Animal Spirits Podcast - How Many People Make $100,000? (EP. 430)

Episode Date: September 17, 2025

On episode 430 of Animal Spirits, ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Michael Batnick⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Ben Carlson⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ discuss Future Proof, 1990s nostalgia, Oasis, why the stock market doesn't care about the labor market, the top 10% is powering the economy, Google vs. ChatGPT, gold vs. AI, IPOs vs. small caps, Americans are richer than you think, a bull market in midwest housing, social media was a mistake, Gen Z wealth inequality and much more. This episode is sponsored by Invesco and YCharts Visit https://www.invesco.com/us/en/solutions/fixed-income/investment-opportunities.html to learn more about their comprehensive fixed income solutions and how they can help strengthen your portfolio's foundation. Get 20% off your initial YCharts Professional subscription when you start your free trial through Animal Spirits (new customers only). Sign up at:⁠ ⁠⁠https://go.ycharts.com/animal-spirits⁠ 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

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Today's Animal Spirits is brought to by YCharts. For years, the story was that U.S. manufacturing was in decline. But when you look at what's happening right now between tariffs, labor shortages, automation, and record construction spending, it feels like the start of something different. Manufacturing construction is hitting

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when you start your free Y-charts trial through Animal Spirits, new customers only. 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 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. Michael, we did. a live future-proof show last week, so let's do a future-proof recap. Sometimes investing based on your gut, most of the time is not a good idea, right? I think we can agree on that. If you're just investing based on how you feel, a lot of times you're going to be wrong. Going into future-proof last week, there was a time, I'd say it was like a half-hour period where you and I kind of thought, like, oh, no.

What if this thing in Year 4 loses its luster? No, no, no, no, no. There was no, oh, no. That definitely was not. That was definitely not. We were saying like what we were positing. What if? No, no, no, no, no. No, no. I don't misrepresent my feelings.

This is important. I was just saying I don't know how much longer I can do this. It's four years. I'm in for another couple. But like I don't necessarily know if I want to be doing a future proof in 2030 in the same capacity that I'm doing it now. That's what I was saying. But then now back to you.

Yeah. So we're just, we're just wondering like, man, like what if this, I don't know, it gets stale or something, people have had enough of it. And then we, we had this conversation, you know it. I wasn't saying it was getting stale in 2024. No, 2020. No, we were just, we were just worrying, like, what if this happens? And then we realized, oh, wait, 52% of the people here have never been to future proof before, which is a number that blew my mind. I thought it would be mostly returning people. And then we walked out to the Sunday night cocktail hour. And we walk, you and Josh

and I walked down the stairs and it's just a sea of people and it the sunset is in the background and the palm trees and the beach and the vibes were just off the charts immaculate and we both go oh what are we talking about this that was ridiculous this is so much fun what are we thinking of and it was again it's like new all-time highs every year you think oh that's the all-time high it's not going to go high and it goes higher that's my feeling of this year yes so that that part is definitely accurate as we walked down the steps we said never mind It is wild how big it's gotten. There was 5,000 people there.

And I can't tell you, unfortunately, how many people were there that I didn't see that I wanted to. That's how big it was. Yes. Yes, same thing for me, that those people, like, I know these people were there and I wanted to say hi to them. And I didn't ever see them because it's like its own little mini city there now. It's unbelievable. But it is good to be back in the dock in our normal setting. The doc is unusually long this week.

Well, we had two weeks between because we did kind of a retrospective show last week. It's 59 pages, so we're probably not going to get through everything, but let's do the best that we can. We'll see. A couple more feature-proof things, just to get... I want to say thank you to everyone. We had an Animal Spirit's Happy Hour, which was a blast. The only thing that broke my heart was that the frozen drink machine got broken because it, like, tripped a breaker. And so we had non-frozen Miami vices, which was...

What a shock there. You can't do that. So it finally, by the time the concerts rolled around, it finally froze. But that was too bad. There was two fails. There was two fails. The liquid Miami Vice and also not being armed with the brown rum for the floaters. Yeah.

We had some, though. We got some, didn't we? Did we? Yeah, someone brought some. Yes. All right. Wait, read your this guy email over the week because you mentioned this to me and I didn't see it. Okay.

For those of you who missed last week's episode, you might be a bit lost here but I implore you to go back and re-listen because this might become a thing on Animal Spurts. I did a bit on the difference between this guy and there he is. And actually,

the other day, Kobe, like, surprised me. And he, like, popped out of a window. I don't remember where we were. And some of those with laugh and I said, this guy. And I didn't even read to him. This guy had my own son.

all right Kobe is of this guy he's also there he is he's both but anyway all right so this guy of the week

email this came in a couple of days before future proof and the email was long time listener first time caller

executive at a top four bank you guys have each had your fair share of horrible to bad takes over the years

from Miami vices to a low IPA intake count to horrible car choices and worst music selection This is starting off great.

Bush and other musical specials at FutureProve have to top off the list of horrible takes across the years. Albeit said, respect for doubling down and sticking to what you like regardless of feedback. Word of caution. The reception at the festival will not be what you anticipate. Thank you for what you were doing. Keep up the great work. And it goes on a little bit more. But anyway, man, is this guy of the weak email?

You could say it's a boner of the week email. I mean, could this have aged more poorly? talk about how great was Blues Traveler and Bush. Are you kidding me? Yeah, I had a lot of fun last year of Third Eye Blind and it wasn't even close. We had so much fun. And Bush is one of those bands that,

I mean, if you list all the rock bands in the 90s, they're probably not at the top 10, maybe not in the top 15. There's so many good bands. Yeah, I would agree with that. And you realize that I haven't really thought of them since that first album. I have a little...

They might be 15. 15 or 20 games. I have like a 90s rock playlist that I put on sometimes in my jogging and I'm a little lethargic and need a little pick-me-up. And I've had little things and machine head on there forever. But beyond that, I haven't really thought much of Bush. You were very excited to hear little things. Yeah, I jumped the gun a couple times.

There's a little thing or little things. It is kind of funny. When you hear one of these bands you haven't heard in a while and they play a song, you know, everyone kind of goes, yeah. Everyone gets really excited. And I think the biggest upset of the whole week was Gavin Rosdale. still having the same 90s hair he had back then, like just tucked behind his ear. And you and I both said, man, that's a, that's just a great looking man. He still, he still kind of got it.

The funny part to me was I was, we were talking in the cocktail hour before the shows were starting with some of the people from Future Proof. And we were, we were brainstorming bands we could get to come next year. And I was thinking of other 90s nostalgia bands. And what they said was, no, here's the problem. These bands are all so expensive these days because millennials have money now. and millennials are like showing up to their tours in force. So it's like even these bands that haven't had a hit in 20 years or whatever are charging premium prices because of millennials. So here's the thing, because you and I also saw Oasis.

So the millennial nostalgia was just off the chains for us last week. How do you invest in millennial 90s nostalgia? Because that's going to be a massive bull market. Live nation. I guess so. One of my favorite parts of the Bush... concert was speaking of generations. So 16 Stone came out in 1994. A lot of our people at the event weren't even born. One of our colleagues, definitely, a lot of our colleagues wasn't born,

but one in particular, and this gave me just the biggest smile ever. So Gavin Rostale did swallow just with his angelic voice chords. Voice chords? What are those things called? Yeah. So it was acoustic? Local cords. My God, geez. Sorry, my brain is a bit fried. And one of our colleagues, who wasn't familiar with Bush, because he was probably born in 1997, 98, took out his phone and was singing a log. And I texted her, I was like, dude, that was, that was just unbelievable. Thank you for doing that. And he said, couldn't let you guys have all the fun. It was, yes, it was like a full moon in the background. And it was just, I have you on video. Look at the moon. Yes. So we enjoyed ourselves.

This is a great email that came in that you responded to. Recently in animal spirits, you guys discuss why the young generation isn't partying like we used to. Why is Burning Man just filled with a bunch of aging millennials? I don't get it. Why are they living for the moment? Why aren't they drinking themselves into oblivion and hooking up with as many people as possible?

I listened to you guys discussed just looking fondly back to those days yourselves, saying that they're going to regret not partying more. And I have to ask, was it really all that good? The lack of purpose. the aimlessness, the sense of shame the next morning, the depression, the regrets and scars you'll carry the rest of your days. Was it really all that good? Or we all just pretending it was because that's what everyone else said.

