Animal Spirits Podcast - The Zero Dollar Club (EP. 435)

Episode Date: October 22, 2025

On episode 435 of Animal Spirits, ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Michael Batnick⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Ben Carlson⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ discuss AI bubble indicators, what Jesse Livermore would think about this market, the pros and cons of owning gold, chart crimes, why the financial media is so negative, 5x leveraged ETFs, heavily shorted stocks are outperforming, will Bitcoin hit $200k by 2027, consumers are still in good shape, $50k new cars, Michael's top 10 horror movies and more. This episode is sponsored by YCharts and Fabric by Gerber Life. Get 20% off your initial YCharts Professional subscription when you start your free YCharts trial through Animal Spirits (new customers only). Sign up at: https://go.ycharts.com/animal-spirits Join the thousands of parents who trust Fabric to help protect their family. Apply today in just minutes at: https://meetfabric.com/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

Today's Animal Spirits is brought to you by Y Charts. After a decade of near zero rates, bonds are back in the spotlight, which means clients are asking tougher questions. Is credit risk rising? How do ladders compare to funds? Are my income strategy still holding up? That's why Y Charts just rolled out bond level data on more than six million securities integrated right into the same platform. Top advice is already used for equities, funds, and proposals. With this update, you can quickly spot credit and duration risk, illustrate ladders versus funds with client-ready visuals, and deliver proposals that show the full portfolio picture, not just the equity sleeve.

This is cool. A lot of advisors love the individual bond security, so to clients. So tons of advisors are already taking advantage of this data. So check it out for yourself today and get 20% off your initial white charts, professional subscription when you start your free whitecharts trial through animal spirits, new customers only. Today's episode is also brought to you by Fabric by Gerber Life. Ben, when I first had my kids, I think I waited too long to get life insurance.

Maybe not too bad, six months. I mean, I didn't die, so no harm to foul. But in my defense, running a household, it's a lot, especially with kids, and I run it. You might have a plan for daily chaos, but do you have a plan to protect your family's financial future? If not, Fabric can help. Fabric by Gerber Life, the term life insurance you can get done today, made for busy parents like you, and me and Michael. All online on your schedule, right from your couch, you could be covered in under 10 minutes with no health exam required. If you've got kids, and especially if you're young and healthy, the time to lock in low rates is now.

They have over 1,900, 5-star reviews on TrustPilot with a rating of excellent. Join the thousands of parents who trust Fabric to help protect their family applied today in just minutes at meetfabric.com slash spirits. That's meatfabric.com slash spirits. Policies issued by Western Southern Life Assurance Company. Not available in certain states. Prices is subject to underwriting and health questions. 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, I told you, I know you didn't want to talk about the AI bubble anymore, but I want to talk more about sentiment in general. Hold on. You're putting charts into my into my doc. I never said that. I never said I don't want to talk about the AI thing anymore. I merely said I feel like it's all we're talking about. Can't avoid it. Oh, okay. Two weeks ago, you said you wanted to do an entire episode with no AI talk, remember? Impossible. Do you forget this already? Failed. Failed. All right. So I want to talk about the difficulty engaging sentiment these days. So Bloomberg has this chart, and they show that the S&P has gone nearly a 100 days out of 5% pullback. And the average is around 97. So we're right about

there, which is kind of crazy. It's been that long. This whole article was about, like, hey, listen, turbulence ahead, expect more volatility. We haven't had this 5% correction. It's coming. Do you look at these AI takeaways from all these articles now? It's like the very top of every article now, Wall Street Journal, Bloomberg, AI takeaways. Nope, I still read the articles manually. Okay.

The whole thing is just talking about how, like, stocks are due for a pullback. It's, you know, my wife is still a today's show watcher. Which one does your wife watch? Good morning, America. Yeah. So everyone has their one. wife has, she doesn't even watch it really, it's just on in the background, okay? And she had it on, I think this was Sunday morning. And the whole, they had a whole expose piece, Willie Geist

talking about, are we in an AI bubble? I did a little screenshot here of my TV. It's weird because on the one hand, you'd say, listen, no bubble in history has ever had so many people call it in advance. But I think you could also say no bubble in history has ever had this many people that are giving opinions all the time. So I'm reading, I'm listening to, not reading, the 1929 book by Andrew Ross Sorkin. Is that one on your list? I'm going to do it the old-fashioned way. I'm going to read it.

Okay. Way too long. How many pages is it? It's way too long for me to read, so I had to listen to it. Credit to him. I didn't even look at the back yet until just now. He's got Ron Chernow, Walter Isaacson, Beverly Gage, and John Meacham writing reviews. That's the Mount Rushmore reviewers.

Okay, that makes sense because this feels like a biography in the sense that there could have been some stuff in the chopping, cutting room floor, okay? no offense, that's how I feel about all biographies, right? But this is, it's a story, and I'm a huge fan of the reading about the Great Depression. It'd be weird to say I'm a fan of the Great Depression because that's obviously a really bad time and history of our country, but it's way more stories

and anecdotes than I ever thought before, but there's a really, in a ton of good characters, and there's some that's a little too much, but then you hear these anecdotes and stories you never heard before. So he has a whole chapter on Jesse Livermore, which is excellent. And he talks about how there was this story in the New York Times in 1929,

called the magnet of dancing stock prices. And I actually found this. I think you showed me this. It was a New York Times has their archive, right? So I pulled up the actual story. And it's funny because a lot of it does. And people keep asking Sorkin about, like, does this period, time period,

kind of make you feel like the 1929 peak a little bit? And so this is from the article. Despite setbacks, the broker's wires again become clogged with orders for stocks from all parts of the country. Tips fly about freely. Violent advances and declines and leading issues are a daily occurrence. This is the best part that reminds me of today.

It is quite true that the people who know the least about the stock market have made the most money out of it in the last few months. And Jesse Livermore stepped in, and he essentially said, I'm using this as a contrarian indicator. All the amateurs are making more money than the pros. I'm shorting the market. And he did.

He made like a hundred million, I think in $19.29. And he made a ton of money. And this is a quote from the article that I've never heard before. He said, stocks could be beat, but no one can beat the stock market. So that was a really good Yeah, I've never heard that one before. It's really, really good.

Yeah. So anyway, it talks about how he used this and he uses this sentiment shift to short the stock market made a ton of money. Can I ask you a question? You think Livermore was a there he is

or was he of that guy? Well, they said he really like to show off his apartments and his cars and his nice clothes and so he might have been this fucking guy. Yeah, he wants to. wanted to be, oh, there he, oh, there he is, one of those guys. But anyway, I just, my whole thinking is, I don't think that you can use these indicators as well anymore as you did in the

past, because there's just so much of it everywhere. It was, it was very confined in the past. You wouldn't, it wouldn't be shoved in your face all the time. I'm glad to hear you mentioned that because I feel like the noise of the sentiment, that's, I've been on that corner for a while now, and you could look at 10 different pieces of information data and make 10 different conclusions. Now, of course, the best is to just make it composite. But even then, which investors are you talking about? I've said this a million times.

Are you looking at Schwab investors? Because their S-tax report paints a lot much different picture than what you're seeing on Reddit or Wall Street bets or the Robin type of younger. And then to the point about the media, the media covers the stories and the bigger the story, the better their ratings. And so they are dying.

for a bust, right? Like, that would be a very, that would be a great story. So I think you're 100% right. It's just, it's very difficult to talk about indicators the way that we used to, because how many over the last decade

have we, could we point to? Now, listen, once in a while, they work, obviously, right? Like, they're not, they don't all not work. Right. But I keep coming back to Jensen Wang

signing a bra and the Nvidia watch party. Was that two years ago at this point? Right. Now, if you zoom out. instances like, yeah. If you zoom out and this does become an 80% washout, which I very much don't think is going to happen. But if that were to happen in the future, 50 years from that, people are reading about

today, well, it doesn't matter if these indicators were 24 months early in the grand scheme of things. Yeah, but to your point about the financial media, I've made the point that the financial media was cheerleaders for the dot-com bubble and no one in the financial media called the 2008 crisis. Well, they were all caught flat with it. They don't want to be embarrassed again. Yeah.

So the fact that the financial media is more negative about everything going on, right? And pointing out all the risks all the time, there's a reason for that. That's learned from past behavior. But I think it's funny, though, because you see, so right now the worry is, what, regional banks and BDCs and maybe private credit. And there's so many of these worries. I put this chart in here about the 10-year treasury yield back under 4%. Remember three months ago when people thought, treasuries are at 5%.

That means we're imposing fiscal discipline and bond vigilantes. And here we go. Inflation is taking off. And I think all these little things people worry about, I think it's worth reminding people that the majority of them just kind of fall by the wayside of people forget like, oh, remember when we were worried about that? It doesn't matter anymore.

Well, that's got to be your default position for most things. Now, it doesn't mean that you're being complacent and you're not worried about risk. because as investors, risk should be first and returns should be, who cares? They'll take care of themselves. So you have to be disciplined and it's not to be, oh, nothing matters.

