The Compound and Friends - 2024 Predictions, Career Advice, and What Went Right in 2023

Episode Date: January 3, 2024

On this episode of TCAF Tuesday, Josh Brown discusses career advice, and what went right in 2023. Then stick around to join Downtown Josh Brown (CEO, Ritholtz Wealth Management) and Michael Batnick (Managing Partner, Ritholtz Wealth Management) for another episode of What Are Your Thoughts and see what they have to say about the biggest topics in investing and finance, and of course, 2024 predictions! Thanks to Rocket Money for sponsoring this episode! Cancel your unwanted subscriptions by going to: https://www.rocketmoney.com/compound Check out the latest in financial blogger fashion at The Compound shop: https://www.idontshop.com 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 Josh Brown 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. Wealthcast Media, 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

Ladies and gentlemen, welcome to the compound and friends. Welcome back. It's 2024. We could not be more excited to be getting the year started. I want to thank our sponsor tonight, Rocket Money. Rocket Money is a personal finance app that finds and cancels all of the subscriptions that you're paying for. And you don't even know why you don't, you don't even remember when you signed up for

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Welcome to The Compound and Friends. All opinions expressed by Josh Brown, Michael Batnick, and their castmates are solely their own opinions and do not reflect the opinion of Redholz Wealth Management. This podcast is for informational purposes only and should not be All right, I want to get to two things very quickly. Nick Maggiuli, who writes Of Dollars and Data, which is an incredible blog. He is also the chief operating officer at Ritholtz Wealth Management. Nick wrote some career advice for 2024 on his LinkedIn. And the concept that he's talking about, I think is a really good one. And I wanted to share this with you guys. I know a lot of people listening to the show are in a phase of their career where they're

looking to take things to the next level. They're looking to move up. They're looking to improve their situation. This is as good advice as anyone could give you, quite frankly, on that topic. Nick says, my best piece of career advice for 2024 and beyond, reduce uncertainty for others as much as you can.

Become an uncertainty killer. So he basically says there's lots of advice out there, like follow your passion or find a mentor or expand your network. But so much of that is ambiguous or vague, and there's not a lot of instruction there. There's not a lot of specifics. This is a singular concrete idea, Nick says. You can start using it in your career right away. And more importantly, this idea will be most helpful if you work with other people. Think about it. If you have a boss

or you have clients or you have people whose emotions you're managing or you have people whose emotions you're managing, or you have people who are relying on you for advice or guidance, which very much ties into what we do at Red Holds Wealth. Being the person in their life that reduces their uncertainty has huge benefits in terms of the way they see you, the value they see you as creating, and what they're willing to pay for your time and attention. Because one thing that we know is true, from all of the academic literature, people absolutely hate uncertainty. They hate known unknowns. Those are the things that keep them up at night, by the way, the known unknowns. They also hate unknown unknowns. Like, I've thought of everything.

Things seem okay. Where is that left hook about to come out of nowhere and clock me? Like, what's the thing I'm not worried about enough, right? So people hate that. And Nick uses all these examples to illustrate how much they hate it. For example, quote, a University College of London study found that people were far more stressed when there was a chance of getting an electrical shock than when they actually knew one was coming with confidence, right?

You would rather just know it's coming than sit there and wonder if it's coming. And so if you are in a professional position where you can reduce that uncertainty for others, whether you're using numbers or emotional appeals or you're building relationships with people or you're doing some sort of predictive analysis or whatever the case may be, the better you can be at making the person that you're doing that work feel less uncertain. the better you can be at making the person

that you're doing that work feel less uncertain. The better you can be at that, the more value you have in that person's life. Or if you're doing that for a company, the more indispensable you become to that company. Becoming an uncertainty killer is a huge, huge idea from Nick, and I think it's something that's applicable to all of you, no matter what you do.