I suspect the latter. You're anchored to that way of thinking, but here's whether the next generation is at. And I think they're absolutely right about it. Long time, listener, I appreciate the show. Just thought I'd chime in and try to explain the oddness of the next generation. Watch the clip and ask yourself, we'll be happier. Okay, thanks, guys, blah, blah. All right.

So, Ben, you responded. Nah, it really was awesome. Some of the best challenges of my life. No depression, made a ton of friends and memories. lived it up in no regrets. The younger generation is the one that's depressed all the time. Wasn't a problem back in the day. And I know social media is a main culprit here.

Listen, we have fun. We had fun and we still have fun. How much fun was Oasis? That was amazing. I don't know if this is like controversial or whatever. Listen, everyone is going to do what they want to do. I'm not telling anyone to do what they don't want to do. Yeah.

But we like having a good time. I'm not going to apologize. Yes, there's nothing wrong with it. Yes. And again, you don't have to be one of those people that has to drink to have fun. I do. That's what I have to do. You can do whatever you want to do. Yeah. It is funny because in college, obviously, I overdid it a lot because I am an introverted and I found that drinking made me more extroverted. And sometimes that I would take that too far to my detriment. And I do look back and I don't have any regrets, but I do think like, man, I probably

embarrass myself more than I should have in some ways. But I don't know. That's part of the fun of it. I mean, listen, it's a line. Yeah, that's being young. And you figure out when you go. That's how you become, that's how you become, there he is. Yeah, exactly. So I'm a trend setter. Am I not? With the bucket hats? With the fanny pack.

Yeah, I wore a fanny pack. I wore it as a messenger bag, though, so it wasn't really fanny pack. I didn't wear it. That was a fanny pack? Did you, was it practical? Did you get used out of it? I did. Are you going to wear it again?

I had my charter. Yeah, I got a bright Nike one and I got a lot of compliments on it too, so. Okay, so fanny pack and bucket hats. So it was your call to go see Oasis like 10 months ago, and they said they announced it happened to be the same week as Future Proof. And I thought like, I liked Oasis. I had their first album. I wasn't a major fan, but I enjoyed him. I thought, there's to be cool.

And the more closer we got to the concert, you start hearing these stories from the other concert goers about how it's amazing and I've been thinking about it for weeks after the concert. And it's like, the hype was just growing. The hype machine was growing. And I thought, like, can it really be that good? And it was. It was epic. It was so much fun. Again, the vibe was just unbelievable in the concert.

They put on a great show. It made me realize there just are no rock bands anymore. Like, oh, wait, people used to play rock and roll. They don't really have that anymore. And it was just, it was amazing. How great is California? Well, that helped, too. It was at the Rolls Bowl.

And so the scene was amazing with the mountains in the background and the sun setting. And, yeah, it was, wow. And it really was this tight-knit age range. It felt like 35 to 50-ish, probably. So it did felt like it was all older millennials, young Gen X. That had to be 90% of the people there. And I don't know. It was just, it was awesome.

It was so much fun. We stayed at an unbelievable show. We stayed at an Airbnb in Burbank. And the houses there are so interesting. It's like these little tiny things that were built in the, I don't I don't know, 60, I have no idea. But there was a pool house, and I think a lot, I think a pool house is like pretty common. So there's a pool in the backyard and a little pool house, which I stayed in.

And there was, there was a lime tree with like actual fresh limes. Yeah, we used it in our beers. It's, it's interesting how, I feel like California is sort of, I don't know, it's like, I don't have looked down as the wrong word. But through the lens of social media, which is we're going to get to later, unfortunately, people, like, You know, it's a snark at California. It's one of the greatest places in the world. There's a reason people are willing to pay so much money and so much taxes to live there. Yeah.

It's a great. I was thinking, though, the person about the party mail, so my brother was a huge fan of concerts. And it was never really my thing. I was always more of a comedy show guy. But he loved going to live music. And I've just thought, so it's been like seven months since he died. I've been thinking, like, I really want to enjoy these moments more. And, like, in the moment, have more gratitude.

And I feel like that was the feeling. that we had this past week there of like let's like be in the moment and actually really enjoy it and and appreciate it for what it is and so i think there was a lot of that that that tuesday night when we did the concert that was legitimately one of the best nights of my life like top 10 most fun i've ever had being with like my best friends and watching it was so much we had and the you know 10 feet in front of us unbelievable so anyway uh Futureproof, I don't know what else to say. It's just incredible.

And I, that's the start of my fiscal year, is September future proof. I can't wait for Miami. It is like a send-off from the summer, right? Yeah, it's just, it is just the absolute best. All right. Let's talk about the stock market. Yeah, but if you haven't come yet, and we didn't just talk you into it, we're never going to because you have to come if you haven't been. So Steve Deppie tweeted, looking at the forest, I still see an overriding sentiment of this can't continue.

No euphoria anywhere. Interestingly, when the S&P 500 records a four-month winning streak that closes at a new all-time high, it's continued nine and ten months later 18 times in a row. Anecdotally, and maybe this is like the, I don't know, you know when you say like people are saying, I think I'm guilty of this. I know you do this a lot. It's like the voices in your head. People are saying it's people in your brain.

You're just making it up. You're projecting. Oh, people are saying this can't continue. It's usually like one person on social media. Then you say people. It's person, but you say people. No, but I think it's projection. So, but, but Steve says, yes, this can continue.

So again, four-month winning streak, new all-time high. When this has happened, the last 18 times, it's been higher nine and ten months later. So I saw another one that, I saw another one that, I saw another one that's going to be broken, but like, that's pretty damn good. And we're coming into a Fed rate cut potentially. The other one was this morning, I think Bispok had it, that when the, you know, Fed cuts, 12 months later, there's like 100% chance of the stock being up, the stock market being up, and it's up 15% on average. Yes, these rules are made to be broken, but you're right.

Here's one for the euphoric thing, I think. How is it possible for a company like Oracle? I think it was $700 billion market cap before it had this big pop. How can it rise 40% in a day? I think it finished up 36%, but it was up 40%. How can a company that big rise that much? That, to me, is absolutely insane. So I hand up, I don't know what Oracle does.

It's like data enterprise storage, software, cloud storage for the AI layer of the data story. I don't, honestly, I don't know, but I did some learning. And there's a reason. The market is not dumb. There is a good reason why this happened. So Eric Newcomer wrote, seeing a 48-year-old database company suddenly grow by more than the size of a Salesforce over the course of a trading day is one of those occurrences that

makes you wonder by the moment we're in. It's at once incredibly, incredible, uncanny and terrifying, like your grandfather doing a family reunion, gathering everyone around, tossing off his Walker and doing Parker. What the hell is going on? So, Wall Street Journal says, in the case of Oracle, the answer is Open AI. The massive, of the massive contracted revenue increase, Katz disclosed, which was $363 billion. Okay? That was out of nowhere. 300 billion of it came from the chat Chb-T maker. The Oracle contract will require $4.5,000. gigawatts of power capacity, roughly comparable to the electricity, produced by more than two Hoover dams or the amount consumed by about 4 million homes. So it was out of nowhere.

That's why. It was $363 billion in revenue, contracted revenue. That was not disclosed in the previous quarter. Yeah. And they're also saying that, I guess for this, their cloud infrastructure division, the projection, last year they made like $10 billion. And it's projected by the end of the decade to be 144 billion. So 14 or 15 times that. And if you look at the chart, they show it here. Looks like Nvidia essentially in their data centers, which is, yeah, so to your point, the stock market took this new information. How does the information like this not get out of there, though? How does it, how do they keep this close to the vest? And one more question. Does Open AI make any money? Yeah. They don't make, they're not, they're not like cash flow

positive. Right. I think they're losing money. And I was they don't, I think Altman said they don't expect to be to be making money until 27 or 29. I can't remember what he said. Yeah, it's got to be a while. What's a revenue? Their revenue is $10 billion.

$13 billion. Actually, so, so Trump wants to do away with quarterly reports and make them semi-annual. And my first, my first thought was like, are you insane? What? Is it like more disclosure, more, more of that a good thing? And then my second thought, like immediately, I had three thoughts simultaneously. So that was my knee-jerk reaction. My second thought was, well, do they really need to report every 90 days?

Maybe it is overkill. It would make the stock market way more boring, though, don't you think? And maybe there's a lot of money wasted, a lot of time wasted. I can't imagine how much money these companies are spending, preparing for these reports, all that goes into it. And anything that makes it easier for companies to come public is a good thing. Right? And this is one of those, this, this would decrease the burden in a little bit. I think that, I think that's honestly a cop out, the whole, it's more cumbersome to be a public company.

