Animal Spirits Podcast - 10 Reasons to be Bullish (EP. 472)

Episode Date: July 8, 2026

On episode 472 of Animal Spirits, ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Michael Batnick⁠⁠⁠⁠⁠⁠⁠⁠⁠���⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Ben Carlson⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ discuss: why the vibecession is over, experience vs. expertise, reasons to be bullish, reasons to be bearish, small caps on are fire, market concentration, Samsung's ridiculous profits, retail investors are moving markets, owning the biggest stock, it's expensive to live in San Francisco, the gambling boom, why car payments are rising and more. This episode is sponsored by Pacer ETFs. Learn more at https://www.paceretfs.com/ Sign up for The Compound newsletter and never miss out: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠thecompoundnews.com/subscribe⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Find complete show notes on our blogs: Ben Carlson’s ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠A Wealth of Common Sense⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Michael Batnick’s ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠The Irrelevant Investor⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Feel free to shoot us an email at ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠[e-mail]⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ with any feedback, questions, recommendations, or ideas for future topics of conversation.   Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Ben Carlson are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. The Compound Media, Incorporated, an affiliate of ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Ritholtz Wealth Management⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://ritholtzwealth.com/advertising-disclaimers⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://ritholtzwealth.com/podcast-youtube-disclosures/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Pacer ETF Disclosure: Before investing you should carefully consider the Fund’s investment objectives, risks, charges, and expenses. This and other information is in the prospectus. A copy may be obtained by visiting www.paceretfs.com. Please read the prospectus carefully before investing. All investing is subject to risk, including the possible loss of principal. Pacer ETFs are distributed by Pacer Financial. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Pacer ETFs are distributed by Pacer Financial. Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing, and watching. All opinions expressed by Michael and Ben are solely their own opinion and do not reflect the opinion of Riddholt's wealth management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Riddholt's wealth management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. Michael, I'm officially declaring it.

The vibe session is over. Okay. Okay? Now, it's not going to show up in the sentiment surveys because, as we've talked about, sentiment surveys are broken. You can't trust those anymore. But I just get this sense,

and this is very eerily reminiscent of the roaring 20s. One of the reasons the roaring 20s happened was not just because there was all these new consumer products. It was in consumer credit, and it was people live. through a horrible period of time. Right? You had World War I. Then you had the Spanish flu pandemic.

You had a depression and all these things. And people were just looking for a reason to celebrate. And it seems like this summer is a summer of celebration. And I think the Knicks thing kind of started it. And you saw all the people, you were part of this. You saw all the people who were just like, oh, thank God. We get to celebrate something. Right?

It was just people want to celebrate something. The World Cup is a huge celebration. It's not just Americans. It's all these people from other countries. coming over here. And you see these huge crowds of people in these American cities going nuts, doing celebration. Everyone has a smile on their face, cheering loudly. I think the Fourth of July felt a little extra. What do they call it? The semi-Quincennial, which is the weirdest name ever. Ben, you missed obsession and backrooms. Okay. Yeah, you're celebrating movies being back again

because you're not celebrating the World Cup. But it just seems like out in the world, there obviously there are still dumer people who are too online who are never going to be happy. And we're never going to get that out of the system. If you're too online, you're just, you're not, and you're too political, you're never going to be happy again. So take those people out of the equation.

People in the real world want something to celebrate, and I'm saying it now, it's over. The vibe session is done. Love it. Right? Rest and peace. You know, I had a very American patriotic weekend myself. I had some people over for the fireworks.

You could see him from my backyard. and a friend of mine brought over, like, I don't describe it, a gun that shoots fireworks, I suppose. I'm sure there's a name for it. And I'm like, dude, what do you do? I'm Jewish. I don't want to shoot these. You sent me the video.

It looked to me like a souped up Roman candle. Okay, sure. Anyway, I got my Roman candle on. I sacked up and I let it rip. That was fun. And then what? I still can't believe the size of the fireworks that they sell to individual people now. Where all you need is one little thing to go wrong and this thing blows your face off.

I can't believe that they give these to people. I went to this fireworks tent with my son and we could, in our neighborhood we could only do sparklers. They outlawed fireworks. Those people were getting too crazy with them. Like, sorry, we're not doing me anymore by houses. And the guy goes, hey, you want to buy a kaboom box? Oh, boy, that sounds dangerous. He points over in this thing, it was like, I don't know, $900 or something.

There was this huge box of all these fireworks. And he's like, if you light that thing, the ground underneath your feet will shake. I'm like, you know what? I'm good. Appreciate that. I'm going to let someone else do the kaboom box. The thing, the Roman candle shooter, it was no big deal. I scanned the QR code and I saw somebody doing on YouTube.

I'm like, oh, this is, I think I could do this. And then, as we were preparing for the party, I ordered, we ordered food that never showed up. Delivery just didn't make it. So I'm like, oh, great. People are able to be able to five minutes. You know what? Let's give Domino's one more shot. Let's give Domino's one more shot.

It's July 4th. Gosh, dang it. Let's give it one more shot. What I did this time, I got the thin crust. And I got to tell you, 10 out of 10. Well, not quite 10 on 10, but compared to the doughy pie, that truly was not really that awesome, trying to be kind. the thin crust dominoes, that rips.

That's edible. The beauty of the thin crust is, so let's say you eat the hand toss. You probably have three pieces, let's say. Oh, hold on. Hang on. Somebody emailed us to get the hand tosses. It's a little bit extra, but it's way better.

What's... But thin crust, you can eat 10 pieces and feel like you can keep going. What's a hand-tossed Domino's pizza? I thought that was just a regular pizza. Either way. Did you know, I have this later in the dock? Did you know that...

Um... Brands sold pizza, apparently Domino's pizza has been ringing their bell, cleaning their clock. Somebody emailed us to that. I'm butchering all sorts of phrases. Is ringing their bell a phrase? No. There's a phrase I'm looking for. I don't know.

You can say you got your bell wrong. That was it. That was it. Anyway, I hope everybody else had a bell ringing of a weekend. All right. But don't you get the sense that the vibes are changing. People are happier. Out in the real world.

Again, not online. The online people are never going to be happy. The people who make everything political, they're never going to be happy. I'm having a great time. Yeah. People in the real world seem happy to me and want to celebrate stuff.

And it's a great thing. All right. Speaking of celebration, Chart Kid Matt had this blog last week. Ten reasons to be bullish. Now, Matt is a younger fellow, right? He's mid-20s, mid-to-late 20s, right? I think there's this difference between,

and Michael Mobeson, I remember, did a post on this once. The difference between expertise, he's an experience. Right? And I feel like people with a lot of experience in the markets,

if you're an old gray-haired guy right now, you have to be bearish about everything. That's just, that's what happens when you get older, I guess.

When you get older, you turn 70, you walk around the locker room at the gym naked and you're permanently bearish about everything. Okay, that's just what happens. But Matt,

being younger, I feel like allows him to not see the world through that lens. And he says, here's 10 good reasons based on the data to be bullish. No one is saying this right now.

No one is saying you should be bullish, correct? Very few people. Very few people. You know what? Because you and I, we've been working together since 2015. And I think for much of that entire time, we were waiting for the other shoe to drop in the market. Because that's just what it was. Roll returns.

This is the end. All these things. And Matt's like, I don't even know what shoes are. What are you talking about? Stocks go up. So he did this in charts, which he's prone to do. And I think his charts are worth going through. I pulled out some of my favorites.