Be the person that makes others feel steadier and more confident. Even if you know you can't predict the future better than anyone else, giving people probabilistic answers is far better than how they're walking around before they meet you or before they talk to you. Just showing someone a range of outcomes and maybe charting out like of this range of outcomes, these are the most likely scenarios that we should be planning for, positive and negative. If you do that sort of work, you become very valuable given how much people just absolutely despise not knowing. Okay. I also want to mention this thing Zach Carabelle did. Zach is an old friend of mine. He writes op-eds for various publications, most recently the Wall Street Journal.

And Zach Carabelle did something called What Went Right in 2023 for the journal during the last week of the year. And I love this because, look, last year was not a great year, just like on balance. If you think about the biggest stories, we almost had a bank run in March. Maybe the silver lining is, hey, we didn't. And FDIC insurance is now unlimited. All right, we could maybe spin that positively. A lot of people were struggling last year to pay their bills. There's a lot of consternation in the housing market. A lot of

young people just unable to start their lives because of where mortgage rates are now. There's obviously economic issues that were difficult. And then, of course, there are issues all over the world. The Ukraine shit show doesn't seem to be getting any better. The events of October 7th, which we're not going to get into here, one of the worst things that I've ever seen. And, you know, there are plenty of other reasons to say 2023 was not all sunshine and lollipops. But there were some really, I think, important developments that are worth getting into. And there were some things that got better last year. And I'd like that Zach wrote this.

And I want to share some of it with you. And I'll just quote Zach directly. What went right in 2023? The first example that he gives is the health breakthrough of the year was the commercialization of weight loss drugs such as Ozempic. While many touted the breakthrough's obvious benefits for weight management, it has quickly become clear that its benefits will extend well beyond waistlines. A world where there is less obesity will be a world of more resilient bodies and bones and less diabetes, which alone is the eighth leading cause of early

death in the US. It's no accident, Zach says, that the stock price of companies that make artificial joints and insulin delivery systems took a hit this year. For the preponderance of our history on the planet, humans suffered from caloric scarcity. Now we are suffering from caloric scarcity. Now we are suffering from caloric abundance, but as is so often the case, we are creating solutions to problems that we created. Yeah. And you know, one of the things you'll hear skinny people say is, well, but what are the side effects? As if like there's any medication that doesn't have side effects. Tylenol has side effects.

We already know that it's hard to get off these drugs. We might learn some more bad things as time goes on. Okay, fine, stipulated. Don't we think though, despite these potential negatives, despite these side effects, the primary effect that we're taking care of is not having people drop dead at the age of 52 from a massive heart attack. We're not having as much diabetes and childhood obesity and all of these other things that have just become endemic, not just in America. I know we think

Americans are like the world heavyweight champions. All over the world, these issues are plaguing people and they're expensive issues and they drive up the cost of healthcare and they drive down the capacity in hospitals and they lead to lots of unnecessary surgeries or surgeries that should not be necessary is the way I want to phrase that. So yeah, I'm sure there are side effects that are not great.

I'm sure it's tough to get off this medication. I'm sure there are a lot of reasons why it's not optimal. But we don't live in a world where optimal is always a choice for everyone. People are just not good at taking care of themselves. I speak from experience. I go through periods of time in my life where I'm feeling very healthy and periods of time where I'm just not doing the right thing by myself. And I think most of us would agree that everyone, to some extent, needs a little bit of help.

Some people need financial help. Some people need therapy. Some people need help with their relationships between themselves and their family, their spouses, their children. And some people just need a jumpstart and they need to get into a healthy lifestyle, but they can't begin. These drugs are giving people the opportunity to begin. I was at New Year's Eve with someone who recently started maybe Munjaro. I don't know. I don't know the difference. I haven't done that much research

on this, but just watching her, she could have a couple of drinks. She's not pounding liquor. She's not stuffing her face. It's like, it's like a one 80 from, from new year's Eve's past to now. And it's cool. It's cool to say I have friends who were obviously obese that I now see running up and down the road in the town that I live in. I have friends where you would look at the person and say, you ain't making your kids weddings. It's just, there's just no way between the food and the tequila and the Marlboro Reds. It just ain't happening. And those people, thanks to the jumpstart that they got from these drugs, have made huge changes in their lives, obvious changes in their lives.

