Animal Spirits Podcast - The Fat Pitch For Bears (EP. 465)

Episode Date: May 20, 2026

On episode 465 of Animal Spirits, ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Michael Batnick⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠���⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Ben Carlson⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ discuss: what can stop the stock market, Nvidia is too big, the boy who cried wolf predictions, market timing reminders, Michael Burry crash calls, AI portfolio strategies, AI is the new Netflix, the robots are coming, rich people who aren't happy, Harrison Ford, Martin Short and more. This episode is sponsored by Grayscale and ClearBridge. To learn more, visit https://www.grayscale.com/ Rising geopolitical tensions, continued market uncertainty, stocks backed by can offer more predictable cash flows as volatility increases. Visit https://www.clearbridge.com/ to learn more. 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/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Grayscale Disclosure: Grayscale is the world’s largest crypto-focused asset manager based on AUM as of 12/31/2025. For other companies in this category, AUM is considered as of most recent public disclosure. AUM is subject to change. Investing involves risk, including loss of principal. For more information, visit grayscale.com  Learn more about your ad choices. Visit megaphone.fm/adchoices

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guide. Today's episode is sponsored by Clearbridge investments. Amid rising geopolitical tensions and continued market uncertainty, investors are looking for stability. Even before recent developments in the Middle East, stocks backed by real assets were gaining momentum and can offer more predictable cash flows as volatility increases. Position your investment portfolio for wider equity participation with fundamentally driven Clearbridge Active Equity Strategies, Clearbridge, a Franklin Templeton company, go to clearbridge.com to learn more. 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 Riddholz wealth management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Rittholds wealth management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. it turns out the stock market cannot and will not go up every single day. Why? Because we're one down day? We had one and a half. We had two. But now there are, of course, headlines that are following why stocks are down.

And I'm not dismissing the yield inflation stuff. I think yields being at their highest level ever. Not that. Oh, Jesus. Not ever. They're their highest level in quite some time. You know, it's worth looking at, not sweeping under the rug. I'm still in that under the rug.

Okay, fine. Every time, I've got plenty to say about this, but every time rates get to 5% people flip out and then what happens, rates fall again and nothing happens. So let's, let's hope that complacent Ben is right. That, but I'm just saying like the, the S&P and the cues in particular are so far, so so far above any sort of normal trend, moving average, whatever. If we get a 4% pullback, heaven forbid even seven. It might just be what the doctor ordered. Yes. This has to be one of those.

Eventually we'll get a, okay, I'm taking profits here. All those semiconductor stocks that are up a million percent, people will go, okay, fine, I'm getting out. I'm taking some profits. I made so much money. So, a friend of mine, I was like, eh, I don't want to say this, a nutshell, it's not really nice. But last, what day of the week was it when we was texting me?

I don't know, Tuesday. Maybe Tuesday or Wednesday. I can't remember. And this is the friend of mine that, like, I don't, I didn't, I didn't, we never, we We don't speak stocks. I assume he doesn't listen to the podcast. And he said, I like what you guys are saying about Micron. I don't even know what show he was talking about because we were talking about it so much.

He sold 10% of Micron at whatever. He crushed. He made a ton of percentage wise. I don't know much. Obviously, I'm not asking how much money he put in, but he did quite well in the trade. And he was saying how he sold 10% and he's mad that he sold 10%. And I was like, ah, you know, if you're mad that you sold 10% of a stock that tripled, I don't know what he bought it.

Like that's, you know, that's a pretty good sign. Anyway, I do think that, so friend, if you're listening, sorry to dunk on you, but whatever. It's a fair dunk. It's a fair dunk. I do think that this is the fattest pitch setup for bears. Now, I just thought of this, so I haven't really, like, gone back and checked the tape, that we've had in a while because you have, you could very credibly or easily make the case

that we are in a CAP-X memory bubble, whatever. Choose your bubble while at the same time we have a new Fed chairman coming in. Inflation is sticky. Rates are high. We might actually need to raise rates. Like that is, that is a very plausible potent potable. Remember potent potable from Saturday Life? I don't remember what those were, but that's a potent cocktail.

But wouldn't the comeback would just be AI? Well, yeah. I'm not suggesting that. I'm not suggesting that that's going to play. I'm just saying there's a lot of meat on that bone for bears to chew on. The weird thing is this has been the first level thinking bull market for so long now. It has been second level thinking. So could we actually, for once, have a first level thinking bear market as well?

Because the risks are so widely known right now. Everyone knows what the risks are, right? Yeah, inflation is sticky. The war. Interest rates are going up. AI potentially just blowing out way too much excess. And those are all the risk. Everyone knows them.

But the AI bubble. Seven months ago, that was not a thing because as we all remember, everyone wanted no part of the bubble. These stocks were getting murdered. There was no memory up eight X earnings. Like, we were in a different environment and it happened so fast. So like eight months ago, nobody was saying the AI bubble. It was the anti-bubble. The matter of fact, the narrative that we were saying was there is no AI bubble.

And as a matter of fact, it is actually destroying everything else in its wake while simultaneously not getting blown up itself blown up to the to the upside but ben speaking of like the first uh first level thinking i've told this other i've said this before the show in 20 i don't know 14 15 uh family member of mine had been a long-time sharehold of apple and he said the next apple is apple or something like that and i definitely like ha ha ha you know i definitely like laughed at him like that internally uh yeah he was right it's been a first level think of bull market howard marks ruined it for for semi-intelligent market participants. Anybody that thought that they were like moderately clever

could blame Howard Marks. It's a great company, but that doesn't mean it's a great stock. But guess what? All the great companies have been great stocks. Yeah. It is really like the first time in history. It's lasted this long.

So yeah, maybe it will be just the obvious risks will be the ones that eventually get us. But the thing is the one, the outcome that is going to leave no one satisfied is just that we have a really quick correction. And then this thing just keeps going. Right? We have a 10% whoosh.

because we need to pull back a little bit, but it's not the system clear everyone wants to see. And then we just kind of a few months later pick back right back up where we left off. We'll talk about smoother for longer later in the show, but let's start here. So we were talking on TCAF with Kai, who killed it, he was really good on the show.

And we've had this conversation a bunch. Like, all right, what stops us? Right? An object in motion stays in motion. There has to be something to knock it off its course. And Kai was talking about, like, because I said, like, what do we think about the fact that companies, management, and listen, I know there are a lot of dumbasses out there, okay?

So it's very easy to like say what about this, this, this, this, this and this. But management teams have a lot more information. By the way, great. You've been using the word dumbass a lot lately. For some reason, it always makes me laugh. Yeah, I don't know. You did it on the show the other day and I laughed. Okay.

That's a good, that's a term we used a lot in the 90s, I feel like. So I'm glad you're bringing it back. Speaking of the 90s, I saw Beavis and Butthet. It's going to Netflix. Oh, really? Okay. You know, that might be the origin of the word dumbass for all I know. Possible.

So let's just... No, I think the guy on Back to the Future, use the word dumbass, Martin McFly. Okay. Let's all agree that companies are better today than they were in the past. And look no further than profit margins. I mean, they just, they're better businesses, okay? Whether you want to ascribe that to management or the products, who cares? It doesn't matter.

