Animal Spirits Podcast - All-Time Highs Should Feel Better Than This

Episode Date: December 17, 2025

On episode 443 of Animal Spirits, ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Michael Batnick⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠��⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Ben Carlson⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ discuss: the stock market rally is broadening out, no one wants an AI bubble, the return outlook for 2026, Howard Marks on how to invest today, hedging an AI bubble, concentration risk, financial markets don't care about labor markets yet, the worst part about inflation, data centers in space, the housing outlook for 2026 and more. This episode is sponsored by YCharts and Vanguard. This episode is sponsored by YCharts. download Charts That Defined 2025, and start your free YCharts trial through Animal Spirits (new customers only) at https://go.ycharts.com/animal-spirits Learn more about Vanguard at: ⁠https://www.vanguard.com/audio 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/⁠⁠⁠⁠ Learn more about your ad choices. Visit megaphone.fm/adchoices

Today's Animal Spirits is brought to you by Y Charts. If you're trying to help clients make sense of everything that happened in 2025, Y Charts just released one of the most useful resources of the year, the charts that define 2025 deck. Instead of sorting through the headlines, you get the charts that actually move markets, the narrowing leadership of mega caps, Nvidia's multi-trillion dollar rise,

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new customers only. Today's show is brought to you by Vanguard. To all the financial advisors listening, let's talk bonds for a minute. Capturing value and fixed income is not easy. Bond markets are massive, murky, and let's be real, lots of firm. throw a couple fleshy funds your way and call it a day, but not Vanguard. At Vanguard, institutional quality isn't a tagline. It's a commitment to your clients.

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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 Ridholt's wealth management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. clients of Ridholt's wealth management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. As we wind down the year, 2025 has been the year of sliding narratives, I think. Your take, Ben? Okay. Continue. I need to hear a little more. Maybe I should make the case. That's fair. Going into the year, we had deregulation. There was going to be a financial boom. The window

anything. Whatever activity you wanted to do, on the table. Let's go. And then we pulled the e-break going to Liberation Day. And there were quotes, Larry Fink, I believe, said our customers are telling us that we're already in a recession, like it was like immediate. So the aftermath of that, which lasted, I guess, through the end of May. I don't know. I don't know my timeline's right there. But there was that. And then in the background, of course, there was the Open AI story and all of their partnerships and Nvidia hitting $5 trillion and the Open AI Oracle deal, which sent the stock up 37% in the day for a minute making Larry Ellison the richest man in the world. And then Sam Altman going on the podcast and all the

questions around the AI is it, wait a minute, the math isn't mathing or the sales going to be there, like make this make sense. And now, and then of course the stock market in the back from the entire time doing what it did. But now we are, the narrative right now is, I would say, angst about the state of AI and the disbelief. There was an absolute wall of worry. You saw Oracle report last week. The stock dropped as much as 14% of the day, closed down 10%.

You saw Broadcom report last week. Stock got murdered. You saw Service Now report or get downgraded yesterday. I didn't read the story, but the stock got murdered. And all the while, meaning today, the stock market is at all-time highs, which is remarkable. So the cap-weighted index is from duality research. The cap-weight index is briefly off its all-time high, but the equal-weight index is breaking out in a big way.

We had the highest percentage of S&P 500 stocks making new 52-week highs in over nine months. And this, while the narrative for the last couple of years, which is not entirely untrue, I mean, obviously there's holes to poke and it's to pick, you know, there's nuance here is that it's only been seven stocks propping up the market. And so now you see a lot of worry about the future of AI is it time to back down from the mag seven.

I say a lot of worry. I mean, there is a lot of worry. You're seeing strategists, make the case. And yet, the rest of the market is taking the baton. So we also have. If we were to tell you like weeks ago or months ago, that Oracle would be down X percent, that Microsoft would be flat,

like all these sort of things, you would say, wow, how much is the market is down? Wrong. Equal weight is at an all-time high. Russell 2000 is at an all-time high. AQUI, all-country world index, is at an all-time high. So, strength is deteriorating. So it is, there has been just a lot of narrative glides over the past 12 months.

I don't think people, to your point, would have believed this happened. So Oracle is down 45%, Netflix is down 30%. Costco, which was trading for like 50 times earnings, is down 20%. Meta is down almost 20%. And Vida is down 15%. So all these huge big tech names are getting killed and the market doesn't seem to care. Remarkable. It's really surprising, right?

Yeah, you're right. Everything's hitting all-time highs right now. And it doesn't matter. Not to mention that the one narrative no one seems to care about that we keep saying is international stocks and emerging market stocks are up 30% this year. On fire. Or on fire going crazy. Haven't given up their lead. So it's- Can I blow your face?

Let's do it. I was reading Mark Rubenstein's substack yesterday, net interest, one of my favorites. Did you know that European financials, I'm fact-checking myself here, I look at the I said, I just want to make sure that this is actually true, EUFN, European financials are outperforming the cues by a lot over the last five years. What's a lot? A lot. By the way, a five-year period.

So think about what's happened on the last five years with the NASDAQ 100. The NASDAQ 100 is up 105%. Okay? Pretty good. EUFN is up 160%. Wow.

Now, off a small base, obviously, expectations were in the toilet. Remember is credit suites to the new Lehman. Remember that? Yeah. So admittedly,

obviously a very different path to get here. But isn't that wild over the last five years outperformed? buy 50%. Never would have guessed that. So, um, so the Vanguard European stock ETF, VGK is up 35% this year almost. Crazy. I mean, Europe was literally left for dead. Why would you ever invest in European companies? They're being left behind. This is an AI boom. Left for dead.

They don't have any technology stocks. It is, it is quite amazing. What's this Microsoft chart? Are you sure this on Slack yesterday? Okay. Um, things that don't happen in a bubble. So wait, wait, wait, before we get, so this, to you, to you, and to me, this is a great thing. Oh, I love it. The market, like, these big stocks have taken it on the chin and the market is rising. This is a positive sign.

If for your, it's a market of stock, not a stock market, this is good news, right? And credit to me, I tried to buy the dip in Oracle. I sold it on the day that it reported earnings. I lost 10%. No harm, no foul, but I said it on our Slack channel. I love it that Oracle is getting the ship bit out of it because the numbers weren't that bad.

They really weren't. But the amount of skepticism, around these stocks is so good for the market. The governor that investors are putting on these names is massively important. Wait, wait, whoa, we don't want a bubble here. Or we're going 35% in one day. We don't want that. Let's bring it back.

I think this is very healthy behavior. So combine that with the broadening out, you couldn't ask for anything better. As somebody just looking at the stock market, you cannot possibly ask for a more bullish environment. Again, I always, when I'm saying this, people are like, oh, Michael, Michael's old publish companies. No, no, I'm not. No, I'm not. I'm not saying anything about the future. I'm saying today, you could not ask for a more bullish environment, okay? If I'm on CNBC, internals will get healthy right now. What was that? You're healthy internals. Yeah. Why is that funny? That's true.

I'm just saying, it sounds smart to say that. Well, but it's accurate. So you're right, it sounds smart because it's true. All right. That's not something I would say. So that's what I'm CNBC Ben. Microsoft. I do like CNBC Ben. I was looking at a stock chart of Microsoft. relative to the S&P 500. I would say that Oracle, there's a few stocks that are like AI proxies, right? Unfortunately, open AI is not public. So we don't know what an anthropic and perplexity.

These are not publicly traded stocks. But I think that Microsoft is a pretty close proxy. InVitya, of course, is core we have to lesser extent is probably that on steroids. But I looked at a chart of Microsoft relative to the SMP 500 since November 2003 when Chad Chbett

launched it's barely up it's barely I'm sorry it's barely outperformed the market if you take away like that initial burst

of holy cow this is wild and whoa Microsoft 10% of this company or invested $10 billion in this company whatever it is it's sideways

it's sideways since April 2020 the biggest or second biggest publicly traded proxy for the bubble has gone sideways relative to the market for more than two years.

That is not bubble behavior. Yeah, the S&P's beaten Microsoft by about 10% or less year. That is not a big percent of the last year. That is not bubble behavior, right? All of this talk about we're going to get a bubble. Are we in a bubble? Are we in a bubble? This is not a bubble.

This is not a bubble. There are areas that you could point to and say that's a bubble. Is Open AI worth $500 billion? I don't know. But is the stock market in a bubble? No. I think that's great. think people are saying, we don't want this. We don't want to bubble.

Investors are rejecting the bubble. It's great. This is good sign. Still not out of the realm of possibility that it could happen. But I agree. We didn't get to like the crazy stupid phase. There was an article either in Bloomberg or the journal talking about investors turning on the mag seven a little bit. Your identity is recommended in another way. There are a bunch of strategies that are saying 2026 is going to be the year where the rest of the market takes the baton. And retail investment, are acting that way. So check this out.

