Like, I’m not working on weekends. I’m not doing this late night. Like, when I’m thinking about doing conferences or executive briefings and things like that, I’m pricing it in terms of how many bedtimes am I missing? That’s the ultimate sort of indicator. But I’ll give you a very personal answer because I think this is going to be very idiosyncratic to whoever you ask this question to.
I am not one of these people who was blessed with deep passion for his occupation. I like geopolitics. I’m good at geopolitics. To quote Rust from True Detective, like, “Careful what you get good at because you have one lifetime. You maybe have enough time to get good at one thing.” I’m good at this, and I find it interesting. But it’s not, like, the thing that animates me. It’s the thing that allows me to provide a living for my family and to support my family, and that’s the most important thing to me, and those are my priorities. And I think particularly for millennials and those that came after, somewhere along the line, we were told that your job had to be the thing that fulfilled you, had to be your passion, had to be the thing that meant everything to you in life.
And I don’t think that has to be the case. A job can be something maybe you like, maybe you don’t even like it, but if it’s virtuous in the sense that it allows you to provide, and that it’s hard work, and that it’s something that’s challenging you sort of on a daily basis. So, the way I would respond to your question there is just to say, yeah, like my family’s my most important thing. And so, I’m making my work fit around my family rather than making my family fit around my work because that’s what I care about ultimately at the end of the day. I will say I spend a lot of time thinking about the future, and one of the questions I most often get is how do you stay sane? I’m actually very optimistic about the world my daughters are going to grow up into. I’m kind of jealous.
Like, I see what’s coming, and, like, there are some bad things. Trust me. I’m not saying, like, it’s all going to be great. But, like, I want to set them up for success. I want them to read books. I want them to know how to be critical thinkers. I want them to have the skills that are going to be necessary to succeed in a world that I think is going to be better than even the world that I lived in. And so, a lot of my work when I’m thinking about that is how do I make those connections, and how do I give them those superpowers in order to go forward?
Brad Johnson: Well said. And I know you didn’t know that one was coming. I just threw it at you, so I can tell you’ve given that some thought prior to that answer. So, well, Jacob, really enjoyed the time. I have a feeling if you’re a Triad member, you might be seeing Jacob in the future, because I’d love to go deeper on a lot of topics. So, until next time, my man, enjoy the nice warm weather down in New Orleans.
Jacob Shapiro: Enjoy. Yeah, I’ll try not to melt into a pool of soup. Thanks, Brad. I appreciate you.
Brad Johnson: All right. We’ll see you, my man.