But the point that Kai made was, it doesn't matter. It's behavioral. So it's not that they're less intelligent or more intelligent than, you know, management in years past. It's that there is a behavioral component to follow what everybody else is doing, perhaps right off the cliff. Matter of fact, Netflix, streaming, great example. All of these companies that were in traditional legacy Hollywood media studios, they followed Netflix right over the streaming cliff. They overspent and it nearly sunk them. So maybe my theory is bunk.

So anyhow, from Torson Slok, America's data center is a counter. is about to nearly double. In the U.S., there are roughly 4,000 existing data centers, and there are almost 3,000 data centers under construction. So the perhaps oversupply, the way the telecom bubble bust, maybe that's just how this one plays out too. I feel like we're reaching here. We're reaching for risks here.

Everyone's just, everyone wants. No, I just feel like everyone wants to. Well, hold on, dude. Hold on. Last week you said, like, how do you not sound like a cheerleader? Yeah. I mean, should we do that every episode? Just be like, this is amazing.

Holy shit, can you believe these earnings? My whole thinking, though, is that whatever knocks us off of our current trajectory, it's going to be something that no one's talking about. That's just the way that I... That's not always true. That's not always true. It's not always true, but I... Dude, we're not reaching here.

I'm not saying if this, this, and then this, and then this happens. I'm just saying oversupply. I agree. That's not a reach. When I write a book about bubbles 20 years from now, and I've talked about the AI trade, that'll be a stat that's in there like, hey, there was 3,000 data centers

that were set to go under construction. Half of them never got built. Something like that. That's what happened to the railroads, right? They had all these lines they were going to build, never got built because they oversupplied. Yeah, that's certainly a possibility. I actually bought a book, a physical book,

because they don't have it in audio, called Broadbandets about the over, the overbuilding of the fibropic cables. And we think a lot about like the dot-com bubble, like it was an internet bubble. it was really the telecom bubble, like the build out of all this stuff. So I think that's a very plausible ending for this.

But wait, but what causes the mega cap hyperscalers to pull back on their spending? What is the thing that makes them stop? I don't know. Because it seems to me like the demand is there. So what's going to cause them to all of a sudden and be like, all right, fine, we're getting off the train. That I agree with you.

But two things can be true. There can be enough demand to soak up all of the excess. applied that is going to happen in five years. But like I'm, you know, I'm not saying it's tomorrow. Because that's the thing. In the fiber optic cable, there wasn't enough demand. There, we didn't have the computers and stuff ready for that yet. It had to come down the line. That seems like now we have the demand. There are too much demand. All you hear is there's not enough compute. So that's a very good question. And I ask Kai this. Like, what is it better? What is more likely outcome? The baton handoff. And he's like, no, that never happens.

And I totally agree. It could happen. I'm just, I'm just giving, I'm having an open mind that like, What if it does, though? I'm with you, dude. I'm doing the Tobias from... The Tobias Harris, who couldn't score a point in the final seven court. What a bum that guy is. Tobias Funkei from the rest of development. Didn't work for those people, but it might work for us.

I think that's a very likely possible outcome as well. All right. So duality research every week, they show the chart of the price return of the sectors. Then they show the EPS growth. and then they show the PE multiple growth. And what you'll notice is EPS growth positive in every sector and multiple contraction in every sector besides for staples, industrials, and real estate.

That's a good chart. So you can look at this from, you know, this is a Rorschach test. You could say that if you're a bull, you could say this is phenomenal. The market is getting cheaper or we still have room to run. There's no euphoria. Yeah. Fundamentals are not detailed. from reality. Fundamentals are literally great. And a bear could very easily say, hey, dumbass.

Sorry, I did it again. The market's not stupid. These multiples are contracting because the earnings keep going up, but the market knows that they're not sustainable. So they can't possibly get a one-time shot in the arm for earnings. Yeah, great. You guys can talk on earnings, but this is not going to last. Right. So we spoke about this last week, and we use this on T-Cath, but I don't want to assume that everybody watches every single thing that we do. So these charts are too good not to share here. We spoke about Nvidia just getting bigger and bigger the numbers, excuse me, the earnings, the market cap, and yet the forward PE is going down. And I said, that's not cheaper. That's rational. So look at the 12 month forward net income versus the forward PE ratio. Yes, the forward PE ratio is on the

lower end of its range that has been over the last, I don't know, nearly 10 years. It has to be when you consider that the forward 12 months earned net income, has gone from what even, it's like I can't even see it. Is that $15 billion in 2023 to $223 billion today? You can't get a premium. It's too big. So Matt showed what the market cap of Nvidia would be if it were to trade at a, at various forward PEs.

And right now at 25 times, it's 8.5% of the market. If it were to take up to 30 times, it would be 10%. At 35 times forward earnings, that's 12% of the market. It's just, it has a size problem. You would think, if a company's growing this fast, why isn't it given a 40 times multiple? Like, it should be. But because then it would be a $10 trillion company. It's already a $5 trillion company or whatever.

Correct. All right. For anybody that thinks that we are in a stock market bubble, not an AI hyperscale, but just a stock market bubble, all right? Let's like put a pin in the eye trade. The S&P 500 is in a bubble. Oh, really? Duality research.

Check this out. The distribution of forward PEs, I've never seen this before, and I love it so much. The distribution of forward PE is by, he shows it both by the percentage of stocks and by the percentage of market cap. So true, the percentage of market cap that is trading between 30 and 35 times earnings, not cheap, is 20%. But look at all of the percentage of stocks that are trading between 10 and 15 times, 15 and 20 times, 20 and 25 times. So 30% of the index by name is between 10 and 15 times. 30%.

So the majority of the market trades below 20 times earnings. Just, yeah, not by market cap. Right. But just number of stocks. Isn't that wild? It is. And if the AI trade blows up, it's not going to matter. The market will all go down. True. This is the case-shaped stock market. But this is the kind of thing where you said, if you were really concerned about it, if you were really worried about an AI bubble bursting. There's plenty of other places to go. Totally. Yes.

A lot of places. All right. Exhibit A chart of the week. Exhibit A for Advice.com. You want to try a free trial. Matt and team did one on earnings growth. And we talked about this. It looks like it's a fake chart. Exhibit, we speak about it all the time.

It's for advisors only. Yes. Yes. I think we had a few individuals try it. Like, hey, this isn't for me. Like, yeah, of course. It's for financial advisors. But look at the earnings, expected earnings, this quarter, just the

quarter, just shot off, shot up like a rocket ship. It doesn't look like it's real. It looks like a COVID chart. So yeah, a lot of people could be saying, to your point, hey, DAs instead of done ass. This is a one-time boost, a one-time shot in the arm. Like, the market has already priced us in and it's going to move on. How about this? If these earnings come back to where they were, the market will fall 40%. How about this, though? Mike's a card. Do you agree? Yeah. Yeah, it'd have to, yeah. It would go the other way. Mike Sicardi, Russell 2000 is seeing EPS growth 40% this year, 38% next year for the small caps.

I need to look inside these numbers. That's wild. Yes, we're going to have to put chart cut on this one because I'd never seen this. This has to be, this has to be massive Bernie's growth. This has to be AI productivity. What else could it possibly be? Are we really seeing that much productivity growth for small caps? It could just be because...