This is the most surprising one to me. So he looks at 12-month total return for the S&P versus 10, 12-month earnings growth. And a lot of these charts are on Exhibit A. Remember, if you're an advisor, you can take for a spin. Also, coming out today, recorded this Tuesday morning, another economic and market update from me, yours truly. Having fun writing these. Wait, so if you're an Exhibit A advisor, subscriber, Ben Ghost writes a monthly report every month. Not even ghostwriting.

My name's on there. Oh. Ghost writing would be like if I was... Good under math. But here's the reason that I want to... And I heard Taylor Sheridan on Bill Simmons recently. And he talked about... Bill Simmons asked him, like,

what do you do differently when you make a movie or a TV show that someone else doesn't? And he said, when I first started, don't have the characters in the movie tell you something in dialogue if you can show it with a camera. And that's charts to me.

That's why I think it's... helpful and that's why I included so many charts my book. I would rather show you than tell you. Anyway, good interview. Uh, earnings growth over the last 12 months has been higher than stock market returns. I have quite a wide margin. Earnings, earnings are up 32%. The market itself is up 22%. That's pretty nuts. Earnings themselves are accelerating. And it's going up for not only the S&P, which is going up considerably, midcaps as well, small caps. So S&P 400, S&P 600. For, that means, obviously if we take a leap there, earnings is growing higher than the market, valuations are falling for the S&P 500, which is kind of insane to think about.

I just posted on Slack this morning. Since the bottom in 2022 of the bare market lows, the S&P 500 is up 24% annualized, 24% per year since October 2020. And in that time, valuations really aren't up that much because fundamentals have kept up. All right. Here's another one. Profit margins continue to rise in the face of everything that's going on this decade. Tariffs, war, higher energy prices, supply chain issues, higher inflation, margins just continue to go higher. And with AI coming, I don't, why would this go be lower?

I don't see why this has to stop. Well, the obvious way it stops is if the hyposcale is pull back because all of the, not all, a lot of the earnings are coming from their spending. Well, that's the earning part. I'm talking about the margin part. As technology improves, why would margins go lower? I think margins improved for the rest of the S&P as a half of technology stocks.

I guess competition. Okay, maybe. That hasn't worked in the last 15 years. No. The Mag 7 weight in the S&P is dropping considerably because the mag 7 is underperforming by a wide margin. I think this is good news that this is happening. Concentration is getting lower.

It is great. Can I say one more? So these are all wonderful charts from that. You mentioned the Taylor Sheridan interview. One of the things that he said, because everybody's like, how the hell are you making all these shows? It doesn't seem possible that you are pumping out this volume, right? Between Landman and Yellowstone and all the spinoffs and Lioness and Madison, whatever,

and, you know, mayor of Kingstown and, what's a Tulsa King? And I'm sure there's a few others that I'm thinking of. And he said something along the lines of ideas are easy. But I just, I'm on my ranch. I lock my door and I don't come out until I'm done. Right. Effort. Yeah.

And he was saying that, like, I probably don't work as hard as some other people do. But no one messes with me. So know what, no, what Chart Kid did last week? And he said, man, it feels good to send these out. He sent a copy of, uh, risk and reward to all several hundred subscribers that are on the Exhibit a platform. And he was jacked up to do it. Sign copies, too.

The little things go the long way. Yeah. Anyway, obviously, there are plenty of other counterbalances to what Matt posted about being bullish. There's plenty of other stuff. And you've heard it, though. Everyone knows what the bearish arguments are, I think. Yeah.

All right. This is an awesome chart from Biscope. Sorry, and maybe the most bearish one is just the returns have been so good. I think that's the most bearish thing you could say is that we've pulled forward a lot. Ah. Right? It's priced. It's returns have to be lower because they've been higher.

That's the only thing I could say. But not as high as you might have thought. So bespoke as a chart showing the S&P returns on a percentile rank basis for one year, two-year, five-year, 10-year, 20-year. And over the last five years, we're in the 59th percentile, not nearly as high as I would have thought. Now, there's 22 in there, which I think, you know, I keep saying that we forget about. Once that one falls off, it's going to go up a lot higher. Okay. 10 years, 78th percentile, probably lower than I would have guessed. I'm sure I would have guessed 90th. And 20 years. Now, we,

have the GFC in here. So once this rolls off, it's going to shoot up. But 54th percentile. But you're right. These are still lower than most people would assume. Right. That's fair. That's pretty good. How about this? Another one from Exhibit and Matt. Small caps had since 2005, small caps had their biggest spread over large caps in that time and by a wide, wide margin. The last time we had a small caps outperforming this much in the first six months of the year, 2018. You'd have to go back to like 2006 before this happened. Small caps outperform by 12%. I still don't have an awesome answer as to why this is happening.

We were talking with Belski that it's not just like a market cap thing. It's got to be a sector thing. I think that's where I've landed, although I don't have really evidence there. Because if you look at the S&P 500 and you break it down by decile and you look at your -to-date returns, the mega-cap are winning. And it's not like bucket six, seven, eight, nine, ten are doing well. They're not. So the larger stocks in the SEP 500 are outperforming.

The equal weight is not really outperforming. And yet the Russell 2000 is outperforming by a wide margin. So I told you last week, I put this in. I took all the Russell 1,000 holdings from Y charts and year to date returns. And I put it into Claude and I said, where are these returns coming from? And it wasn't one sector. One, it was biotech. And of course there's like the semis and AI part of the small cap where it's happening.

But it's all over the place. Like I said, it's like two thirds of the returns, two thirds of the names are up year to date. It's a lot of small caps. Well, then also on the narrative part of it, I think conventional wisdom says that small caps tend to do better when the cost of capital is coming down, which is not even close to happening. when Main Street is outperforming Wall Street. I don't know if that's really. Maybe I just made that up. So how about this?

Is it a flows thing? Do we, if money just finally flowing in there to where they find some value? I don't think that's a good answer either. All right. Getting back to the large stuff. Although I think when you don't know a good answer about the market. Flows. The market, but the market is usually right about these.

Like, this is the market getting ahead of something. could it also be an AI thing where people are going, you know what, we're trying to look forward to where the next winners from AI are going to come from. No. You don't think that's it? No. You don't think that smaller companies are going to benefit from AI. That's not what you just said.

They may benefit from AI, but you think enough investors are like saying we're going to buy small caps because they, no, I don't think so. You're reaching for trust. All right. I am reaching out because I don't know. So Semblis is a chart showing equity market concentration. We've spoken about this a lot, that the U.S., but this is an incredible visual. The U.S. is actually at the lower end. So the top 10 companies as a share of the index, India and Japan are smaller than us.

Everything else is more concentrated. Significantly so. Yeah, it's not even close in most cases. There's a handful of countries. It looks like, I don't know, a dozen countries where the top 10. make up almost 100%. Probably 99%. The massive difference

that sort of makes that chart totally garbage or perhaps useless is the size. Yes. So seven U.S. companies have a similar weight to the next seven biggest countries in the MSCI, all country world

than the next combined. Tesla, meta, Amazon, Microsoft, Apple, and VD, Nvidia are as big as France, China, Korea, Canada, UK, Taiwan, and Japan. Look at this next one from Deutsche Bank. they had this America 250 report, and they show that the U.S. accounts for half of the world's public market capitalization, but they also show the MAG 7 on here. And yeah, the MAG 7 would be, as a country, the second biggest to the U.S. if you just stripped out the MAG 7.