But it's okay. How about this? If there's two extremes, everything matters and nothing matters, probably nothing matters is the better default position. And that's where I landed on this, this BDC stuff.

I've been doing a lot of reading on it. And the truth is we're all guessing. Nobody knows, nobody knows where the cockwitches are, nobody's reading the loan documents. I know as much as everybody else. I read the same shit. How about this? Sometimes there is,

only one cockroach. Sometimes it is your first rodeo, and sometimes you haven't seen the movie yet, and you don't know how it ends. How's that? Yeah, I love it, Ben. But the, so my default position with this is, yeah, there's some bad behavior going on, and there's some, there's some bad loans being made. I've no doubt about it. There's no doubt about it. There's too much money coming to the space. People are lack of days ago. There's no, I have no doubt about it. But does that mean that this is systemic risk that is going to take down the financial system? and BDCs at the Canary and the Coal Line? Maybe it could happen, right?

We'll see. But I don't, that can't be that your default case, unless you really know something that everybody else doesn't, unless you really know. I'm sick of people warning me about systemic risks. Like, I'm at the show me point of stop telling me this could lead to something down the line. Show me when it does. That's where I am at because everything that people have warned us about,

none of it has mattered. Right? None of it. Most of it. All right. Speaking of hedging systemic risk. I wrote a blog post about why I don't own any gold. And it's a tough position to be in because, so here's our friend, Medfavor.

Yeah, I would not be pounded the table on why we don't, we don't own gold. Like it's, you know, gold is kicking ass. I'm not pounding the table. I want to explain myself. So Meb Faber says, listen to a suite, going to be a lot of uncomfortable conversations at year end when people ask why their portfolio manager or advisor doesn't own any gold, Ben and Menace this year. So I thought, like, perfect time to explain the reasons behind why I personally don't

own any. Well, we don't want gold for clients, and there's, there's people that are asking about it. Yeah. People are certainly asking about it. Because gold is a headline asset. Here's the, yes, it is, when it's doing well or when it's not doing well. Here's the thing, though, like when Meb says, there's going to be a lot of uncomfortable conversations, you could say that every single year about any single asset class. Why don't we own Bitcoin? Why don't we own biotech stocks? Why don't we own? But gold, gold is a different piece than all of those things. Gold is not biotech stocks. Because gold is, when gold is flashing on the front pages of the, of the paper of the USA Today,

it gives potentially uncomfortable feelings about the system, about the dollar, about confidence in the economy, in the political system, like it is its own beast. And people don't ask about biotech stocks or any other asset class the way that they don't ask about it. Yeah. And I heard from, there was some crazy gold people who gave me the business a little bit on this. And it's funny because the real true gold bugs, it's funny. Even when gold is working, they're not happy. Right? They're not, because it's like, of course, the system's going to, the system hasn't failed yet. Like, they want the system to fail. That's going to tend to me happy.

But there's a lot of people who wrote me and said, listen, I put five to 10% in gold as an insurance. A lot of people say, use the word insurance for me, for why they own gold. And I thought that, that's a, that's a completely fair reason. It's a hedge. It's an insurance. It's, it's the dollar falling. It's all this stuff. All valid. And I get it. And gold is one of the most unique asset classes that there is. It really does march to its own beat. And I think, so like the case, I tried to paint a nuanced picture here. Like, I totally understand the case for owning gold. I mean, I do think, I do think last week, you were a bit harsh on this podcast saying that, like, none of what

they said came true. Like, it felt like, uh, it felt beneath, beneath you. You're punched people when they're winning. It felt, it didn't feel, didn't feel great. Okay. Listen, I just, I, it was, it's more the charts than anything. The church, I was, I was, I was, I know where you're coming from. You're thinking like, oh, the dollar's going to blow up and the system's went to meltdown and therefore gold is going to be your savior. I know what you were saying, but in a vacuum, it felt, it felt harsh. Okay. I am an optimistic person.

I'm anti-dumerism. So maybe that's where I'm coming from is that I don't like the people who are constantly trying to use scare tactics. And so that's like- Same page, of course. Those chart crimes and stuff just kind of are, but listen, the people who own 5, 10, 15% or 20% in gold or whatever, obviously they don't think the system's going to fall. It's a diversification, volatility, rebalancing, because that piece makes sense to me.

Obviously, like I get that from a portfolio management perspective. Here, let me just walk through why I don't, my personal opinion on it. So I did this thing in the, in my post where I looked at the return history of gold. And gold went crazy in the 70s, mainly because Nixon ended the peg to gold with a dollar, right? So it was up like 1,400%. So that it's a huge, and it was playing catch up because it was pegged all those years. I feel like that that whole period, the bubble and the aftermath sort of has to be removed from history. because it is a true one of one will never happen again.

So it's almost like irrelevant a little bit. Now, I know it also coincided with inflation. And so that's part of the story. So he can't do that part of a bit. And oil price shocks. And so, but my point is, if you look at gold in the 80s, 90s, 2000s, and 2010s, you had three out of four decades where gold was in a lost decade. So in the 80s and 90s, gold, and obviously part of that was the overhang from the 70s.

But that whole period, I'll be honest, that whole three of four decades of having a lost decade and going nowhere. Now you can say I'm cherry picking, because if you start in 2000, hey, gold looks pretty good. You're starting 2020. Like, there's time periods where gold does look better. I just, that whole period of multiple decades in a row where you have, you go nowhere. And now, some other people said, listen, you're comparing gold to stocks.

That's the wrong comparison. Compare gold to bonds. And if you look at the long history, like Demoderin has the return history going back to 1928 for gold. And actually, gold returns going back that long. are closer to bond returns, actually. And obviously, some people would say, well, why do you have to choose?

I could do gold, and I could do bonds, and I could do both. And you don't. So, and I'll be honest, I was wrong about this. I kind of thought Bitcoin would take the shine, pun intended, off of gold a little bit. So it surprises me that Bitcoin didn't knock gold down a peg.

Because I'm more of a, I guess, a techno optimist, and I would have thought Bitcoin would have had a bigger impact on gold. So I was wrong about that. But that's the reason. It's more of a... market history thing for me than than anything. And the people own it, I understand it. But I just, I personally

could never wrap my head around it. Fair. Anything to add? Um, I mean, this is, it's such a big conversation. It's like, I feel like you can spend an hour on this. There's a great book, The History of Gold, or the Power of Gold by Peter Bernstein. Yeah, gold is an interesting unique.

And it's been around for thousands of years, too, so that that could be part of it. I guess the only, yeah, listen, I mostly, I mostly agree with you. I don't want old gold either. We don't know for our clients. So we're on the same page. The thing that it's like, again, the decade of the 80s, you really have to take with the grain of salt because that happened after one of the greatest runs of all time, right? So I think it's more fair to look at like maybe rolling returns or how it diversifies

the 6040 portfolio. Do you need gold? Obviously, we don't think so. Do I wish we own gold this year? Absolutely. I guess like anything else, I would say that know why you own. it. If you don't, if you didn't own it now, is now the best time to really dive in. I mean, probably not. I think that's the point. But there's, I think there's always going to be something

that you go, man, I wish I owned that. So, so, uh, Verdad Capital did this really cool chart where they show the U.S. equity market in a 6040 portfolio going back to 1975. And they look at what was the diversifying asset. And you see that, see these colors how it changes. So it's, in some instances, it was international equities and reits and gold and factors and fixed income and commodities, and it changes every two to three years, where it's like, this is the diversifying asset. Now, you could say, listen, I'm going to own them all. And as someone who is a diversified investor, I like being widely diversified, but I also don't think that you can own everything. Remember following 2008 crisis in 2010s, everyone talked about how you need to own managed futures.

And some people will say, listen, you have gold and managed futures, and you'll be fine. Do that just do it trend following. But to me, that was like, I understand the appeal for managed teachers, it just doesn't fit in my portfolio purview. And that's okay. I mean, you can't be okay not owning everything. Right. You can own everything. You definitely can. But if you do, depending on the wrapper in which you own it and the visibility in which you own it, there is a high degree of likelihood that at some point you're going to rip something out because it just doesn't work. Or I'm using air quotes. It hasn't worked over X period of time. And the more you expose yourself to different asset classes, the more likely you are, not everybody,

but in general, the more likely you point to something and say, get rid of this piece of shit, it's not working, why do I own it? That's the thing. And the problem is you do that and then you add something else that just did well, and then you're investing in the rear view here. That's the problem.

So, yeah, you just have to be comfortable about what you own and why you own it. For sure. I understand my people on gold. I just personally don't. That's all. Yep. Okay.

Remember this chart? Mike Bird tweeted. Who remember those Fed balance sheet as a P500 charts? You don't see those so much anymore. And it was, yeah, it's funny. Yeah, great chart. This was the thing.