What could it be? I don't know, because growth is so low in 2025. I don't know. I honestly have no idea. All right, I'm putting, you mentioned yields at the start. So yield, the 30-year treasury bond is up to like 5.1, 5.2%. Everyone keeps saying, this is the highest yield since the great financial crisis. And oh, boy, this is something.

Just wait. Okay, so here's, I can't remember where I pulled this chart from. It shows. Highest since 2007. Okay. So treasury yields are up a lot. Do you know what TLT, so TLT is a 20-plus year government bond ETA? Do you know what the performance is this year for TLT, inclusive of the yield?

What is the performance this year if you had to guess? Because rates are up a lot. Down 3%. Yeah, it's down 2.5% or so. Do you know what the performance was last year? It was up. Yeah, it was up like 4% or 5%. Yeah.

Yeah, but that doesn't mean anything. But I'm saying that so... Nobody is saying the price of your bonds is the risk. But this to me is a boy who cried wolf thing. Show me a real impact of this, and I'll believe you. But every time this happens, people, freak out and then nothing happens. So I'm saying this is a boil cried wolf. Sometimes the wolf comes. Do you know what the average treasury, do you know what the average long-term treasury yield

is going back 50 years in the United States? What's a long-term average for the yield? Six. 6.2 percent. Today it's 5.2 percent. So what? That's what I'm saying. So what? Stop telling me this is a crisis when nothing ever happens. Show me. I'm sick of hearing about government debt and yet in treasury bonds. In Japan, they're saying Japan bond yields are up so much. Guess what? Stocks are at all-time highs. Where are stocks at all-time highs in the U.S.?

Same thing. It doesn't matter if yields are higher. Until it does. Show me a crisis, then. I'm sick of hearing people complain about it. Show me. I'm sick of the Boyo-Cried Wolf stuff. Nothing happens.

Nothing ever happens. Give me a crisis. Please. I really, really, really hope this is an age poorly. No, listen, I am with you. Throw to my faith. I'm sick of hearing it. I am with you.

I am friendly with you. But we are here to talk about the market, and this is a potential risk. Yeah, and I'm saying, no, it's not. Okay. I hope you're right. All right. I want to talk about market timing. So on the Prof G podcast, last November, they had asked about the motor on.

And he's one of the smartest, if you listen to his pot, any, him in any interview, he's one of the smartest people alive in the markets, probably. Easily. He's ridiculously smart. I remember I read one of his books, his, like, books on valuations, like this, you know, like four inches thick when I first, in a lot of it. of it was over my head. But anyway, really smart guy. So he was saying, listen, I'm super, super worried about an AI bubble. And I'm raising cash for the first time basically in my life.

And Galloway was like, man, because they worked together at NMIU. He's like, I've never heard you sound this bearish before. This is, I've never heard you like this. It's crazy. And he said, yeah, I'm telling people they should maybe raise cash because this is, and I've never done this before. So he was on the show again this past week for an update. And he's like, you know what? Did he say just kidding? No, he was like, you know what? This is why you don't time the market. I was wrong. And he owned up to it.

When did he say that? When did he say raise cash? So this was last November, last Thanksgiving. I remember listening to it when I was down at Disney. And I was like, man, this is a really smart person. He sounds Uber-Bair. She's like, listen, this whole AI trade, everything is the AI trade. And when it blows up, there's nowhere to hide.

I'm raising cash. And he said, I've never done this before. And then he said, you know what? Timing the market's hard. I was wrong. And I just want to remind people how hard it is to time this thing and how long this thing's been going on and how no one is going to get it perfectly.

And if they do, they're lucky. They're pulling out of their ass. It's not like a real analysis. You can't time these things. I'm not as susceptible to market opinions from smart people as I was in the past. I used to be very easily influenced, especially if somebody had a British accent

that was bearish. The bow tie. Bowtie gets you every time. That was my kryptonite. If I could, like, give investors, general investment, like people listening, one ability,

it would be to, listen to these smart people and just completely discount it. Yes. Just say, okay, these are intelligent people. They can't see the future. Intelligent people can't see the future. It's so hard. It's so hard because these demotering, whoever you listen to,

they know 400 times as much as you do. Yes. And so you think that they're experts and therefore they can predict. It just is not the case. I learned this early too. When I first was in meetings, when I first joined the industry, I would listen to these people talk about the market. And I'm like, oh my gosh, I'm never going to be as smart as these people.

And then I saw what happened in the great financial crisis in the years afterwards. And I thought, oh, none of these people knew what was going to happen. They've all been wrong. And that was like a real wake-up call for me. Like, you're right. Like, don't take some analysis and tidbits from them, but they cannot predict the future. They can't. Yeah.

And I'm also not discounting experts. No. Right? Like, like, Demono, legitimately, some of these people that you listen to are brilliant and know so. Okay, so I was listening to, uh, uh, Dwar Keshe, I, I was listening to a podcast yesterday, the day before. It ended on Spotify and it automatically started playing the new one, right? So it was Dwar Keshe Patel and, uh, he had like, um, he had somebody on that studies, uh,

how, uh, my God, I can't even, I can't even describe what they were talking about, how, um, your, your genes change over like millennium, right? Like natural selection, how that all works. And these guys were speaking a different language. And that Dwarkasch could go so wide. It's amazing how many different things I can talk about. Anyway, I don't even know why I was listening to quite frankly. I did understand the single thing they were saying. It was just a sort of background noise. So this guy who was talking about like how things change, he can't predict the future either. Right. And did you hear the fertility guy with Derek Thompson? Yes. Like, and that guy can't predict the future. So those are

legitimate experts. They know more about their field than anybody on the planet. And yet their they're tossing a coin. And the reason is because they're human. So Michael Burry, there was another headline. Michael Burry warns of stock crash as tech jump echoes 2000 peak. He said, history tells us that even if the party goes on for their week, month, three months or a year, the resolution will be much lower prices. Why is he doing this? We're getting into rare air, so extreme, the consequences will be unavoidable no matter where one hides.

It's kind of something similar. Spencer Jacob at the Wall Street Journal did this thing where he plotted Burry's calls on the line of the market, right? Remember 2019 he was calling for a passive bubble? He said in 2019, he said this will be ugly. In 2022, he said this will be worse than 2008. Remember he had the sell tweet in 2023. I just like to remind people of these not to like shove it down someone's throw. Like, ha, ha, you were wrong.

But it's to your point, you can't listen to every one of these predictions. It will drive you insane. I would love to see what his returns look like. I'm guessing. I bet they've been okay. I'm guessing they've been not even like if you if you lined up the things that we see about him in the newspaper versus his performance, you would say something is not tracking here because there's no way that he's lost 20% a year for the, I mean, obviously, right?

But it's like that with all those people. With Drucken Miller and Dallio and PTJ, you hear what they say in CNBC and you go, oh, my gosh, these guys are so bears. They're predicting another crash. And then you look at what they hold, and it's not like that at all. They're making macro predictions, but they don't allow that to seep into their portfolio. That's the thing. Right.