Way ahead of China. Way ahead of Japan. Total world market cap. I don't know. I think this is through June 30th. $167 trillion. Kind of a lot of money. Okay.

this is a crazy stat on AI stuff. Someone flagged this, I saw this on Twitter. Samsung had a big meeting, internal meeting, and somehow all the quotes leaked or something, or they put it out to a press conference. This year's profit for Samsung will exceed the cumulative profit generated over the past 40 years since we entered the semiconductor business.

Oh, my God. One year of profits is more than the 40 years previously combined. It's kind of funny. Talk about the market knowing and not knowing things. So over the past year, Samsung is up, over 400%. In the past five years, the company is only up 300%. Okay, so all of that return has essentially come in the last year. So you had, you had a few years there where chat tip-tetee came out, and then you had AI stuff going on in 2023, 2024, 2025. It dipped a little bit, and then it took off.

Why was the market so slow to understand that there would be a memory shortage? Can't answer that. This seems like one of those things where the market really was, everyone was behind on this. Was it just people thought like there's no way this is going to happen as quickly?

There's no way. Yeah, out of my depth. Samsung... A lot of stuff we don't know today. Yeah, yeah, well... Markets do that to people. Can't know everything. Samsung fell.

7% last night. Hang on. That's a huge red flag, though. If you are talking to someone in the, that a pundit, a wealth manager, hedge fund manager,

if they know everything, they're full of shit. No one knows everything when it comes to the markets. Yes. So Samsung reported seven, I'm sorry, the stock is down 7%.

Micron pre-market down 6% or so. Micron is in a 25% drawdown. It's all priced in. Western Digital looks significantly. worse. Wait, you've been championing this 30% micron drawdown saying what's going to happen. I'm not rooting for it. I just, um, Sand it, not saying this, Western Didge.

You got a vacuum going on there or something? I do. Okay. I'll close my door. Let's just pretend it's not happening. Western Didge down 34% at the open, Peak to Trough. Or current prices from Peak. One second. Anyway, is, is this the top for these names? Who the hell knows? Money is self-orotating out of the AI names and back into some of the software names. But that was the easiest call to make that we've been saying for a few weeks,

eventually these stocks are going to get slaughtered. Yeah, that was not a brave. I don't think it was going out on a limb. Didn't go out on a limb. I know. Hey, out of the limb, you got that one. Boom. You know, somebody emailed us.

I was talking with a friend actually at the beach over the weekend about how sometimes your brain breaks. He was looking for a phrase. And I said, dude, I give him like the Leo gift. So this happens me five times. a show on the podcast. I can't, you know, once the camera's recording, the mic is on, you know, lights get bright.

Yep. Okay. Retail has become the structural bid. This is from Citadel. Retail investors are deploying capital at a record pace. June is on track to become the strongest month in our history with daily purchases running nearly four times last year's average. There's another one showing that retail investors are buying the dip heavily, aggressively.

Retail investors purchased nearly three and a half times the average daily amount on S&P 500. down days during the first half of 2026. The strongest buy the dip behavior in our data set, unbelievable. Even on rallies, they continue to buy nearly one and a half times a daily average. Wow. By the way, someone from Citadel emailed me, said, hey, Citadel is the hedge fund. Citadel Securities is the market maker. There's a difference.

We know. Okay. We know that. You know that. I know. Yeah. Apparently, I didn't say it called him Citadel instead of Citadel's securities. Okay.

Well, I believe this comes from Citadel Securities. Setting the records straight. It says, well, it says Scott Rubner. Rubner-Rubner? But then the source of Citadel. Those are really good reports that they put out. I like it. You know what?

I thought, you know what this happens? Speaking of not knowing everything, when you think something, where you're reading something, you're like, oh, that's because of this. And then you scroll down and then like immediately you get refuted. Right. That happened to me with these charts. Okay.

So I thought, well, yeah, the Mag 7, like the favorite retail names have been underperforming all year. They just keep doubling down and, you know, putting more, more, more, more, more and more and more on Mag 7. Literally, by the next chart, retail investors in the past week showed less interest in Mag 7 stocks that on roughly 85% of trading days since 2022. Rotation. So they have no interest.

Right. So my first, my instinct word was completely wrong. So part of the reason Meg 7 is selling off is obvious. People are not interested as much anymore. And people are not interested? The question is, are they not interested for the right reasons? I don't know. They're not interested because they're not performing.

How's that? Yeah. It's all momentum play, right? The returns slowed, so they went and found momentum elsewhere. The market is interesting how, like, sometimes it will, I'm using like Apple in this case. Last week or two weeks ago, I said on the show, when Apple fell 6% after that it was going to pass through price increases. I thought, I was like, hi, I would thought it would be, the stock would rally 5% on the day because they're obviously taking something to the bottom line, right?

They're going to, like, they're going to raise more than they need to. And is that going to slow people down from buying Apple? I highly doubt it. Stock fell 6%. And the next three sessions, it's backed on an all-time high. Oh, okay. So that was an algal-driven style up then. I suppose.

Here's another good one. From Luke Kawa at Sherwood, Securities. Just kidding, just show work. The correlation between the daily change and the SEP 500 and net purchases of single stocks and Robin Hooded is negative 0.54 so far this year, a testament to the eagerness to buy dips and dialed down purchases during big updates. So I guess Robin and, you know, probably rots a lot of their orders through Citadel securities.

The finger waggers will say, this is going to end badly. Just wait. You know what? People have pucker up buttercrop, remember that guy? that email that came in years ago to us. Oh, yeah. Yep. Puck up buttercup.

Yeah, people have been saying this forever. Yeah. And I will take the other side of this. Sure, when there's a financial crisis, it's going to be painful. But it's not going to be painful because people buy stocks and then they keep going down. Like, that's not going to be the painful part. The painful part is going to be people losing their jobs. Lose their jobs, yeah, yeah.

And not having savings to invest. That's going to be the painful part. Yeah. All right. Hendrick Bess and Binder, new, new report already. You know, I saw, I saw somebody, you about to say it. I saw somebody refer to him as Hank.

Hank Beseminder? Okay. All right, I like it. Do you know, you know, Henry's my middle name? Did you know that? I did not know that. And growing up, I was embarrassed about two things. Or more than two things, but two things.

Hank Batnik. I was embarrassed about my middle name, Henry, not a kid's name, and I have a large big toe. That embarrassed me when I was a kid. Now you know my deepest darkest secrets, Ben. you do have a freakishly large big toe, don't you? You've seen my big toe? Yeah.

I mean, I wouldn't say it's freakish. It's dominant. Yeah, it's long. I like Henry as a name. That's a good name. Well, it came around in 1992. Henry was not, you know, Henry was embarrassing. So he has a paper on do nothing.

He looked at like the S&B 500 and if you just bought these 500 socks and let him go and didn't rebalance. And he's saying like a lot of the just buying hold. portfolios work better. Anyway, that wasn't the interesting part of his paper to me. The interesting part of his paper with me, he looked at different size portfolios. He looked at like 500 stocks, 300, 100, 10, and then one. And he looked at what if you just bought the biggest stock every year in the S&P 500, going back to 1971. It's not that many stocks. IBM for a long time, AT&T there for a little bit, Exxon, GE for a very long time, and then Apple, Microsoft a little bit. So it's like seven names or something. And by the way, look at GE's

run from 94 to 99. It was up 45% per year or more, 40% or more per year every single year. Up 45, up 40, up 51, up 68. In consecutive years, unbelievable. No wonder this thing crashed. But it's kind of crazy if you look at it because the idea is, I've seen studies before that say like, hey, if you buy the biggest 10 names or something you're going to honor to perform, the average return for Just buying the biggest name is 11.3% per year. I think it slightly underperforms the S&P, which was, I don't know, 12% per year or something like that, or 12.5. But it's not like the returns are terrible.