This is from the Daily Shot, Vanda Research via the Daily Shot, via the Daily Chartbook. Too many videos. I apologize. Flows show retail investors rotating away from MegaCap tech toward ETFs. Why did they do MagS7X meta though? I don't know. I guess are they buying meta? Does that make the chart not work?

Whatever. Mag 7X meta flows are rolling over and all ETFs up into the right. that's good news right people are looking for value elsewhere i think it's great i love it i'm here for it all right internals ben all right put your cnbc hat on them got it cyclical this is from turning point market research cyclical sectors are leading the breakout list for the first time since july financials industrials and technology simultaneously saw at least 10% of their stocks hit 50-2-week highs. Okay.

I see a lot of green arrows on this chart. That's got to be good. You want cyclical stocks leading the charge. Okay? And a clean breakout, you don't want to see breakouts led by you by staples and health care. Now, it doesn't always work like this, but sometimes there, you get a new year, you turn the page and people go, why should a new year matter? For some reason, sometimes, though, that happens in completely, this is what happened in

2022. It really does. It shouldn't matter, but it does. Well, can I tell you something? I'm going to die on January 1st, so there you have it. It's psychology. You should do it on December 31st just to beat the rush. But do you think that it feels like we could get one of those next year, 2026, where everything just changes immediately? Yeah. What if what if 20206 is the year of, let's go to two extremes. 2026 is the year of the catch up, maybe even there's two sides of the same coin, where, Oh, we were, we overestimated what AI can do. Salesforce is going to be fine.

Adobe's going to be fine. All of these companies, service now, all of these companies that were supposedly disrupted by AI, they're the catch up trade. And all of the beat down that they took in 2025 is going to reinflate in 2026. And simultaneously, more air will continue to come out of the AI trade. Well, I would love to see some, if we're going to look at a positive AI trade, I would love to see the fact of other companies that are benefiting from it. I don't remember what podcasts I'm stealing this from,

but C.H. Robinson has been going crazy. And I had a friend who worked for C.H. Robinson. I have to be honest, so I don't know what that stock is. So they're a logistics company. And they help match truckers to routes, and they've been using AI to totally speed up their process. And if look at the chart of this thing, it's going vertical. It had like a 20% update.

And the reason is, is that AI has allowed them to shorten the length of time that it takes them to match a truck driver with a truck with a shipment. And is this stock in the dock or you just want me to pull up the chart? Oh, no, I didn't put in the dock. But I would love to see, so this is a $20 billion company almost, but I would love to see the AI trade brought it out to come more companies like this where they're using it. And I think that would be a good thing if these small midcap names started getting some

positive spin from AI, not just the Meg 7. I think that would be how this stock is working. So I don't have this in the dock. But the earnings expectations, oh, I saw this morning actually in the Daily Charpa. They have a chart showing the earnings of the Mag 7 and the 493 or something like that, the Mag 7 in the Equator, the Max 7 of the Russell 2000, whatever it is. And the Mag 7 is constantly double digits, like 15 to 20 percent. But the earnings expectations for these other companies has been rising higher every year.

And Jerome Powell did say something about productivity games from AI on the presser last week. I do think that it is very much in the realm of possibility where you see further margin expansion among these small names, seeing increased productivity. And this is part of the economy, the economic story. So the only reason that I'd be slightly bearish on 2026, if you wanted to put your market strategist's hat on, look at the returns that the S&P has had lately. It's unreal. And obviously, the NASCAR 100 of them better.

This decade alone, up almost 20, up almost 30, down 18 in 2022, up 26, up 25, up 17 so far. Like, the returns have been spectacular. So the hope would be, hey, listen, the S&P is going to lag, but equal weight and small caps and midcaps and international will pick up the day. But that's the thing where you go, the returns have just been otherworldly for a long time now. Yes, and also, I do believe, now this may be bubble talk, but I am a believer in this AI story. I do think that is a line of demarcation.

So I don't think the 31% return in 2019 has literally any bearing, what's on the stock market in 2026. Like none whatsoever. Anything pre-2020. Yeah, that's a different story. It's a different universe. It does not exist. Now, I understand it exists in the sense

that investors have been treated very well. But in terms of how that impacts the valuation and the earnings from back then and today, don't care. You know, we're going to talk about private companies in a little bit. But it is funny to me that there's been this narrative. You talk about sliding narratives that, hey, listen, you're missing out on gains from companies not going public, right?

The Amazon went public. Yeah, Amazon was a joke. The NASDAQ 100 has compounded at 19.5% per year since 2010. You didn't have to invest in these tiny little companies to enjoy large gains, right? Like, oh, we missed out on Amazon because it didn't go public and Facebook went public later and all these companies going public later.

It didn't matter. I'm so glad you mentioned that. I mean, because that is one of the talking points. And it's not untrue. Yes, we, yes, we weren't able to invest in open AI at a $20 billion evaluation because it was in the public, it was in private markets. Yes, that is a fact. But it is not a fact that investors are being robbed of gains by not having the ability

to do that, because to your point, look how well public markets have treated investors. What, 19% of years is not good enough? What percentage of VC funds do you think beat the NASDAQ 100 in that time period? Which time period? It's in the last five, 10, 15 years. I bet it's a tiny, tiny percentage of investment. any VC funds that beat that? Less than 10%. Yeah, I would say like less than five. All right. Howard Marks. Grand Rapids Hedge guy. We should send him a T-shirt. Do you read his latest piece? Is this a

bubble? I read most of it. Okay. So it's a long piece. And he does the thing where, and some people, you mentioned it, some people don't like this. He does a lot of back and forth on the one hand, on the other hand, right? He's, and he says, since no one can definitively say whether this is a bubble, I'd advise that no one should go all in without acknowledging that they face the risk of ruin if things go badly. By the same token, no one should stay all out and risk missing out on one of the great technological steps forward. A moderate position applied with selectivity and prudence seems like the best approach. Now, some people leave that and go, come on, man, get off the fence, make a decision. But I totally completely agree with him.

Me too. The people that go to the extremes in these scenarios, it's not a smart position to take. because not only because of the potential financial problems you could have, because you miss out on something or you sit out of something, it's the psychological burden that it carries. I am team marks here all the way. Sorry, nobody could see the future. Like, weathermen can't even predict the weather, which is seasonal, right?

Like, that should be, you should be able to predict the weather, and they can't do it. Sorry if nobody could predict the future about the technology, and the world, and the stock market, it cannot be done. So if you read this post from Howard and you say, well, thanks a lot, asshole, on the one hand on the other hand, that's, sorry, that's the truth. That's about as good as it's going to get. And I think he did a really good job laying out both points because nobody knows. We'll see.

Okay. What's your Nvidia chart here from Chart Kid? So Matt said me, Matt showed with this chart with me. Invidia is cheaper now versus chat, GBT launch. And he's looking at the Nvidia's forward PE ratio. And it was 40 times, 39 times when Chad ChpT launched, and now it's 24 today.

So he's showing multiple expansion or contraction over time. This is a crazy chart. I never would have guessed this in a million years. Okay, so this is not what happens in bubbles, but there is a big, big, big, however here. And the however here is maybe we're looking in the wrong spot for the bubble.

And maybe multiple expansion is the wrong, the multiple is the wrong place to look. It's the market cap. And I think, $4.3 trillion, it was up to five, it's such a big number that it loses all meaning. Right. And I'm not going to do that if you stack $1,000 bills. Oh, who am I kidding?

Yes, I am going to do that. It goes around the moon 12 times, right? $4.3 trillion is $1 billion, $4,300 times. I mean, it's insane. That is a lot. And so I understand that investors aren't paying more and more for each dollar of earnings, but how could they possibly? What would this company be worth $13 trillion?

It would be more than all of the bonds outstanding at some point. Like, it's just... I need a Warren Pyes chart that shows the biggest company relative to GDP, because we live in a $32 trillion economy now. It's bigger than Germany's GDP. Well, okay. I mean, obviously, that's a stocks versus flow thing. But I need over time, but yes, you're right.

That's a massive thing. I talked about the concentration thing, and you know my favorite thing with the Wall Street Journal. The everyday investors hedging against an AI bubble, okay? Everyday investors are hedging. What does Tony Wynn say? Yeah, they're not taking Brian Hahn, had most of his savings in tech stocks for a decade. Credit to Brian. It said the 51-year-old math teacher had 80% of them.