All right. Speaking of a passive bubble, good one from Goldman Sachs that I love, this ownership of the U.S. equity market. So I saw someone post the thing the other day saying passive index funds now make up 60% of all fund assets. It's like, holy crap. Now look at for the total stock market. Passive mutual funds make up 6%. ETS make up 10%, which is the same as active mutual funds at 10%. Passive mutual funds and ETSs make up less than foreign investors. So it's a tiny piece of the overall pie. But what if foreign investors are holding ETFs and index funds? I don't think it works like that.

It doesn't work like that. They'd be included in that. Your point is taken. It's it's, it's simultaneously, obviously a gigantic part of the market. I mean, obviously, right? It's like many, many, many, many trillions. But it's also there's other things going on instead the stock market, stuff like mendic's funds.

Here's, so people keep saying, people have no decisions. There's no fundamentals involved with buying this stock. The biggest piece of the pie is direct household ownership. And guess who owns those shares? Elon Musk, Jeff Bezos, the founders of these companies, are they ever selling them? And that's 40% of the market.

That's where most of that money is. It's people who work at these companies and own shares in the stock. They're not selling either. Here's, I think one of the things that is very legitimate about the changing structure of how the market is held and traded. Back in the day, there was a lot of analysts, a lot more analysts than there are today covering a bunch of different stocks. Like mid-cap stocks, small-cap stocks used to have a lot of analysts covered.

And they just don't anymore. And if nobody discovers these names, it is harder for them to trade on fundamentals, which is why I think a lot of the active managers have had such a hard time. It's like, there can be value in these stocks, but they're just dead money because nobody's there to recognize the value. But all of these companies are going to be covered now because of AI. There's not going to be any more stones left unturned. Think about how much easier it'll be for an equity analyst to have a wider, cast a wider net

in terms of the companies that they follow. Yeah, good point. Right? There's going to be no more. no one pays attention to these companies anymore. That's the thing in the past. Equity research departments are going to cover every stock they can. All right.

So speaking of AI, let's get to this email that we got. Okay. As you discuss your new Porterhouse SMA strategy, I wondered to myself, could I ask AI to tell me about their momentum strategy so I could skip all that pesky having to send ridholds my money and just get the expertise free from the machine. And then this guy sent us like whatever AI spit out.

And I wanted to talk about this, because this is going to be a thing where you can go to, you'll be able to go to AI. and I'm sure that I think there's already, you know, public has something like this already. I'm going to create my own index and I'm going to hit a button and it's going to say trade it for me. And I'm going to create my own rules and I want this basket of stocks and I want it to do this and I wanted to change this. Do it for me. That is definitely going to be a thing.

Oh, yeah. But I think what's going to happen is you're going to create one of these systems and then you're going to tinker. And then you're going to change this and you're going to change that. Wait, that didn't work. Let's change this. Well, that didn't work. Take that out. you're never going to be able to stop tinkering because it'll be there.

There's no barriers to entry. And sometimes having strategies with relatively simple rules, and our strategy actually is not that simple. It's a thought that goes into it. But the hard part is just sticking with something. That's the thing. And I think AI is going to just the barest entry being knocked down, it's going to be impossible if we're able to stop tinkering with stuff like this.

Depending on your personality, totally. For me, absolutely. I'm a tinkerer. You know that. So what do you think about these people who want to just, all right, I'm just going to replicate what you do. I'll take up, I'll, I'll get 75% of the way here and I'll try to do it myself. More power to you? Yeah, sure.

Why not? Experiment. Yeah, go for it. You can outsource trading systems and stock screens and all this stuff, but if you don't understand how a strategy works and why it's built. That's the hard part. It's like the portfolio construction. It's not necessarily building a screen is not rocket science.

I mean, there's, you know, not to this kind of. how much work went into it. But it's the portfolio management and it's the decision making and the behavior and can you stick, you know, the stick to it. And like understanding, guess what, this strategy is not going to work at some point. No, no strategy works all the time. There's going to be a good win rate in the stock market is maybe 55 or 60 percent. Oh, yeah. So we had somebody busting our chops about launching momentum strategy after one of, after like an all time performance run for momentum. Is this the top? And he was just busting balls. Like, because I responded, I said, we started building this in the winter.

Like, I wish that this didn't happen. Because momentum, like anything else, is seasonal, right? It has its days in the sun and then it has its periods where it sucks shit. And there's no doubt about it, the momentum on wines are really painful. That's the nature of the beast. Yes. And you also have to figure out the position sizing of, well, how much of my portfolio is this going to be? Right.

If you put all your portfolio in it, you're going to, it's going to be probably kind of painful. If you put a piece of your portfolio in it and you have compliments to it, that's a different thing. And that's, you're right. It's the portfolio management side of thing. anyone can create any screen they want these days. That's easy. Fair question, though. So I want to stick with, I want to stick, we're going to skip this,

I want to stick with some of the AI stuff because I think a couple of months ago, like, my personal usage of AI has happened gradually than suddenly, and I was trying to think of a different phrase because it's so cliche, but it is true. So like maybe like a year and a half ago, I was thinking like, how exactly are you using AI? And I mean you bankrupt, I just mean like people that are talking. about it so much. How are they using it? So I want to give an example of how I used it over the weekend. Howard, Linson, shared an article, AI is the new Netflix. And it was fairly technical and I am not a technical person, especially when it comes to technology. I'm not going to

I read this piece. I still don't quite get the analogy. I do. Keep going. Okay, I don't get it. So if I understand it correctly, the internet was built and Duncan can jump in here. If this is a Duncan thing. The internet was built for download. It was like, and when streaming came along and it really disrupted the broadband availability, like I think things sort of buckled. We didn't have enough infrastructure. So we were built to receive information. AI, we are pushing it out. This is like an upload thing. So I think this article was about like how the system is going to evolve. So anyway, I asked Claude to break it down for me. And here's what Claude is.

said. Back in 2008, video streaming was the thing that made people care about download speed. It ate bandwidth, drove everyone to upgrade their internet and force the cable fiber companies to rebuild their networks around it. Oh, Malik, he's the author. And also the guy that wrote broadband. This is how I found that book. O'Mallick's argument is that AI is now playing that same role, except it's flipping the direction. AI is the killer app of the next error, not because of what it downloads, but because of what it uploads. So I had never thought about it that way. And I said, hmm, let me ask Claude how our Porterhouse portfolio is positioned for this potential disruption, this potential theme.

Now, obviously, this is not investment advice, okay? Duh. So we have, we have Porterhouse and Y charts as a plug-in. And so it pulled it directly. And it said, pulled the live book. Porterhouse is heavily exposed to this theme, but through a specific slice of it and not the slice, not the slice, O'Mallac actually emphasizes. So I said, hmm, okay.

So it showed me the holding, the ticker, the weight, and where it sits in the thesis. So Sienna, Vertive, and Amphanol, three of the bigger names in the portfolio. And it described what's going on here. And then it said to me, you have essentially zero exposure to the part of Oms' thesis that's actually differentiated. Claude said his sharpest, least credit point was the Axis layer structural split, which is Verizon and AT&T, as well as structurally advantage cable,

Comcast and Charter. Porterhouse holds none of these. No telecom, no cable. So the portfolio is loaded on the crowded AI infa-capex reading on the thesis. By the way, yeah, is Claude taking shots at our portfolio? Momentum by definition, especially when it's working. Hey, Claude, guess what? I'm glad I don't own AT&T.