I think there's just more private capital. I think there's just more private capital that makes it easier to stay private. Because it's harder to go, because it's more annoying to go public. The two are not unrelated. It's the, the reason why there's so much private capital is because going public sucks. All right. And then my concluding thought was, no, it was like the meme. No, yeah. No. We need, because you know what, if we don't have reports and if we don't hear from the companies every 90 days, they're going to take advantage to their investors. Yeah, there's way more shenanigans going on. They're going to lie.

And when I say that, I don't need all of them, obviously. But investors, I think, will be harmed. And I was thinking about this because I just listened to a book, Apple and China. And in 20, I came out what the year was. but Tim Cook got lambasted for not disclosing some of the problems in China and there was like a class action lawsuit, I believe. And so if Apple was playing games,

imagine what the average company would do if they only had to talk to their investors twice a year. Yeah, I think it would hurt individual investors and would help, like, hedge funds. Like, it'd be like taking a reg FD off the table. I don't, I don't... It's not black or white. I have to think more about this,

but it's not... not that crazy. I don't think I like it, though. All right, one last thing. So I don't know if I clip this from the journaler or Eric Newcomer, so I apologize. But is there any chance we don't get a bubble? And let me read this clip. The Open AI and Oracle contract, which starts in 2007, is a risky gamble for both companies. Open AI is a money-losing startup that disclosed in June it was generating roughly $10 billion in annual revenue. There it is. Less than one-fifth of the $60 billion and it will have to pay on average every year. Oracle is concentrating a large chunk of its future revenue to one customer

and will likely have to take on debt to buy the AI chips needed to power the data centers. I would say 80% chance of a bubble. It has to be. I don't see how we get through this without some sort of, at least mini bubble. Now, let's define this. All right. I'm going to say, in order for something to qualify for a bubble, that means that it has to get to levels through which

in no scenario can they fulfill the promises that are being discounted into the price and therefore the bubble will pop and prices will fall 70%. So through that lens, what do you think? Do you still think 80%? Because that's pretty high but that's what a bubble is.

A bubble inflates to a large enough level so that it pops and falls a lot. 70% is a pretty high bar. I'd say 50% is pretty for a mini bubble. No, no, no. Well, but that's not a bubble. The market can fall 50%, just, you know, not just because, but I would say to reach the record books of the dot com mania of the railroad of the 1930s, you got to fall 70% if you want to be considered in that category. Okay.

And that's where a lot of the comparisons are coming from. All right. I'm in a record saying that I don't think there's any way we could see the dot com bubble just because these companies have so much, make so much cash flow, even if they get ahead of their skis and fall 40%. So, yeah. There's also a big, big difference between a 50% fall and a 70% fall. It's not 20%. It's much bigger than that. So I would agree with you.

All right. How about this? So Oracle, when they had their big day, that moved them to the 10th biggest company in the S&P 500. So you look at just the top 10 list, it's Oracle and above here from Bespoke. What sticks out to you out of this list of the top 10 names? Because there's something that stuck out to me right away. And I go, oh, my gosh.

Yeah, obviously. Go ahead. It's Warren Buffett. It's Warren Buffett and nine tech stocks. I think this is honestly one of his crowning achievements. The fact that he survived the dot-com bubble and now is surviving whatever we're calling this AI thing. And I guess it, I mean, it seems like it's only a matter of time until, I don't know, Netflix comes up and it's all 10 tech. It feels like that's where we're going.

Yeah. This thing ends when it's all, the top 10 is all tech stocks. And they come up with a new name for the top 10. And then it just keeps going for another five years and we keep talking about it. When is it going to end? But don't you think that this is one of Buffett's most impressive things he's ever done? Mm-hmm. That he's kept up with these tech stocks, and he's in there, in the mix, and he's a trillion-dollar company.

It's unbelievable, I think. Who's going to be the first trillionaire? Larry Ellison became the richest man in the world the other day for a second. Yeah, you know what that's great for? Michigan football, because his wife is a Michigan alum, and they were big donors to the NIL fund for Michigan. So bullish Michigan football in the future because Larry Ellison's so rich. That's great for me. All those stories about how rich Larry Ellison is, send them all to me.

I love it. Michigan's going to be, Michigan's going to have the best quarterback for the next 20 years. All right, this is a really interesting one to think about the dichotomy of AI bubble talk versus what's actually going on. So first is Google versus ChatGPT. This is the one that, like, there was all these conversations of Google's dead. There's no way. So I looked at Google since ChatGPT came on board in November of 2022.

Google is outperforming the Q's and the S&P by a pretty wide margin. And a lot of the performances come recently. But they've, Google essentially, track the NASDAQ 100 throughout this whole time. Remember, it had that one initial fall that lasted for, what, a week, maybe? Wait, what did? What did? Google. It had a little bit of a down draft because people said, oh, no, Google, no, that was, that was real. Right.

So I bought that dip. I bought that dip because I didn't believe the story that chat CBT was going to kill Google. Because I was using Gemini. It's like, it's right in there. It's the first thing that comes up. And then... I had CNBC on, which I really do, and there was, there was, like, a report about some of the numbers being leaked about chat GPT usage. I can't remember what it was. Google fell 7% that I said, ah, I don't need this headache. Who needs this? I don't need this cloud hanging over me.

And the stock is up like 50% since I sold it. The move is unbelievable. Yeah. So here's a more surprising move to me. This is from Luke Cowat at Sherwood News. gold is outperforming the NASDAQ100 since the launch of Chad GPT. No one ever could have possibly explained this. And he gives some reasons here.

He's saying that a lot of it is like people worried about fiscal and monetary policymakers and inflation. And then those sanctions imposed on Russia and the wake of the Ukraine. So a lot of other countries decided to start hoarding gold. If this is a bubble, it's one of the weirdest ones ever. Because the whole point is gold is this relic. and technology should make gold obsolete, and that has not happened. It's unbelievable the fact that the NASDAQ 100 can boom, Bitcoin can boom, Ethereum can boom, and gold can boom all the same time.

That almost doesn't seem possible. Yet here we are. It is a weird market. And I think getting back to the point that we opened the market talk with Steve and there being a lot of disbelief, there are people who look at some of the dumb behavior going on in, like, smaller stocks, and Nvidia being at $4 trillion and say, how could you say that there's not euphoria? But there's not euphoria. The S-tax report just came out from Schwab, and it's barely up over the last month. And the Russell 2000 is not on a new high.

Still sticking with S-Tax instead of stacks, huh? I'm still sticking with S-tax. There is not, none of my friends are asking me about the stock market. I would say this, this doesn't feel anything like 2021 to me. No. Right? That was, to me, that was a crazy little mini bubble because we did see 50 to 70% drops in a lot of stocks. And some of them haven't come back. A lot of the hot stocks over the past couple of weeks, now, some have rebounded a little bit, but a lot of the mom-o name's got smoked.

I do feel like the 2022 bear market is going to go down in history of like, oh, that was a run-over-the-mill bear market. But there was some stocks that got absolutely annihilated. And that one's going to be kind of lost to history a little bit. Totally great. Totally great. All right. I want to give a shout to Daily Chartbook. which just the best compilation of charts every day,

a lot of the work, a lot of the things that we use here are from that site. I look at it every day in my inbox, and every day there's nine or ten charts I've never seen before. Yeah, there's gold. So here's one. Who is this from? This is from MacroBond.

They say that margins tend to decline before recessions. And that is definitely, so there's a great chart showing, The path of margins before recession versus where we are today. And it's just, it's not, it's not there. It's not happening. Margins are breaking out. Should we do just technical analysis on the margins?

That's a faux pot. Okay, so we had Wes Krill from DFA on Talk Your Book this week, talking about a bunch of different things. But he made a great point. We asked him because DFA has historically been a, that's how they got their start with small caps. And one of the things, and you talked about it earlier, the IPL thing,

one of the things that people have said is small caps aren't going to be good anymore going for because companies are staying private longer, right? So Tors and Slok has this chart. The median age of IPOs is currently 14 years, and that's gone up, right? And this idea, like, there's the old stat of Amazon went public at $400 million, and that will never happen again today, and people are missing out. And so his point was, listen, that sounds great in theory, but in practice, IPOs are terrible investments as a whole.