It was all liquidity, fed-induced liquidity, and I'm not saying that wasn't part of the story because it absolutely was, but clearly it wasn't the whole story. And I mean, AI, my God. I can't not bring it back to that because it's true. Absent, absent open AI and what they're doing

in the arms race, maybe this would have, maybe this chart, in fact, not maybe, this chart would have looked a lot different. It is highly possible that the S&M, would have followed this chart, and this relationship would have appeared to be rock solid. Were you a Scooby-Doo watcher when you grew up? Oh, yeah.

Okay. So at the end of every episode, they would, the bad guy would say, and I would have got, he would tell his whole plan, he said, and I would have gotten away with it. It wasn't for those darn kids and that dog, right? That's the stock market of the U.S. economy. It's always the bad guy saying I would have gotten away with it if dot, dot, dot, dot, dot, dot. It seems like there's always something. And eventually there won't be something.

Sometimes those cries are more valid than others. And I feel like this time, it is valid. I think that absent Open AI, the stock market would not have bottomed in October 2022. And we would be singing a different story. Yeah. But my point is the U.S. economy, it's almost always something that saves us. You're right.

And speaking of October 22, last week we spoke about the fun you have debating when a bare market started when a bear market ended, when a bull market started. Well, it is unequivocally true that the market did bottom three years ago. And Yuri and Timmer wrote a piece on where we are, year three of the bull market. The bull turns three. So this next segment is sponsored by Fidelity Trader Plus. They allow you to trade seamlessly, cross all your devices from anywhere. If you want to learn more, check out Fidelity Trader Plus.

let's look at some of Euryan's charts in this note that he put out. Some of the best charts in the game, too. He's, um, does he have the crown? I mean, they just looked the, I don't know how he does it, but, um, and if you missed it, he was on Ascent Compot with me a couple weeks ago. We just did a whole thing where I just, we went through all of his charts. Yeah, you know what?

It was fantastic. You know what? I think you could crown him. He's certainly on Mount Rushmore, but he's, um, yeah, he's the king of charts as far as the good thing is, is that no one's charts look like his. Yeah, yeah, yeah. All right, so the first chart that I wanted to pull out, He looks at cyclical bull markets, the median length, and he does them with dots.

And the size of the dots represent the cape ratio over that period of time. I've never seen it broken down this way. So this chart also, it adjusts for inflation. So look at like, for example, look at the 1978 cyclical bull market. Look at how tiny those dots were. Oh, okay. Money, right? So I think what stands out to me on this chart is this is right down the fairway.

Because there's another line, and you just go to the show notes to take a look at this if you're not watching the video. There's another line that shows like the average path or like a band. And this is filing with a two a T. That's interesting. So this is, so we had a textbook bare market, like non-recessionary bear market. And this is now a textbook bull market coming out of it. Here's another great one. So Urian says the first year of a bull market typically begins with P.E. expansion.

as price, discounts, and earnings recovery. And then in year two, the baton gets passed to earnings growth as valuation compresses. Not this one. So take a look at this. I've never seen it broken down this way. He's showing the price from the low. He's showing the PE from the low. And then he's showing the earnings per share from the low.

And the price, as we mentioned already, right down the fairway, the PE on the higher side. and earnings growth pretty much steady as it goes, like right in the middle, then the next chart shows this. And this is the key takeaway, at least for me, for as much as we talk about bubble, euphoria, expensive stocks, peak earnings, and maybe. Look at this. So, Eurian's chart shows the stock market on top and on the lower pane. He shows the EPS growth. and the P.E. over year. The P.E. has only grown by 1% over the past 12 months. Only 1%.

Not a lot of multiple expansion there. 11% earnings growth. So yeah, this recent period has been almost all earnings driven. It's fundamentally driven, right? That's good. And exactly what you want to say. And it's not a huge spread either, right? It's pretty, there's a lot of huge spreads on this chart.

So look at what happened like in, the rebound in November in the spring in the summer of 2020 that was all multiple expansion you had earnings shrieking duh right obviously and you had PE's supporting

the entire rally right which is because in 2022 the PE ratio dropped by a considerable amount and that was an interesting observation too in 22 obviously multiples got crushed and earnings yeah earnings fell certainly

or they came off the highs let's say Another weird period in time. You know, everything's a weird period in time. Yes. No, this, if you look at just compresses to this decade, just look at, it's crazy. It's all overlapped.

And obviously, that's the COVID and supply shock and inflation and all that stuff. If anything, the most normal part of the period is right now, right? The last six, 12 months or so. Sure feels. Everything before that was crazy. That was a JK. All right. Balchun has tweeted $1 trillion with two and a half months to go.

He's talking about ETF flows. Unbelievable. Unbelievable. So look at the biggest flows. V-O-O-I-V-V-V-S-Gov and VTI, and then I-Bit, which is the Bitcoin. So three out of the four are just big stock market ETFs and then short-term treasuries? Keep asking this question. I don't know that there's an answer that's not very simple.

Where is all this money coming from? I mean, listen, part of it just has to be inflation, doesn't it? It is funny at three out of the top four S&P 500, but... No, no, no, I'm saying, like, the fund flows. Like, is it merely earnings, like American people are earning a lot of money and then putting it into the stock market? So if we're looking at... I'm sure that's obviously the biggest source of it, like, duh, but it just seems like so much

money. I would need to study this further, but how much of this could possibly be baby boomers retiring, rolling over 401Ks, into IRAs, and that money is going into ETFs, and money going into financial advisors. That's a strong head. You need to see the other side of the equation with mutual funds to understand that. Okay. But yeah, you know what? That's a theory. That's a, I'm going to say what, that's obvious. That is 100% happening. That's probably part of it. So is that two-thirds of the pie or maybe more? Or, I mean, think about our business. When we have people come to us

who have individual stock holdings that they made a ton of money on, what do we, what do they want to do with that, diversify it, out of the concentrated position, into funds or, right? So I think that's probably part of it. It's not the whole thing. It's part of it, though. Well, hold on. Maybe two-thirds is underestimating it. It's earnings and it's, and it's that. What, what other pieces can there be? Were the money telling from? Where else would it come from? Where else would it come from? Right. Maybe just, yeah. earnings and the 401K stuff. All right. We cracked the code. Good stuff, Ben. This is a great one. Since 2020, the value of equities, who tweeted, Daily Travert, the value of equities held by households has risen 300% for households under 40, 542% for the

final 50% of households, and 50% for the middle 40%, the 10% to 50% of households. This is via Citadel Rubner. This is a wonderful chart. That's really good. This is really good. So the value of equities held by the middle 40%. That is steady as it goes, for the most part. there was an inflection in 2020, but the under 40, this chart is worrisome, and I love, I love that people are in the game. I love that they're speculating. Wait, wait, wait, you're worried about this? I think this is fantastic news.

No, no, no. Worried, I don't know if that's the right word. Let's just say that I think that this one is the most susceptible to drop dramatically. Okay, that's fair. Because as a lot of these D-Gen names, and I don't mean that disparagingly, I would assume that this is not cool to say. But listen, I'm sorry. I don't know what else to call it. A lot of these non-profitable names that have gone up into the right, which is what this crowd owns, they are going to crash. So I think my thesis is, and again, I think this is fantastic news that younger people are

more represented by the stock market. This is great. So do I. By the way, three trillion. That's a hell of a lot of money. Wow. If you look historically, it takes a really bad period for young people to throw their hands and give up. So after the 70s, when the death of equities happened, it was young people who gave up. Older investors stayed invested. Young investors said, I'm out of here. After the 2008 crisis and we saw two 50% crashes, it was young people and millennials that said, I'm done with the stock market forever. So I think it would take, especially since people are more diamond handsy these days and used to crashes, I think it would take an extended period and probably a financial crisis to get young people to say,

all right, I give up. I'm tapping out. 100% concur. Can I take umbrage with something that I just said? Now, I've mentioned this in the past, but it's been a while. So for newer listeners, there's times that I say stuff on the show that I acknowledge sounds completely idiotic and I'm about to do it, where I will listen back to something I said two days ago and said, whoa, whoa, whoa, nope, you're wrong. And it's me. I'm calling myself out.

So we've got takes flying all over the place. So if you disagree with something that I said, there's probably a good chance that I would say, yeah, you're right. That was stupid. All right. So what do I disagree with myself? 30 seconds ago about, this inflection point that you saw in 2020, I think that if you were to look at the aggregate holdings of this younger cohort, it most likely is dominated by the Mag 7 names,

okay? It is most likely dominated by the blue chippers. There's probably more ETFs and index funds in here than most people realize. Yeah. So it's not to say that those can't fall 50%, of course they can. But the names that I would just referencing, the nuclear, the uranium, the quantum computing, all the names that are up 1,000 percent of the last 12 months, that's the names that I think are at some point going to crash. And I also think that that is probably a relatively small, let's call it less than 10 percent slice of the pie. Right. Yeah. These people are the, these people are the gamblers, too. They're on the Reddit or they're on their sports stuff gambling. Like, this is just, I don't think that crowd is going to

take a really bad bear market to get that crowd. Yeah. And now I also think that these people are smart. Like they know what they're doing. They know that the music is playing. Now there's some true believers who think that these companies are the future. Maybe they are. And they've also, they've jumped from the meme stocks of GameStop and AMC to these

other, to AI stocks to quantum computing to like these people, these people who are speculating and stuff, they've been jumping from idea to idea. They haven't been stuck in something. I have been making a hell of a lot of money. So I don't begrudge. This is not shot in for it. If it doesn't crash, I would do it. Great.