Now he says he's worried. In October, he took all that money out and put it into gold. He said, it's too much of risk for me to assume that this was going to keep moving higher, which, you know, that's not a bad idea. Hold on. Can we just get full code? Brian Hahn. This guy outperformed the shit out of me, probably by 2x over the last 10 years. Oh, yeah. He did amazing. Here's my thought process, though. I think this whole concentrate, like, if you went against all conventional wisdom in terms of reasonable financial advice,

investment advice, the kind of stuff that we give, if you went against that for the last 10 years, really the last five years, though, you did amazing. If you speculated, if you concentrated, if you did all these things that you probably shouldn't do on a regular basis, you won. You made a lot of money. Well, that's not really true. It's sort of true. It depends on... A lot of people did.

It depends on which stocks you went all in. Yeah. If you went in on the max seven stocks, you did phenomenal. Yes. Oh, yeah. But I think a lot of people did that because it was, hey, I'll just invest in what I know. And it worked, it worked to perfection this trade. Dude, we talked to them every day.

I mean, right? There are quite literally millions of people, millions and millions. I don't know if it's tens of millions. Maybe it is, probably. made, that got rich off of Apple. And I think this, I'm, like legitimately. I'm staking my claim, there's a high percentage of chance that this is a once in a lifetime thing that just happened.

So at Colossus, that Dom Cook did this piece, and you sent it to Josh and I, about Henry Ellen Bogan. This guy, Dom Kook, is unbelievable. Yeah, his profiles in Colossus are really good. And this one was about, so this guy, Ellen Bogan, was a, the New Horizons Fund at T-Roe which had a really great track record, it went back forever, and his returns were amazing. But I wanted to pull up this piece.

So whenever you heard about like Tiro's mutual fund investing in private shares, yes. It was this guy. He invested a private investment in Netflix in 2011 when they did the DVD by mail thing. They were going to separate the companies. And Netflix was in real trouble. And he said, I believe in it.

So he got invested in Netflix at like a $450 million dollar valuation. I think I've told the story before. That was my best trade of all time. I bought puts on Netflix like the week before they reported earners. I don't remember why I was bearish, but let's just say I had a feeling. And I think I made like 30x my money on that trade. Because it got, what got slaughtered? Yeah. Yeah, the stock, the stock got down like 30%. That's my best trade of all time. It's been downhill ever since. So we would have bought there. It would have been great. So it says, it talks about his,

the whole profile is long, but it's worth a read. It talks about his pattern recognition. And he's thinking through the market. And this part that you pulled out, I thought was worth it. He said, said, he trades his portfolio as little as possible. By the beginning of 2022, it became clear that it wasn't a temporary dislocation, talking about the market. The regime had changed. He went back to his study on compounders in a normal decade, about 40 stocks compound wealth at 20% per year.

In the free money area, when 120 stocks had achieved it, there were impostors in his portfolio. Unbelievable. That is unbelievable. Hold on one more time. In a normal decade, 40 stocks compound at 20% a year. And in the free money era, it was 120 stocks. So here's my point. So many, there's been such a bigger bucket of stocks that have gone just insane in the past

five, 10, 15 years. I think people are going to extrapolate that and think, this is normal. Why would I not do this all the time? And obviously, there are people who are coming to us and saying, listen, I know I got lucky. I basically hit the lottery, help me diverse. So like, we're not seeing crazy behavior from people that come to us. But I think there are a lot of people who are going to take the wrong lessons from

this and go, oh, this is easy. I'll just buy the stocks I know. I'll put all my money in five stocks and I'll make way more money than anyone. And I'll perform all the professionals. Yeah. It's never going to always be this either. I trust, I trust investors to learn the right lessons over time individually, not as a group, if that makes sense. Because I think as a group, people will forever buy and hold levered ETFs. It just is what it is, right? Because there's always, there's always a new crop of people that need to learn these lessons. But I really do believe that people age and get wise and burn their hand one too many times. Yeah, you pay your tuition. I agree.

I do think that most people have an evolution of investing where they understand, like, oh, when I was younger, I thought X, Y, Z, and now I understand the truth. So I am bullish on investors learning the right lessons over time. It does happen. You mature, different things come into your life and you have more responsibilities and you have more money. And less time, less time for speculation, less self-delusion that you're going to do it. Yes.

But there always have to be some losers in the market. Like that's an unfortunate reality that there's always going to be people who make mistakes. And some people never learn their lesson. Sure. We know this. Of course, of course. But yes, you're right.

More people than not probably do learn their lesson over time. But I think this is a lesson people are going to have to learn that. This, eventually there's going to be a scenario where just the best, biggest stocks that you know and own, you can't just own those and it's easy. It's been too easy. That's the thing. All right. It was Jobs Day today, I guess.

Man. How's your dog like in the new neighborhood? She's patrolling. What's out there? Do you ever just go to the dog, like, what are you doing? Like, when your dog barks at something that's irrational or, like, do you ever just look at the dog and go, what's, what are you doing? Why are you doing this? I do this to my dog all the time.

What are you thinking? So I have a boxer, and large dogs are not prone to, like, barking that much. there's a dog outside the window that she's barking at. But thank God she's not a chronic barker. But of course, yes, it's like, stop, stop, stop, stop. Watch this. Enough. My dog, for whatever reason, watches TV. So we're trying to watch a movie or TV.

If another dog shows up on TV, she'll, like, watch it like she's looking out the window. And she thinks she sees, and she goes crazy if she sees a dog on TV. Wow. All right, let's talk about the labor market. We got some data today. and it's funny. I put the unemployment rate data from Whitecharts in here. It shows the unemployment rate by month.

Look at the October. It's just blank, which is kind of funny. But you'll notice every single month, the unemployment rate is going up. And it's gone up 50 basis points since June. So 4.1, 4.2, 4.3, 4.4.4. Skip a month, 4.6. On an absolute basis, the unemployment rate is still very low. It's obviously going in the wrong direction.

Matt Bosler tweeted this this morning. he had another one that is kind of pushing the recessionary bounds. U.S. unemployment rate at 4.6%. It's up half a percentage point in the last five months. In 77 years of data, the number of times that's occurred outside of a recession can be counted on one hand. And it's like the 1950s, the 1980s, and it hasn't happened since 2003. Sometimes I think we take these things too far.

I saw multiple people on Twitter today. Post the unemployment rate out to three decimal points, right, to show how far we had to, because we're rounding up to 4.6. It's really 4.5746 or whatever. That's a little too granular for me, for what I don't like to use. Here's the thing. I still don't know why granular is a word that is like in your box, in your penalty box. I used to work with a guy who use it to sound smart.

And there's certain words people use to sound smart, and that's one of them that has always triggered me for some reason. Okay, fair enough. He used it all the time, all the time. And it used to just grind my, so that's what. That should grind your gears because granular is not a daily word. No, we'd use it all the time. I probably use it once a quarter, tops.

Yeah, because someone uses that word, you know, go, ah, that's a smart person, yeah. So here's the thing. The labor market obviously continues to deteriorate. You can't say, like, it's in a strong place. Stock and bond markets don't care at all. Spreads are still low. Bond markets, you'd think if the bond market was really concerned about the labor market, yields would be falling more.

I guess it's, maybe you'd say, well, yields are lower than they would be because of all the tariff inflation stuff, so it is. But the stock market, again, is it ultimatized markets, financial, markets do not care about the labor market yet that's correct just when are they going to care what would it take um that is a good question i think the market will care about the labor market when it's worried that it's going to show up in earnings but i don't think it's i don't think it's worried about that at all yeah i again because it's happening on the margin but the opposite is true. I think that the labor market is not in a great place because companies are

being slow to hire because they're waiting to see what AI is going to be able to do for them. I guess you could also say, listen, the fact that corporations are laying people off and we're not in a recession means better profit margins for them. That's why the stock market doesn't care. I mean, that works to a point, obviously. Yeah. All right, there was a piece. I also, hold on, one less thing of this. I also think that the consumer is fine. not to beat this dead horse right into the ground, right? The K-shaped conversation, but in the aggregate, okay, in the aggregate, because I'm looking at, and I don't know that the stock market is always a source of truth here, but I think in

this case, I'm going to lean on it. Ally Financial. Ally is a large automotive lender and a large percentage of their clients or subprime borrowers. Capital One, pure consumer exposure. Look at this. I mean, the stock is at an all-time high. I'm not, like, obviously American Express is the luxury client that's at an all-time high, too.

But just capital won an ally is good enough for me. If the consumer in the aggregate, not segments of the consumer, but in the aggregate, was deteriorating, the stock would not be at an all-time high. Duh. So can I give you something that's the opposite of the K-shaped? It's a K upside-down. I don't know what that is. Backwards K.