You take the group of IPOs, and I thought, man, why didn't I ever think of this? So Jay Ritter is a professor at the University of Florida, and he's kept track of IPO data forever. And so I pulled up his most—he updates this, I think, in an annual basis. I pulled this up and looked at his IPO data, and look at this average three-year buy-and-hold return, and he looks at IPOs, and they market-adjusted, meaning, like, compared to the market. And look at, from 1980 to 2023, the average IPO over a three-year window underperformed by 20% annually against the market. It's a massive number. IPOs are terrible investments as a whole. And he looked at this next one, shows three-year buy and hold return.

He shows 60% of IPOs had a negative three-year return from the first close. Almost 40% of them had a return of negative 50% from the first close. You could say, listen, it's different in the last five years or something, or different in the last 10 maybe. But history shows, actually, you're not missing out that much by not getting in on all these private companies. What do you think about that? Well, I said this to you. I said, why are we so sure that successful IPOs are pulling up the Russell 2000? Right.

Because you would say that's not the case at all. But I do wonder if Amazon's rise from 400,000. million to say a billion, two billion, cancels out all of the other small IPOs that come public at 100 million and go to zero. I don't know about that. But then the other part is, all right, but these companies, they graduate out of the Russell 2000 very quickly. That's a thing.

Right? So let's say that Amazon leaves the Russell 2000, goes from $400 million to $2,000. I'm making up the numbers, and then it's gone, and then all the other, and then it goes to the midcaps, and then it goes to the 500. And so, yeah, I don't know that I buy the argument that it's a lack of IPOs that are causing the Russell to $1,000 to perform. So Facebook went public at $100 billion, I think, roughly. It's up almost 2,000% since it went public in 2012, 2013, whatever it was.

It's up 25% annually since it went public. It went way bigger than Amazon, right? And it's still done fantastically well. So I think that might be just a little bit of a misnomer. I got some new charts from Goldman Sachs. This is interesting. So they looked at the average allocation of 401k account balances. Now, this is not euphoria, but this is just risk-taking.

So how's that? There's no euphoria. There's definitely a larger appetite for risk. For sure. How's that? So participants in their 20s from 2013 to 2022 went from 76% in equities to 90%. All ages went from 66 to 71%. So people have definitely increased their allocation to equities

in a pretty decent way. Well, you know what? Somebody shared with me a video that was on YouTube. Fidelity was, I think it was from Fidelity. They were interviewing people, what year was it? 1990, I can't remember if it was 94, 97. But either way, people's attitude

about the stock market just seems so different than it is today. Yeah, well, look at this next chart. So this shows the average, to stocks, bonds, and cash. And for the 70s, 80s, and first part of the 90s, and probably the dot-com bubble, people had just as much money in bonds as they did in stocks, which is kind of crazy because if you think, this is the baby boomers back in the day, and they were still

relatively young. So the fact that there's more money in equities now makes a lot more sense than that did. Like, there shouldn't have been a 50-50 mix. And it was stocks, bonds, and cash. And I know that rates were higher back then. But this was essentially like a one-third one-third, one-third in stocks, bonds, and cash for the aggregate allocation of investors. And that makes no sense. It should be, equity should be way higher like it is today. Yeah. This was an interesting too. So they show the equities as a share of household assets in the U.S., Japan, UK, EU, and China. I think we looked at something like this before. But it's 50% or so for the U.S., 13% for Japan, 10% for UK and the EU, and 9% for China. So the fact that we've accepted risk, it hasn't quite been to

accepted around the globe yet. And I think that's actually a bullish case for stocks in the future. These countries are going to catch up to us. I had a conversation with someone at Future Proof saying, like, listen, the advisors in Canada are a couple years behind you guys. The advisors in Europe are like five years behind you in terms of the U.S. I think Australia is the closest. Saying like, it's coming. This stuff is coming. All right. So we get this question a lot. Like, why doesn't the stock market care about the labor market? And how is it possible that corporate profits keep rising faster than GDP? I've never seen this chart before, but somebody who is this from Wells Fargo?

Yeah, Sam Rowe posted this one. Okay. S&P 500 EPS is almost evenly split between goods and services. All right. So basically, a 50-50 split. Stark difference versus GDP composition. So the biggest difference is that goods only make up 16% of GDP. but 47% of earnings per share in the SSP 500.

And boy, do we buy a lot of shit. Speaking of one of the... This is the ultimate, this stock market is not the economy kind of chart. So 72% services in GDP and then 11% government spending. One of the big takeaways. So I got home Wednesday night at around midnight from Future Proof. Robin woke me up at 6 o'clock the next morning and said, get up, we're moving. One of the big takeaways is we buy a lot of shit.

We hold a lot of shit. We hoard a lot of shit. At least my wife does. But everything ends up in the garbage eventually, including us. Especially when you have kids. We've been purging for the last six weeks because we redid some of our house. And it's like, God, we have a lot of stuff. But this is why moving is so good for economic activity.

We need the housing market as like a hedge. Because when people start moving, they throw stuff away and they buy new stuff. You spend a lot of money moving. Bingo, you also don't realize how much, like, why do I have, why do I have four packs of nine VEV, the little batteries that don't go in anything? Why do I have so many of those? But you're 100% right. We threw out almost all of our kitchen stuff.

All of our kitchen stuff is either, I don't even know how it shows up. Honestly, some of this plastic stuff that we have, I don't even know where it came from. But the real stuff that we have, like the ceramic stuff is from our wedding in 2013. So I said, whatever, we could replace all of this on Amazon for $2,000. $100, like all of it. Yeah, that's why the housing activity is going to be a really, I think it's going to be like a shock absorber for the slowing economy if rates fall. I think housing activity is going to be that shock absorber.

All right. So these next two charts are very important. It's like, make it make sense. A lot of talk about the disconnect, right? How people feel, how the economy is doing. And obviously, not to, you know, not to relitigate that point. But it's all about two things. It's high-income people and it's retirees.

And that's the entire story. Mystery solved. And both of those groups are not as impacted as other groups by what's going on in the economy. Correct. And in some ways, they're immune to it, which sounds crazy to say, but they are. So this chart is in Bloomberg, and it shows high-income Americans are behind roughly half of all U.S. consumer spending up from about a thousand. third in the early 1990s.

The crazy thing to me is that this century alone, it's basically been around 40 to 45%. So it's been high for this whole century, pretty much. We just now have the data to back it up, and it's going higher, obviously. All right. And one other chart that pairs nicely with this from variant perception via the daily chart book. All right, this is amazing. Retirees continue to make up more and more of U.S. consumption, less sensitive to job market feedback loops, although still sensitive to wealth effects from home values, et cetera.

So this chart goes back to the turn of the century, and it shows 65 years and older as a percentage of total consumption. And this chart has gone from 15% in 2020 up to around 25% today, and it's projected to just keep going up into the right. And retirees are obviously not completely immune to the economy, and certainly they're not immune to the stock market. But like the labor market, assuming that it's not, assuming that the labor market isn't crashing because the economy is crashing, they just keep spending.

So that's why you can see jobs, job openings go down, job hiring go down, and spending continue to march along. We got retail sales today, and it's more of the same. Just think about boomers, how they're the wealthiest generation. ever, tons of equity in their home, their houses are mostly paid off, stock portfolios that are way bigger than they ever could have hoped in the 2010s. You're right, what's going to slow them down from continuing to travel and spend their money? It would have to be a recession. But the chicken and the egg problem here is like they need to slow their spending for there

to be a recession, you'd think. All right, I want to zag a little on the labor market here. This is not me actually believing that the labor market is still strong, but I just want Ryan Rosillo this and say, like, I'm actually more impressed with the job market than people think. Okay? Can I do that? Are we sure the job market's actually slowing? I mean, all right. So, no, there's obvious retorts here, but look at this. I just want to play this out. Okay. Liberforce participation rate, prime age, which is 25 to 54. So this takes away the boomers that are retiring is as high as it's been in the last 20 years, almost. 84%. Way higher than it was in the 2010s, but it was falling in. Now it's been rising.

People keep saying the U.S. unemployment rate for ages 16 to 24 is like this crisis right now because it's over 10%. But if you look historically, the average is almost 12%. It's below average still. Now, every time this has ticked up in the past, it's kind of led to recession, but it's this is... But not this time. 10% unemployment rate for 16 to 22 is not out of ordinary. Every time this goes up, at least there's a recession. But it's just funny to me that people think 16 to 24 having a high unemployment rate is a terrible thing. like, of course it is, that it's much harder to get a job and you're in and out of the labor. I don't know.

