Muddy Waters’ Carson Block on How AI Could Unwind the S&P 500 | #640
July 17, 2026
AI Summary
5 min readMuddy Waters founder Carson Block has spent two decades as one of the world's most prominent activist short sellers, exposing frauds from Chinese reverse mergers to Wirecard. But on this episode of The Meb Faber Show, Block makes a confession that would surprise anyone who knows him only as a professional skeptic: he has started running a systematic momentum strategy within the S&P 500. "It's compounded at over 70% gross, which in a way is depressing as a short seller," he says. The admission sets the tone for a conversation that is less about righteous crusades and more about survival, adaptation, and the structural risks Block sees building beneath the market's surface.
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What you'll learn
- 1 (00:00) **Introduction & The State of Short Selling** - Carson Block joins Meb Faber to discuss the profession's decline and the changing market dynamics.
- 2 (05:00) **Regulatory Decay and the "Golden Age of Fraud"** - Carson critiques both Democratic and Republican approaches to enforcement, arguing the system is broken.
- 3 (08:10) **Case Study: WireCard's Evil Genius Strategy** - Carson recounts how WireCard manipulated regulators and the media to survive for over a decade.
- 4 (10:45) **Carson Block's Evolution: From Short Activist to Pragmatist** - Carson explains why he expanded beyond pure short selling to include long strategies.
- 5 (16:03) **The AI Thesis: Displacing Knowledge Workers, Unwinding the S&P 500** - Carson presents his core macro concern: AI will displace 15% of U.S. knowledge workers within three years, with severe market consequences.
- 6 (22:10) **How to Trade the AI Disruption (Second & Third Order Effects)** - Carson details his specific trade ideas, emphasizing capped risk and the timing of the repricing.
- 7 (26:29) **The Complacency Problem: Why No One is Worried** - Meb and Carson discuss the market's indifference to record-tight credit spreads and suppressed volatility.
+ Full timestamped outline available in the app
Show Notes
My guest today is Carson Block, founder of Muddy Waters Research & Muddy Waters Capital and one of the last short sellers still standing.
In today’s episode, Carson Block explains why he thinks AI could displace 15% of knowledge workers and unwind the market’s biggest stocks. He breaks down his short of SoFi’s aggressive loan accounting, why record-tight credit spreads worry him, and how he trades that risk with put spreads.
To close, Carson explains why he still calls China uninvestable and recounts his hardest battles.
(0:00) Starts
(1:02) Carson Block on the evolution of short selling
(3:03) The impact of AI on jobs, economy, and markets
(9:43) Evolving Muddy Waters' business model beyond short-selling
(13:32) Investing in momentum and junior gold miners
(17:52) Navigating markets amid AI disruption and labor market impact
(25:21) Thoughts on historically low corporate yield spreads
(30:25) Carson's short call on SoFi
(38:10) Carson's most memorable investment
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