All right. So there's this piece for the center. K's symmetrical. So an upside down K is a K. Oh, backwards K. No, that's still the same thing. Center for Retirement Research at Boston College wrote a piece about inflation. And they say, listen, just because inflation is low, and this is the point everyone's been making. Let's look at cumulative. And they did this chart that shows all these different categories since 2020. And it shows total inflation is up 25% like cumulatively. But if you look at food and beverages are up a little more, 26. Housing is up 28.

and transportation is up 37. So those are the big things people focus on and that. So the fact that those three items are up more than the average, people don't look at, well, education is only up 4% or recreation is up 16 or medical care is up 11. A one-way ticket. Apparel's up 13, right? A one-way peak ticket into New York City from Long Island Railroad is $14. Okay.

What would it have been before the pandemic? I have no baseline for this. Eight, seven or eight? Okay. It's crazy. It's unbelievable how expensive it is. So do you pay every time or do you pay for a monthly? I pay one way because I'm only in once a week.

Okay. And but 14 bucks for a one way peak ticket. So how much does a monthly pass cost for the train if you're taking it every day? That's, ooh, that's a great question. Like $500? I have no. It used to cost. I don't remember.

It's been so long as I bought a monthly ticket. It used to be like, uh, $200-something dollars. So peak is $1450. How do we get a monthly ticket time? A monthly, let's say. The December monthly ticket is no longer available. You could buy the January monthly ticket on or after December 25th.

All right, so sorry, I can't find out. But the good news is you still have to on a car. So that makes it all worth it. Right, yeah, and cars are cheap. But so listen. Man, you should have seen the waffling I was doing this week about my car, Ben, that back and forth, it's out of control. When do you have to make a decision?

It is heating up. My car is doing April. My lease is up in April. Okay. You've got some time then. Get your car broker to work. But this piece also looked at the wages. And again, overall wages have grown two percentage points faster cumulatively.

But look at the, it's still crazy to me that the lowest quartile had by far the biggest increase in this period. So 30% versus 25%. And the highest actually fell behind inflation. The highest quartile was only at 24%. versus 25%. If you could poll the audience, if you could ask every American, and let's just throw away the electoral college, just number of votes, majority wins, majority rules, would you prefer

where you are today in terms of your income and the inflation, or would you rather go back to 2019? Handily, not even close, we go back to 2019 prices. If we could just reset, not even close. But would people be happy going back to those wages? That's the thing. Would it be, would the loss aversion? Yes, I'm saying your wages go backwards and the prices go backwards. I think people would say that, but if you actually did it to them, they'd go, oh, they'd be shocked that their wages are gone down.

I think that's the problem is that it's whatever the loss ofversion is, that's the thing that hurts more. Well, that's a different conversation. You might be right about that. But I'd just say if you just take a vote, if you ask people, stay where you are today or roll prices back, your wages and the inflation. and roll it back. I think the majority of this country votes to roll it back. You know, I've been thinking as obviously technology is going to become a bigger part of our lives and there's going to be robots and there's going to be self-driving cars and AI is going to do God knows what. You know the movie The Village? Sure do. I saw the, did I sit in theater

with my dad? Yeah. 100%. Yeah. My wife and I saw it in the theater. I think we're still dating at a time. And credit to her, she predicted the ending before I did. But do you think there's one of my, you know, I don't know if that's a weakness of mine like predicting the ending. I But I don't do that in my brain. I don't try and predict the end. I constantly try to predict what's going to happen. That's all I do. So I'm watching that the Shiv Roy kidnapping show on Peacock.

I'm sure your wife watched this. It seems like a Robin show. She did to watch it. The whole time, all I'm trying to do is guess who did it. Because I know that in the first five or six episodes, they're going to show me the person and make me think it's them, but it's not them. I know it's not them. I don't get invested because I know it's not them.

So I got to think who's the person they're not trying to. So anyway. You know, I'm blessed with the burden of not. I don't think I had. Okay. I don't think ahead. But do you get back to the village thing? Like, it's these people who live in modern times,

but they decide to go live like it's the olden days. Do you think you could ever see someone like that? Say, like, listen, we're going to go back to when it was... Yeah, the Amish. Like, do you think people would want to do that? I think there's going to be people who are going to go... No, what? You don't think that some...

Because you see all this nostalgia for the old. I would love to give people that experience. Hey, for a month, you're going to live like it was pre-internet days and see how you like it. The technology that you had back then, would people actually like it better? You can't survive in the modern world because everybody else is using today's technology. Yeah, but I'm going to create our own little town, though, right?

Okay, like in the Truman Show or like a reality show. Yeah. All right. Let's talk about AI a little bit. I feel like Open AI is an obvious short, and the evidence keeps mounting that this is, there's a difference between a good business and a good product. Let me ask you a question. If Open AI were public and it's down 40%, do you press the short?

I think at this point you might because I think Google's going to eat their lunch. because Open AI, I think it's a good product, not a good business. Why aren't they selling ads yet? Like, what do they... So listen to this. This is from the Wall Street Journal. Open AI is already doling out far more stock-based compensation than other tech companies, owing to an intense talent war that is waging with its competitor.

The company expects to spend $6 billion this year on such cost, almost half of its projected revenue. Okay. Repeat that. Half of the revenue is going to employ stock options. Don't care. I don't think this is a well-run business, and I think this is an obvious short. Tell me I'm wrong.

Okay. I won't tell you you're wrong. Let's just consider the other part of this. There are so many parallels to earlier businesses. Facebook can't monetize social. Netflix can't do this. You're evaluating the business of a baby business. It's foolish. They're in building mode. They're not in the monetization at all ends mode. I can guarantee you. They don't know what their business is yet. And the open AI business, whatever it's going to be, does not exist today. But guess who does? Google does.

These companies already know, listen, we're going to sell ads up the ass on this stuff. You don't care. Why are they doing that? They're going to be. There's no, of course they're going to be. They're right now, they're trying to build the best product in the market

and they're winning. Yes, Gemini is growing a lot, but Chat Chb-T is still totally dominant in terms of the number. I saw Schrelli posted a tweet this morning, actually, that I saw about the number of minutes on Chad Chepti versus Gemini. And you know, I don't need to guess.

Let me just, because this is important. So, percent, 55 billion minutes spent on AI sites this month, last month, 64% chat GPT, 15% Gemini. Now, Gemini grew 391% year over year, massive, catching up. Chat Chabit only grew 54%. So chat chabit has 60%. So first mover advantage. So first mover advantage gets them locked into a lot of people.

Yeah, so I think, listen, I understand it's the obligation. of Open AI look insane. The business model today looks insane. But I just, I'm not getting involved in those discussions of the revenue today, the business today. It's so early to judge. It's not fully formed. Give it a minute.

I just wonder how long the market will give it, though. It's already down 40% in my brain. I don't know. All right. Okay. So, all right, another one, like, AI adoption rates by corporate customers are slowing. Don't care. It's so early.

This to me, this is utter noise, utter noise. Alex Cantowitz in his substack wrote, Enterprise AI is the fastest growing software category in history, expected to bring in $37.5 billion next year up from almost zero in 2022. This is going to be a $100 billion category. That is pretty nuts. It's funny. So I've said a few times, you always get mad at me. I said, like, people in Bitcoin and gold were right for the wrong reality.

reasons, right? Or, and they were... I just think it's... No, but I'm saying, you can apply this to stock market investors, too. We were all right for the wrong reasons. No one predicted AI was going to come in 2022 and change the game so much. Like, we didn't... So I'm saying everyone is like that.

So Gavin Baker was on Patrick's podcast, and I understood, I don't know, 15% of the conversation resonated with me, right? Gavin is talking... When they start talking about the different types of chips and the GPUs and the TPUs... No idea. No idea. No idea. But a few things... resonated with us that we pulled out. So, um, uh, Patrick asked him, like, how do you, like, take me to your office. Like, what are you actually doing with these things? And Gavin said,

um, I think the first thing is you have to use it for yourself. And I would just say, I'm amazed at how many famous and, and, uh, investors are reaching really definitive conclusions about AI based on the free tier. The free tier is like you're dealing with a 10 year old. So I'm pay, I was paying $20 a month for the chat for chat, like the whatever, the, right? the whatever version to pay to unlock it. And I said, hey, wait a minute, that's such a good point. It didn't even occur to me to, like, pay for, pay $200 bucks a month. So I'm curious, like, what does $200 a month get you?

And the first query that I typed it, I laughed at how it's not, it's apples and oranges. Like, the $20 a month version is, is magic. This is, this is like a whole other universe. It's night and day between the $20 and the $200 version. Now, am I suggesting in any universe that the $200 universe, that the $200 version, that the $200 version is going to be, like, mass adopted? Of course not. Who needs to pay $200 a month to chat EBT?

Like, the $20 a month version is just... You know it's a big difference. Oh, my God. Okay. You would not believe... Like, just try it and cancel it. Like, you would not believe how unbelievably better it is than the $20 version. So, like, we're making decisions and discussions around, like, what it is today.

