The Asset That Could Be the Market’s Biggest Mispricing

South Korea’s market fell 25% during the political crisis described by the guest, then rebounded by a third after the military supported democracy and the president was removed. The guest also noted that MSCI classifies South Korea as emerging while FTSE classifies it as developed, and that his firm had found Korean companies at one-third of book value five years earlier.

The guest argues that AI’s real-world importance does not make AI companies attractive investments at any price, questioning whether firms valued at $2 trillion each can justify those valuations if profits are years away or never arrive. He makes the same distinction between long-term prospects and purchase price in the broader U.S. market, which he calls the most expensive by almost any metric.

The guest uses Japan’s 1989 market, when it represented half of the world index before crashing, and the early-1970s U.S. market as historical valuation warnings. He says today’s conditions resemble 1972–73 in combining extreme valuations with rising inflation, excessive fiscal policy and money supply, global skirmishes, and a handful of dominant, expensive stocks—but frames this as an analogy, not a forecast.

The guest sees electricity demand from AI and other uses as a reason to favor nuclear power, citing its ability to provide electricity without pollution or carbon at a competitive cost; he also described China’s CGN as a growth company whose reactors could be bought for far less than the cost of building reactors in most of the world. Separately, he says low natural-gas prices may need to rise to sustain supply, and argues that today’s energy and materials share below 5% of the U.S. market may make an explicit natural-resources or energy allocation necessary to match the exposure energy provided in the 1970s.