Wonderful. Credit to you for saying that word correctly, because it's always hard for me. Yeah, no, I have no rooting interest for these people to lose money. I don't like when people lose money. All right. So at Speculator underscore I.O.

tweeted a list of these companies. It's called the $0. And there's a... Wait, why is it zero? Because they don't make any money? That's right, then. That's wild, huh? Forget about money losing companies.

like companies that like basically have little to no revenue like serve robotics is on here we've joking about that because because i think there's a name that josh might have owned in the past um we were looking at their earnings report and it was it like 400 000 a r i mean it's like a it's like a it's like a it's like a it's like a it's funny that on this chart they list price to sales and price to earnings for everyone is at n a and then it shows the year they returns and it's just it's hilarious i mean absolutely a wild scene here so so so Obviously, and I don't follow these DGEN sacks very closely. The market caps for these were pretty small to begin with,

but now they're all, like, relatively large companies. Yeah. Look at the size of the market caps on these things. Yeah, dude, these are not small names. They're not tiny anymore. So what's the biggest name on here? AST Space Mobile. AST is the ticker.

I will admit, I am not familiar with this name. This is a young man's game, and I'm no longer a young man. That's $35 billion. Acklo is $25 billion. Raghetti is 18. Quantum Scape is 10. Joby is 15. Big companies now.

Listen, these allegedly are going to be the companies that change the world. So I'm hoping that they work. Okay? I don't get a twisted. I am not looking to pound my chest if these names crash.

I think everybody's consensus at these names are crash. There's no way that a pasta is going to change the world. Raghetti computing is never going to change the world. I'm willing to say that. I'll also say like, there is a reason that these stocks are doing what they're doing. And now there's always a reason. And it doesn't mean that it's not being taken 3,000 steps too far. But there's a reason.

So Morgan Stanley has a national security index. Who tweeted this? I want to give this person credit. Dividend talks. So 39 companies across four major industries worth watching. They're looking at nuclear energy and uranium batteries and energy storage, rare earth and strategic metals and lithium. And a lot of these names are in this list. And so if these are deemed to be national security type stocks and the government gets involved, then puts them on our balance sheet, L-O-L-O-L-O-L-O. Maybe the valuations might not make sense, but maybe they might be elevated for a reason. So getting back to my Scooby-Doo analogy, with all this stuff you're seeing, like if this

economic recovery or economic expansion continues. in the years ahead, people are going to go, well, if it wasn't for robotics and if it wasn't for self-driving cars and if it wasn't for all this new energy sources, the economy and the stock market would have rolled over. That's going to be the story if this thing continues, right? It's kind of crazy to think, we're people are debating the AI bubble, but we haven't even got the robotic side of the things yet. Yeah. Like, I actually think, here's my take. I think if an AI bubble does burst, I think it will be a glorious, glorious buying opportunity because the AI stuff is going to work eventually. Robotics is coming along. Like you could, if there's a 20 to

30 percent bear market because the AI stuff gets too far ahead of itself, it is going to be an unbelievable buying opportunity for the years ahead. I need a humanoid in my house that I can do all sorts of tasks, one of them, electrician, plumber, cleaner, all this sort of stuff. I need somebody, I need a robot to look at my Wi-Fi connection and figure out what the hell is going on, because I've had Verizon in here three times. And, you know, know these extenders, there's, I used to have an orbie at my old house now. I've got these eros. Are they just complete, are they just selling a shit because we buy it? I can't prove that it works. I can't even prove that it's on. I see a yellow light. It's not working. Yeah, I use

some Google ones. I agree. It's hard to tell if it really makes your Wi-Fi better or not. I just feel like this. I've got two or three of those throughout my house too. I really don't know. This is the American consumer. Oh, an extender. Yeah, I need that. Yeah, extend. It doesn't work. That is true. I don't know. Think about, I've said this before. All the baby boomers in years ahead when they when they get to old age and need to be helped like we're going to need we're literally going to need robots to take care of them in old age because they're never going to leave their house

right like millennials aren't are too selfish to take care of them sorry millennials it's true yeah we're going to need robots to help take care of people all right here's this this is worrisome to me a million people tweeted this out uh ETF tracker says this there's 13 new five times single stock ETS or just filed with the SEC, AMD and Amazon and coin and Google and strategy and NVIDIA and Pallenteer and Tesla and all the companies that you know. And Ether, wait, so what happens on the day that Ether felt had a 30% drawdown? Does this five times leverage?

Does this, do you owe this company, do you owe the stock exchange money? How does this work? I mean, a million people made this joke, but this is the onion headline of Gillette saying, we're doing five blades, which they did eventually. But I, come on, what are we doing here? This is the kind of thing to me that is going to lead to a flash crash someday. Like, there's taking stuff too far. Yeah.

Yeah, this is crazy talk. I also don't know how much I'm bothered by it. I would want somebody, I would want, like, Nodick to say, like, dude, this is the type of stuff, to Ben's point, that does flash crash assistant. Because in a vacuum, I don't give a shit about people gambling, because that's clearly what this is, right? And that's, like, obviously, the world that we live in, and so to each their own. Definitely be people that use these. Now, if this poses like market structure risk, then ban it immediately. To that point, Dave Dondek does weigh in here and he says, if I was making odds here,

I suspect that these will be nixed by the SEC staff as soon as they come back to work and clear off their deaths. There's a government shutdown. Dave says, but that's part of the strategy. Thanks to the ETF Rule 6C11 and recent generic listing standards, as crazy as these filings may seem, they are actually, quote, normal and thus at the SEC. doesn't explicitly kibosh them, they go live at 75 days. If this shutdown drags into the end of the year, a whole lot of products are just

going to appear without a weather eye, and it will all come down to how conservative velocity, all right, whatever, this is crazy town. So if their strategy is to sneak it through while the government is shut down, and I guess from a business point of view, kudos to them, right? Like, you know, they're doing business and this is business. But my goodness, if this is where we are, this is, uh, yeah. I don't love it. I get it.

People are going to do what they want, and the pendulum obviously just keep swinging. I just, if we're going to get the deregulation, can we please make it in places where it matters, especially the housing market? Just, like, is the deregulation really just going to be we're going to let people blow themselves up with these different strategies? Yeah. Let's make it easier to build houses. Come on, what are we doing here? All right, there was an article in the journal, China.

Betting it can win a trade war is playing hardball with Trump. Last week, Beijing imposed sweeping restrictions on the export of rare earth minerals, which are vital to consumer electronics in the tech industry. Trump then thrown in the additional 100% tariffs on China. All right. So China knows what they're doing, right? They're trying to mess with our stock market. They know that Trump is going to cave. I mean, they have seen this movie before.

They do know how it ends. It's now Taco Day. It's not just Taco Tuesday. It's taco seven days a week. And speaking of China, I just want to make one thing. Last week we spoke about Beijing versus the United States. The book, Breakneck, who's going to win? And when I said those people about China, just to be very clear, I don't mean

the Chinese people. I mean the government. right i'm not dispatching a whole nation oh because they control everything yeah i'm not dispatching a nation of three billion people i'm talking about the government specifically and then no no no you don't have to say that cancel culture's over fine so i also wish that so i didn't finish listening to the book while we were having that conversation and towards the end they were talking about like people defecting and leaving china and not thrilled with what's going on And I wish, I would like to amend my answer of last week, like, oh, they're a tough opponent

and who knows how it's going to play out. Who knows what it's going to win? They are a very tough opponent. And yes, who knows how it's going to play out. Yeah, that was interesting. Basically saying a lot of the people who are well to do and not well to do in China are saying, I'm not going to, I can't take this. I'm out of here.

Yeah. So it's not like black or white where there's going to be, okay, here's the winner. Here's the looser. Like, it's obviously shades of gray and everything else. But if I, we're going to win, like, how could you just not believe in freedom and human rights versus a centralized authority, authoritative decision maker that gets to do whatever they want to their people.