So I saw this stat back in probably 2016 for the first time, I'm guessing. And this was a Ned Davis chart. And it showed that if you only owned the largest stock, you significantly underperformed the index. which does make intuitive sense, right? Like trees don't grow up to the scry, mean version, etc. So there was, there used to be a big gap.

Yeah, I wonder if Apple being so well has changed this. Apple broke the data series. I think so, because Apple has done so well. You're right, that it's, I think it's kind of increased the average. Yeah. Anyway, I thought that was, that was interesting. All right, here's something that I'm sick of.

I just wanted to stop, like forever. I want to stop pandering to people who are doing well off, complaining about their financial situation. There are people who legitimately have a grip against the economy, against how much things cost, but not these people. In San Francisco, even $180,000 tech salaries are no longer enough. Okay? And they talk about how Open AI and Anthropic and all these, the rich AI money coming in is hurting people.

And they interview people and they talk about this 27-year-old who is earning $180,000. And her partner earns $185,000. And it says these days, even though six-figure salaries are no longer enough in San Francisco, Boo freaking who. I feel sorry for the teachers and the firefighters and the police officers and the service workers

those people, how do those people survive in a place like San Francisco? If you're a tech person and you make six-figure salary, I'm sorry you're not as rich as the AI people. I'm sorry.

Deal with it. I'm not going to feel sorry for you because I'm sick of these stories about that are trying to make upper middle class or rich people feel bad about their situation and a lot of them to complain. Am I being too harsh?

No. I get it. They're saying, hey, a lot of people are going to have to move to Seattle or Austin or somewhere else. And there's a huge concentration of wealth in San Francisco. They don't build enough housing. I get it. It's got to be super annoying. You work in technology.

You can work remotely. Yeah. You make way more money than the vast majority of Americans. Well, I guess I'm empathetic to that, but also, nobody's writing an article about the firefighters and the teachers. You're right. That's what I'm saying. We should.

You're right. Those are people that deserve sympathy. You're right. San Francisco is a weird place, especially right now. Now, I haven't been to San Francisco in like 30 years. Not 30 years. I went when I was 17, so I can't really comment on what goes on there or what does it. But from this aspect alone, in June, so Mike Simonson tweeted this, in June, 44,

transactions in San Francisco closed at at least $1 million above the final ask price. So they show this data series going back to 2024 and obviously this, you know, 44, it's not a gigantic number, but this used to never happen. Why would a house go over a million dollars above the asking price? And now there is literally just not enough homes to house all these people and there's way too much money.

There's a huge imbalance here. So how do the how do the firefighters and the teachers survive? Don't know. Matter of fact... How would Danny Tanner survive? Was he... He worked in a morning show

for Full House? He had that great house on the hill in Full House. There's no way that... But listen, Danny Tanner took on roommates. Uncle Joey lived there. Uncle Jesse lived there.

Uncle Jesse's family lived in the top floor of their house. They made do in San Francisco. Right? Full House. I don't think you can make do anymore. No.

I guess. Get the frustration, but I'm just saying there's other people who deserve more sympathy than tech workers making $400,000 a year. Yeah. In their 20s. In their 20s. Move somewhere else. That's the thing.

All right. This I thought was a moderately interesting email. Hey guys, weird little AI story, but I think you'll appreciate it. I connected my budgeting app to an AI tool which meant that I'd eyes on my brokerage account, most likely judge my position sizing more than I'd like. I was in the middle of overthinking some portfolio moves and asks it for a podcast that could make me sound smarter as I convinced myself to buy SpaceX of the IPO. It said animal spirits. Rude that an AI knows me better than I know myself, but it was right.

And now I haven't missed an episode since. That's a genuinely useful AI use case if a slightly humbling one. Also, I had AI write this entire email, including the subject line with the explicit goal of getting you to click it. So really, the AI recommended your podcast to me and then turned around the road an ad copy to get your attention. Did it work? It's basically running my financial life and my correspondence at this point send help. This did not sound like AI. Yeah, but do you think, you don't think this is a person who went and changed a few things for AI or not?

Probably not. Well, I don't know. Maybe, maybe it could have. But the point is that you're able to have all of these tools go through your centbox, learn how you write. And this is just it. I was using Claude the other day for some sort of research piece. and then at the very end, I think it was when I was researching small caps or something,

it said, tying back into what you've been writing on a wealth of common sense, and I didn't even, you know, it just, it tied it back into my stuff, but it was pandering to me. Yeah. Right?

Well, you know how the conversation was like, we're tied to this AI slop, it's so obvious when it's written by AI. Yeah. It's not going to be obvious anymore, which is, I guess I have mixed thoughts on that.

I don't know. I still feel like I'm going to be able to, I'm going to be one of the people that can spot it. Were you able to spot this one? That sounds like a good game show. Like spot the AI. Give me five pieces of writing and I'll tell you which one of the AI produced. All right.

People are gambling. Let's talk about it. Okay. Joey Polatano wrote this for the argument. Americans are set to lose nearly $250 billion gambling this year, a record high of more than 60% since 2019. And that's before counting unofficial betting via prediction markets or crypto. Can anything stop America's gambling boom?

Yes. a recession. Can I zag here? Okay. This is a sign of, this is a sign of good times. This is a sign of a really healthy economy. Yeah, you're right. People have money to blow. Yeah. Now, I understand that there is obviously an element of hopelessness in here, that there are obviously a cohort of these betters that are doing it because they see no light at the end of the tunnel. Right? Like, obviously, there's a group of people. You're right. You find out who the real degenerates are in a recession

because they're still gambling. Right. They're not using it as entertainment for side money. But he's saying that Americans are set to lose nearly $250 billion in gambling, a record high at more than 60% to 2019. What a sign of progress?

Now, you might hate it, and I certainly don't, you know, I'm not, I'm not, I don't love it. Credit delinquency soars in the years after gaining access to legalized sports betting. Okay. So this is, this is, this is, the dark part that I was just talking about. Whoa, I just messed up to that. This is the dark part of it.

So it is, it's, these are, these are small numbers. Right. Right. In the relative scheme of the whole economy, you're right, $250 billion, is a drop in the bucket. So the change in the credit delinquencies, it's like, what is that, half a percent? Like, well, I, I, I'm, is it 10% of gamblers are problematic or five percent? It's, you're right, it's a, it's probably a small number. But there are people who are getting their lives ruined, and it's easier. You and I have heard stories. People have their lives ruined by gambling just because it's easier to do. And that's unfortunate.

But it's also a small number of people. Yeah. So if I could set my fingers and make the shit go away, I would. Yes, I agree. There's no real use for it besides advertising for podcasts. Yeah, the human stories of people losing their lives is beyond, beyond, beyond tragic. Okay. So that's true.

But it's also true that I think that you don't have $250 billion with. gambling in anything other than a pretty healthy economy. I will take the other side of this and say that number is never going lower again, ever. Unless we have a prohibition on gambling, that number is as low as it's ever going to be and it's only going to get higher because we're going to keep making it easier and having more platforms to gamble and that number is never going lower. Yeah, you might be right. I'm not like calling a top war.