It doesn't seem to be. And finally, wage growth is still above 4%. It was never that high in the 2010s. Not once. It's falling, but it's still pretty high. Look at this from Torson Slok. Layoffs and discharge rate. Still way, way lower than anything we saw in the 2010s.

Yes. So I think, how about this? You can't make the claim that the labor market is strong, obviously. It's weakening. But I'd say some combination of AI, immigration, the crack down there, and baby boomers retiring is going to make it really hard to understand what exactly is going on in the underlying labor market. I think all those forces coming together at once is going to make it really weird for a while.

Yeah. I would agree with you. And this from ZipRecruiter, CEO, blew my face a little bit. I got this from the transcript, which also, shout to them, just. do phenomenal work every week. All right. What we have just witnessed was an unprecedented downturn in the labor market that lasted for 32 months straight.

For 32 months in a row, there was less hiring each month than the previous month. To put that in context for you guys, if you go back to the 2008 financial crisis, that downturn and hiring lasted 22 months. So this is rare. However, finally, for the last two quarters, we have started to see stabilization. All right. So this was a faceblower, but also context is required. I think there's a lot of over-hiring coming out of the pandemic.

Yeah, doesn't this just mean in 2021 there was a ton, a ton of hiring? Yeah, but nevertheless, it's still a surprising. Like, that's a pretty wild stat, 32 straight months. Remember when people were worried about GDP now crashing? Yeah, back above 3%, right? The stock market or the GDP SMS are not worried about the labor market. Not yet. Yet.

Okay, good one. from, I want to talk about wages real quick here. Good one from, this was from Fortune, and it was kind of going around social media a little bit. Americans think you should land your dream job by 29 by your first home at 30 and earn six figures by 35, but they're in for a reality check. So they kind of fact-checked some of this. So they said, this is interesting. Research shows that the average person changes job 12 times in their lifetime between 18 and 56. The average age of a first-time home buyer is now 38 years old, which is kind of depressing. And I don't know what the breakdown of this, but they say

only 18% of individuals earn more than $100,000. So just saying that like these, and this was probably a survey or something. They, the survey found that people need $500,000 or more to feel comfortable, but only people need. Yeah, well, need.

If they want to feel comfortable. But only 0.8% of all positions according to ADP make $500,000 or more. I mean, this is American exceptionalism. We're so ambitious and delusional that we all think we can be rich. But this is the thing. We are still by far the richest country. Jamie Herbertall says they're looking, he's looking at new census data.

Median family income is at an all-time inflation-adjusted high of 105,800 in 2020. He has another one that shows one-third of American families now have over $150,000 of income the first time in history. and this is adjusted for inflation. And this chart always gets me because the middle class is shrinking, but it's because the upper class is rising. And it's people moving because the lower class has gone down to.

People are moving up in the world. Huh. And this is another one. So on top of this, Tom Harwood says 34% of American families make more than $150,000. By comparison, just 2% to 3% of British households earn more than that. Yeah, but you know what?

Not a yeah, but in addition to, and also, we also consume a hell of a lot more. So relatively speaking, the average American definitely probably doesn't feel richer because they're spending so much of it. Probably, but people are spending a lot more overseas as well, and they're not making as much money as we are. So do you think that this job opening thing matters? Because I remember when there was so many job openings, and I think Joshua is the one who said, like, someone on TCAF said most of these job openings are probably fake anyway because people are trying to hoard employees right now.

So there's been a lot of charts going around that show that there are more unemployed people than there are job openings. And then it starts in 2020, right? So like this has never happened before. Wrong. I had chart can make this. If you zoom out, this is almost always the case.

This is a post-pandemic phenomenon where there was more job openings extent. To your point, Ben, who even knows if they were real? Yeah, that was the abnormal situation, right? Yeah. Um, but... Sorry, to cut you off. I didn't realize that this, it's been so much of a spread for so long before. I didn't see it go back this far before. Yeah. The rest of the century was always more unemployed people than our job openings. Which kind of makes sense, right?

Yeah. Right. It shouldn't, yeah, there shouldn't just be a job waiting for, probably not going to be a job waiting for everyone. Right. All the time. So labor, obviously, obviously, obviously, obviously, obviously, had the upper hand from post-pandemic to, I don't know, a year ago, two years ago. Remember, job switchers, that chart? The best way to get a raise was to switch jobs. Not anymore. Sherman Williams suspends 401K matching amid week sales. Not great, especially considering that the numbers that they've done, net income-wise. Can you buy this stock at one point? Yeah, I sold it yesterday. Funny you should ask. Okay. I saw it yesterday, because this just feels, I don't want to be associated with the company that does

Well, to me, this is just a housing story, right? This is, oh, you're, you're selling in solidarity with the people who are having the 4-1K match. I mean, I don't need to own the stock. You know what I mean? Like, I just, I rolled it into Home Depot. It's just, I'm trying to get housing. Yeah, this is the housing-related thing to me because it makes sense that there wouldn't

be as many people painting houses. Like, if you move a house, first thing you do, and you come in, yeah, I'll paint all the walls. No, but my point is, like, how shitty is this? And it's just a, it's just another example of where we are in the labor market. Yeah. Yeah, you're right. there's got to be a million other things they could cut before a 401k match.

I agree, that's a really crappy thing to do. Okay, so, and this is a point that I will, that I've been making and I will continue to hammer, maybe even more vociferously, if I use that word right. Listen to the companies, not the headlines, not the tweets, not the newspapers. Listen to what the companies are saying. Companies tell you the truth.

They have no reason to lie. If they lie, the market. It punishes them, okay? The market keeps them honest, and quarterly reports keep them honest. So, in thinking about the consumer, I'm going to read a couple of quotes from the transcript. And it's not to say that everything is hunky-dory, because obviously there's pockets of weakness, obviously. But my God, is it not as bad as it seems. Capital one.

So as I've been saying for a long time, that I still very much feel that the consumer is an anchor of strength, I think, in our current economy. There are a number of indicators that continue to be very strong. consumer debt burden is very comparable to pre-pandemic levels and historically at a relatively modest place. Macy's, the consumer has been resilient. We are pleased with second quarter results and momentum has continued third quarter to date. Walmart Sam Club. Sam's Club.

I would tell you that in general, members are pretty rational. The consumer behavior is pretty consistent. And so far, the impact from tariffs has been fairly muted. PNC. Consumer remains really strong. We saw record spending, I think this quarter across both our debit and credit cards. Mastercard. consumer spending continues to be healthy.

This is very consistent with what I shared at our second quarter earnings call. The consumer continues to spend a healthy clip and finally visa. The record said, how is spending going question? The word that comes to mind is strong. You're an odds guy. If I had to place odds on there will be a recession by the end of this decade, right? So four more years or whatever. What would your odds be on yes?

There will be recession in the next four. years? I would say better than 50-50. Let's say 60%. That sounds about right. I don't want to pound the table, but it's been a while. And could we get, could we, by the end of the decade, could we be getting some of the AI fairy dust wearing off a little bit? That would have to be the thing. I'm just starting to come around to the idea. Hold on. Hold on. No, wouldn't. No, wouldn't. Because recessions happen out of nowhere all the time. Who knows what's going to happen? Well, yeah. True. Well, all the time? There haven't been that many recessions. There's been three recessions this century alone, and one of them was caused by a pandemic.

I'm just saying it wouldn't shock me if there really wasn't a recession by the end of this decade. Oh, it definitely wouldn't shock me either. I mean, the AI stuff is obviously that would be the easiest one. Like, okay, of course that led to a recession. But it wouldn't shock me if we didn't get one. Ben, last week I asked the audience, or maybe I was talking to you and asked the audience for help. Hey, how do I get, uh, how do I turn like an all caps paragraph into lowercase? And we got a few emails.

And then it hit me. There's no excuse for asking questions anymore. Like, hey, you know, your, your friend to ask you a question. It's just like, you want to send them like, just Google it now more than ever. And I had to remind myself that because why did I ask you in the audience? I could just, I put into chat, CBT. I said, I accidentally have been writing on all caps for a whole page. How do I fix this?

Boom. Two seconds. So, we are still, for as much as we talk about AI, it's the, it's the zeroth inning. The game hasn't even started yet, because I use it and I'm still not using it. Yes. I'm sure the way that we're using it right now is not at close to it. We should be using it. There's people that are using it for way more, way better things than we are.