Yeah, when momentum works, it is crowded by definition, okay? So that's not like that. Because these aren't momentum names yet. Maybe they will if this thesis plays out. Okay. So, but here's what Claude said. Let me finish. So the portfolio is loaded on the crowded AI infarapix reading of the thesis and has no position in the genuinely contrarian last mile angle.

That's not a criticism of the signal. Telecoms haven't had the momentum to qualify. But it tells you the factor is expressing the consensus version of the theme, not the differentiated one. Not that you ask, but it is important, at least for me personally. One of the reasons why I love the strategy so much, not to make this sound too much like a commercial. But I can't ride winners. I've said this to you guys a million times. I don't have the ability to do it.

It's not in my personality. I know how hard stocks. I know how many stocks are terrible. And so when I have a winner, I take it. And Peter Lynch famously said, selling a winner and add into a loser. Now, I don't do that. I don't add to losers. But selling a winner and adding to losers, which is like the natural thing to do, is like

pulling out your flowers and. watering the weeds. And having a systematic strategy that doesn't do that for me personally is hugely beneficial. I'm the same way. I could not hold a stock for 500%. I sent you the quote yesterday, Howard Marks was like, there's two reasons you sell a stock because they go up and because they go down because they go down because they're going to go back down. And you sell and they're down because you worry they're going to go down even further. Exactly. Because momentum is, it's a totally behavioral strategy. And that's why there's not a lot of money in these strategies to begin with. It's way easier to understand a value strategy. I'm buying a dollar for 50 cents or 60

cents. That's easy to understand. Momentum is not easy to understand like that. I'd want to say, Claude by far is the best stock market analyst there is for these LLMs, and it's not even close. So I'll take the year-to-date holdings for the S&P 500, and I will upload them to Claude and say, what's going on here? And it'll give me a sector breakdown, a stock breakdown. It's actually pretty unbelievable. So this brings us to what Ken Griffin said over the weekend. Like the work that I just described to you that I did over the weekend, which took me all of, I don't know, like I was start to finish between reading the article and getting this in 10 minutes. That's a job.

That might be multiple people's jobs. So Ken Griffin was talking about this, how this is going to impact financial services. And I want to play this and get your reaction, Ben. Really interesting to watch, to be blunt, work that we would usually do with people with masters and PhDs in finance over the course of weekends. weeks or months being done by AI agents over the course of hours or days. So these are not mid-tier white-collar jobs. These are like extraordinarily high-skilled jobs being, I'm going to pick a word, being

automated by agenic AI. And I got to tell you, I went home one Friday, actually fairly depressed by this. Because you could just see how this was going to have such a dramatic impact on society. And when you witness in your own four walls, when you see work that used to be manures of work being done in days or weeks, it's like, wow, like that's the first time I've seen real impact in our four walls. Thoughts? I did listen to this. I agree with him.

It's kind of scary and depressing in ways. The biggest question I have is it, is AI doing jobs or is it doing tasks? And I think that's a big distinction. Dude, that's, that's a job. What I just did over the weekend and what he is describing, and to his point, that's not, that's not like entry-level jobs. I mean, you know, maybe there's something I was doing was. But so it is, it is certainly part scaring and depressing. I mean, it really is.

And of course, it's also super exciting. So what will put more analysts out of work, AI or index funds? Did Jack Bogle do it or did the AI going to do it? Because you could make the case that index funds had a bigger impact. Fire and gasoline. Okay. Yes. I agree.

There is a lot of scary stuff with this. And yet the unemployment rate is still 4.5%. Dude, we're so early. So to that point. Hold on. No, no, no, no, no. What's the time, Sam? 2027 before you can't say that anymore?

So Gavin Baker did a I don't know. He was at the Sone conference talking about this. And it's 25 minutes and I highly, highly, highly recommend it. I didn't listen to this yet, but I heard a bunch of people say it's, yeah, he makes you feel way better about the bubble, about like, he makes, whatever, just, just listen to it. But Gavin said, 10 basis points of the population are using these models. And there is a shortage of compute.

What happens when it's 5%? So he was saying, like, it can't be a bubble if the demand out strips of supply. Is that what you? Yeah, he's basically saying, like, this was his case for smoother for longer. But, dude, it is so early. I was at a party a couple weeks ago for like a March Madness party. And we were talking about, you know, how much do you actually use AI in your jobs? And I was talking about how I switched between Claude and Gemini and Chad GPT, depending on what I'm doing.

And this one guy was like, what's Gemini? I've never heard of that before. So don't, don't, don't, that's most people, though. Of course. Most people. Don't tell me about the unemployment rate today. And I'm not predicting 10% anything like that. But to look at the unemployment rate today and say AI is not disruptive is a joke.

And you're better than that. Do you, if you looked at the numbers of what's happening and this is still going on after it's been out for three or four years now, wouldn't you be surprised that the unemployment is still as low as it is, given all the leaps forward that we've had? Yes. But it was invented three or four years ago. it has only just begun then. Here's the one thing that I think is impossible to predict in all this. So Alex Tantwitz put this tweet out. This is incredible.

AI is getting booed out of the stadium at any commencement address that's mentioned. So Eric Schmidt did a commencement speech at Arizona. And anytime he mentioned AI, the students booed. Oh, I love it. AI is a villain. And so the question is, what are the political ramifications? And like, are companies going to get... penalized.

We have to tax the robots. Yes. If for nothing else to make us feel like we're doing something. Yes. Because I don't know that anything can stop this, can slow this down. Because I think if you just look at what happened sentiment-wise after 2008, none of those bankers went to jail, which is still beyond imagination from, I don't know how no one went to jail.

You could draw a direct line from that, the lack of ramifications to where we are today. Definitely. So my question is, like, are politicians? actually going to do something about it. Will companies be penalized if they have a mass layoff because of AI? I hope so. And will you say,

hey, your company gets a lower tax rate if you keep hiring people and don't lay them off because of AI. Like, I don't, you can't see, because some people just like, you know what, there's no use fighting it. It's inevitable. And I get that.

But I also think you can't predict what the political ramifications of this are going to be because people are, people hate this so much. Yeah. So that is a clear, you know, I know we keep talking about it. That is a scary part of it.

All right, potentially exciting part of it, although maybe scary too. So Brett Adcock, the founder of a humanoid robots company called, oh, my God. What does the name of this company? Gosh, dang it. It doesn't matter. I robot. No. So they have been live streaming robots sorting packages.

They said our original goal was an eight-hour run. We wanted to run nonstop and fully autonomous. Since then, we made the decision to keep the party going. We're now over 48 hours of nonstop autonomous operation without a failure to perform the use case. This is uncharted territory. So the task is small package sorting. The robot detects the barcode, picks up the package,

and reorient its barcode face down onto the conveyor. Humans average around three seconds per package. The robot is now around human parity. I think it's still running. Man oh man. So this is one of those things that I think this is a double-edged sword of boy, this is scary, robots taking our jobs

but I also think, I think we need robots in this country. So you talked about Derek's podcast about the fertility crisis, right? That we're not having, we're not replacing enough. If a couple has one child, the replacement is not there for humans. So like eventually population is going to decline.

We're going to need robots to help take care of people in services and we have to have them. Otherwise, this whole thing falls apart. Looks like they're coming. We were talking about... Hang on. Would a baby boom be the most surprising thing in the next 20 years if we had a baby boom?