So answer amended, we're going to win to these other. Here's the thing, though. I have faith in the U.S. system as well, but in something like this, in a trade war, they can take pain way more than we can. So in a trade war, I would put my money on them. Yeah, because they don't give a shit. They don't care about their citizens

and the livelihoods of the people the way that we do. Some of the stuff that described in the book is truly horrific shit, and the ability for them to tolerate pain on their society is next level compared to ours. We cave as we should. Yeah. So the fact that we did cave, and it's better late than never, I guess. But if you, after reading that, and you and I are still macro-tourists, but now I think we consider ourselves like 20% China experts, if you read that book or listen to the book, you realize, like, we never had a chance. in this trade war against them. The way that they produce products

and how far ahead of they are. Yeah, they're laughing. Yes, they've been laughing this whole time. So the Wall Street Journal says, the U.S. is tiptoeing away from many of Trump's signature tariffs. Apparently, they're exempting a lot of the products because they're goods that we can't make in the U.S.

and can't produce in the U.S. And, duh, of course. This makes it, but at this point, then we should just probably take them all back and just like, let's chill here. because it does seem like it's all small businesses that are the ones that are dealing with a pain here. The large businesses have the margins. If they're dealing with, they're fine.

That's why the stock market hasn't cared as much. I think my dad asked me a couple weeks ago. He said, man, I guess I was totally wrong about these tariffs because I thought for sure it was going to sink the economy and the stock market. If you just look historically at how bad tariffs can be. And I told them like, no, you don't get it. They went back on all the biggest stuff that impacted the biggest parts of the economy in the market. That's why. It's still having an impact just in different ways.

Totally. And when I say totally, I have to admit, I wasn't listening. I was typing. I apologize. That was rude. But I did have to send something. That's okay. The over under for parley on how many times Michael's going to ignore Ben for this episode

is set up four and a half. Oh, under. That's one time. All right. That's at least two. All right. So there's a chart from the Financial Times showing the heavily shorted, the heavily, most heavily shorted U.S. stocks of race higher this year.

and it shows the most shortest stocks since 2020 versus average U.S. equity returns. And so this is the top 250 stocks that are in a heavily shorted basket with a market cap above $300 million. That just a Liffamor quote. It has not just outperformed recently. It has literally outperformed the entire decade.

Now, it's raised way higher recently. Now, I have two ways of looking at this chart, okay? One is, man, this stuff is out of control. This is insane, like, speculative, whatever. the second way to look at this is why are hedge funds so bad at shorting stocks? Well, there's the third way. There's a third way.

Okay. So the first one is, what was the first one? This is a speculative. This is crazy. It's so speculative and, oh my gosh, the stock control. Yes, why are hedge funds so bad at shorting? I know they're so bad at shorting. Obviously, they did not learn their lesson from the GameStop fiasco.

That's surprising. Correct. All right. So it's a combination of speculative. Unleashed on society and in trading apps, the likes of which we've never seen, right? Bucket shops. This chart shows Reddit one. Bucket shops made it very difficult to speculate.

And even in the 60s, right, when these these brokerages got just literally, they couldn't fill all the orders. Remember that? What was that book? The Go-Go Year's Once in GoCon? One of the John Brooks books. Yeah, Go-Go-Go-Years. Okay. The other part of this potion is,

in a technological revolution, like we're in right now, the money losing companies that people would short and say these aren't real businesses, they get the benefit of the doubt because you are in a believe everything bull market. Yeah. Right? It's funny, though. So all of these names like, yeah, this is a speculative bull market with new technologies. the companies aren't making money because they don't need to, right?

Like they're just, they're not there yet. It's like that thing it's in, um, in, in, in Silicon Valley. No, no, no, no, revenue is the worst. Don't show any revenue. So it's funny, though, because I, I tweeted about this and I gave my two things like saying one, one, speculation is out of control, two hedge funds are terrible at shorting. And Jim Chano's a fame short seller replied to me and said, even another way to put it. Despite clear outperformance from such stocks, long only managers still generally underperform

the market. And it's like everyone loses. But the thing is, this decade is literally the only people winning are retail. Yeah. Like retail Dgen traders or retail just, I'm going to buy what I know. Those are the only people outperforming the market. As somebody who is not on the other side of those people, you love to see it. Now, I can't imagine the frustration from the professional investors.

Fundamental, I'm guessing, like a David Einhorn or something like that would look at the balance sheets of these. I can't, I can't, I can't imagine the pain of I, this doesn't make sense. I've seen this movie before. I can't imagine what that is like to live through. That I'm happy that I, that I don't. Short selling stocks just, it's, you have to be wired differently. I would never be wired to try to short anything. Oh, no, I'm a sheep.

I need, I can't, I can't take the pain of people being in. All right. This is interesting. Let's talk about crypto. This is from Kalshi. They have a bet. Will Bitcoin be above $200? $200,000 by 2027.

And I think the, it's, does it hit that at any point in the year? Which is not that far away. And it's essentially, it's a little, it's like 53% say yes, above $200,000 by 2027. I feel like that's exactly where the odds should be. It feels like a coin toss. Really? Like a double, essentially in the next two years? Yeah, why not?

Two years? Yeah. You think that should be a 50-50 proposition. I mean, that seems, those odds seem, way too high for a double. Okay, then bet no. I, all right. I mean, if it's free money, Ben, pick it up.

All right. Obviously, it's not free money because there is the tail. Oh, there's that Grand Rapids hedge right there. Yes, but I, I'm sorry. That number should be 25%. Okay, then that's grossly misprice and you should pick up those dollars. Yes, I think I will. How's that sound?

No, I don't do your prediction markets. Come on. I'm degenerate. All right. Let's talk housing for a second. You just bought a house. So this has nothing to do with your purchase. But I think it'd be really hard to be bullish and or positive on the housing market right now for a number of reasons. Here's some charts from Redfin. The homes sit on the market a lot longer. So this is median days on the market has gone from like 20 to 50, which is a lot. It's going up and to the right. Most houses are selling for under list price these days. The median down payment, obviously, has hit a record high. This is kind of crazy. So it's $70,000 on a U.S., on a median home these days. This is surprising to me, though.

Where's the chart? Oh, I didn't put it in here. But they show that the average down payment is still roughly 20%. I'm surprised people, or the median down payment. I'm surprised people haven't lowered that. But listen to this. So this is, it seems to me like it's just the people with, it's a shrinking group of people who can be the buyers.

And you mentioned this. You said, like, listen, we had like one or two people check. the house out essentially, right? It was a small pool. We had two offers. So, this is from a redfin article. With the housing market into downturn, the people who are buying are those who are financially comfortable, secure in their jobs, and have money ready and waiting in the bank for a down payment. Said this guy who's a agent in Austin, Texas. For example, a few months ago, I helped the buyer close on an $800,000 home with a 50% down payment. They were able to liquidate stocks to make a $400,000 down payment without thinking too much about it, and now their monthly payments are lower. That's the

wealth effect right there. Yeah. Austin is one of the worst areas of the housing market right now. Yes. Texas and Florida sound like they're in a kind of a world of pain. And I don't know. I'm starting to think like the people have decided like listen

that the prices are just too high in a lot of areas. And I'm just going to sit out. Okay. I am on the other side of this. I don't think it's hard to be bullish about housing. I think that

what's your bull case? Rates continue to come down. That's it. That's a whole king of caboodle. I don't think it's a down payment per se. I think it's the monthly payment. It's just crushing people. I feel like I've been on that corner for a while now,

and I'm wondering if the level of rates is lower than we assume to get people to really, because rates have been falling this year. I think we're right there. Like I think that like once we get to five and a little bit under, I think housing activity can explode. All right. I've had that same feeling for years now. I'm starting to like backtrack on it a little bit.

I don't know that I'm saying that prices are going to, explode higher, but I think that activity is going to, the activity could moon. I still think that there's a lot of people, I don't think people stopped wanting to be in a house. I think it just became completely unaffordable. I also think that, go ahead. The difference between buying and renting in some places is so wide now that I think a lot of people just said, fine, I'll just keep renting. It's not worth it. Yeah. Well, that is definitely what happened. All right. Cool chart from, we talk about this all the time. Like, am I rich? Well, tell me where you live. Right. Right. Flowing data has this cool chart where they broke out housing costs by state.

And it's are you paying more or less than the national average, right? And it looks like Alaska and Delaware right at the national average. Of course, places like Washington, D.C., California, New Jersey, these places are way above. So California is 60% higher than the national average for housing costs. But it's funny that there are more states that are below the average national average than are above it. So the places that are really expensive, California and Hawaii and these places, they pull up the average a lot. It's a huge, huge difference. Yeah, it's really good stuff. Yeah, anyway. All right, let's do some quarter stuff.