And I get it. There might be side effects. Fine. Stipulated. This is still better. This is a better situation for these people. Not for everyone. But maybe we end up with 20 million people on these drugs

out of a population in the United States of 350 million. We end up with 20 million people. Maybe it's 30 million people. I don't know. I don't know. And maybe a couple of million of those people don't need it. Okay. I'll stipulate that too. But for the rest, we're in an economy where Southwest Airlines feels compelled to offer a free second seat next to someone who's too overweight for the entirety of their body to be contained inside of one seat. Is that better? Is that the quote back to normal we should be at? Is that the quote back to normal we should be at? So I think on balance, these drugs will represent a significant breakthrough. And I don't know how many of these drugs will be big or whether it'll be one or two companies that own the whole market, et cetera.

The stock market will sort that out. The FDA will sort that out. The FDA will sort that out. But I think we might be underestimating the power of what these drugs can do in society in a good way. I think predominantly in a good way. Zach also gets into the murder rate being down 12% nationally. Most people in the country think crime is getting significantly worse. most people in the country think crime is getting significantly worse. And there are certain types of crime that are in the news pretty much on a daily basis, like looting department stores and breaking into cars. But Zach points out when asked in a December Gallup poll,

77% of Americans said that crime is going up. Regardless of political affiliation, Americans for years have believed that crime is going up both locally and nationally, even as it has been falling. With the exception of 2020 through 2021 during the pandemic, significant majorities think that crime rates were lower 20 or 30 years ago when almost everywhere in the United States, crime was substantially higher back then. So murders down 12% last year, again, coming off of pandemic era. everywhere in the United States, crime was substantially higher back then. So murder's down 12% last year, again, coming off of pandemic era, but we were making progress. Violent crime in New York City is down double digits. The murder rate in Detroit is at a multi-decade low. Even in San Francisco, contra everything that you're seeing on the social media,

Contra, everything that you're seeing on the social media, overall crime is down 8%. So, you know, I think it's important to just point out things are rarely as bad as they are painted on cable news and on social media because we know it gets attention and double digit drops in crime in New York City don't get that much attention. Not great for the media. One other thing on the economy. I know a lot of people struggled with higher prices last year,

and this is not to make light of that or to say that their feelings weren't real or their economic anxiety wasn't real. I think it's worth pointing out that on balance, 2023 was a good year financially, economically. Of course, the negatives are well known, deficit spending, the national debt, but GDP growth is up 2.6% in 2023. We were supposed to have had a recession. I think you would agree, plus 2.6 is better than what the consensus expectation was. The unemployment rate, more important than anything to most people, is now back to its lows of 2019, which was the lowest in generations.

So prior to COVID, we just had this record low in unemployment. We had open jobs everywhere. The pandemic happened. We got that spike in unemployment. We had open jobs everywhere. The pandemic happened. We got that spike in unemployment. That entire thing healed itself within two years, unbelievably. And the labor market really is better than we've seen it in decades. We now have a normal interest rate. So the distortion of 0% rates is out of our lives. We've got normalcy there. Inflation went down without unemployment going up. Also an amazing outcome, something that most people would not have predicted. Average hourly earnings are averaging 4.2% growth and inflation is only 3.7% if you use CPI. So wages outpacing inflation, very, very important. And that's another development

from 2023. In the meanwhile, stock prices, all-time highs, the cost of investing all-time lows, housing prices higher, which depending on where you are in your life cycle is either great or terrible. Fine. I understand that. Mortgage rates are backing off a little bit, which should help affordability somewhat. And then like bonds came back, you've got yields on cash, the highest that we've seen in a very long time. This is also very important. Nobody's being forced out onto the risk curve.

You can earn a risk-free rate of return that is actually positive relative to inflation. So that's something new that we haven't experienced in a long time. And you've had just this huge gain in retirement savings. So you have 150 million Americans with retirement accounts, and we've seen a huge boost in the net worth of those accounts, whether we're talking about IRAs or talking about 401ks. On balance, this has been a very positive year financially for most people, not for everyone. And I think that's worth applauding. So thank you to Zach Carrabelle.

