Every fall, a tight-knit group of investors gathers for a friendly, but fiercely competitive, stock picking challenge. It’s hosted by Paul Tudor Jones, the legendary hedge fund manager. But it isn’t just for a good cause. The top picks from the event, backed by the likes of Bill Ackman and Stan Druckenmiller, would’ve returned 7x your money in just six months. Not bad for a dinner party competition.
Now, Tudor Jones is hoping to expand the event and draw in more diverse talent. The next round kicks off this fall. Buy-in? $10,000. Format? One long, one short. Stakes? Bragging rights and maybe a market-beating return.
But this year, what really turned heads was Tudor Jones’ macro view and how he’s investing his own capital.
Key Points
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Tudor Jones expects sharp Fed rate cuts, a weaker dollar, and one last stock rally. His picks were gold, gold stocks, and a small Bitcoin allocation.
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The U.S. can’t fix its budget without massive cuts and tax hikes. Markets are ignoring it for now but a reckoning is coming.
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AI will level the investing playing field but could wipe out millions of jobs. Jones urges action now, tax AI use and share the gains.
Betting Big on the Yield Curve and a Dovish Fed
When asked what he’d pitch as a winning long for the next competition, Tudor Jones didn’t flinch. “Front-end rates are going lower,” he said. In fact, he predicts a dramatic steepening of the yield curve, fueled by rate cuts and a shift in leadership at the Fed.
His logic? Fiscal reality.
“We’re going to have a new Fed chair within six months,” he said. “And I think Trump’s going to pick someone who’s extremely dovish.”
Why? Because the U.S. is fiscally handcuffed. With debt-to-GDP near 100% and budget deficits expected to run north of 6% for the foreseeable future, lowering the cost of debt becomes more than a preference—it’s a necessity.
The “Big Beautiful Bill” vs. Fiscal Reality
Tudor Jones laid out a thought experiment that was part political satire, part financial roadmap. Imagine trying to actually balance the U.S. federal budget. He calls the theoretical solution the “Big Beastly Bill.”
Here’s how he breaks it down:
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Cut rates to 2.5%: saves $175 billion
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Remaining shortfall: $725 billion
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Split the gap: 50% tax hikes, 50% spending cuts
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Spending side: across-the-board 6% cuts to defense, Medicare, Social Security, you name it
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Tax side: top income rate to 49%, capital gains to 40%, 1% annual wealth tax
His point? Bond markets are letting governments globally play chicken with fiscal reality. “At some point,” he says, “markets are going to call B.S.”
What Happens When the Music Stops?
So how do you invest in a world built on borrowed time?
According to Tudor Jones, the day markets wake up to fiscal reality will be painful, especially for equities. But until then, the path is clear.
“Stocks probably go higher,” he says, “because we know short rates are going lower.”
His base case:
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Rates cut sharply in the next 12 months
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Dollar down 10% from current levels
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Equities get one last push before reality bites
The Ideal Portfolio Right Now?
Tudor Jones has a blueprint:
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Gold
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Volatility-adjusted Bitcoin
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Gold Stocks
He still recommends a 1–2% Bitcoin allocation, particularly in a world where policymakers are likely to run hot inflation and negative real rates to deflate away debt.
But he’s not all doom and gloom. In fact, he’s surprisingly bullish on a new idea making the rounds: giving every child $1,000 at birth and letting family members add $5,000 annually into an investment account. By the time they turn 18, they’d have real skin in the game, and a real stake in capitalism.
“That would be the best $4 billion the government could ever spend,” he said.
The Cookbook That’s About to Serve Us?
Tudor Jones also turned his focus to artificial intelligence. While he’s deeply concerned about the potential for AI to destabilize the job market and society, he’s also embracing it in his firm.
“We just tested two commercially available AI models,” he said, “and where this tech is going, it’s unbelievable.”
According to him, AI is about to democratize quant investing. Firms like Two Sigma and Jump Trading—who’ve historically had a data and manpower advantage—are about to see that edge eroded.
But with that upside comes risk. Big risk.
He pointed to Elon Musk’s warning that AI could pose a 20% existential threat to humanity, and recent comments from Anthropic that suggest 10–20% of white-collar jobs could be wiped out within five years.
“There are no guardrails,” he warned. “We’ve been served, and we don’t even know it.”
The Real Crisis? Wealth Disparity
Perhaps the most important takeaway from Tudor Jones wasn’t about trades, it was about trust.
“We’re in a fragile social moment,” he said. “Productivity gains over the last 40 years have gone 85% to the top 10%, 15% to the bottom 90%. And we wonder why the country feels divided?”
If AI continues to accelerate productivity, the distribution of those gains will matter more than ever.
His suggestion? Tax robotics. Add a fee every time an AI model is used. Build a framework now, before it’s too late.
The Bottom Line
Tudor Jones isn’t sounding the alarm bell just to be contrarian. He’s been through cycles, debt crises, and market meltdowns before. What he’s seeing now is a toxic mix of fiscal recklessness, unchecked tech disruption, and fragile trust in institutions, and it calls for careful positioning. But not paralysis. You can still make money.
Gold. Bitcoin. Equities, carefully. And above all, pay attention to the signals behind the noise. Because when reality hits, it won’t be subtle.