I do, I keep saying this. I do love hearing from the companies. And we've had people say, like, Michael, you keep saying the CEOs won't lie. What are you talking about? All right. I think what I'm saying is... That's a fair pushback. Totally. So let me be clear. If they are forced to report every 90 days, the ability for them to hide parts of the story that they don't want you to hear goes up dramatically. Because if you give them 180 days, they can maybe think that they could figure it out. That's human nature. Don't, don't tell anybody we'll figure it out. If you report every 90 days and there's cockroaches and you don't tell shareholders, you're out. You're stuff.

will get crushed, the board of directors will remove you from the position if you lie to your investors so blatantly. So are there a million examples of that happening? Yes, there are. Absolutely. And I think that if you were to, if you were to remove the 90-day increments, that would only happen with an increasing amount. I agree. The level of analysts looking into things and asking questions. Did kill you. So I only mean that CEOs are incentivized to tell the truth only because everything's public. That's all I'm saying. If they could lie, oh, yes, they would. Absolutely. And obviously, there still will be cases of fraud, but it's got to be so much harder today than it was in the past to really fool people. Yeah. So, all right, Amex. Amex is just, Amex is in the absolute

sweet spot of this K-shaped economy. They are a premium product for premium spenders and they are killing it. So their total build business, it's just, it's 6%, 8%, 6%, 7%, 8%, that's year-over-year growth. And these are not small numbers. And goods and services and travel and entertainment, up 9% and 8% respectively in the recent quarter. Here's the chart that we share every year, every quarter, and it just continues to blow the face right off my body. Look at the year-over-year growth of the younger people. Gen Z is 39% growth. Millennials growing 12% versus. versus baby boomers are only growing 4%. And if you look at a percentage of the total,

Gen Z is only 6% with 39% growth that will continue to creep up the percent of the total. But look at millennials, dude. Millennials are 30% of total spending higher than baby boomers. How about that? Where did you put this?

It's a great quarter, guys. Total build businesses. The second chart, U.S. Consumer Services, build businesses are highlighted in yellow. Oh, there we go. How crazy is this? Millennials are spending more at Amex than baby boomers.

Huh. Yeah. That is surprising. So a lot of people would say this is bad news, but... Bad news? What's the bad news? That people are spending more on credit, but I... This, no, no, no, no.

Amex is not a credit card. Amex is a charge card and you pay this shit. Amex, people are not relying on their Amex to make ends meet. That is not what's happening. And to that point, their credit metrics, no change. Percentage of card member loans and receivables that are 30 days past due, 1.3% for the last five quarters. These are, now again, does this speak to the entire economy?

No, these are premium spenders. But net writeoffs, too, there's nothing here. People with money are continuing to spend money. But look at their net card fees, Ben. Look at the next chart. Yeah, I know because I pay them. So it was a billion dollars in Q3, 2019, and now it's $2.6 billion. I wonder how much of that is the annual.

payments. That's what this is. That's what this is. By the way, speaking of credit cards, this is another one that was, do you remember how many news stories there were about when the U.S. credit card debt hit $1 trillion? Oh my gosh. A trillion dollars in credit card debt? What's it now?

1.2 trillion. It's at 1.2. This is from Y charts. As of Q2, 2025. And guess what? I actually view the increasing credit as, for most people, like you say, it's probably a positive. Because they're feeling good and they're okay. And you're right. of them pay it back off. So it doesn't, it doesn't matter that much.

Right. It's an expansion of the pie. Right. All right. So let's talk about Bank of America, a company that serves more or less Main Street, Main Street America, right? Bank of America. All right. Look at their asset quality.

Net charge-offs and their net charge-off ratio. Is this going higher or lower-bend? It's falling. Total net charge-offs of $1.4 billion, decreased by $158 million from the second quarter. Plus look at how tiny the percentages. It's nothing. Provision for credit losses.

Less a half a percent. And if you look at, if you look into a consumer net charge-offs and you look at credit guards, falling, Ben, in the first quarter of the year, is 98 basis points, down to 90, now down to 82.

I'm sorry. I know that there are people struggling. Broken horse here. There always are. But this, broken horse. Broken horse, broken, what did a dead horse beat into dead horse broken wheel

you just put broken arrow broken arrow broken arrow broken arrow that's what I meant to say I think you combine broken record broken record broken record nope so wait a man I can't remember we do so many podcasts sometimes they all merge together but you asked someone a few weeks ago like if you had one indicator in a few years to know if you're right or wrong what would it be

and I feel like for you credit card companies that's your indicator this is it I don't I don't care about the stories in the journal that are interviewing random people show me the data Right. We found this one person who is struggling because they have a low income. Of course you did. There's a lot of them. Show me the data. And matter of fact, somebody sent us a video that I watched. It was on PBS about the K-shaped economy. And it's sad as shit. Hearing these personal stories from people, like on an individual person basis, it's horrible. I hate that there are people struggling. That's not unique to today. There are always. But if you look at the aggregate data, it is not showing. what they want you to believe.

So I just put the finishing touches on my new book. I'm handing in the edits this week. It's done. Going away, it's going to come out in the spring. And I write about the Great Depression a little bit in there. And even after the roaring 20s, which is like one of the biggest booms for retail households ever, like they got all these new, fancy new things in their houses,

and they borrowed on credit for the first time. by 1929 at the peak after the great decade it was one of the better decades we'd had at that point 60% of U.S. households were below the poverty line. Wow.

So like no one had any money. And so it's like you people point to these things and obviously it is sad but it's an improvement in the past which is hard to wrap your mind around sometimes.

Yeah. Speaking of the past one of the books that I'm listening to I'll talk about it maybe next week when I finish it historical records and all these historical books

you mentioned in 1929 you know where a lot of the qualitative the good stuff comes from it all comes from diaries right yes people kept track of stuff right like my grandfather had a diary

we found them when he died and reading them was actually pretty brutal yeah you know what our diary is called Twitter yeah prior generations did not have easy lives you're like great-grandchildren are going to be like, wait, my dad, my great-grandfather created this pie chart? Yeah, he was just shit-posting

all, well, well, for a period he was and then he grew up. I mean, the Hamilton one, all of it, it's based on letters they wrote to people, yeah, it's, it is kind of crazy, that's how people, because they had nothing else to do. What else are you going to do besides word a letter at night by candlelight? You know how, TV? People had nothing to do. Bill Simmons always talks about, like, future generations

are going to think Carmelone was the greatest power forward of all time, and that's why he created this sort of, line in the sand arbitrary metric that cuts off Carmelone. I wonder if future generations are just going to look at headlines as the arbiter of truth. They're going to look at Google searches and newspaper articles as if that represented the reality of what was happening. I think history is going to be rewritten a million times because there are so many opinions now. I think in the future people are going to be able to look back and pick and choose and they're going to be able to create the history that they want. So history is going to be very hard to

discern going forward. It'll be a choose you own adventure. Speaking of that, I had this really dumb, obvious, not profound thought the other day about because Kobe, Kobe is reading goosebumps. I told him to get, see if those books were still around. So he got one of the ones. And I was like, oh, man, I remember this from my childhood. Yeah, books don't disappear, obviously, right?

We're reading books at hundreds of years old. But I was like, oh, wow, good. Goosepumps is still around? Yeah, of course it's still around. No way. Yeah. All right, this is a, this is a tweet on the internet. from boring biz underscore people wildly underestimate how hard it is to be wealthy the bull market

has cooked everyone's brain and reality is that almost people that most people will not come out wealthy on the other side many will be stuck as their paper wealth evaporates being sustainably wealthy is grueling requires years of hard work and building up skills and relationships the people trying to tell you that that you can side hustle or day trade your way to wealth are selling a complete lie I agree with most of this I fully agree with sentence. Do I think that most people will not come out wealthy on the other side? Depends what the other side looks like. So you could, you know, quibble with that maybe on where the market is in a couple of years. But the people, the people trying to tell you that you could side hustle or

day trade your way to wealth or sell complete lie. Amen, brother. I agree with that. I actually think, I disagree with the first part of though. I think it's never been easier to be wealthy. than in the past. We talk about the Vanderbilt stuff and them squandering at all. That would never happen today. I think there are so many experts and advisors and consultants

and lawyers these days, if you're an extremely wealthy person, it's never been easier to hold on your wealth. Yeah. Yeah, fair. I guess he's probably talking to like the self-directed young men that are 23 that think that like

they are going to be wealthy for the next forever and ever. I think for that cohort, yeah, he's right. Yes, right. And yeah, the paper wealth thing, it's true. It's not real until you,

until you make the sale, right? Yeah. On the other side, though, you can say, like, listen, if I don't sell, I don't lock in the loss. Right? Diet of zero, am I right? All right. This is nuts. Speaking of wealth, our colleague Patrick Haley shared this.

I think it was a Boston Globe article talking about how to deal with, like, cognitive decline as you get older and health problems and how are the baby boomers going to deal with this. And they show this chart that shows wealth and death gap of U.S. adults oversea And it breaks it down by people over 60 and what part of the wealth cohort they're in. And so the top 10%, the death rate is 11%, and the average age of death is 85. If you go down to the bottom 60, 80%, the death rate is closer to 20%. And the average death, age of death is 79. So as you go lower down the income scale or the wealth scale, the death rate increases and the

average age of death is earlier. This is a crazy chart, is it not? This is nuts. Yeah. Also, what you would, the numbers are starting. or startling, but also what you would probably expect, no? I guess I just didn't expect the gap to be that large. And that, so the bottom 80 to 100 percent, the average age of death is 76.