Would that be the most surprising thing that could possibly happen? Imagine AI and robots make the world like this Nirvana state and everybody just has free time to procreate and replenish the population? hilarious. Well done, Ben. All right. A couple of weeks that we were talking about, there was an article in the journal. Was it Greg Gipp? Who we liked?

But like, but like, he was making the... I think he was making the contrarian case that an AI slowdown would actually be fine. No, it wouldn't. So, Torson Slocke showed AI is penetrating every corner of financial markets. What began as an equity market phenomenon has become a capital markets-wide transformation. AI now accounts for nearly half of all investment-grade issuance, 87% of VC funding and a growing share of high yield underscoring how deeply the AI investment cycle is penetrated every corner of finance. If this stops, the music stops.

Can I just say, though, that we have moved the goalpost a lot on this because at first it was, no, this is never going to work. And now it's like, oh, now it's working too well. Yeah. So I think we've moved the goalpost in some ways. So this is better than the alternative of we spent all this money and nothing happened. The top line numbers that are being reported out of Anthropic are like nothing we've ever, ever seen before. And in when was the max seven and the ad trade really in the shitter? It was when Sam Altman went on the podcast.

Was that the fall? I can't even remember this. It was over the fall. Sounds about right. And all these names got hit, and Oracle was at the center because, like, wait a minute. I don't think Open AI's $300 billion commitment to Oracle is going to come to fruition. And now that has turned dramatically, both Oracle shares and the entire narrative because the fundamentals are proving every doubt or wrong. So I can't, living in, like, San Francisco in that area has to be so trippy because everyone,

who talks about this stuff is talking about the world changing at the fastest pace in history. If you hear the tech bros go on podcast and talk about this stuff, we talk about AI and what it's going to do. They talk about it like it's the, you know, Nirvana is already here. But it's also the wealth piece. So this DD on Twitter post, he said, the vibes in SF feel pretty frenetic right now. The divide in outcomes is worse than I've ever seen. So he said, over the last five years, a group of, say, 10,000 people at Anthropic, Open AI, Nvidia, Hit retirement wealth of above $20 million based on their shares in the company. Everyone outside of that group feels like they can work their well-paying jobs, less than 500,000, for their whole life and never get there.

Worse yet, layoffs are in full swing, but this is funny. He goes to all these different people and why they're miserable because of this wealth. And one of them is like, good luck competing with someone from Anthropic who just catch out their shares to buy a house. Right? But he said, the rich aren't particularly happy either. No one is shedding tears for them, but those who have made it experience a profound lack of purpose. some have gone from less than $150,000 of $50 million in a few years with no ramp. It flips your life upside down.

He said some of them escape to New York to live life. Others start companies just because to end status points. They never imagined by age 30 they'd be set. I once asked a post-economic founder friend why they didn't just sell the company. And they said, then do what? Right now, everyone wants to talk to me. If I sell, I will only have money. It has to be a dystopian, weird kind of place to live, is what I'm saying.

There was a lot of people dunked on this. rightfully so. I understand the dunks completely. He's totally on point. He's totally right. So from the outside looking in, that whole pocket of life is bizarre world. There is more to life than this, right?

Okay. But if you are inside of that life, and that is your life, all of the human emotions that he's describing are human. You need, like, one of the things that I find so incredibly satisfying and lucky about my path is that I hit rock bottom. I was unemployed for a long time and I had no career prospects.

And things were going incredibly bad for me. And I had a 15 year ramp to get to the point where I am today, which I never thought I would get to. And it has been, I still cannot believe the journey that I've been on and how fucking lucky I am. And I think about it every single. second of every day for the most part. I wanted to talk about this later.

If that happened to me overnight, like, yeah, it totally screwed. Totally messed up. Without the struggle and without like the gradual improvements and now I can do this and now I can do that and now I can do this and do this and do this and do this and do this for my family and that. If that just happens overnight, it breaks your brain and then and then living in society with your friends and your neighbors when everything is so public, you become like,

oh, fuck that guy. Think about if you joined Open AI II. years later and you're more talented than someone else who joined two years before you, but they're ten times richer than you. Just because they happen to join the company before you. Is it because they're- That scrambles anybody's emotional- Is it because they're smarter than you or they're better than you or they're harder working than you? Maybe not. They might have just got lucky and timed it right. And so Clooney and John Ham have talked about how they are happy that they found fame in their later 30s and they

struggled for a while before to get there because they're like, if I would have got it earlier, I would have been so screwed up. And sometimes waiting is, so I agree, the perspective thing, I just think it's, but I mean, again, imagine trying to compete for a house in that area. When these people who just got all these shares go, I don't care, I'm buying whatever house I can, I don't care if I pay more. I got this got $10 million. A couple of weeks ago, we were talking about the Three Kings book, or not Three Kings,

whatever it's called, with Coppola and Spielberg and George Lucas. And they each said when they made their monster, monster hits, they were depressed afterwards because... Yes. That was the thing I pulled out of the Spielberg thing that was like, oh my gosh.

Being on top of the mountain is not fun. It's climbing the mountain. And that's like the whole purpose of life. But he also talked about how Spielberg started working with David Geffen.

And David Geffen was a billionaire. And Spielberg at that time was only worth $600 million. And he's like, looking up at, this is the guy who's created some of the best movies in history. And he's like,

why don't I have a billion dollars? It's a natural human emotion. So you can't, you just, It just, if you, the listener, if anybody was in these shoes, these people are all human beings. This is just what happens. Yes, but I agree with you. And I'm very happy.

I think everybody reading this is like, thank fucking God that I'm not, that's not my life. Because that sounds miserable. But you're right. I do think the one thing is the way that you break that cycle is just gratitude. Like, I'm better off than I was before. I don't care if I'm not better off than that person. I'm better off than I was than I ever thought possible. Yeah.

And that's hard. 10 years ago. That's hard. But yeah, that is the way. All right. I want to talk about a discussion I had at the post office. What?

About inflation. So I've been going, there's a post office right next to my office, essentially. And I'm sending out books to people. I'm sending out signed copies of my book. And I went there two or three times in one week because I had this big batch of books.

And the guy at the post, and it's this really large guy, like muscular, like built, you know, kind of guy. His name is Cletus. Okay? So I get to talking a little bit. He goes,

why do you keep sending out so many books, man? Because you have to tell them. What are you sending? Oh, it's a book. He said, are you an author or something? I said, yeah, I am. I wrote a book. He said, well, what are you writing a book about? He said, well, it's about investing in markets.

And he said, let me ask you something. You still like Micron here? He goes, what do you think about everything that's going on right now? And I was like, what do you mean? Go, keep going. And he's like, just, he's like, you, are you familiar with Weimar, Germany, hyperinflation? People carrying wheelbarrels full of cash down the street. He's like, I kind of think that's where we're heading.

And I said, okay. You should have given him a signed copy of your book and said, read this. What I told him is, all right, man, listen, I don't want to, like, debate you on this. This is a very articulate guy. I think he went down kind of a crypto rabbit hole on this stuff. And I said, I'll tell you what, next time I come in with the next back to books, I'm going to give you a copy and I want you to read it and let me know what you think. Here's my thinking on this. I think having sky high inflation this decade was one of the most surprising psychological outcomes.