I have no idea. It'll dip. I think it'll dip during the next series recession as people lose their jobs. But maybe it gets really dark. and then people really start gambling. That's what if people decide, like, I need to do something. I'm going to keep gambling.

Well, you know why they're not going to do that? Because I think people are smart enough to understand in general that the more you gamble, the more you lose. So there was an episode on the Odd Lots podcast. There was an article in the Times written by Adam Iska. And he was talking about the shark.

That's what they're called. Sharks with a P. These are like the intelligent betters on these platforms, polymarketing and Cali, that are actually winning a lot of money and making a living here. I thought these guys were very interesting. The guys who are doing this, and they're just kind of,

they're not like Wall Street people. They're just kind of regular people who have feared out that there are still some common sense loopholes in the prediction markets, and they know where they are. So Prince Hal, a struggling screenwriter turned full-time CalShe trader has been trading for about a decade. He showed me how he builds inflation forecasting

models that consistently outperform major financial institutions to the tune of $3.7 million in lifetime profits. He said, me and the banks are doing the same thing. I think it says more about the market than it does about me. They can't beat an acting major in a garage with Excel. The author said he asked a macroeconomist who forecast inflation for a prominent Wall Street hedge fund to review Prince House trades and methodology. And he said, quote, I'm actually dumbfounded, he told me. This guy might literally be Nostradamus. So him, this guy explaining how he built his inflation model, I thought was fascinating.

He talked about how, listen, inflation is stuff that's, the inflation number has already happened. So he says, I got on the phone with BLS, and I figured out how they calculate this stuff. And I created a model, which just looks, and he said, listen, gas prices are kind of, there's a lot of prices that are known. The other stuff, you have to make some guesses and estimates. But he's like, I don't understand why the Wall Street people don't do this. And the reason is, and I thought about this,

he's like, how are these Wall Street people so bad at forecasting? And I just literally built the same model that BLS uses, and I'm really, really close. Why don't they do this? And you want to know why? Because most of the strategists on Wall Street are not quants like this guy. They're not in the basement running numbers.

They're marketers. That's it. They don't care how accurate they are. They want to have a wide range of results, right? You don't think that's fair? They want to have a wide range of results? What do you mean? Well, you want to be in the headlines?

No one, I mean, obviously if you have a, I'm saying like the reason that they don't have more sophisticated models like this is because the most of the strategists, again, they're going on CNBC and they're going on Bloomberg and they're marketing people. They're not, maybe, want people. For the most part. Anyway, I thought his whole story was really interesting. Yeah, me too. It was, what does that, what does that say about the way things are done?

Is it group think? Is it, I'm not sure exactly what it is. But what you said, his point was, I'm not trying to forecast something that I think is going to happen. That's obviously extremely difficult. I'm trying to model something that happened. Right. It already happened.

The prices have already changed. But I thought the point, the whole thing about prediction markets, though, and they were like, listen, we don't think that this is something that's going to, like, totally revolutionize and change the world because it's zero sum. And that's the thing. What happens when the suckers leave the poker table? How do you keep finding enough suckers to keep. coming in. Well, so this is the thing. There are a lot of suckers, but don't you eventually

sort of run out of people? So they were saying like this, this happened in in poker and what was the other one that they used, the other example that they used? Fantasy football and yeah, the same thing, yeah. Yeah, like there's the, the sharks are waiting and eventually the minnows just say, I'm not going to the sharks anymore. This is what happened in the fund industry. When people went passive, they left. We're not going to try to pick active managing or we're just going to buy index funds. Yeah, I'm so curious.

And the people who are left competing are the pros. Yeah, I'm so curious to fast forward. I don't know how long it takes for that to happen. Is it in 10 years? Is it in 20 years? Where people are like, I don't fucking gamble on Kalshi? What are you the biggest moron on the planet? All you're doing is go and get professionals.

So do they have to change the way that they, do they have to become like, do they have to take the other side of some of these bets somehow? Well, Susquehanna and these market makers, they're taking the other side of every bet at the right price. Here's an interesting story. Wait, so we keep saying this. So why would we be wrong on this?

What would cause us to be wrong? On which? Eventually this kind of runs out and peters out for these predictive markets. Okay, here's how. if people bucket this as entertainment spending money, if they say, yeah, I lose 3% a year, or I'm making that up, whatever it is. I have, I have $1,000 a year that I use for entertainment purposes, and that's just what I lose every year, and I have a great time doing it.

Yeah, like people who trade options and stock trade or, yeah, they're funny. But I've mentioned this before about my own gambling habit. somebody emailed me and it's like, hey, this is fun. I'm just getting into it. I'm like, oh boy. But they're like asking for safety, you know, tips and whatever. I don't really have a great answer here. But for me personally, my, my Fandual app now shows my cumulative losses and I lose.

I've lost seven cents on every dollar. That's where I'm at today. But guess what? I've made. You're essentially paying the Vig. That's your losses. Yeah. And it's, and I, I, I, I,

love gambling. But if I do a million dollars worth of bets over the next 10 years, am I comfortable losing $70,000? I mean, it's not that much fun. You know, so, you know, I don't know where the line is. All right. Well, it's already probably bigger than we would have thought if you would ask this five years ago. So maybe we'll continue to be wrong on this. They said like 40% of men between ages, whatever, 18 and 40 have gambled. I think that's light. And it'll obviously spike around political events.

That stuff will still continue to be big. Oh, that part was interesting to me. One of the reasons why they're consistently able to make money on elections is there's an emotional element to elections, like there isn't with inflation. People are betting on who they want to win, not who they think will win. So maybe there's some persistent alpha there. But if enough money comes in, all right, whatever. This story was interesting.

Spotify deletes stream of chart-popping song after suspicious Kalshi bets. So the platform removed more than 500,000 streams of Malcolm Todd track earrings on concerned traders propelled it to number one. That was a FT story. So look at this chart. So they had bots playing the song over over again? So I think it costs Matt Levine was writing about it. Like it takes a dollar to play a song 100 times or whatever it is.

So somebody did this enough times, spent enough money to do this, and bet on this to be number one song and made like a 10,000% return or something like that. Weird shit is happening. So Matt wrote, prediction markets are truth machines in the sense that they give people incentives to figure out what is true and bet on it. But they are also obviously and increasingly false in machines in the sense that they give people incentives to make bets and then distort reality to make those bets pay off. Because of prediction markets, it is now lucrative to figure out what song will be the most

popular. But it is even more lucrative to make a different song look most popular. their prediction markets can make it harder to know what is true. Joe had a good point. I thought an interesting point. So I think most people are like anything inside of trading related should be punished and criminalized and prosecuted. And I think we generally agree, especially if you are in a position of, if you're

an elected official straight to jail. But for everything else, Joe's point was like, sort of who gives a shit in the sense that you really want government resources being allocated to this of all things. True. Well, I guess the counter to that would be the people who give a shit are the ones who bet on Olivia Rodriguez and go, hey, wait a minute. I got screwed. I was going to get a payoff on my bet. And now some jerk did his Spotify thing and he won. So that you're taking advantage of... You're gambling. You're gambling. This is gambling. All right. That's fair. That's true. If you bet on which Spotify song is going to be number one with your money... It's hard to have said. Do we lose... We want government resources there. By I be aware. Okay. Two interesting nuggets and private markets. This is from Bloomberg. The total amount of money and software investments held on the books of alternative asset managers is difficult to assess, but by some measures could be in the hundreds of billions of dollars.