If you go up to the top 10 percent, the average age of death is 85. Yeah. Nine-year difference? That's crazy. It is. All right. We got to talk about $50,000 cars. This is just my beat, I guess, because a million people sent me this story about how

the average price for a car is now $50,000, according to Kelle. Blue Book. Adding to the sticker shock, more than 60 models had average prices of more than $75,000. Insane. How much of this is attributable to inflation, which is obviously big. And I think the average price of new car is up 25% since the beginning of the decade, right? And then we have all these new sensors on the cars and the cameras. And so like the Apple Carplay, the screens, there's more stuff in them. So in that sense, it makes sense cars would be more expensive. But how much is this, how much of this is also just people buying trucks and SUVs as opposed to sedans? Like, I'd love to know what percentage of that increase is because of that.

It's got to be a big part of it. I suppose you can still get an accord for, I don't know, 35, 38, something. So Arbor data and science wrote about this. They write the average age of the U.S. passenger cars on the road up until the right since 1995. It was 8.4 years. Now it's 14.5 years. They also say that the Toyota Camry, the best-selling car in the U.S., is more effective. affordable than ever. They show it adjusted for the median hourly wage. It used to take

1,600 hours. Now it only takes 1,000 hours. That's it. That's very interesting. But here's the other thing that I was thinking about. Yeah, 50,000 for the average car does sound nuts. I think that a lot of the SUVs are pulling this up and maybe some of the high-end cars are pulling this up. Yeah, it said the luxury vehicles definitely are pulling it up. All right, but think about it this way. Because cars are on the road longer than they ever have been, because cars are have so many more pieces of technology and gadgets and are more durable. It's sort of like the stock market.

Like, yeah, the multiple is higher. It should be higher. It's better companies. Is it not the same exact thing with the cars? Right. Now, notwithstanding the piece of shit that I drive. But, oh, and speaking of pieces of shit. So my car is,

my lease on my Wrangler hybrid is up in April. So called my broker or text them. I said, hey, Steve, I've got, I'm like six months. one's out. Can I, can I get out of this now? Like the summer's over. I'm not going to take the roof down. I want to get out. He goes, uh, maybe what's your VIN number and how many miles is he got? He goes, nope, you're 10,000 underwater. He goes, he goes, you're paying the lease off and then you get a new car. All right. Um, not to throw shade here. Is it time to fire your car

broker? Because every time you get a new car, you're underwater like immediately. No, these, this is an insane amount of money. This had nothing to do with him. Um, all right, on the other Duncan sends us that a new accord starting MSRP is 28,2995. There you go. So you drive a car long. If this concerns you, you drive a car longer or you get a sedan or so like there are ways around this if that number is, it's sticker shock is so big for you. But I'm guessing most people will just say, screw it, I'm taking an 84 month loan out.

I don't care. Okay. That's where probably most people land. Other part of the car story is Head Life and Bloomberg. Underwater car loans had four-year high in new signs of distress. Just over 28% of trade-ins toward new car purchases carried negative equity. The highest level since the first quarter of 2021, according to, okay. The amount owed on those so-called underwater loans was $6,900.

Not nice in the latest quarter. I think that a lot of this was supply chain COVID issues. I also think, hey, guess what? headline writer back it's not even where it was in 2019 and was anybody writing about this story in 2019? Did anybody care about underwater cars in 2019? Nope. Yeah, aren't most cars underwater by definition? You drive it off a lot and it's 20% less than when you had to. Exactly, Ben. It's not even where it was in 2019. Right. Oh yeah, so in 2019 it was 34%. Yet here we are and I'm not mad at journalists. I know I've been like hard

of them. Like I'm, this is the business, okay? And we all do what, what is right? No one was talking about this in 2019. It wasn't a story at all. Nobody gave a shit. And in fact, getting back to why I enjoyed listening to the company call so much, Ally, kind of exposed to the auto market. So, Sanjai, Sakharani, and analyst asked, okay, obviously, lots of jitters around some of the cracks that we've seen in sub-private auto and just broader consumer credit trends,

Michael. It seems like your metrics don't necessarily suggest a lot of that. Okay. So the CEO said, I appreciate there's a lot of macro uncertainty in the environment. but we're not seeing that impact our credit performance. And so we feel good about what we're seeing right now. Credit performance, data, data, okay? Look at the net charge-offs.

Do you see anything there? Is it going up to the right or is it going down to the right? Look at the delinquencies, Ben. Is it going up or is it going down? This is one of the biggest sum prime lenders in the world? No? Just wait. Hadn't happen yet.

It's going to happen. So, okay, I saw this morning on Instagram an image of somebody who looked a lot like Rocky on the beach running with the dog from Rocky and it said, oh, I play Rocky and it said, nope, no, no, no, no, no, no, we're not doing this. We are not doing this. I don't want to remake of Rocky. No, hard no. And good news. It's not a remake. It's the making of Sylvester Stallone making Rocky.

And that I'm in for. What documentary. Okay. Yeah. All right. that I'm in for. All right, Daniel, like, tweeted. I can't believe it's been two years

since we brought in audiobooks, premiums Spotify, blah, blah, blah, blah. Audio listening hours up 37% you over year. It does feel like I've unlocked a new form of learning in my life with Audible. It really feels good.

Yeah, it does. It feels so much better than listening to most podcasts. A lot of the garbage I listen to. I still have some garbage that I listen to. I listen to Sean and Chris talk about the best hard movies of 2025. And I loved it.

and I do love it, but it feels nice to mix in a little bit of education every now and then. All right, two quick things. I know we're running along here. Sorry, Duncan and team. So I got the house that I bought, there's a bar in the basement area. And we don't really have, like, a place for the kids to play. There's no, like, there's no, that is the basement. There's no, you know, so.

The great thing is eventually the kids graduate from play areas. We took the play area and gutted it and turned into a media room. Yeah. Didn't need it anymore. Yeah. I can't wait to get there because I'm going the other way right now. So there's a bar in the middle of the room, and I love it because I love alcohol and I love the look of it. And I wanted to be my bar, but it's not my bar. We're getting rid of it. So, all right.

No, you're getting rid of your bar? I'm getting rid of your bar. Tell Robin to call me. You can't get rid of the bar. Sorry. I lost this battle. So we got two quotes. One of the people we know is a little bit more expensive. And the other guy just wasn't getting back to us. So I'm like, all right, well, go with this person. It seems like, I guess, sort of reasonable.

$5,500 was the quote that he gave us to get rid of the bar and clean it up and paint it whatever. And then the other guy just got back to us this morning, $1,800. And I said, well, shit. Because we just gave the other guy $2,000 deposit. And so I went to chat, GBT, and I copied and paste it. And I said, tell me the difference between these two contractors. Why is there such a discrepancy in the prices?

is one promising to deliver anything more than the other person is. And it worked amazing. It was perfect. The output was freaking perfect. So anyway, now I got to call this guy and be like, dude, I need my money back and or you got to love your price dramatically. Oh, so it didn't say like this other guy is ripping you off. He was, so the one, the higher price is two and a half time.

It's $1,800 versus $5.500. Right. That's a big deal. It's a big difference. So, all right, I'll let you know how that goes. I'm a little bit nervous to be like, hey, I'm going to be like, Hey, I don't want to be back, but I'm going to do it. All right, Ben, you would just say, it's fine, keep my money, right?

No way. All right, I am done with pumpkin farms. I'm done with pumpkin farms. I'm just done. Oh, thank you. It's, they get bigger and grander every year, don't they? It's just enough. Towards the end, I'm yelling at Rob.

I'm like, just pay the pumpkins. I'm done. I want to go home. And then everyone's got to take the Instagram pictures next to the whatever. She's 100 feet behind me. I'm online. There's people that are now behind. behind me online. And now I have to let him go because Robin's not coming. She's with

the kids. And I'm like letting people go. And I just get off the line and I'm man. I'm like, I'm screaming. She goes, she sounds like a crazy person. I'm like, yeah, I want to go. I've been here for long enough. I hate those places too. But here's the thing. We've been so busy with kids sports. We just realized this morning where my kids go, wait, we don't have pumpkins yet. And my wife going, oh my gosh. You know what pumpkins yet? Good for. Yeah. I'm jealous. And we just realized we have no time to go to a pumpkin farm. And I'm going, yes. I'll get him at the grocery store. Don't worry. Who cares? Yeah. Not me. We're going to throw them out anyway. We're going to throw them out All right, before recommendations, real quick.

Paul Warner on Blue Sky said, Looking to differentiate this, a new system, Halloid, which is the original name of Xerox, hired a Greek scholar at Ohio State University and coined the term Xerography from two Greek roots, meaning dry writing. Halloid changed its name to Halloid Xerox in 1958, then Xerox in 1961.