I can't imagine what this is going to be in six months and 12 months and 24 months. Like, all of the changes come. coming. It's going to change everything. The $200 model will be the $20 model at some point. Yeah, probably. It'll as things get better. Yeah. That was his point. I mean, obviously, we have to talk about the data centers in space. He talked about this. And this is the thing everyone pulled out. And this is the clip everyone watched. And it's one of those things where it sounds either brilliant or idiotic. And there's no middle ground, right? It's like, of course you put data centers in space. You can cool them easier because it's cooler up there. And you,

you harness the power of the sun. And other people go, no, no, no. How are you? How are you going to take care of these things? If something breaks, you have to fly up there every time and how are you going to get them there? Not knowing anything, there'll be data centers in space. And then... Wait, hold on. What do you think?

Will there be data centers in space? I do. So the next day, there was a story in the Wall Street Journal saying Bezos and Musk, race to bring data centers to space. I don't know, man. I mean, what happens if something goes wrong? That's not your concern. I don't know what the cost is.

I think we can probably improve the technology enough on Earth where we don't have to send them in space. That's my thought process. Don't you think they've thought of that? What happens if something breaks? Yeah, but I'm trying to think this through a cost-benefit analysis. In the next 10 years when we have data centers in space, I'd say probably not. 15 or 20 years?

Sure. All right, so 10 years, you're in line on the sand? Yeah, I'll take the under on that. I think there'll be data centers in space. Okay. I just, it seemed, I can't even imagine that we have the, or what the cost would be and we have the capabilities to do that. I mean, SpaceX is going public.

What the hell do I know? SpaceX is going public. I think that knowing nothing about the company, other than that Elon Musk is somebody that gets shit done, why won't there be data centers in space? It's space. I don't know. There's a lot of stuff that happens there. I know.

Dude, I know. The knee-jerk reaction is L-O-L-O-L. Like, L-O-L. I get it. But I don't know. Why not? Yeah. But on the other hand, the theory makes sense.

Like, yeah, I get it. Yeah. You're cool. You just turn it. The sun's that way. You just turn the other side. You just turn you back to the. the sun, right? You're good. All right, here's another one that we took out of the article,

the podcast. Talk about Taiwan semi. Gavin said, a big problem in the world right now is that Taiwan semi, by the way, this is, we've done this in the past where we talk really fast about people that we know in the industry that we take for granted that, I don't know Gavin personally, but that everybody listening knows them. Patrick O'Shaughnessy, our friend, has a great podcast called Invest Like the Best. He had this guest on this week, Gavin Baker. Gavin Baker is a technology investor. So that's who we're talking about. And if you miss out on stuff we talk about, we have show notes on our blogs.

Go there. There's links to everything. So Gavin said, a big problem in the world right now is that Taiwan Semi is not expanding the capacity as fast as their customers want. Skip ahead a little bit. So I think Taiwan Semi is in the process of making a mistake, but they're just so paranoid about an overbuild and they're so skeptical. They're the guys who met with Sam Altman and laughed and said, he's a podcast, bro.

He has no idea what he's talking about. They're terrified of an overbuild. So it may be that Taiwan Semi single-handedly that their caution is the governor. So I think it's phenomenal that investors are the governor, that Taiwan Semi is. Like, everybody understands that a bubble that gets out of hand eventually pops and there's collateral damage all over the place. We have some healthy bubble bottlenecks right now. Yeah. It's a great way to put it.

I, yes. I like it. So wait, so are you going to continue paying $200 a month for chat GPT or not? I haven't had as much time as I would like to play around with it. But like, so all these audiobooks that I'm listening to, like, I'm using it all the time. And so for the old, for the $20 one versus the new one, not that I need this, but the answer is that it gives me. Like, tell me about the movies that this producer made or whatever. Like, it gives you like immediately, like not just like the name, like a list.

But it gives you the list by decade. It gives you the tiles of all the movies that you could, like, scroll through. Like, it's just, like, next level. That makes sense. Do I need to pay $200 a month for that? Right. Probably not. Probably not.

Like I said, it's going to, you're going to get that eventually anyway. Probably 12 months. That's what's going to be the $20. All right. Mike Simonson has a great housing outlook for $2026. Tons of good charts. I pulled a few here. He's for Compass Intelligence now.

He says, listen, home prices are probably going to be flat in 2026. I think that's probably the baseline most people are using. Like, we're just going to have another. And he looked at affordability. So this is price-to-income ratio. And it's funny. It never got down to the affordable level, like home prices at three to four times income. But it's severely unaffordable now.

And he's saying, it's just going to continue to go about it. It's going to get into less affordable territory if housing prices stay normal and incomes keep rising. But look at this. This is home price change year over year. And he shows the top 20 names in the Case Schiller Index. So all of them had huge gains, obviously. And now they're all, many of them are going into negative territory. Miami, Tampa, Seattle, San Francisco, San Diego.

These are minor losses, Dallas. But some of them are starting to see down prices, which is not bad. Okay, this is the crazy one, though. So he shows healthy home equity cushion for homeowners. 86% of borrowers have at least 30% of equity in their home. You can see how this has changed since 2013. 2013, barely anyone had any equity. And now the vast majority of people have a ton of equity in their house.

And the negative equity is essentially zero, which was actually like 15% in 2013. This is the consumer backstop. Even if it's illiquid and it's not like, this is a backstop of some sort for people, for a large number of people in this country. Absente financial crisis, yes. Right. Yes, for sure. Financial crisis.

I was looking at some houses in my neighborhood yesterday because two houses hit the market. Not a lot of houses are. Two houses on the water. So I'm lucky. I'm looking at them. I'm like just on Zill. I haven't looked at Zill in a while. There's a house in my neighborhood that has that just the price just got lowered by 25K.

It's now a million 50. I don't know what it started at. A million 50 for this house still sounds crazy. but whatever, that's the world that we live in. It is just under 3,000 square feet. It's a fine house. It's been on the market for 200 and, because I was like, wait, this house is still for sale. It's been on the market for 229 days.

Wow. That's a long time to have to wait through that. If you bought a new house and are sitting on two mortgages or just waiting to sell your house to buy a new home. Now, this, I think this was like a flip. I think this is like an investor that put money into this. so they need to lower the price yeah but like this I mean obviously we're in a different environment than 23

and 22 and but yeah the housing market is still soft and obviously people aren't going to get the prices they want sometimes I still get the Marco Island houses just because I checked Zillow once when I was there and every time it's price reduction price reduction price reduction I think in places like that like I did get an email from someone the other day saying hey I'm thinking about moving from a cold place in Utah to Florida and putting in a little ball offer.

It's like, it's about time. You know, as much as, so we got our first fall, our first snowfall this week, I know Michigan has snowy or winters than we do. As much as I hate the bitter cold, and I guess bitter is a relative word. To me, bitter cold is like 20 and below,

below 20 degrees, right? That's bitter cold. Well, you walk outside on it hurts. Oh, yeah. Right? We've had that for the last two weeks. It's been like 12, 12 degrees. But I like the suffering.

I think it's part of the whole thing. Like, I like getting to the other side of it. I love when it starts to thaw out. And I have like a mental calendar, like summer to fall, all that sort of stuff. Now, I'm hating the winter more and more as I get older because that's, you know, the circle of life. Everybody likes the cold a little bit less each year. And at a certain point in my life, I'm sure I will be done with the cold, like every

other Long Island Jew who moves south. But for now, I still enjoy the thing. It must be us reaching middle age at the same time. I find myself liking the winter more and more. I have to take my dog for a walk every day, and it's freezing out, and I bundle up, and I put my long johns on, I put my big boots on, and I make my son come with me, hey, put your snow pants on, put your coat on, you're coming with me. And we take the dog for a walk, and it's freezing. We can see our breath, and it's something about it is like invigorating, being out in that type of weather. Good for you.

Am I a bad dog? I don't walk my dog enough. My dog, if I don't take my dog for walk every day, she goes by the door and barks. Like, she barks at me until I take her for walk. Okay. Once a day, I have to take her. and yeah the kids think they take her for a walk no it's me and they wonder why she liked the dog likes me the most

they say you're always mean to her why why does she like you so much i'm the one it takes her for a walk that's rye let's talk about semblis a little bit hold on before we get to semblis i just popped in my brain i walked downstairs this morning and uh ru was laying on kobe very very sweet but i walked downstairs i said are you watching blank check again he was watching blank check again that's one of his rewatchables all right so Michael Semblis from JPMorgan had a 50-page piece. I guess he does a deep-dabbing alternatives every year. And he did this one on private markets, what is most recent piece. And I think

the biggest one for me, there's a ton of charts here that we can pull, is just that. What's your single biggest takeaway? He looks at the speed of monetization of these buyout funds. How quickly are they turning their investments into money for their investors? And it is slowing considerably. And it says the median percentage of value remaining to total, and it's going up and up and up, and it right now, even the 2016 vintage, it's like they're still, it's only been, they've only monetized 30% of it. And in the past, this was a complete opposite. You were monetizing 70% of it by this point.