I totally underestimated what it would do to people. And I think for him, it was all about inflation and how he's like, inflation is basically ruining the country. And I think we've all been reading and writing about behavioral psychology for 10 years now or something. I was, I underappreciated the psychological impact of inflation on people. It was a doozy. Yes.

And I think that's going to, remember we talked about like what the, what is the long last impact of the COVID pandemic going to be because the Great Depression caused all these depression babies who wouldn't save or who saved too much and wouldn't spend, they're frugal or whatever. The outcome of the COVID pandemic is whatever,

however long the sentiment from high inflation lasts. I think it's going to be a have a longer tale than most people realize. I agree. This is interesting. Julian and Klamochco tweeted a chart of Bitcoin and software going back to 2021.

And some of these charts are hard to eyeball when you squeeze the Y axes and make them different. So I put into Y charts and I stacked the charts. And yeah, they do look direction on the same. Not the same at all points in time, but just eyeballing this, they look like they move together, no? It's pretty wild that it goes that far back. That's a pretty long time for the correlation, right? Yeah. I mean, it's, it's, you know, again, if you zoom in on different periods of time, maybe they diverge a little bit.

but zoom out and they sure look like the same chart. All right. Anyway, he said, so it's Bitcoin and software, IGV. Digital gold, monetary hedge, decentralization, global liquidity, all with question marks. Censorship resistance, portfolio diversification. Turns out Bitcoin was just a software stock. I wonder what it would look like in the 2017 to 2021 era, though. Because one of the things that people talk about with bonds and stocks, people are saying

now that bonds are broken. because they're more correlated with stocks. But I think in a diversified asset, you want something that's going to change its stripes and sometimes it's correlated with this asset and sometimes it's not. So eventually, Bitcoin won't be correlated with software stocks anymore.

It'll be correlated with something else. You would think. But in 2017, Bitcoin was not an asset class. Like, what was the market cap? It was, you know, it was tiny. That's good. Anyway, not to say this will forever and always be the thing, but I just said, is it really that symbol?

Did I really own that much software? All right. I want to talk about the biggest inequality, wealth inequality of this decade, what I think it is. I can't remember where I pulled this from, but this is the economic innovation group. They look at the new homeowner penalty. So it's existing homeowners, the proportion of their income that they spend on housing costs versus people who are now buying new homeowners. And existing homeowners are basically the lowest they've been since 1990. What is this? What is it? Housing costs as a percentage of income.

Got it. Okay. So if you owned a home, you refinance into a 3% mortgage, your housing costs as percent of your income are about as low as they've been over the last, you know, how many years has been? It's been 12 years since 1990, right? 15 years? Over the last, whatever, 35 years. This guy. New homeowners has just shot up like a rocket and paying way more. This is a big source of wealth inequality. And we keep asking, where's all the money coming from? Where's all the money coming from that's going into all this stuff? Guess who has more disposable income? People who owned a home with a way low lower price and a low mortgage rate. Think about how much more disposable

income those households have. And that's a big proportion of the country. So this is what we were just talking about earlier with gratitude or whatever. I had a thought, and this is not something I spent a lot of time thinking about, but I am a new homeowner. And my friend who lives across the street, I probably paid, I don't know, three times for this house, what he paid for his house whenever he bought it. And I'm like, that M. F. That M. All right. This is, you know, but. That's right.

You're in the new homeowner thing. Yeah, I'm in no position to complain that. I'm not. Right. But it does suck. Yeah. And it is a huge source of like the K-shaped economy. Is the new homeowner versus the existing homeowner?

Yes. You're right. Yes. Yeah. Because there's people now who are moving into neighborhoods who are like five times richer than other people who live there. But their housing costs are way higher. Yeah.

It's weird. It's definitely weird. It's a bizarre thing. All right, I want to give a public service announcement. I'm sure we've spoken about this at some point over the course of the show. There was a large demand for these basically publicly traded companies that were privately held. So, SpaceX, Open Eye, Anthropic, and all, like all these giant names. And the way that investors would access them was with something called a special purpose vehicle.

And there were special purpose vehicles inside of special purpose vehicles. It was like a Russian doll where you don't really know who this primary source of liquidity was because the companies have in some cases, in many cases, no oversight into who's selling what shares to who. So imagine you thought that you were a shareholder in Open AI or SpaceX and you're like looking your chops to find out that it goes public. And you don't even own the stock. Could you imagine the nightmare fuel?

So anyway, for people that are thinking or working with an advisor or asking somebody, hey, can you get me in? Just be very, very, very careful. Well, this story from the Wall Street Journal says people are freaking out. It's like realizing you don't have the title of your home as a market rips higher. Yeah. Scary. Scary, scary.

This is also scary. Blue Owl has seen inflows at this from the FT. Blue Owl has seen inflows at its flagship credit investment fund for retail investors all that dry up. The group's near $20 billion dollar Blue Owl Credit Income Fund. reported just $26 million in new investments on May 1st, about a 50% decline from the prior month and a 95% decrease from this time of year ago. So at this time last year, the fund that tracked nearly $500 million a month, from $500 million a month to what did it say 26?

Can you imagine being an advisor trying to talk your clients in the blue owl right now, though, with all the headlines? Yeah, that's got to be a special group of advisors. All right. I got a personal finance question for you. Go ahead. So I was home in Trevor City this weekend for a soccer tournament. That's where my parents live in Northern Michigan.

I'll more on that later. And it gets me every time. I go in the bathroom and I've washed my hands and I go to the soap dispenser and it's soapy water that comes out. And my father, when the soap gets to the end and there's a little soap left to keep it going, he fills it with water. Okay? My dad did not grow up a lot. He grew up in a tiny house with four other siblings. I look at the house now and I go, how do they have five kids in there?

Like he did not come from, I would even call like middle class back, right? So he came from not a lot. He has those frugal, that frugal mindset still is with him. And some of these things, I'm like, Dad, you can afford this stuff. Why don't, for him, it's not like a money thing. It's a principal thing. Yeah. So I was thinking, like, what's something in your life that you're still, because you can't spend some things you just out of principle, you go, no, I'm going to be cheap on this.

So what are you still cheap on? Because I was thinking about this. I'm like, just buy this. I'm cheap on. So I went the other way. I grew up, I'm not even going to pretend that there was poverty because it definitely wasn't. But I had restrictions. Like, I remember my mother saying that I couldn't order like chicken parm at the diner.

And that like sort of scrambled my brain a little bit. I was like, why not? Why can I just get chicken parm? It was like just because it's $20. Yeah. For me, when we'd go to Arby's, I'd have to get the junior roast beef. But I wanted a regular roast beef. Right.

So I went the other way. Like my limitations in terms of what I could buy as a child or my parents could afford caused me to like overspend. So I am like the opposite of frugal. I don't, I, and it's not because I make good money now. Like even when I made a lot less, I just didn't care about saving. So I was, I was always a natural overspender. But I'm sure there are things that I am cheap about. Like for me, for instance, I'm looking at my lease is up on my Explorer. I'm going forward Explorer. I'm looking at new SUVs now. And I'm looking at the prices and big time to take a shock for me. I think I will never be able to buy a luxury vehicle. I can afford it. I don't think I ever, I will,

never, principally, I will never, because I'm an A to B guy as far as vehicles go. I think I will never be like one of those people that could spend a ton of money on a car. I just, my, my internally won't allow me to do it. Oh, yeah, no, I get it. The sticker shock is something. For me, I would say it's probably take out food. Now, I still, I've gotten over it, but like, it still pisses me off. I still give Robin a hard time when she gets a salad for $27.