I did have a, I'm putting this in the dock right now. I had a half-hour battle with Chad JPT yesterday. I was trying to get it to make me into a little infographic. I wrote a post about the 10 things I've learned in Wealth Management in the last 10 years. And look at the...

I'd put it in here. That's great. No, look at it closer. I didn't look at this close enough. Oh, there's two sexes. Oh, yeah, yeah. It couldn't get the numbers right. I kept saying, no, the numbers are wrong.

It's got to be 1 through 10. And I swear I battled chat GBD for half hour and it literally could not do it. This is part of my point. It's only going to get better, obviously. But I couldn't believe. But you could have used Gemini or something else. Okay, I guess maybe I should have.

The fact that you didn't even think about that just goes to show my point. It's funny how it can do these complicated things, but the simple things it can't do. I feel like there's like a lesson there. It does look good. Numbers notwithstanding. Yeah, it looks good if it could learn how to count. And I'm finally in the end I said, I said, why can't you get this? And it said, I'm sorry.

It's my bad. Basically, that's all it said. Like, sorry. I'm shoehorning this in here, but from Ed Yardinney. Speaking of profit margins, he said, there is no sign that rising tariff costs and labor shortages are squeezing profit margins. We have to conclude that productivity growth must be strong. The thing is, though, what stops this train?

If we're getting AI as a productivity tool, what stops margins from continuing to rise? This is not a mean reverting series anymore. No. For years, I was taught this is the most mean reverting series in all finance. It has to be because if profit margins are high, competition rushes in. Yeah, these companies are too big. Nobody can compete. That's the problem.

You know Portis Five Forces? I think that needs to be re-looked at. It might be. I bet they still teach that at all the NBA classes, right? They got it. Yeah, it's timeless, but maybe not so much. All right, let's talk about crypto. This guy posted this thing about Bored Apes and how he bought one for $400,000 or $425

and sold it for $37,000. Now, I don't know, I can't, sometimes with crypto, I can't tell if this stuff is real or if it's satire because social media, everything is fake, I guess, now. Whatever the case is. I mean, remember how big this stuff was when it first came out? Jimmy Fallon had Parasilt on his show to talk about they both owned a board ape.

I think they got sued for it because they were, like, pumping it because they owned it. I pulled up a chart of the price over time, and it did, it peaked in the 2022 at like $400,000 per one of these. and it was going to be this big community that was going to be formed, and it was going to be this brand, and they were going to do TV shows and movies, and that's the kind of thing that doesn't exist today. That sort of suspension of reality. Oh, doorbell. One second. Be right back.

Nice new doorbell you got there. Okay. So, that was. was National Grid, which is a local utility company. And so we moved in on Thursday. And I called the plumber because I'm like, hot water's not working. And he looks at it and whatever he comes to, he goes, hey, is your gas on? I'm like, yeah, why wouldn't it be? It was called National Grid.

So I called them and my gas wasn't on. So I'm like, wait, I have an account number. My wife said that she called you guys. And they said, yeah, she did, but you didn't set up a service appointment. And said, hang on. Why would you let your customer set up a new account and not make an appointment? So she said, sir, we sent you an email. that we were going to be contacting you.

I don't even know what she said. I'm like, but wait. Sorry, I'm like, Robin, give me your phone. The email says that nothing else needs to be done. You will be contacted in 48 hours. We were never contacted. How is this? I have kids.

I need warm water. So for the last six days, we've been, it's a good thing we didn't close on our house that we sold because we've been going back and forth, having them shower. and do laundry at the old house. So Kobe goes to me, Daddy, are we like the Vanderbilt's?

So I said, what do you mean? He goes, because we have two houses. And I said, yeah, no, not exactly. Wait, are you making him listen to the Vanderbilt book with you? No, I should have. But when we went to the Breakers, I was telling him about the Vanderbilt and how they, so Robin was asked me what happened.

I said they lost their money because they bought too many houses and wasted their money. And good segue because someone said, Michael, we need more updates on your selling and buying your house. How was it dealing with agents? Did you pay a buyer's fee? Yeah, I have a lot said there. I'll do that next week. So anyway, yeah, the board apes, it looks like it effectively went to zero or close to it, not quite. I guess 37,000, whatever the floor price is. You know what's interesting, though?

I don't follow this stuff closely. Obviously, I thought it was wild at the time. But cryptopunks are still... Are still hanging in there. Okay, that's the thing. I think, and JC owns a dick butt. He says those are doing well. But yeah, but that type of behavior, just the unbridled speculation.

Now, listen, people, we were home, right? Like, that sort of thing is not in the market anymore. So the housing market, I do wonder what we're going to see over the next couple of months as rates come down. Because rates are at the lowest level that they've been at in a while. I think once we get into the fives, you'll start to cease some movement.

Mike Simonson posted this. Days on market per state. And this is interesting. So it's way high in the southeast. Florida is high. Alabama, Mississippi, Louisiana. The quickest sales are happening in the Midwest. Michigan, Wisconsin, Indiana, Illinois, Ohio.

Still flying off the shelves here. I think a lot of this is just catch up, to be honest. These other states already had it in the Midwest is playing catch up a little bit. But we haven't really had a slowdown in real estate here. Like we had a house go up for sale in our neighborhood. It sold the day it got listed. Immediately. Immediate sale.

Yeah. Day it got listed. Gone. Huh. Maybe. Yep. There's just not as much. There's no supply yet. The Wall Street Journal did an article about people staying married because

Yes, I read this. It says their divorce to 2% mortgage If only mortgage rates If only mortgage rates were low in the In the 90s maybe My life would have been ruined So they

Finalized their divorce in April She lives in a trailer in the yard And they keep their loan Which is refinanced at 2%. That's quite a financial sacrifice there Right? Yeah At that point, why don't you just stay married?

You're more in love with your mortgage than your spouse. Seriously. But they were saying that they gave a few other anecdotes. It's not that a lot of people are doing it, apparently. Well, listen, I understand. All jokes aside, like a lot of people, a lot of people need, can't afford to financially be separated. Right.

You need two places to live. It's two, you're paying for your own place. There was a lot of shenanigans in 2021, not just bored apes. But how, why, remember how much we spoke about the unicorns? these privately held companies that had a billion dollar valuation. This is a great chart. All the funding grounds were insane. I think this from Sidgemore.

In 2025, almost four out of five 2021 uncoins are still unprofitable. Wow. According to Silicon Valley Banks. Holy smokes. Only a quarter have at least $300 million in annual revenue. So, 79% are unprofitable. 75% have less than $300 million in revenue. And 28% are not even growing year over year.

See, these companies are not not going public because of stringent reporting restrictions and stuff. They're just, they got thrown way too much private money. And so they're, you don't call these zombie companies or anything, but they, they have such a long runway because they got so much money. Valuations were completely insane. So this was a bubble. Yes. Right? Like a lot of these companies are down 70%.

All right. Speaking of private markets, so Torson Slok, who obviously does a lot of great work, listen, I'm mad. He works for Apollo. Okay. So they're talking their book. We talk in our book. I get it. But this irked me a little bit. He wrote no alpha left in public markets. And I'm thinking no alpha. What? The S&P is up 15%? Who cares about alpha? Who needs to outperform when the index is up 15% a year? He said there are fewer public companies to invest in and firms that decide to do an IPO. I mean, we refer this before. Combined with the domination of passive investing, failure of active managers in high concentration in public markets and high concentration in a few

stocks, the reality is that there's no alpha left in public markets, implying that the alpha is in private markets. Maybe that's true, but it just struck me as a little bit. Come on. Yeah, I would say that the alpha in profit in private markets has shrunk considerably as well. It was there in the 80s and 90s. It's not much there anymore. Right. The other thing is, like, the active mutual funds in ETS aren't outperforming. They're still underperforming, but individuals, I think, are outperforming more than they ever have been. Yeah, you know what? I've been following Strauss's work and the whole group at All-Star charts,

and they're one of a million examples of incredible quality research for individual investors. It didn't exist in the past. You didn't have access to stuff like that. Now, obviously, it's on you to execute and blah, blah, blah, blah, blah. But, like, there's a lot of truth in the first. fact that Joe's are smoking pros. Remember Jones versus pros? Was that an MTV show? What was that on? Great show. He was it? No. Was it? No. Okay. Maybe. All right. I've got a new theory for you. Go ahead. I can't back this up with numbers. I'm just basing it on anecdotes and vibes.