So 10 years in to a fund, and you've only gotten 30% of your money back. That to me is the biggest thing that these, these are, they're sitting on such longer investments in these private markets. and they're not having exits. So the investors have to be getting worried about this. Yeah. Like, where's my money? Come on.

Yeah. Well, onto the wealth channel. I mean, it's no mystery. Like, part of the reason why they're looking for our pockets is because institutional investors are, they're allocated already. This is a great line in here. I didn't realize that this was so obvious, like when I read it. I was like, oh, yeah, duh. But I just had never seen it put this way.

since accredited investor thresholds aren't indexed to inflation, the share of qualifying households rose from 1.8% in 1983 to 22% in 2022 and is on track to 30% by 2030. It is kind of funny how the government indexes some things to inflation, but not other things. This would be one that you'd think they would, but I guess it just allows more investors to invest in this. I'm sure the private investment managers love this. Yeah.

Give them a bigger pool of people. The monetization stuff is incredible. So what changes this? What makes it so there's more exits? There's more IPOs. There's more M&A going on. There's, why aren't we seeing it? When is it going to happen?

What's going to cause it? Because we've had a boom in speculation this decade. Don't you think that that boom would include IPOs? Why hasn't it? I think my knee-jerk reaction, I have to think more critically about this and would love to hear people who know have a better answer, maybe.

I think the reason why the pool of capital is so much bigger. It's a lot easier for money to come back to investors when the pool of money is $200 billion. When it's when it's $3.1 trillion, I'm making up both numbers. It's not a scarce resource anymore. There's just too much money maybe here. There's so much demand for, there's so much more trading going on in the equity markets by retail investors. and I know the IPOs aren't going crazy when companies do come public, but don't you think there's demand by investors to try something new?

I just don't understand why there's not a new IPO on Robin Hood, one's a month. IPOs are also a much, much, much, much smaller segment of exits than M&A. Like, I don't know if it's 10 to 1, but maybe even more than it actually. Most of the time it's M&A. To me, another big takeaway, and I knew this, but venture is just a waste of time. Fourth quartile venture managers have been in money pit, destroying substantial value relative to the equity market every year since the late 1990s. Listen, if you can get into, so they have a chart here, the top 5% versus the top quartile.

Yeah, if you can get into the top 5% of venture funds and we know who they are, right? It's that they persist because they have access to the networks and all that sort of good stuff. I would give them all my money. They wouldn't take it. But other than that, it's a waste of time. It is crazy because the thought. process seems to be, if you're not in the top quartile, you're out of luck. But even the top quartile numbers here are coming way down and do not look very good at all. That's surprising to

me. Yeah. But look at the chart of U.S. Biop performance, like, versus the S.P. 500, like, bio, it's still okay. It's still, it's still a good asset class. Like, even the median fund has barely underperformed the index. It's not bad, considering how hard it's been to outperform the index. Yeah, you're right. It makes sense that the returns would be way worse in venture than it would in private equity. Because those are more mature companies and they put some leverage on it, right? You think you get that those sort of equity returns. And the number of legitimate, oh, the manager earlier from Tira Price, he's a weird last name that's escaping me, said that the number of imposter companies, like there are too many imposter companies in venture. And buyout when the average EBITDA is, whatever, $250 million, like those are real companies. right? And if you buy it with some leverage, yeah, you're going to perform fine. And that's

basically what happens. All right. I want to talk about reading. I think if I had to say one thing that helped me in my career early on more than anything else, it'd be reading. Now, have you seen this chart from the FT flying around? No. Percentage of U.S. teenagers who read in their leisure time and it goes from almost every day to was, you know, 35% or so in the 1980s, now it's down to 15%. hardly ever went from 15% to almost 50%. Now, I do want to take a little umbrage with this chart. I don't, did you have a lot of friends who are reading their leisure time? No.

I guess you could say, listen, I mean, I was reading Sports Illustrated in my leisure time. I was not reading books. No. I don't think I had one friend in high school who read books on their leisure time. I didn't start reading my leisure time until I was 25 years old. Probably, that's probably pretty similar for me too. But how do you square is with the fact that people are probably reading more stuff than they've ever read in their entire lives? It's just not books anymore.

That's what I was going to say. It's emails, it's newsletters, it's, I mean, obviously, here's my way of thinking about this. Because I'm having a tough time squaring this with the fact that every, I talk to a lot of college kids. They reach out for career advice. I'm always happy to take those conversations. These kids are 10 times more knowledgeable and prepared than I was. They know the industry. They know the kind of company they want to work for.

They know the markets. When I graduated, these are like juniors in college. I knew none of that. I remember I was in a class and someone asked, how many people want to work in investment banking? And I, someone, like half of us put our hand up, like, yeah, that's like the best money. and then a teacher goes, what do you, what does it, what do an investment bankers do? And one guy in the class knew it. All of us are like, hands slowly down. Now, almost every kid knows that because it's easier to research these things. So I do the reading was like had the biggest

impact on me more than anything early in my career. It's how I, it's how I caught up and I learned what the markets were and history and all this stuff. But I do think that with podcasts and newsletters, and if you want to, there's more opportunity than ever to know what's going on. I just think it's probably like inequality. There's different ways of learning these days. Yes. I just think the extremes, if you're someone who just gets caught in the slap of, I just watch TikTok all day, and I scroll through social media and I doom scroll and all this stuff, yeah, your brain is probably turning into mush. But if you take advantage of the information, it's so much better than it was in the past. I just think that the inequality of learners is

probably going to be wider than it was in the past, even. That's my thinking. All right, the New York Times said this piece. Streamers are raising prices at an astonishing rate. Here's how much more you're paying. And they go through all these lists of every streamer. And I was looking for a table, and I didn't have one. So guess what I did?

I put it into Chad GPT or Gemini. Can I remember which one? It looked at the price. Disney went from $5.99 to $18.99. Max went from $16.99 to $1840. And all these raised their prices by $2 or $3. And if you look at since they first started, it's way, way higher. Do you think it really matters, though?

What do you mean? Are people going to give up because they keep raising prices? Like some of these, sure. Bloomberg has a chart showing a rare subscriber increase. US pay TV customers rise for the first time since 2017. Hmm. That's surprising, right? I mean, does YouTube TV count or not?

Because that's what I use now. I feel like that, to me, is like basic cable now. is US pay TV is YouTube in here I don't think so okay I mean I did the thing where I bundled Max

and Hulu and Disney together and that made it a little cheaper for I think it's like $29.99 a month but I'm one of the people I'm never getting rid of any of these I'm locked in forever we spoke about the Netflix

Paramount Warner Bros saga Josh and I are talking to Bill Cohen from Puck. Or are you going to ask him about unscripted? He was in there a little bit. He was in the book. He broke the article open. He wrote the article for Vanity Fair in 2015.

So, yeah, I can't wait to talk to him. So we're going to talk a lot about the story. Him and Bellany at Puck and Julie Alexander. They've been great on all the reports. So a lot of speculation. Oh, I bought Netflix last week. I don't know if I said this on the show. I did too.

I could down 30%. Every time Netflix crashes, it's a wonderful buying opportunity. Maybe a false war. Here's, can I make a pitch to you real quick? Sure. I think Google should buy Warner Brothers. They have you, if people, because people in Hollywood are freaking out about this.

That would be blocked. Whoever buys them, then you could have HBO as a tile on YouTube TV. Wouldn't that save the, the studio more than any of these other options? What do you mean, you mean save the theaters? Well, people are worried about what this means to Hollywood workers.

Whatever, if it's Netflix or Paramount, a lot of people are going to lose jobs. No, no, no, no, no, no, no, no, no, no, no, no, no, Netflix is not going to be cost-cutting. The synergies that are coming from Netflix are coming from Netflix not paying HBO a licensing fee. Oh, come on, that's the stuff they say. They're going to, they're going to cost. You're kidding me? No, they're not.

No, they're not. No, they're not. Netflix is not fine everybody. They don't have a studio. What are you talking about? Netflix is not firing. Netflix is not going to ask people the way that Paramount will. Paramount has a studio.

The duplicative roles are all gone. Netflix is not this far without having a studio, though. No, no, no, dude. Netflix is not going to whack Warner Bros. Studio. They're not going to whack HBO. All right. I don't believe that, but... They're not going to.

