Epic warning! Legendary trader Tudor Jones: The S&P 500's ten-year return is negative, sovereign debt bubble at 252%, holding $BTC long-term is the trend!

It took me 50 years to realize one thing: all great wealth comes from long-term trend holding.

This quote is from Paul Tudor Jones, founder of Tudor Investment, a living fossil who has traded on Wall Street for half a century. Recently, in an in-depth interview, he rarely publicly apologized to Buffett, admitting he has been “the biggest fool.” He said Warren Buffett is the pioneer of compound interest, understanding its power at age nine, while he has spent his entire career cleverly avoiding compounding. He specifically mentioned Buffett and Munger’s partnership: one buys a dollar’s worth of something for fifty cents, the other deeply understands the power of compounding in growing businesses—together, they are too strong.

But what Jones really wants to talk about is the destructive risks brewing in the current market. He warns that, based on current S&P 500 valuations, historical data shows ten-year nominal returns will be negative. He gives a staggering figure: U.S. stock market capitalization as a percentage of GDP has reached 252%—the peak in 1929 was 65%, in 1987 was 85% to 90%, in 2000 was 170%, and now it’s 252%. Once the valuation reverts to the past 25-30 years’ average P/E ratio, it implies about a 35% decline in the stock market. 35% times 250% of GDP equals 80% to 90% of GDP in wealth evaporating. The wealth effect reverses, capital gains tax revenue drops to zero, budget deficits explode, bond markets collapse, and a negative self-reinforcing snowball effect ensues. He clearly states: we are in the midst of a sovereign debt bubble.

Even more unsettling is the deterioration of liquidity. In 2007-2008, private equity accounted for about 7% of institutional portfolios; now it’s 16%. Liquidity is much worse than in 2008. The proportion of individual holdings is also at an all-time high. Jones says if you buy the S&P 500 at the current P/E ratio (about 22 times), historical data suggests you probably won’t make money in ten years.

So what can make money? Jones offers an answer based on half a century of trading experience: follow the trend long-term. He cites the greatest wealth creators in history—Bill Gates, Steve Jobs, Buffett—all accumulated wealth through long-term trend holding. Trends can be in companies, value investing, or scarce assets.

Speaking of scarce assets, he compared gold and $BTC. Gold’s annual new supply is about 2%, while $BTC’s supply is limited and decentralized. During the inflation trade in 2020, he explicitly pointed out that $BTC is the best hedge against inflation, better than gold because of its hard cap supply. Of course, he also admits risks: during hot wars, cyber warfare could disable all electronic assets, and quantum computing poses a potential threat. But for now, $BTC’s scarcity is unmatched.

Jones also shared his extreme concern about AI. A closed-door meeting 18 months ago included modeling experts from four major AI model companies. When he asked how to solve AI safety issues, the almost unanimous answer was: wait until 50 million or even 100 million people die in an accident before taking real action. He said that’s crazy. AI development follows the ancient human pattern of “build-destroy-iterate,” but this time, the tail event of “destruction” could kill hundreds of millions or billions of people. He advocates the most urgent policy: require all AI content to be watermarked, and three intentional violations should constitute a federal felony. Because deepfakes are already affecting reality—he himself was asked twice this year whether a video was real, only to find they were all fakes.

Back to trading itself, Jones revealed an emerging opportunity: USD/JPY. The yen has been seriously undervalued for quite some time, and Japan’s newly elected prime minister is highly entrepreneurial, reshaping the economy with “Japan First.” Japan holds about $4.5 trillion in net international investment positions, 60% of which is in the U.S. and mostly unhedged. Once the yen strengthens, it will trigger huge capital flows. He uses boxing as a metaphor for trading: step into the ring, test, jab, look for openings, and occasionally land a knockout punch when a great opportunity appears. The $BTC in 2020 and the two-year rate in 2022 are his KO punches.

He described the state of extreme market moments: on the day gold and silver experienced their largest single-day drops in history, silver’s daily volatility was 33%. You must be fully attentive every minute—how to handle the open, how to respond when prices cross unexpected levels, plans must be prepared in advance and executed automatically. He wakes up at 2:30 or 3:00 a.m. daily, works for half an hour to watch the London open—this habit has persisted since the 1980s. Information overload is the biggest enemy—80,000 emails a day erode the ability for “precise execution.” Precise execution means buying during bloodshed, selling during cheers.

Finally, Jones talked about the meaning of life. He says he loves trading because he wants to make a lot of money and donate it—this is a noble pursuit. He founded the Robin Hood Foundation and established the Stepforth Academy in Bedford-Stuyvesant, which ranks first among 543 elementary schools in New York. He quotes an 83-year-old family doctor: “When you retire, you die.” So he insists on exercising two hours daily to keep his mind sharp. For young people, he recommends news writing training—conclusion first, principal component analysis—this is the logical framework for all trading decisions.

If you can only remember one thing, Jones hopes it’s the story of a two-and-a-half-year-old lost child who was helped by an old Black gentleman. The old man refused the mother’s $5, saying, “You would do the same for my child.” Since then, his prayer list has included “that gentleman” four or five thousand times. This act of kindness created ripples; years later, he saw a story on TV about Eugene funding impoverished children, which resonated instinctively, leading him to start a charity that changed thousands of lives. He says doing one simple good deed every day—together, 350 million Americans—could restore the world to what it should be.