If you want to read the piece yourself and see all of this data, check out What Went Right in 2023 at The Wall Street Journal. Okay, that's enough from me. I'm going to send you directly to an all-new edition of What Are Your Thoughts? Yes, I'm back on that, but so is Michael Batnick. We get into some predictions for 2024. We take a look at how the year is starting out and all sorts of other fun stuff. I hope you enjoy it. I'll send you there right now.

Thank you guys for starting off 2024 on the right foot, listening to The Compound. We missed you while we were gone. Now we're back. Let's do this. Now stay tuned for What Are Your Thoughts? All right, all right. 2024, first show of the new year. Sean Graylish is putting it out there.

The F-bomb line is 3.5. How does that work exactly? So if it's three or less, the people who took the over lose. Dude, if I go to four, for everybody who's listening, listen to me, listen to four, if I go to four- For everybody listening, listen to me, listen to me.

I am the best gambler in the world. You would have bet on that. I just checked, I just checked my FanDuel stats. Yeah. For every dollar, for every dollar that I bet,

how much do you think I get back? I don't know. 95 cents. That's basically like pro-level shit. Yeah, it's pretty good. I gamble,

I bet a lot and that's pretty damn good you're getting all the enjoyment and none of the losses I'm paying a 5% tax it's incredible all day hey welcome back guys we miss you and it's great to see everybody in the chat say hi to Bob

and Dr. Horton and Keon Parker Rachel's here Kevin Patterson's here some people. Yeah, let's go. Kevin Patterson's here. Some people we don't shout out that often. Jeff Asola, Michael Bergeron, Travis Connors, welcome to the show. Michael Selby.

New names. Love it. Some new names. Landscaping Toronto, of course. I wouldn't dream of getting started without you showing up. Howdy. Howdy right back. Okay.

We have a sponsor tonight to start off the year. Michael, tell us about Rocket Money. We've got Rocket Money. It's a personal finance app. I use it, that finds and cancels your unwanted subscriptions. So you see it right away. What am I paying my next seven days? I love it. They have over 5 million users and they've helped save their members an average of $720 a year with over $500 million in canceled subscriptions. I, uh, you know what I love Josh? I don't know if like you have the credit card that like you get the alerts on your phone. Do you have that or no? Like when Shari swipes, I feel like sprinkles has that. I don't, I wouldn't, I wouldn't set that. Yeah. For me, I wouldn't set that up for myself. I don't have that. We don't, we don't do

that, but, but, but rocket money- Your Apple wallet, though. I do get the Apple wallet. It's like an hour after I buy something, I'll get a notification from the wallet that I use. I usually get notified immediately, but that's just me. But I do get large transaction detected. And I'll say to Rob, I'm like, what is this?

I love it. What's a large transaction for you these days? Anything eight figures? think anything eight figures. Yeah, eight figures. Eight figures. Okay. So listen, if you call to action, if you want to stop wasting money, if you've got subscriptions you forgot about, I did.

I literally had subscriptions I forgot that I was paying. Go to Rocket Money.com slash compound. Check it out. Rocket Money.com slash compound. All right. Let's get into it. So I like how the year is starting off. Check it out. Rocketmoney.com slash compound. All right, let's get into it. So I like how the year is starting off. It's spicy. Do you feel like this was a spicy opening day of trade? Some shit went on today. Quite, quite. Quite spicy. So, yeah. Let me say, actually, let me go ahead for like two seconds. When you start off a year, you have this narrative that ends the previous year.

And I think we could all agree the narrative was, you got to bet on what's been working. You got to be all in. And now you can bet on what's not working. So we had like everything rallying within the last few days of the year. Pretty much everything was working by the end. And then I changed my narrative today based on what I saw in the markets. My comment was, oh, it's rebalancing. How could it not be?

That's profit taking, of course. I think it's tax. My honest take though, and then we'll get into the data. My honest take is the number one reason for the selling today in NASDAQ names is tax-related profit taking. People just wanted to push that gain into this fiscal year. No, I know it, and I'll show you how in a minute. My secondary narrative, though, is rebalancing. And a lot of large pools of capital do rebalance, especially going into a new year. And that's why the NASDAQ up 50% last year, double the S&P's performance. Of course, they're going to sell NAS and buy the Dow.