I don't believe you. All right. I think Google should buy them. I think that makes sense if you want to keep this stuff going. That would never pass muster. There's no way that Google would, that YouTube would be allowed to buy anything else. Yeah, I guess so. Like, that would be blocked in a second.

Anywho, hold on. What else was in here? So somebody emailed us because we were talking about like what, like Netflix is really trying to, Netflix is at war with the theater. And I mean, it's not war. Like they won already, right? And so what Sarando said just to rehash it in case people are not following this, what Sarando said, and this is the part that Ben, you should rightfully maybe not believe that they're going to keep the number of movies coming to the theater. But what he's really going to do is he's going to narrow the window. So if movies were in the theaters for 40 days, he's going to narrow the window to 15, effectively squeezing movie theaters, because if you have to win only 15 days, you're going to wait and you're just going to see it at home. And then it's going to be just in the big markets. And then, yeah, that's what happens.

Anyway, somebody said, hey, a listener emailed us, Netflix owns the Egyptian theater in Hollywood and go to this website. This is actually pretty cool. So it just shows Netflix stuff? So you could see a bunch of Netflix movies in the theater. I don't know why you would want to see Jay Killing in theater, but you could. A house a dynamite in theater. That would piss me off if I went to the theaters for that one.

Oof, yeah. But I thought this is interesting because you could watch the Stranger Things finale in the theater. That'd be kind of cool to see a theater. That's kind of cool. So I love that they're doing this, even if it's on a small scale. That is kind of cool. I want to, speaking of like, I don't know if this is innovation, but just people like, you know, like people like going to comedy shows because it's better to laugh

with people. It's good to have some shared experiences. I laugh way harder at a live comedy show than I would watching it on Netflix. Of course. You would chuckle at home. Maybe if it was like an amazing joke, you would laugh. But laughter is contagious as your feelings. So I saw The Shiny at IMAX. By the way, I bought a ticket for myself. Robin goes, are you seriously going to see that on Friday? It's our anniversary. I was like, oh yeah. You went to see a movie by yourself on your anniversary? Well, my anniversary was technically on Sunday. Or is it Saturday? It was Saturday.

No, Sunday. So I said, no, no, no. You know what? F this. You're coming with me. It's my anniversary. You're coming with me. She never comes to the movies with me ever.

Like, the last thing we saw was the Star is born. So I said, we'll do dinner. It's 7 o'clock theater. We'll do an early dinner. We'll go. And Kobe found out that Kobe has a basketball game. Like on Tuesday, they announced a basketball game on Friday. So I'm like, oh, each chicken is like 30 bucks.

So I'm like, all right, whatever. And then I'm thinking to myself, you know what? Like, Shining is an IMAX for one day. Like, I really want to see this movie on a big screen. So I'm like, all right, I'll go to the 9.31. So now I spent $90 in The Shining. So the Shining came out in 1980, five years before I was born. I did not see him in the theater at Ben.

It was packed. There was at least 200 people there. And guess what? It was amazing. Holy cow. seeing that in iMacs versus watching that on your laptop or your teeth i mean forget about it what great experience i have i take umbrage of this because people said this about one one what's the one battle after another one battle you have to see it in iMacs like i'm sorry if you need a caveat

for why a movie is better or worse because like i don't like caveats for movies what a horse should take you don't think that there's a distinction between watches them at home and watching an iMac and a giant screen but you can't turn a you can't turn a bad movie good because you saw it in iMac that's all i'm saying okay of course okay of course all right so wait caveats 100% so i don't want to hear it now you hated one battle after another like no let's wait to recommendations i got more let's just but but ben the scene where the roads went like this that was cool but yeah i'd need three hours for that all right so a million people emails about cheap TVs and someone says an ex you to employee in their partnerships team i

hear about this a lot there's basically a hidden revenue model where tv manufacturers get paid by roku google netflix and others for putting preloading the app having the app on the button all this stuff. So it's basically a revenue stream. I would have thought the cost would have outweighed that. But obviously the streamers, that's why you get cheap TV. And that's my point of why Netflix should give you TVs, right? Yeah, maybe.

Maybe one day. All right, so that was the story. It's being subsidized for us. It's basically subsidized. On your remote now, you have Disney Plus and Hulu, you have the buttons, and you have preloaded with stuff, and the tiles are probably closer. You pay for the, so all this stuff is just, we're being subsidized by the technology companies. Thank you, Amazon.

This is a good thing. All right, email. When the topic of cars come up on the show, I think you both maintain, you both mentioned at various times that you both are leasing at least one of the cars in your family. I was wondering if you could both talk about your rationale behind choosing to lease versus buy. Leasing is often considered a cardinal sin among personal finance people. All right, here's my answer. I'm not a personal finance person.

Boom. I don't care. You know what, honestly, my biggest reason is having little kids, you destroy your cars. And I am perfectly fine not owning for a while. I think when we're older, probably we'll start owning again. But I love the fact that I'm leasing it and my kids are destroying someone else's vehicle. For me, variety is a spice of life.

So I love every three years that I get to buy a new car, or at least new car. I also like the fact that the technology is improving so much in cars, that it gets better. So I think now is a great time to lease because every three years, you get better self-driving capabilities, better sensors and better technology. And I'm not, Ben is more of a spreadsheet guy

when it comes to finance than I am. I don't care if, leasing cost me an extra $2,500 per lease. I just don't care. Like, I enjoy, if whatever it costs me, I like, that I have the option. Well, no, it costs you less, but it just costs you more in the long run if you were to buy it and then own it for 10 years. Leasing is more expensive, right?

No, the monthly payments and leases are way cheaper. Oh, really? No, I'm just saying, like, versus the alternative of buying. You're obviously not a personal finance guy. The owning gets you when you pay the car off in four years or three years, and then you own it after that and you make no payment. That's where owning. So buying and holding or buying and owning over the long term is cheap.

You know, here's the other reason that I like leasing. I hate paying for car repairs and dealing with that because I've had some lemons in the past. I love the fact that you buy a new car and it's fine for three years and then you turn it back in and you don't have to deal with a ton of repairs and such. I've had so many cars break down to me over the years. And I saw my dad buy so many crappy clunker cars. Yeah, make it somebody else's problem. We got another question that I haven't thought about.

We can say this for next week. what's one blindingly obvious improvement to a business that you, like a public business that you can't believe they have it done? I haven't thought about this. We could save it for next week. This person saying, like, why is Amex sending me like physical mail? Like, they're wasting like $50 million a year on that, making that number. That is really dumb. I don't know what the, what the calculus is in that. Why you still receive so many. I think for, I think maybe for financial stuff, it's regulatory. Okay. All right. Recommendations. What do you happen? You go first. Okay. So last week, we spoke about Sandler and Clooney.

here's a take. I'm bullish on more of this. You know how like some maybe you see it in the NBA like players in their in their later career like coming together? Like oh, we're boys like let's play together. So Billy Bob and Sam Elliott, for example, you've never seen them on the screen together, have you? I don't know, maybe you have. How good are they as a duo in Laman? Are you kidding me? Billy Bob is fantastic in that show. There's some there's some parts about that show that are like just a tiny bit cringe, but his performance, he's so good in that. I think it's, you know, it's really remarkable that Taylor Sheridan is able. Now, I'm pretty sure that he's a very bright

guy that he's self-aware that the cringe, it's intentional cringe. But the fact that they're able to do intentional cringe, that doesn't like, that's not like so over the top it, like it's hard to watch, but like the stupid music and the dumb lines, like that they're able to threat, that he's able to thread that needle is. My wife said the other day, I hope

that they don't make the wife in that show go over the top like Beth and Yellow Sound. Like she was, she was like a character versus character. She already has, you know? I think she hasn't, I mean, She's always been a little over that, but she hasn't quite crossed the line yet for me. But Billy Bob is so good in that show. Okay.

All right. So, yeah, the Shining was amazing in the IMAX. And guess what? It's a good movie at home. Now, I haven't seen The Shining. I don't know that I've ever watched it start to finish. I know I've seen the entire movie, but I don't think in one sitting. So there are two parts in particular that stood out to me that I forgot.

One, like the music is the horror. Like, that is, the music was so freaking scary, even from the opening credits. So two things. Number one, I didn't realize that when Danny is on the tricycle riding around the house. So there's one part, there's three different times where he rides around the house. And one time, he goes from the wood floor to the carpet, to the wood floor to the carpet. So it's like, smooth. Oh, yeah.