In 2025, the value of software-related private equity transactions reached $203 billion, according to a recent report by Pitchbook. So check this out. Money flowing into the software sector has gone from around 25% to half of new private equity and venture capital, more than double that share from 15 years ago. There's going to be some really, really bad numbers over the next decade that we find out about. It's kind of funny to think that private equity used to just be more hard asset kind of businesses. And now in the past 15 years, it looks like they've just made a huge, huge push into tech to try to keep up with VC, I guess.

You're right. The whole industry has kind of been transformed. Is that wild? And you can't just cut your losers short when you're in private equity. You have to deal with it for a long time. All right. So let's do a market check. It's 9.50.

Tuesday morning. And the AI names are getting smoked. Sandus down 9. Amat down 10. Western Ditch down 8. 7 AMD7, Micron 6.5. Yeah, that's what happens in momentum names. A couple of weeks ago, Josh and I were talking about Rantel launched DRAM,

which is obviously, you know, explosive success, credit to them. Then they launched RAM. This is the business, which is the double X lever, which has now been cut in half in one, two, three, four, five, six, seven, eight, is that nine trading days? but there's options on RAM. Jeez. So we spoke about leverage a couple of weeks ago. We're on the other side of it now.

Okay. Yeah, so that that that ETF is down a quick 26%. Which one? DRAM. DRAM. Biers will step in, but is it right now or is it 15% lower? We'll find out. Okay.

One more. So we've spoken not as much in recent weeks. Some of the noise has died down about the private credit outflows. Well, that was mostly on the wealth channel. Large institutional investors are diving in. North American direct lending funds that seek to attract institutional clients raised at least $16 billion in the second quarter. the three months ending in June 25th.

This was the second strongest quarter in four years for fundraising by such close-end funds which raise money from investors only once in a finite life. Isn't that interesting? So retail is running out and large money is diving in. I guess it makes sense that, yeah,

if you have a longer time horizon and you see some disruption here, hey, we're going to hold for the long haul. That's the biggest problem. is people who didn't hold these things, didn't know that you had to hold these things for 10 years or whatever. All right. Really cool report in the National Bureau of Economic Research, Enber. We talked about, a couple weeks ago, I talked about the 0% credit cards. And I said, how is this possible? Who's paying for this? They kind of have an answer. Every time a consumer swaps a credit card,

the merchant pays an interchange fee, typically 1.9% of the transaction value. That's the average. Most of which funds the rewards that cardholders receive. Because merchants generally charge the same prices, regardless of how consumers pay, consumers who use cash or debit cards effectively help finance the rewards enjoyed by credit card users. So the idea is, if a merchant is paying 2% more for this fee, everything goes up by 2%. Right? So if you're paying in cash or you're using a debit card, you're not getting that 2 to 3% back on your rewards. You're the one who's paying this. You're paying higher prices because of it. You are the one who is subsidizing the rewards.

And sometimes, I mean, oftentimes, a pizza spot will be like 850 cash, 915 credit card. Right. That's pretty rare. So they say because credit card usage rises with income, the system generates an estimated $9.2 billion in annual transfer from households earning less than $150,000 to those earning more. Yeah. Wait a minute.

I think what that's becoming standard around here. Standard might be a stretch, but I feel like I see that all the time. That's not uncommon. Yeah, maybe. No, well, you and I live in different places. Okay. That's true. But you're right.

We said it's these people, it's subsidized. It's getting subsidized, and that's effectively what's happening. Right. All right. From Bloomberg. U.S. car payments hit a record $770. Sorry, $777. I can't say this.

$777. That is tough. Yeah. Okay. How about we call it $780? with more than a quarter of U.S. car buyers taking out loans of seven years or more. The average amount financed an all-time high of more than $44,000. Average down payment fell 10% from a year ago.

More than a fifth of new car buyers signed up for monthly car payments of $1,000 or more in the second quarter, leading many to owe more on their car than it's worth and others default on the loans. I had Claude come up with this for me. They took Edmund's numbers. And so at the end of 2019, the average car payment was $575 or something. So it's up $200 a month since in this decade alone. And I keep kind of asking this, but how much of this is the type of car you drive versus people just paying more? It's obviously a little bit of both.

But if everyone, we snapped our fingers at tomorrow, everyone said they gave up their trucks and they gave up their SUVs. They're huge gas guzzlers. Although they don't guzzle as much gas anymore. My telleride gets an amazing gas mileage because it's hybrid. Anyway, they gave those up and everyone bought a sedan. Everyone buys a Camry or an accord. How much do those, how much do those monthly payments go down? A lot.

A lot, right? Yeah. So a lot of this is consumer choice. And the point of the article was, no one is changing their behavior. Despite this, despite the fact that there's huge sticker shock. And I said, when I bought a new SUV recently, I had massive sticker shock. my gosh, I can't believe how expensive these car payments are. But no one is doing anything about it. And to your point, maybe is that just bull market behavior? No one is, no one's, no one's,

no one's raining things in yet, right? No one's pulling back. No one's making substitutions. Great point. I found the email that I wanted to read before. So speaking about like teachers and firefighters, somebody said, I keep thinking about my future children entering the workforce 20 to 40 years from now, not the future AI engineer, surgeons or high-income earners, normal jobs, the common man jobs, teachers, nurses, retail workers, bankers, firefighters. What does sense of achievement look like for them in 30 years? Price out of homes, Disney vacations, new cars, Chipotle. What if our kids grow up and turn out to be common and most will? The goal when having children is to hopefully prepare

them with a life better than mine. And I'm not sure that's true anymore, easy to accomplish. This is the sad thought in my opinion. thoughts. That's every parent's worst nightmare, obviously, that their children will be worse off than they are. But the data shows most kids are better off than their parents. I understand the worry, but I think thinking that for out into the future, we have no idea what's going to happen.

Yeah, I think that's probably the right take. And also, I don't think that people that went into teaching 15 years ago were like, I'm going to go on a Disney vacation and another vacation a year. and in 15 years, I won't be able to afford it because of inflation. Like, those things were never really attainable. Don't give me the 50s, whatever. Like, yeah, things are more expensive. I get it.

But so, yeah, I don't know. So I have a friend recently who I hung out with from high school. And he's an elementary school teacher. His wife is a principal. He says, we don't make a lot of money. Like, he said, I would love to take my kids on more vacations. We can't afford it. If my kids want something, and his kids are teenagers now, they're older.

I tell them to get a job. He admits, we don't, because we're teachers, this is life we chose. He's a teacher and a football coach. He doesn't make a lot of money, relatively speaking, right? I love to take more vacations. He said, I can't, we can't afford it.

So, like, he understands this, this traitor. You're right. Unfortunately, everyone can't do that. And that's just the system we live in. Yeah, I just, I think it's more pronounced today, but it's not, that's not, that's always been the case. What's more pronounced today

is that you just see the other people taking the vacations, and you didn't see that before. It's just shoved down your throat. All right. I went through the comments last week. I haven't done this in a while, but I pulled out a couple of them. One of them was fast forward six months.

Michael says, my rangerover has been in the shopper over three months over this check engine light. If I could bet on a Kelshi, I'd put money on that. Here's another one. I think this guy was talking about it's leasing cars. I don't know. But he says, these guys make tons of poor financial decisions. They must be overpaid.

probably. I think that there is something of a personal finance graduation, that when you make more money, you should make decisions that personal finance experts would say that's a bad decision. From the personal finance perspective, that should be your goal in life to do something that people, personal finance people say that's a bad idea, because if you compounded it over 30 years, right, I think that that should be your goal in life to have lifestyle creep. It's not a bad thing. That's a good thing. It's a great thing.