Of course they are. And that's exactly what's laid out. Of course. Did you tell us this last week? Of course. It's not obvious. No, I'm telling you that today. It's obvious to me as of 4 p.m.

that there was profit taking and there was rebalancing. I think that's all there is to it. Okay. Well, I don't- That's my thesis about what just happened. That's all I'm saying. It's not a prediction. I don't know why they sold the winners today,

but what's indisputable is the winners were sold. So next chart, please, John. Hard. So this is today, hard indeed. Next chart. So I did this little thing. I looked at the return today on the bottom. That's the January 2nd return. Oh, this is great. By indeed. Next chart. So I did this little thing. I looked at the return today on the bottom. That's the January 2nd return.

Oh, this is great. By the way, thank you. By the way, that dot all the way out there on the right is Moderna, a stock that I literally bought. Hold on. I bought this stock a month ago. I sold it two days later, and it's up 50% since I sold it. Thank you very much.

It went up 13% to start the year this year. Dude, I literally bought it and sold it two days later. So I bought it. Thank you very much. It went up 13% to start the year this year. Dude, I literally bought it and sold it two days later. So I bought it. It's like, you know what? I think this might, I think this might pop. Did you see Pfizer today, which we talked about in the same breath as Moderna? No. Same thing. Huge upside day. One of the big winners in the S&P. But anyway, chart back on. So the big losers today are the big winners of yesterday. So 23's monsters got destroyed today. Is it, does this matter? Is this noise?

I don't know. We'll see. We'll see in a couple of weeks. Well, one thing that I would point out is like, look at, look at Uber, look at AMD, other than the three cruise lines, which I don't really understand what went on there. In the S&P 500, the top five worst stocks in the day, right? Norwegian, Royal Caribbean, and Carnival

are the worst three. The second two- Really, what do they do? They're involved in cruises. I guess, is there another outbreak somewhere? I don't really know what happened there. What did the stocks do today? Oh, uh, Norwegian down 9%, Royal Caribbean down seven carnival down six and change. But then the next worst to AMD,

which was one of the biggest winners ever last year, up down 6% today, Uber down five. down 6% today, Uber down five. And I happen to own both. So that, you know, I looked at that and I just said, there's neither of these companies had news, nothing changed, nothing happened. They both doubled last year, more than doubled. So that's to me, to me, it's as simple as that, because then I reversed it. And I looked at the actual, like, looked at the actual like what were the big what were the big S&P 500 uh movers you mentioned Moderna Las Vegas Sands which I don't think did much last year up four percent then you had a whole bunch of uh then you had a whole bunch of um healthcare stuff Pfizer had a good day Merck had a great day Insight uh S Yeah, healthcare products are terrible the other day, sir. Cigna, Biogen, Centene. And then like the defensive,

Campbell's Soup went up today. The Cruises got killed because I watched Titanic last night. Well, that'll do it. It's as plausible a reason as your rebalancing nonsense. All right, let's get into it. Okay. Anyway, that's my take on today's action.

But what I wanted to talk about- Sorry, but who rebalances on January 2nd, on the first day of the year? A lot of people, when the year ends. Yeah. Yeah, yeah. A lot of people. Okay. All right. If it's tax-related, if it's tax-related, of course they do. If you're going to sell, why wouldn't you wait three days and incur the tax gain in the next year. What's the rush to pay the taxes? Makes no sense. So if you held it all year, you captured the whole rally in the fourth quarter. That's who sells on January 2nd. Yes or no? C or no? I mean, enough to move a $3 trillion stock. Yeah,

that's why it went down because some people were taking profits. stock. Yeah. That's why it went down because some people were taking profits. Well, Apple, Apple got a downgraded today. There's another, another story. Bark Barkley's a downgraded on slowing iPhone demand. Okay. I wanted to just, just wrap up 2023 because the same people obviously have predictions for 2024. Are you amazed at the degree to which the consensus was as wrong as it. I think it's the most wrong I have ever seen the consensus for any year that I can remember in terms of the economy and the stock market. Are you like, well, I'm still amazed by this. I can't believe it. I'm more amazed. I'm more amazed about how last year turned out than people predicting a recession. Like in 2022, a recession in 2023 was very much the rational call.