And it's just, it plays so well. But they have, so the contraption, the technology. for that is called a steady cam like how are they able to even shoot that that's like the full body vest that they put on so obviously if you had somebody just with like a handheld camera running it would be shaking the whole time so it's like it's a contraption they put onto their body and they put it on and they're able to capture it that way that's how they did the shot with uh with like rocky running oh yeah you know what I mean where it's like yeah all right the last part is when Jack Nicholson is banging down the door with an axe

So the camera, like, goes back with him. It goes back and forth and back and forth. So when he's swinging it backwards, the camera sharply rotates. So I put on YouTube, like, how did they shoot that scene? And it's like a selfie stick. The camera was on a selfie stick. So when he goes back, it goes this way, he like jerks it both ways, Cooper did. It's almost more impressive they did it back then.

See, I watched it a couple years ago for the first time. And I'm more of one floor with Cougars Nest guy versus The Shining, but I can appreciate, like, what the Shining was and did. It's just not my thing. All right, so that brings me to this. As I've been mentioning on the show, I've been very into like old Hollywood books these days, the Diller and the Eisner and the Paramount stuff. So I was talking to our colleague, LaRosa, Dan LaRosa,

and it must have been in reference to this, but he goes, you ever hear of Bob Evans? And I'm like, is that a client? Like, who you took? He goes, the head of Paramount. Yeah, yeah, okay. What are you talking? Yeah.

He was on this show about the Making of the Godfather. So he had played him was really great. So he said, he said, Bob Evans had a great book called The Kid Stays in the Picture. Read that. So, boom, listen to it this week. Unbelievable. How do I listen to it so fast? It's only, it's six hours.

It's down to three at two X speed. And it took me an hour to shove my driveway, so I banged it up there. So there's one part in the, in the book. Actually, you know what I think, you know what book kicked off my audiobook stuff? This sort of bring it a full circle. It was take the gun, leave the canoli. Or did I get that backwards? Leave the gun, take the canoli.

The Making of the Godfather was the first audiobook that I listened to over the summer to get me into this. Yeah, Bob Evans, you're right, that's Old Hollywood. That book is amazing. I loved it. Great stories. So Bob Evans ran Paramount, and in the book, Bob Evans is trying to cast one of his movies. I think it might have been Love Story. And he sees a kid in the corner.

He goes, I want him. And they're like, who? Like, him. And the producer or whoever he was talking to was like, or the casting director, he's like, No, no, no, no, no, he's an extra. He's like, that's not an actor. And he goes, I want him. It was Jack Nicholson.

Right. The stories of him and Nicholson being friends. And also the fact that Steve McQueen stole his wife. And it's unbelievable. And then, okay, so lastly, so I started watching the offer this week. Okay. It's a little long, but I like it. And the guy playing Bob Evans is really good.

All right. So the new Knives Out movie came out. It's a third one. Did you watch it yet? It's called Wake Up Dead Man. Not yet, but I'm very excited. Please, please, please, no spoilers. No, I won't do any spoilers.

So the first one, I think, is one of the best movies of the past 10 years. I'd give, like, an 8.5. The second one, I didn't care for as much. It was entertaining, just not as good. And I'd give that, like, a 6.8 or something. This one... Is this better than that? Yes, this is probably more like a 7.5.

I really enjoyed it. It was fun. It had more of the DNA of the first one. Okay. And the cast is amazing. Daniel Craig, of course. Josh O'Connor, who's in the Challenger's movie with Zendaya. He plays a priest.

Oh, he was great. I really like him. Glenn Close was in it. Josh Brolin, Milakunis, Jeremy Renner. Whoa. Andrew Scott, Kerry Washington, Jeffrey Wright, Thomas Hayden Church. The cast is unbelievable. I didn't say no cast spoilers.

But I did hear it's an amazing cast, but I was specifically avoiding the cast. Okay. Wow, that is incredible. But it's, I really enjoyed it. And the way that they tie in a bow at the end, and I love Daniel Craig in this part, I had a lot of fun. It was very good. I just said one less.

So getting back to the, like, I'm not a prediction person. I feel like you can't watch Knives out without predicting it because that's like the whole point of the movie. Right, like they... Yes, and it's... The way that they do it, the whole telling the story the end is great. I watch Train Dreams on Netflix. This is Joel Edgerton, and...

What is it? I've never heard of that. So I would love to come up with a better word than this, because I don't use this... This was a beautiful film. It was so good. It's just about a guy who grew up... who worked as a logger and built train tracks in, like, the early 20th century. And he falls in love, and he loses someone, and this movie should win all the awards. I don't know if you would like it.

I can't tell. It's just a very, like, kind of small, compact movie that has a lot of emotions. Is it 90 minutes? It's probably 110. It's not long. It's like an hour 45. I can't believe how good it was for Netflix. All right.

Now I want to get to one battle after another. So I think it's okay to have strong opinions about movies. So Quinn Tarantino went on a podcast recently, and he just slaughtered Paul Dano in There Will Be Blood. And he said he's just a week. week, uninteresting guy, the weakest actor in SAG,

and he went to town on this guy, okay? And everyone came to Paul Dano's defense. And I like Paul Dano. I think he was great.

I think he's great. But if you read Quentin Tarantino's book, cinema speculation, or whatever it's called, he takes a baseball bat

to like all these classic movies and says, like, that was a terrible choice. This scene sucked. That actor shouldn't have been in it.

That actress was terrible. Like, he does not hold back. And I think we need more of that. I don't think we have enough of that today. And so here's

that I'd say. One battle after another, it sucked. It absolutely sucked. Finally, a take. There was no point to it. The plot, like, listen, it's going to win some awards because it was good acting. It was a, it was good cinematography, right? The scene at the end with the bumps, like, oh, that was cool. I didn't need to go to IMA to see that. It sucked. It wasted a good performance with Lead Art of DiCaprio. Beniso del Toro was a zero. Sean Penn was in a different movie. I don't understand the meaning of the movie. The best character was gone in 30, 30 minutes. minutes. The mom at the beginning, she was the best character in the movie, but she was a very flawed character, and I didn't understand why she was a revolutionary, but then left her family

to not do the revolution anymore. It didn't make any sense. This movie sucked. I love it. I think people who say it's a masterpiece are crazy, and guess what? That's their opinion they can have it. I love it. That's where I follow. It's the most overhyped movie of this decade, and it sucked. I love the tip. Fine, yeah. But I understand why some people liked it. How's that? My personal opinion, just like Tarantino doesn't like Paul Dano, but I I do. Wow. Okay.

So I liked him more than you did, but I love the take. We mentioned, we opened the show, Ben, talking about the sliding narratives and the twists and the turns. And one of the reasons why I love, I just thought about this, why, like, I really love reading movie, reading the books about, like, movies and what almost happened with, I love trades in the NBA that almost happened. Like, I love the fact that Tim Duncan almost went to Orlando and thinking about the implications of what could have happened with the world that did, that almost did but didn't.

In Barry Diller's book, he talks about, like, almost buying a large stake is Dunkin Going Nuts. He said, we need to make that a social clip of Ben going nuts. I love that Barry Diller almost invested in AOL early, but didn't because somebody thought the price is too high. But, like, had he bought 25% of AOL, the AOL time weren't emerged probably doesn't happen. And then, like, literally, who knows what happens from there? Right, like, all the casting what ifs. It is fun. I love that stuff.

But I think it's okay to have strong opinions. And I feel like the people in the movie industry now, like the people who talk about movies, they just want to call everything a masterpiece because they're too scared to say what it really is. And I'm with Quentin Tarantino. Sometimes you have to give your opinions, even if people don't agree with them. Well, you know what's interesting? Because there's also like, if you went into that movie without any outside interference, like literally, if you just said, I'm going to watch this movie.

You don't know that Paul Thomas handed to directs it. You don't know that the artists love it. You just say, I'm going to watch this movie. your opinion would be different, right? But your opinion is colored by the opinions of others. So, like, that's sort of how I felt about, like, sinners. And I was, like, afraid to push back because, like, I get it. It was like, there's a lot of great stuff.

But, like, I love, I like sinners way more. No, no, no, no, I like sinners. I like sinners plenty. But the over the top. It wasn't a masterpiece. Yeah, the over-the-top reaction to sinners, to one battle after another, to all of these masterpieces. Like, not everything's a masterpiece.

And I, and you're right. Those are different because I like sinners way more than, like one battle after another. But it is interesting how the opinions of other shape. our opinions. And I'm sure it was better in the theater, but going to see it in the theater doesn't make that movie better to me. I can't imagine watching that at home. You gotta watch it again. And no, but dude, come on. On a 70 inch TV with my soundbar, I know the movie theater's better, but it's not that much worse. Anyway, that's my thought. I'm sure the film people will be after me, but bring it. All right, Animal Spirits of the Compound News.com. We will be here the

next two weeks. We're going to make it happen somehow, some way. Yeah. We'll be with you. We'll be with you for the holidays. Annal Spirts at thecompan News.com. Thank you for listening. Thank you to the production team. We'll see you next time.