Right? I was, I was 20. You spend money on that? What are you? That's, that's insane. You're wasting money. That should be your goal in life. I was 25 years old, unemployed and unemployable.

I had worked the previous six years full time because I was kicked out of college twice. And I had nothing else to do except for work. So I had, I had a Cush bank account. I don't know how much it was. Let's say I had $30,000. I felt rich when I was like 19, right? I mean, I had all the money in the world. No prospects, but I had a decent amount of money for a kid.

And then I was cold calling, trying to get people to buy. Life insurance policies, not really. I stopped cold calling. I just went at the work in 2009 because I had nowhere else to be. Where else was I going to go? I was paying $400 a month in rent for this job from my office, swear to God. And the money was going to zero.

My bank account was going to zero. And my eye was twitching for a year because I was so stressed. My mom was dying. That was part of the stress. But there was a lot of financial, emotional stress. And things were really not good for me financially. And then I get a job. And I was making no money when I started for the first couple of years because we were

starting from nothing. And I had to be smart with my money. And I had to budget and count every dollar and blah, blah, blah, blah. And now I'm on the other side of that. And it's awesome. Everybody should strive for that to not have to make spreadsheet financial decisions for their entire life. And is renting a car a suboptimal financial decision? Yeah.

But I am not optimizing for my spreadsheet anymore. And I think a lot of people would be surprised at some of the financial decisions I make because I'm not, I am not optimizing for like the biggest number. I really don't care. about what my liquid net worth is because, hey, I'm optimistic about my future earnings potential. But I'm 41 years old, and these are, like, probably going to be some of the best years in my life. I'm spending money. That's what I choose to do. Right.

When you're in your 20s, you do have to be the spreadsheet person. I was, too. You have to be. Everybody is. When my wife and I first got married, I had to have a conversation with her because she was going out every week with her friends like P.F. Chang's. I'm like, we can't afford this. Actually, you know what? The other side of my experience is the Ivy League investment banker kids who don't have to make any

spreadsheet decisions when they're 23 years old because they're making $110,000 a year. Right. I was not that person either. But I thought to myself, when I had that talk with my wife, I felt like, hey, you're going on to eat too much. I thought like, man, I can't do it. I have to make more money. I can't do this in Penny Finch my whole life.

Yeah, you do in your 20s and then you hopefully graduate. Anyway, all right. Lucas Shaw, great stat here. Netflix top showists have been losing 30 to 70% of their audience between seasons one and twos. Executives are trying to figure out why. we talk about this a lot. So they talk about how

season two of beef suffered a 70% drop. The night agent should have 50% of his audience for the second season. I liked the second season of beef.

Did you watch it? Yeah, I thought it was just okay. Not as good as first, but I liked it. But they show all these different shows. Four seasons is one of them too, which I like the second season too.

But most shows these days should be one season. And I actually am more excited when I find out something is a miniseries and it's not going to be more than it. Like, most shows aren't good enough because most shows today would have been movies in the past.

And when they go to the second season, they're doing it for a money grab, or they just shouldn't be two-season shows. I think it's hard for the Netflix's of the world, though, to just continue to pop out one-season shows. Because when you have a hit, obviously, you're going to make more of it, no? Of course, yeah, you've got to keep trying. And obviously, there's just more shows today.

This was a crazy one, though. Lucas says, Betty against Netflix has long been a fool's there, And he talked about why the stock price is so bad. And it is in a 50% drawdown still-ish, which is kind of crazy. So 42% drawdown from the highs. Netflix still accounts for half of the most watch shows on streaming. So it's still a massive, massive winner in streaming. And the stock doesn't care.

I bought more on Netflix last week. It's probably a poor decision. The stock looks, is not acting very well. This is an interesting story, though. Yeah, but every time Netflix has fallen 50s, 60% has been a wonderful buying opportunity. That is true. But yeah, you're right.

Most seasons are not worth continuing. Like, I'm, I know I'm saying this every week. Are you watching Cape Fear? I love that show. Nah, I'm not into Cape. I didn't get into. I probably will eventually. I'm having a rip-worn good time.

I don't want to see a second season. Right. It'd be too much. Because guess what? That was originally a movie. They're stretching out. For most shows, one season is enough. Except for Taylor Sheridan, for the most part.

I don't know about that. I don't know about that. I mean, Yellowstone went down quickly. But that was a three-season show. Well, but he said, he said on the interview why it went down. Like, they wrote it for three seasons and then they stretched it. Yeah, four was garbage. All right, this is a good chart.

Maxi Carty tweeted this. Somebody made a, um, is this like a histogram? I don't know. Like a distribution of, there we go. Yeah, it's a distribution chart. For every film by genre. And the takeaway, is horror is up top, very fat tales.

Because there's a lot of really, really, really bad horror movies. Right. There's way more people that hate and way more people that like. There's a lot of ones and a lot of fives. Yeah, I don't even think it's taste per se. It's just there's genuine garbage. Which makes sense because there's so many of them. Yeah.

And it caused very little to make them. Whereas documentaries, for the most part, are generally pretty high quality. same thing with like sport movies right there's not like a ton of like garbage sports movies like they're both they're generally pretty okay that makes sense so that is a pretty tighter distribution uh documentaries uh war tighter distribution animation animation is there

but you talked about the movies this year obsession and was the other one called backrooms or whatever there's so many they're throwing stuff against the wand hoping something sticks and when it sticks it really works um i saw this on my TV and I just couldn't believe it I mean, of course I could believe it, but Instagram is now on TV. That was a sponsored ad that popped up on my TV, and I just said, nope. So you can scroll through the reels on your TV?

It is so, I know I've mentioned this many times. I am so addicted. Everyone is so addicted to Instagram. Never have to be. It is the most powerful narcotic on the planet. I check it like once a week, maybe. I don't know why. Instagram never did it for me.

I'm still Twitter guy. You got to get it. You got to get involved. I'm just kidding. Don't. It's terrible. All right. This was interesting. So Constellation Brands, Ticker is STZ.

I'm sure there's an origin there, but Constellation Brands is doing terribly. And a large part of this is the GLP1 story, I think, shifting habits. So beer is 91% of their sales. I don't think it's a Zembequia. I think this is just young people. There's a lot of young people not drinking as much and having fun and people having more gummies and I think that's it's been a longer term trend on that. Okay.

The market cap peaked a couple years ago at 50 billion. It's now 22. And they're the ones who own Modelo and Corona and such, right? Sierra Nevada and, yeah, Pacifica Corona. But you know what's interesting? Only in the United States. So A, B, InBev, Anheuser-Busch owns it globally. Isn't that weird?

owns what globally? Pacifico. Oh, so you say the only dropping off in the United States. I think that's something that we've learned in the World Cup from people coming here, like Scotland drank Boston out of beer or something. We can teach the Europeans about consumerism, and Europeans can teach us about the joys of partying and drinking. Yes.

So anyway, Anheuser-Busch, the stock is rocking because globally people are drinking. So it's just in the U.S. that people are not finding. So what's driving, what's driving the sales at consolation brands to these send than anything is, is something called ponies. You know about ponies, Ben? No. Okay. The name pony dates back to the 19th century, according to Molson Cors.