So I'm not shocked. I'm shocked at the outcome. Not that everybody was wrong necessarily. No, but just the degree to which everyone's- Dude, it was a wild year. It was really a wild year. NASDAQ was up 50% last year. NASDAQ was up 50%.

It's crazy. So, all right, this is, let's get this on screen if we have it. So this was a Bloomberg story, just documenting like just how wildly wrong, it says fewer than one third of economists now forecast a recession in the next 12 months. Last year, they were singing a different tune. 70% of economists were, or economists were predicting a 70% chance of a recession last year is the way to phrase this. So the same economists now for this coming year are saying, 19% are saying it's a, it's a no recession, soft landing. 32% are saying recession. Josh. So 49% said soft landing. 19% said landing, no recession. What's the difference between a soft landing and a landing without a recession? I thought that's what a soft landing was. A soft landing is like the economy decelerates without spilling all the way into a recession, I guess. I don't know. And what's a landing, no recession?

into a recession, I guess. I don't know. And what's a landing no recession? A landing no recession. Oh, it's not soft. Like it's a little bit rocky, but we still don't have a recession. I don't know. I don't know.

A landing? I predict a landing. How about that? Rebalancing. Yeah, it's positioning. All right. This is a quote that you pulled out. Let's hear it.

All right. So Michael Sanbless was doing like a recap on how everybody was so wrong. And I thought this is very, very smart. He said the solution here is – oh, I'm sorry. He said the problem is that the real world is not as consistent as model builders might like. So he's talking about people using like economic models. Of course we know that. But then he says, this is the profound insight. The solution here is not to sweep past doctrine under the rug.

It's to be more forthright. Macro economists very often don't know what is going on. And that holds true for all the different styles and flavors of macro. Yeah. of macro. Yeah, I think, I think like also it's the, it's the hangover of an event, the likes of which we've never seen. We've never, we, we just don't have reliable data for the reaction to the unwind of a pandemic and just the sheer amount of stimulus that was done, both monetary and fiscal, even the people doing the stimulus, like Janet Yellen could not have been more wrong.

She was spearheading the stimulus for Biden, at least since the Biden takeover. Like the Fed, their own modeling, their own forecast, which is so insanely off in both directions. But I think that that can be explained by just the magnitude of money that we threw at this problem. And there were just, you know, and then there were some pandemic specific things that just, you know, how, how could you have, how could you have an analog to compare it to? We've never lived

through this before. But so, so the, one of the takeaways is like that fiscal policy basically sending checks is more effective than monetary policy. Well, yeah, it was during the pandemic, but who's to say that the next time that there's a recession, so now the takeaway is, well, you can't do that much fiscal stimulus because look what happened during the pandemic. You got all this inflation. Who's to say that if there was just a regular recession and you did fiscal stimulus, that there would be corresponding inflation to follow? Like absent supply chain issues, who knows? Um, there's another piece that looked at, um, the advice that wall street was giving and, you know, again, stipulating like this was not an easy thing to get right, but the degree to which things were in the exact opposite direction is really also amazing. So not just how many people got it wrong,

but how horrible the consensus advice was in terms of what investors should do going into 2023. So I'll just quote a little bit of this. Let me see what, this is also from Bloomberg. Bloomberg's been pretty tough on Wall Street. Over at Morgan Stanley, Mike Wilson, the bearish stock strategist who is rapidly becoming a market darling, was predicting the S&P 500 index was about to tumble. A few blocks away at Bank of America, Megan Swiber and her colleagues were telling clients prepare for a plunge in treasury bond yields. And at Goldman Sachs, strategists were talking of Chinese assets as the economy there finally roared back.