I'm like, are you fucking kidding me? And she'll always say, like, why is this a thing? thing because it's ridiculous. It's a salad. But I think this is one of the reasons that fire people get so much flack from everyone else because that thing with my dad having like that, you know, growing up, his parents were the depression era people. Like, it stands out more if you're like a fireperson now because more people were cheap like that in the past, cheap for whatever you want to say. And now you stand out if you're that way because not many people are anymore. Yeah. It's not as prevalent as it once was. Anyway.

All right, Ben. I got it. I have another bone to pick with Apple if you could believe it or not. All right. I have a, I have speakers in my backyard. I have to go into the Sonos app to change the volume. I can't, I can't use the volume on my phone to control the speaker, the speaker volume. Is that some shit? That's a Sonos problem, not an Apple problem. Don't blame Apple for that.

Apple blocks it. Wait, tell me why. Because the Sonos app is awful. I have Sonos as well. It's terrible. That's a Sonos problem, not an Apple problem. I'm pretty sure that Apple will not allow you to do it. I don't know. I think the Sonos app is just really, they made a change like two years ago,

and it pissed everyone off because it stopped working. All right. I'm a new to Sonos. Okay. I have a love-hate relationship with youth sports. I've talked about it here before. The whole, like, I have some friends who, we have both my daughters in club soccer, and they travel a little bit. And my friends, like, talk about it like, like, I'm an idiot. Like, I can't believe anyone would ever do that. Like, at, like, age seven, these kids have to start doing tryouts, which seems like not even fair. Like, why do we have to have,

and like, you're on the best team and you're on the second best team, you're in the third best team, which is actually the worst team. And then you have to travel to these places and there's games all weekends. And like, we went to a tournament in Traverse City this weekend.

There was 35 soccer fields, all going on at once. 35? 35 fields. There's one road that goes into this place to park. So the parking was an absolute nightmare. We're dealing with lightning delays and rain. and, you know, then it got hot, and it's like, you know, we travel two enough hours to get there.

It's like, why do we do this? And then my little princess Kate, she's eight years old, just turned nine. And the very first game was really close. We were down two to nothing, then we scored and tied two to two. And, you know, the only people watching these games are, of course, parents from grandparents. So there's 20 people in sideline. And my daughter kicked in the winning goal. Basically as time expired, which doesn't happen in soccer.

And she's not the star player, you know? She's not the one that, like, scores other goals. and I saw the smile on her face and that was like, oh, this is why we do it. This is when it clicks like, oh, the look on her face, like, I don't care if they win or lose. I don't care if they score. I just care that they try hard.

But when they're happy, that's why you do it because they're so happy. It was like the create, like she scored and then they blew the list like, that's game. And usually you don't have like a buzzer beater in soccer, you know? And then they went on and won the championship for their thing. And like the smile on her face was like, oh, this is why we do this. Because it makes your kid smile.

I still wouldn't go. That's great. Anyway. That's great. All right. By the way, I got a few emails. So the reason, so the reason I had a few people email me about me leaving the parents, the flag football chat. They said, Michael, just mute your phone.

I said, hey, were you not listening? I muted the conversation. Apparently, if there are non-Iphone users in the group chat, they sneak through and ding your phone. Darn Andrew people. So did you leave the chat? Of course I left the chat. Okay. did Robin give you flak about it?

Like, hey, I saw you left the chat. No, no, no. Well, people were making fun of me in the chat. Ah. So Robin was like, I'm so embarrassed. I think you come out looking cool on that, though. Okay, all right. Recommendations.

Speaking of, like, the whole gratitude thing, I've got two, I think I listened to the best podcast of the year this week. And I hear many people talk about it, but Ted Danson and Woody Harrelson have a podcast called where everyone, yes, isn't that crazy? so Woody Harrelson barely comes on but Ted Danson interviews celebrities and so there's a podcast this week

with Ted Danson, Woody Harrelson, and Harrison Ford and oh my God, it was awesome. What's the name of the show? Where everybody knows your name, I think. Everybody knows something like that. I'm gonna find it right now. I don't know that maybe he's been on him before I don't think I've ever heard Harrison Ford on a podcast before

and as a guy who's quite possibly the biggest actor of the past, arguably of the past 50 years, maybe one of the most important of the past 50 years. You've seen him on interviews before. He's very self-deprecating. He hates talking about himself. He hates talking about movies. But he was with two other, you know, really big actors

talking about the craft. And I think Harrison Ford might be the coolest guy alive. I can't wait to listen to it. It is, and like him, he drops F-bombs a lot, which is kind of funny. He sounds like a guy that you just love to have a beer with. But his whole thing is he hates talking about himself. He can have the biggest ego in the world.

But he talks about how gratefully is for like and how lucky he was. Well, he was lucky. He was, he was Brad Pitt and once upon a time in Hollywood. Yes, he was a carpenter. He was the guy building celebrities' houses on the roof, probably smoking a cigarette, looking all cool with his shirt off. Yes. Easily one of the coolest guys ever.

Yes, easily. And so he has this, he has this aura of gratitude. It's like, that's how you find happiness with success is you have gratitude. So the other one I'm watching is Marty, Life is Short on Netflix. So it's a Martin Short documentary. So I've now seen the John Candy one recently. Steve Martin had a great documentary. And all these kind of intersect

because they knew each other. And the Martin Short one on Netflix, it's not that long. It's like an hour and 40 minutes. And same thing. He is a very grateful guy for what he has and all the success he has. And he seems like well grounded.

And it's great. But just the old stories of Eugene Levy and Martin Short and Dan Aykroyd and John Candy and Catherine O'Hara and Gilda Radner, all these people coming together at the same time in their 20s to create comedy.

It's, anyway, really like, I've read his book before, and I just really like his outlook on life. Very cool. Both of those guys. All right, I was hesitant to recommend the show because it is extraordinarily dark. All right?

It is not an uplifting show, and it's quite graphic. It's called Halfman. It's on HBO. It's a miniseries. But you think I would like it? I'm pretty sure you would like it. Okay.

It's by this guy Richard Gad, who did Baby Reindeer, which was a phenomenon. I didn't see that show. I've never heard of it. Here's a description. When Niles' estranged brother, Rubin, shows up at his wedding, it leads to an explosion of violence

that catapults us back through their lives from the 80s to the present day. And it is intense. It's something. Okay. But it's a mini-series. Six episodes. You can sign up for that.

It's a strong wreck from me. But yeah, it's graphic. Very graphic. Okay. All right. Stockmark check. Stock markets down again. Good.

We could use a correction. Yeah. I always say this. We could, though. Well, I don't say we could use a correction when we're in one. That's true. When we're in a correction, I say, please stop. This isn't fun.

All right, animal spirits at the compound news.com. Thank you for the emails. Thank you for listening. We'll see you next time.