I think we've never had wealth inequality this great among young people. And this is one of the reasons that a lot of them are so unhappy. So I get the emails all the time for people who are in their 20s and early 30s and talking about how rich they are because of stock options. This I put a one in here. This is from the Ask the Compound. This guy and his wife are 27, and they have 21 houses they own worth $4.5 million. And so I stuff about stock options and getting rich on crypto.

And I think that it's never, you did not hear stories like this in the 2010s, like about people who are 20s getting wealthy. There literally wasn't one story like this about someone in their 20s getting obscenely wealthy. And now they're stories about all the time. I had $37 in my Mass Mutual pension. Okay.

Plus, you're shorting the S&P, so that had help. But you're right. Then this was not a thing. So I think wealth inequality and the ability to see people get rich on stock options and crypto, and I bought this stock and it went to the moon. I bought Nvidia or Tesla or whatever, and I got in at the right time. I think wealth inequality among young people is probably as great as has ever been. Yes.

And when you combine this cocktail with what's going on with social media, it has some really nasty, nasty ramifications. So Jake, our friend, Economic, tweeted this. from Sam Harris. Since deleting my Twitter account nearly three years ago, I've generally ignored social media. However, in the past 48 hours, I've spent enough time studying the response to Kirk's death to be further convinced that platforms like X and TikTok are destroying our culture. No metaphor does a problem of justice.

I've compared social media to a dangerous psychological experiment, a hallucination machine, a fun house mirror, a digital sewer, but nothing captures the ludicrous insults, moral injuries, and delusions that millions of us after they produce and consume my mind. If the medium is the message, this message is mass psychosis, and it will send us careening from one political emergency to the next. The fact that some of the most deranging and divisive content is being created or amplified by foreign adversaries and that we've literally built and monetized our capacity to do this beggar's belief, we are poisoning ourselves and inviting others to poison us. What was I just going to say? So my hope is that for my kids, because this worries me about my kids coming up in age, that they're going to, recognize this. And they're going to go, we don't need this crap. We don't need to

like pollute our brains. And we're going to do something else. That's my hope. It's gone, it's gotten so crazy. And there's so many insane people on it. And God knows if they're even real people at some point. Like every reply on Twitter for me now is a bot. They're all very positive, but they're all bots and they're not real people. And I wonder if it's just going to be bots talking to each other in the future. And the young people are going to go. why do we need to be part of this? Yeah. I hope that's scared.

I completely lost my train of thought. But yeah, social media has been an absolute disaster for the world. Like, just hard stop. Are there good aspects of it, obviously? Like, we, you know, to say that we owe a lot to social media as an understatement. But my God, it is, it is so, so, so, so bad. They want to many lives it's ruined. People have literally lost her job because of stuff they said on social media.

This happened last week to people. All right, I was going to say something, but I guess it was not that profound. But this is a great example on a much, much different scale. But I was reading this article from the Financial Times and just in terms of like attention and the way that communication works these days. So they wrote an article, U.S. public pension funds, pair allocations to private credit. And on the front of it is Cincinnati's $2.4 billion retirement fund is growing cautious about private credit investments.

All right. So they go through this whole article about private credit and how dangerous it is and loose covenants. And they literally end it with this. Stephen Meyer, CIO of the $295 billion in New York City retirement system, said the fund was looking to increase its private credit allocation. And it goes on. We have completely committed to private credit, he said.

This article is backward. It should have said, U.S. public pension funds are completely committed to private credit and then ended with, however, not all are convinced, okay? It leads with a $2.4 billion fund from Cincinnati and it ends with the $295 billion fund in New York City, which is completely the opposite of what it should say. And this is exactly what is so f***ed up

with media and social media and attention and rewards and monetization and it is so crippling to our society. And of course, we all feel very powerless and hopeless and down and sad. And it is just really, really, really, really fucking terrible and scary. And I don't know, I don't know how any of this gets policed or regulated. There's no incentive to regulate it. Elon Musk is obviously the most powerful man in the world. It's just horrendous, horrendous, horrendous, horrendous, horrendous, ripping our society apart.

Well, then you realize when you go in the real world, and they go, oh, yeah, people aren't really like this in real life. They're just like this online. It's like too, it's like a bipolar reality. It's like how people behave in their car. Yeah. But it's not on worse. Yeah. Let's do something a little lighter.

Matt Bellany says rotten tomatoes, rotten tomatoes are rigged. He looks at the average score from 2014 to 2024 and they're all way higher. and he's saying that like studios can complain, they can get people to give reviews that they shouldn't. He said two years ago, New York reported on the PR firms that recruited little-known critics and paid them to write or change reviews that boosted Rotten Tomato scores.

One film was elevated from 46% to 62 after manipulation. It's all very gross. He went through all these different examples of how they can, how basically Rotten Tomato scores are totally useless. They bring in people who aren't really critics. They get people that vote in and change scores. This is why I'm an IMDB guy.

When I look for a score of a TV show or a movie, I don't go to Rotten Tomatoes to go to IMDB. You know, I hear you, I get you. All that being said, I'm Rotten Tomatoes. Although, you know what? I found myself looking at it way less than I used to. Here's where I look at it. If I'm on an airplane and just,

and the only reason why I look is if there's a movie that I've never heard of, I just want to make sure it's not a 12. You know what I mean? Like, so if I see a 53, would that stop me from watching it? Absolutely not. But if I see like a 12 or a 20, yeah, I'm probably going to pass. It also depends on what type of movie it is.

If it's like a drama or a thriller, it's got to be a higher score versus a comedy. You can accept a lower score for a comedy. True. All true. All true. All right. Back to the Vanderbilt stuff. This is a comment we got. Fun fact on the Vanderbilt family. Fun fact on the most famous, he was in that stick show, the one Wilson. Good, good, good one.

Ben observed horror movies don't pick cars struggling to turn over anymore because cars just start. The guys have previously discussed the enormous increase in the durability and quality of cars goes hand in hand with higher medium price. They're just better machines now. You can't get a new 20Kmart style anymore.

Yeah, true. That is true. All the sensors and stuff and the cameras, like it makes sense cars are more expensive. But this was the point. He said, we're talking about like how people are financing cars longer, which is like dangerous,

Like, when cars were trashed after six or seven years, why would you finance them for very long? Of course he wouldn't. So he said when cars are completely solid with the ordinary maintenance for 8, 10, 12, euros, smooth the cash flow by extended the loan. Giant exception, whatever Michael's driving, that man has a nose for a lemon. Risk sniffer. True.

I am a huge risk sniffer. All right. You have picked some really bad cars. Yeah, I have. All right. Let's book on the show with, there he is email of the week, shall we? Long time listener and fan of the show I thought you already did it

There he is or you did a that guy No, I did a this guy email of the week Oh, okay This is a there he is email You're really trying to make this a thing Longtime listener and fan of the show As wonder if you can rank your top Three to Five things you yell

When watching football in the fall Especially when the Giants You know how depressing the Giants are I didn't even watch week two I mean granted I was moving and stuff But I don't think I've ever not watched week two I don't care All right so this is this is his

Midwest fan version. You got to get rid of it. What are you guys doing? Jeez. This is very Midwest. Wow. That was nice. Did you see that?

But you're watching the game alone? Well, who do we play next week? Mid-second quarter? So true. These refs, I can't do it this year. Oh, they'll get that right with the replay. They've got to overturn that one. Not bad.

Pretty good list. You know, mine is? I just, right, my daughter always comments on this and thinks it's so funny. I say whatever the announcement is about to say. I do that like 10 times a game. because I'm explaining the game to her and I'll say, and then the announcer says it after me and I'm like, yeah, that's right.

So there's this idea that the monoculture doesn't exist anymore. And I think this is a total bunk theory. So people say because we're not all quoting the same movies and watching the same movies or TV show or music as we did in the 90s that monoculture is dead, right? There's not everyone, there's not 40 million people

watching the same show anymore besides the Super Bowl, right? And I think it totally exists and I think it's more prevalent than ever because my daughter is 11 going on 12, and she feels like she's already like a teenager. And the youths now, they all know the same memes. They know the same sayings of memes. Like, instead of quoting movies,

they quote stuff from YouTube. It's like all the kids say the stupid 6-7 thing, which I still don't get. Oh, my kids do the 6-7. What is that? Yeah, I don't know. But it's a meme. My kids, it's a meme.