It is commonly used as a synonym for small. So ponies are like the seven ounce beers. Like these little tiny things. What's the little, boop? Everything in moderation. Anyway, so I asked, I was talking to Claude, I said, so just so I understand. Again, Corona is growing around the world but struggling in the U.S. So outside the U.S., which is Anheuser-Busch, revenue grew 8.3% to 2025 with volume growth in 30 markets.

You're right. Anheuser-Busch stock looks great. But in America, it's not doing well. And this is pretty depressing, but this is what Claude said. The reason isn't a brand, it's the customer. Constellations U.S. business is heavily dependent on Hispanic consumers, about half its sales, who have pulled back on spending amid immigration policy concerns and economic pressure.

Fewer social gatherings, fewer store trips, less spent per trip. Add tariffs on the imported product and generally soft U.S. beer market and the U.S. version of Krona's fighting uphill while the global version is putting up some of the best numbers in the industry.

Very interesting. Yeah. We keep saying it. We'd be happier as a nation if we just drank more. Fertility rate would increase. Right? People worry, how do we fix a fertility problem?

Alcohol. That's how you do. fix it. That was a Jerry Seinfeld bit about how 90% of the population is ugly, and they said, well, how are people procreating and getting married? He said, alcohol. Yeah, I think we could use a little bit more lubrication.

There you go. Let's do recommendations. All right. My wife and I watched the drama this weekend. I believe you were the one who recommended it originally. Zendaya, Robert Pattinson. And all I knew is the premise of the movie. Four friends are having dinner or drinks,

and they each share the worst thing they've ever done in their life. That's the only thing I know. Don't spoil it. Okay, I'm not gonna say. I won't spoil it. The only thing I will say. And I told my wife this,

that's the only thing I know. I know that there's a twist coming and that's it. I thought it was a really creative movie. I thought the premise was really good. I didn't. Come on, man. Just have a good time. I'm not.

My wife said I was being too nitpicky. I don't buy that Zendaya was the one who had did this thing. There's no. world. That's a movie. I know, but it would have been way more believable if it was Robert Pattinson and not her. And I know why they did it. She was more of the shock value. But I didn't for a second believe that she did this. Not for a second. There's no way you can believe that she, this person. Take this stick out of your butt. That looks and sounds like this. There's no way. No way. It just wasn't believable. Having said that, this is a new genre of movies and I know why you like him.

It's uncomfortable. The wedding scene at the end was so uncomfortable. It was like the most uncomfortable scene I've seen in a long time. And that's a genre of movies now. So it was really well done. It was really creative. That was my biggest nitpick is that I didn't buy for a second that she's the one who did this terrible, would have done this terrible thing. Okay. But the premise was, and I thought about like, what would I say?

What's the worst thing I've ever done? I still got to think about it more. Oh, me too. Credit to me. I've done many probably not awesome things. Yeah, I couldn't come up with something like, oh my gosh, like the things that they said on this movie. Guess what? We'll do that reveal next week.

I think I would have taken that one to the grave. I don't care how many glasses of wine I've had. I'd probably take that. All right. I did this tweet the other day. I rewatched Days and Confuser once in a while. When I was in college, my sophomore year, I lived in the dorm still. And one of my friends, Days and Confused was his favorite movie.

And we'd go out to a party. And then sometimes we'd stumble back from the party. And we'd put pizza rolls in the oven in the dorm. We'd bring pizza rolls back up. We'd put Days and Confuse on until we passed out. I love that movie. I watch it all the time. I realized as if you were watching it,

first of all, they talked about the bicentennial in the movie because it took place in 1976. It was supposed to. But this movie was released in 1993. Okay? So I thought I did the math, and I said, if days and confused, if that happened today, it would be a movie in 2009.

So 1976 to 1993 is the same as 2009 until today. And I put the tweet on it went kind of viral, and a bunch of people said, yeah, that's super bad. Super bad is our days and confused because it's the end of school. And I kind of felt like, wow, super bad is the 2000s days and confused. That's a really good analogy. I do think that Superbad is like the movie that I saw that was just the best at the time.

Like where I was, I guess I was in high school. I was a senior or junior? And it was just perfect. It was absolutely perfect to be a senior in high school. seeing that movie on screen with your friends for the first time. So American Pie came out the summer of my junior, senior of high school. And the movie hit differently because of when it came out. Of course.

And when I saw it. But yeah, I like the idea of Super Bad being the Daze and Confused up today. Somebody sent me something on Instagram, a picture of all the actors in American Pie, and it made me feel old. And you know what, Ben? We are not that younger anymore. Yeah, we grew up with them. We're old too.

Wait, I have a story for you that. When Vince Vaughn and Owen Wilson are on the steps of the monument, like, what are we going to say? Looking back, we're just a couple of kids. And Oliver Wilson's like, we're not that young. I have about being old. I got one story, I'll share. So we're at our lake and we're having, it's Fourth of July night, right? The kids are doing sparklers in the backyard.

We have friends over and little kids running around. We're doing sparklers and we're roasting marshmallows on the fire and waiting for it to get dark enough for the actual fireworks to come. And we have this backyard that kind of runs up the lake. and we have neighbors that kind of share the backyard area, right? And they decide some of the guys that their kids are older, like college age, right? They decided, we're going to write some fireworks off before the show, right? So they're doing bottle rockets. And they moved the bottle rockets away from their group because they didn't want to light fireworks them.

But they came over very close to us, right? They went away from their group. They came to us. And it's these college kids who have been drinking, and they're not letting bottle rockets out of a bottle, which is why they're called bottle rockets. they're holding them with their hand and lighting the bottle rocket and let it go over their hand.

But as they're doing this, they're dropping them and they're falling and the bottle rockets going everywhere. And they're right next to us. And we have little kids running around with sparklers and these guys are cracking up

because it's hilarious. How old were they? 20s, you know? I probably would have been doing it back then too. But they're... And finally, like, everyone in our group is getting very uncomfortable because these kids are like

dropping these bottle rockets and not... If you hold a bottle rocket wrong and it goes the wrong way. It's, you know. So I finally, it's my house. I have to say so. I said, hey, guys, can you do that somewhere else? We have little kids here. And they go, well, we're trying to have the bottle rockets go up, you know? And I feel like such an old man, because in my 20s, I would have been doing this too, right? But they're holding, and the bottle rockets are like blowing up on them almost, right? And they go, yeah, sorry, we were trying.

And I'm like, yeah, you know, you're holding them. You're going to shoot one in the wrong way. And, you know, someone's going to, whatever. It's, there's kids. So they leave and my daughter is just mortified, like 12-year-old, is mortified that I said something. And that's being an adult. You have to be the bad guy sometimes. Good for you. Right?

Am I a jerk for saying something? Definitely not. Usually you give me crap for not saying anything when I called up my window. Yeah. So, yeah, my daughter has never been more embarrassed of me that I said something to the college bros about holding bottle rockets

and lighting them around little kids. You had to. Yeah. Middle-aged guy. Young at the cloud. All right. And then you sent me a picture of you setting off a rolling candle, two feet from your boat, just, fom, boom, fom, you know.

It was sort of anticlimatic. It wasn't kind of cool. Next week we'll do 10 reasons to be bearish. Okay. Just to balance things out. Animal spirits at the compound news.com. Thank you for listening. Even the people commenting on us making stupid financial decisions.

Personal emails, personal responses. We'll see you next time. Hey, y'all. It's Kelly Clarkson with Wayfair. Ever order furniture online and wonder what if? Like, what if it doesn't hold up? That sofa was four days old. You should have ordered from Wayfair.

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