So they literally made up, and they literally did make up a word. Zerography, wasn't a thing. Huh, good for them. Yeah. All right, recommendations. I got a lot this week. I watched I Like Me, the John Candy Dock on an Amazon Prime.

John Candy was my guy. Yeah. Okay. I think Uncle Buck is one of the greatest movie characters of all time. It's one of my top ten favorite movies. Plains Trains Automobiles is obviously one of my obvious favorite movies too. And it's just, it's so, so good. It's very sad, too, in a lot of ways at the end.

But it's crazy how in the 70s, there was a group of people that got together in Chicago and Toronto. And it was like Martin Short and Bill Murray and Harold Ramos and Catherine, O'Hara and Dan Aykroyd and Eugene Levy and John Candy and all these people that's happened to be coming up at the same time together and it's kind of like one of those lightning in a bottle moments but it was so good and you got to see all the like how good of a guy he was and all the different parts he played and everything he was in was good I summer rental and great outdoors and he had the small parts in you know vacation and home alone and I was a big John Candy guy love it was very very good I want to watch it I'm not a

as big on him as you were, but I love that you love him, and I want to watch it. Uncle Buck is probably one of the movies I watched more than any other in my life, and I introduced my kids a couple weeks ago, and they loved it, too. Is there one in the woods that you've mentioned with him and Dan Aykoyd, or is it just Dan Aykroyd? No, that's him and Dan Aykroy, the great outdoors. Okay. That's a great summer movie. Great.

Dan Aykroy plays the shooter guy from Chicago. Very, very welcome. No, it's so interesting. So because you were just a few years older than me, like your window of my window of movies of your childhood movies is like fairly different than mine at least on the early side like those those 80s movies like I just missed them by like a year or two yeah that makes sense like the whole I remember seeing the preview for home alone and going oh my gosh this uncle buck too because it was McCulley Culkin and realized oh that's a kid from uncle buck um okay

I also introduced myself my kids to tremors this week Kevin bacon classic my son wait why tremors it's so random my son loves that kind of cheesy action stuff Trembers was one of my movies, too, growing up. I don't know why. It was Trembers was just, I watched it all the... Anytime it was on USA, I watched that movie so many times. And my son watched it like three times last weekend. He loved it.

And it just, it's one of those movies that shouldn't work. It should be way, if it was made today, it would be way cheeser than it is. But it just, I don't know, something about that movie, it's so good. And you being a horror guy, you should love that movie. I like Tremer's. It's so kids don't know what it was like to watch a movie on USA. oh yeah it's like all right we this movie's uh three hours with commercials and you're just gonna sit here right and the swear words are bleeped and yeah all right one more another movie

i watched all the time it was on rewatchable so i rewatched it again since it was robert redford month um sneakers they ever watched sneakers before i never watched sneakers and i never saw the natural okay we my daughter and i sat down to watch the natural this week too and i i said he's like otani and it dieders basically in real life uh but sneakers is one another one of those 90s movies that I watched all the time. My mom and I love that movie. And it's just a great, like, spy. And it feels a little dated now.

But it's, in the cast of that as Dan Eckrod's in that as well. It's amazing cast in that movie. Great movie. And I think Robert Redford might as, he has, people always talk about like James Earl Jones and Morgan Freeman. I think Robert Redford has one of the best voices ever. Oh, yeah? How's that?

Because he, he did the voiceover for River Runs Through it, too. He's just got a great voice. Did you finish task? We didn't do it yet. I was watching the Lions game last night. Okay. What do you think about the finale? Great.

So just, HBO is just better than everything else. I mean, obviously. Ruffalo, oh, so there was a, there was a, there was a, no spoiler. There was a scene at the end in the courtroom where Ruffalo just was amazing, amazing acting.

The acting in that show was amazing. The character, Mave, I thought, was the strongest. She was good. The dude who played Robbie, I forget his name was excellent. Yeah, he's the guy from, he was in Ozark. I think he's fantastic. Yeah. It was a very good show. And I love, because I even do think that episode six and seven had quite a bit of fat in it, like more character stuff than I, than I love. But I love that it was seven episodes.

Yeah. Love. That's pretty, yeah. Oh, I was, okay, I almost forgot about this. I saw, I saw one battle after another. Okay. All right. It was a good movie. It was a very good movie. It didn't drag, even though it was very long. It wasn't like, it wasn't like, it wasn't like, I was. I didn't fall, say it wasn't bored. But, but, um, and there's some, there's some great stuff in there, some really cool camera stuff that the film nerds love. And it was a good movie. It just was. It was it a $170 million budget good movie, uh, wild. But I just, people love PTA and I don't get it.

And I don't want to be a hater because I like the movie. I really did. I really did like a movie. So it's like a seven out of ten maybe? Uh, no, it's better than that. I would say like it's like a, a. 7-4. Like, it's a good movie. It is a good movie. You're right. That's why I told you, can't trust the film nerds anymore because they're

blinded and they just say everything is the greatest thing they've ever seen. I just, the PTA adoration. Now, I'm just a movie guy. I'm not a film guy. So, I just don't get it. Yeah. I'm okay. All right, last, all right, real quick, let's run through this. It's Halloween season. So I did come up with my 10 favorite hard movies. Now, this is no particular order. And I, to be honest, I didn't spend a ton of time. on this. So is this the definitive final list? No, but it's my list. And there's no, nothing obvious in here, okay? No Friday of 13th, no Halloween, no scream, no Blair Witch, no The Ring. Like, I don't think there's any movies on this list. In fact, there are no movies

on this list that did like $50 million to the box office. So nothing mainstream. Okay. Here we go. These look like names that you all could have just made up and I wouldn't have known any better. Now, I do love found footage. I love a good fan. The, They just scared the bejes at me where it's either found footage or when they hold the recorded. Yeah, found footage. I guess that's what it is. Deadstream was one of those.

Host. Host they did during the pandemic. It was a Zoom call with five teenagers and things went awry and that scared the hell out of me. Speaking of hell, Hell House, LLC. Hell House LLC. Great one. Great one, Ben. I think he might like that one.

All right, I saw this movie when it came out in 1995. I've spoken about some of the podcast before. What yours is this? Ninety-four. Insane. My dad took me to see this when I was nine. And this movie gave me nightmares for months. My mom was very upset that I saw this.

In the Math of Manus. This is a John Carpenter movie with Sam Neal. You ever hear of it? No, it sounds like it could be a porno, though. So the concept is Sam Neal. is, is he an agent, a literary agent? I don't even know. But like this author, this famous horror author goes missing and they go to find him and they get wrapped up and like he's

writing the movie. It's very meta. Very good. All right, VHS, similar to Hellhouse while there's multiple of them. VHS has also found footage one. The most recent one is a Halloween version. There's probably five or six of them. Always slap. All right. And then the next few were demented. The dark and the wicked. The dark and the wicked is quite dreadful. Just hurts to watch. Borderline painful. Speak no evil. Not the American version.

Not the American version. Not the American version. Green Room. I don't have green room as horror per se, but I don't know what other genre you would put it in. Okay, I actually tried to watch that. I couldn't make it through it. Very gnarly. I would say grizzly. That's grizzly. Eden Lake, also a grizzly movie. That is with Beth from Yellowstone.

And lastly, perhaps the cake taker of demented films is when evil lurks. I think that was an Argentinian one, but I'm not a hundredth of positive. Greener was the only I've ever heard of here. Argentinian horror. And you said you're not a film guy. So I had a realization this weekend. We went to one of those horror things in the woods, right, at our local ski place. And it was a path you followed, and it was meant to scare you, right?

And so we went with my daughter and her two friends, they're 11. And people would jump out and the people dressed up were really, really spooky looking. It was very well done. I don't like that. That's too much. See, I wonder about it. So, like, honestly, I had zero. I was, my daughter's like, why are you laughing?

I was laughing at what I was going through it. It didn't, nothing scared me. It didn't do anything for me. And my daughter and her friends are freaking out, right? Because they're jumping out and they have clevers. I'd be terrified. I get very scared at hard movies. So I think that's why you like,

for whatever reason, the horror thing doesn't do anything. Like, it doesn't bring about any emotions for me at all. And that's why I don't like these movies. All right. You're not alone. I just, I find it bizarre because, for me, I, there's oftentimes, in fact, I would say 90% of the time where I will either have to, like, mute it while I'm watching. Like, I prefer to watch Halloween during the day because I get very, I close my eyes.

I get scared. That's why I love it. See, for whatever reason, it just doesn't hit me that way. So to each their own. Okay. Credit to you. That's why there's a market. You're a bravely.

Idon Shop.com. We have a brand new animal spirits mug for the fall for all those hot chocolates. Coffee, tea, right? Very well done. Thanks to the production team, as always. Duncan, Dan, John, Travis. What else am I forgetting? Nicole, Rob, Graham.

Appreciate you all. email us Animal Spirits at the compound news.com and we will see you next time.