And my daughter, all the kids were the exact same clothes. Like, if you go to a football game and see all the kids there, they're all wearing the same. exact thing. And today it's sandals with socks. They all look exactly the same. Sandals with socks. I really am a Trent Setter. That's what I told them. I said, you guys don't realize that when dads used to wear sandals with socks, that was considered that they were like the nerdiest person there. But now it's actual Trent. But so the kids, now that they have texting and they see

everything on YouTube, they are, the monoculture is probably stronger than ever. Did your kids watch the demon sliders? Yeah, they liked it. The demon slayers, the K-pop demon hunters? I gotta be honest, I watched a little bit with him I'm surprised it was as big as it was I thought it was just okay I watched a little bit with them I'm surprised they liked it they didn't love it

I mean they liked the songs and stuff but I can't believe it's such a massive phenomenon This is the greatest thing ever My friend texted me this His friends his kids share a room They live in the city And these kids are whatever The age doesn't really matter that much

Although the eight and whatever Years old Listen to this So the boy shares room with his sister, and apparently she likes this movie. This is the most shittiest crap on earth. Can't believe that. I'm forced to listen to this fucking stuff every night.

Wow. The most shittiest crap on earth. That kid has taste. All right. That's a New Yorker right there, obviously. Do you know about the Savannah bananas? Yeah, of course. I've seen the videos and highlights and stuff. So we went on Saturday. They sold out Yankee Stadium.

Oh, how did you like it? We've been before. It's great. Forty-nine thousand people there. So they're just the Harlem Gold Trotters of baseball, right? Yeah, it's great fun. So one of the added benefits is it tells you how much time is left in the game. Although I guess if the sixth inning, you know where the night thing is. But whatever. It tells you that there's like 30 minutes left. So I said, to Robin, all right, we got to go. And she goes, wait, but they're having so much fun. I said, she was, I said, I said, I have to teach me about leaving early.

There's 49,000 people here. We're in the Bronx. It's going to be a disaster getting out of here. Yeah, with kids, there's no way that you can do it. So I said, all right, Kobe, here's the story. And I explained to him, we could stay until the end, but it could take an hour to get out of here, or we could just leave now.

And he goes, let's go. Yep. So they're on board. You're teaching something, right? All right, Ben. Recommendations, what do you got? Okay, so Dunkin Rec, after we saw Oasis, and everyone we talked about Future Proof

was probably sick of us talking about it because we were giving glowing reviews to everyone. But Duncan said, you have to see the documentary on them. I hadn't seen it. It came in 2016. It's called Oasis Supersonic, and I rented this weekend. Where did you watch it? I had to rent it on Amazon, $39, or whatever.

It wasn't on any streaming services. And it was fantastic. It's just they decided, like, we are going to be the epitome of a rock and roll band and we're going to drink and we're going to do drugs and we're messed stuff up. There was just some excellent stories. Like, the first ever overseas show they did, they took a casino ferry to Amsterdam.

And I guess they just got really drunk and they were messing up the casino and throwing chips everywhere. And Liam's like, yeah, we're rock and roll stars. That's what we do. So they never made it to the concert. They had some great quotes. So they talked about how democracy never works in a band. They both thought they were the prime minister. And that's like one of the reasons they broke up.

But this is a good one. So Noel was the songwriter and Liam was the lead man, right? which you could see at a show that was Liam was the lead so they talked about how like why their relationship got sour over the years and Noel said Liam was always this is like a total

personal finance thing I think Liam was always cooler than me. He had a better walk and clothes look better on him and he was taller and he had a better haircut and he was funnier. Did you see him wearing the sobriero in Mexico City? So Liam clearly would have liked to have my talent as a songwriter and there's not a day that goes by where I don't wish I could

rock a Parker like that man and he did at the show he looked excellent in is Parker. But he's saying, listen, I was jealous of everything Liam had, and he was jealous of my songwriting. It's like, you can never have it all. I thought that was a really good. Anyway, the doc is really well done. They talked about how Noel left the tour because he met a girl, and he said, I need a break from the tour. I can't stand all these shenanigans Liam's doing. They were doing, you know, lots of drugs and just being crazy. He said, I met this girl in San Francisco after a concert, and I went to go stay a weekend with her. I don't remember her name. I don't

remember what she looked like, but after staying with her and talking with her about the band, I wrote a song. It was called Talk Tonight, which they played at the show. And just like stories like that, there's excellent stories, really good. All right, one more. Did you watch TASK at an HBO? Yeah. Okay, so I watched the first two episodes, and I'm totally, and it's the guy who wrote Marrabeestown, and it's like two or three different shows in one, and there's drug heists, and there's a biker gang, and there's FBI agents, and the guy who plays Laurelini's brother in Ozark is so good as the lovable you know he's going to mess up

but he's still you still really like him Oh yeah it's the same type of role you're right He's so good at that and so I'm really in on this show I really like it Yeah you win? Oh I'm in I'm all in Did you watch the speaking of crazy drugs Did you watch the Sheen doc

Not yet I don't know how crazy that was in real time Yeah like the whole winning thing when he did that interview And it was just like watching the most famous person in the world I don't know if I can watch that kind of train wreck. I don't know if I'm going to watch that one. Okay. All right. So Apple and China, phenomenal book.

This stat seemed fake. Is this one you listen to? Yeah, I had to look this up. Apple has gained. Remember when Steve Jobs died and there was obviously a lot of question about the future of Apple? Who the hell? I bought the stock the day after Steve Jobs died. And I can't believe I sold it like five years later.

Why did you buy it? I thought like this is way overdone. Like, it's still a great... I think I was just, like, a betting on the iPhone. And I held it like five years, but I sold it in, like, 2016. Huh. So there's so much good stuff in that book.

Listening to the story of how Apple did what they did, there's so much of a vision as history when looking at a line on the chart, right? Like, you look back 15 years of Apple, it's like, I'll put it to the right? No, it wasn't. There was so much... There was so much in there.

So many things had to go right. It's a miracle that they did what they did. But here's a stat that I thought was fake. Apple has gained $600 million a day in market cap for 365 days in the year since 2011.

Jeez. $600 million a day. Wow. One of the things that's remarkable about Apple, I had chart can make this chart. I also listen to the 90s by Chuck Closterman. You read that book, right? Very good.

So they spoke a lot about about how much like the first VHS costs. I think Top Gun was like $90 inflation adjusted. How technology is the most deflationary force. By the way, somebody sent me an email about how not a hot tape up like Michael is right about when you're in a new place, walking around, listening to whatever. So I was walking around Burbank, went to the Warner Brothers Water Tower studio, listening to the 90s.

What a vibe. Love California. Anyway, the iPhone is the biggest technological. force that goes against the grain. Their prices keep going up. Look at this chart. They were way under price at the beginning to get people hooked. But the price of the iPhone will never go down.

So all these stories about like, about, you know how Gallow it was like calling Apple a status symbol and it like blew us away? It was like, oh my God, what an insight. But it really was. There was people in China that were selling there. There was one guy that sold his kidney for an iPhone. There's one guy. They also getting subsidized by the phone company?

at first, too, though? Yeah. Well, was that at first? I don't remember. One person, a guy in China took out a 30% loan. I'm sorry, I'm sorry. I'm sorry. Spent 30% of his annual income on an iPhone.

He was a man man. He said, because when I have an iPhone, I'm not a mailman anymore. So they couldn't calculate the demand. They were so, by every economic metric that you would look at, they were so wildly off. Anyway, phenomenal book. All right, we've gone way, way, way too long. Sorry, Don't get him on. and Daniel and John and everybody else

who's involved in editing this. All right. One more thing because it kind of ties it all nice and neat. So at the end of the Oasis, Doc, they talked about how they had this huge concert somewhere in the English countryside and it was 250,000 people there. And they talked about how it felt like it was the last time

before the internet age really hit and how like it was just, it really was a different time. And I think Closterman talks about that in his book too. Yes. And it really, there's no going back now. But listening to him talk about how great it was and how people could just be in the moment and not in their phones and not on social media, posting about it. And people always say that, like, people are, you're nostalgic for the past and it wasn't really that great. But no, the 90s really were that great.

And people who say that, like, don't, like the 90s were, they just were better. They really were in a lot of ways. Yeah. Signed, middle-aged guy. Get off my lawn. All right, Animal Spirits at The Compound News.com. Thank you for listening. We'll see you next week.

Don't go.