Muddy Waters’ Carson Block on How AI Could Unwind the S&P 500 | #640

**SPEAKER_2** (0:05)
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**Carson Block** (0:30)
Cynics always sound smarter. Optimists live in bigger houses. The dirty secret of the activist short selling model is that it's not scalable. We're not as humans going to be able to keep up with the pace of change.

**Meb Faber** (0:49)
Welcome to The Meb Faber Show, where the focus is on helping you grow and preserve your wealth. Join us as we discuss the craft of investing and uncover new and profitable ideas, all to help you grow wealthier and wiser. Better investing starts here.

**SPEAKER_4** (1:02)
Meb Faber is the co-founder and chief investment officer at Cambria Investment Management. Due to industry regulations, he will not discuss any of Cambria's funds on this podcast. All opinions expressed by podcast participants are solely their own opinions and do not reflect the opinion of Cambria Investment Management or its affiliates. For more information, visit cambriainvestments.com.

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**SPEAKER_6** (1:48)
Welcome back everybody.

**Meb Faber** (1:49)
Happy summertime. Today we have an awesome episode. Today's guest is Carson Block, founder of Muddy Waters Research and Muddy Waters Capital. Carson's well known for being the last short seller left in the world. Carson, welcome to the show.

**Carson Block** (2:03)
Yeah. Thanks for having me, Meb.

**Meb Faber** (2:04)
Do you know any others? I mean, I feel like they've all retired, gone the way of the dodo and makes me sad. Are there a few left?

**Carson Block** (2:10)
I mean, there are a few, but yeah, I mean, there have been a number of retirements. The voluntary retirements were right after the GFC. The involuntary retirements are in more recent years, but it's not an easy profession that those of us still in it have chosen.

**Meb Faber** (2:26)
Well, I joke that all my short seller friends, they definitely have like a little screw loose, usually in a good way. I'm a long time defender of short sellers, as much as I got into it with Elon on Twitter years ago.
Anytime these CEOs are fighting with the short sellers and say, look, just take care of your business. You don't have to worry about them. They're buyers of your stock at some point, so just execute. I call the short sellers the immune system of financial markets. Nobody's going to work out this fraud, certainly not the general regulators and governments. So you need people like yourself. You're doing God's work. Anyway, is that why you're in a bunker in Sonoma?

**Carson Block** (3:07)
That's right.
Hiding out from all the bad guys. But no, I mean, look, there's a lot you said that I could react to.
In politics as well as in the markets, it's much less civil time. So if you go back, say, 15 plus years ago, I think a lot of investors on the long side had that same attitude of, well, I don't want my management to spend too much time and energy dealing with short sellers. It's probably a red flag if they do. At best, it's a personality defect. But now in these times, a lot of the investor base cheers on these managements as they just engage in lawfare against their critics and constantly try to make aggressive moves against them, whether it's in real life by sending investigators after them or just on social media. So it's a different time. And I noticed this acutely. We shorted SoFi a few months ago, and that's a stock where the management has really focused on cultivating a retail base, almost to the exclusion of institutional and even sell side. And I mean, those guys are a rabbit, man. There were some pretty nasty death threats out there, and nobody even on Twitter, nobody even said, hey, that's too far. So as far as how most longs, and especially retail longs feel, about companies going after their critics these days, I think it's just sport. They like it.