Blended together, these three calls, sell U.S. stocks, buy treasuries, buy Chinese stocks, form the consensus view on Wall Street. And once again, the consensus was dead wrong. The S&P went up 25%. The Nasdaq went up 50%. Obviously, we know bonds were a disaster. And obviously, Chinese stocks making multi-decade lows. So you could not have come up with a worse consensus going into 23. So it's not just they were wrong directionally.

It's the degree that I think is so surprising. And these are really bright people. And so the takeaway isn't everyone's an asshole. The takeaway is this is really hard, no matter how much econometric data you have at your disposal, no matter how many Bloomberg terminals you have in the building, no matter who you talk to, your level of experience, put all of it, put all of it on the table. And this still doesn't get any easier. Isn't that the right takeaway for investors? My big takeaway before we get to our 2024 predictions is that nobody

can see the future. It's just very simple. Nobody can see the future. Other than Barry Ritholtz. I totally agree with you. I totally agree. That's it. All right. What are these charts? Let's do these. Let's just go through these real quickly. So this is from Semblist. He was basically saying, so throw away the pandemic because that recession obviously was, you know, COVID induced, not economic, an economic recession. Deliberate. It's a deliberate recession. Yeah. The, the Fed never got that, that tight in this time around relative, relative to how tight the real cost of money had been preceding previous recessions. So you can see that in this chart. Next chart, and this is really just incredible.

So the red line is corporate net interest payments as a percentage of their overall profits. And obviously, you would expect this to somewhat follow Fed funds rates or interest rates. Wrong, because 90% of their debt was locked and fixed. And as a matter of fact, not only did their interest payments not go up, it went down because all the hundreds of billions of dollars that they're holding on the balance sheet. This is so important. And this is not something that I saw in advance, but it did become apparent to most of us during the course of last year.

You don't have to wait for year end. We spoke a lot about this over the course of the year. So it was not predicted, but it was certainly remarked upon. And I will tell you, there are people selling macroeconomic stock market systems to traders. There are people selling alerts and all this bullshit. And this is the thing, like if you had to guess, why did people keep saying recession, recession, recession the whole year? Like what was the main thing driving that? I think it's the over-reliance on previous rate hiking cycles where you didn't have this much money locked up at such low rates.

Like that's where they, they overestimated the rate at which we were going to see an uptick in defaults or the rate at which we were going to see a maturity wall come crashing down. And, and we just, it never happened last year. It may still, but that was like, that was the, the main reason, in my opinion, that people that were bearish the whole year and talking about recession and the cycle ended, that's the thing they didn't see. What, what, what do you think about that idea? Yeah, that's it. That's it. It was just, it was interest rates. It was any, listen, it's not complicated. If the Fed is trying to slow the economy, why would you be bullish?

Right? It just, the Fed, the Fed couldn't slow the economy. So I don't, I don't point fingers at or anything like that. It was a really tough year to get right. Right. The Fed couldn't go back in time and stop companies from, from locking in 3% rates. Like they couldn't, that's the thing they couldn't do. They couldn't force companies to have to re-up on, on, on credit earlier than they actually had to. And they couldn't stop the fact that so many people extended their time horizon. And that's just the end of it. Like,

it's really, it's pretty black and white. One more small ingredient in all of this is that companies had a really difficult time getting talent during the pandemic, right? Like, job switchers were making so much money when they switched jobs that they were probably reluctant to do layoffs at the margin. And just another, a small reason, but a reason nonetheless, why maybe unemployment didn't go up as much as you would have thought. Let's get into what strategists are now saying. Now that we've just completely trashed everyone's opinions about the future, let's talk about people's 2024 outlook. The outlook going into 2024 is a lot rosier than the outlook was going into 2023. This is a deal book piece at the New York Times, very well done.

Analysts see lower borrowing costs, a soft landing, whatever that is, and a pretty good year for investors. Here, hold on. We have all the targets. We don't have to go through the targets. Here are some comments. Bank of America's equity strategist led by Savita, who we love, are among those in the bullish camp in their annual forecast. They said S&P could close out the year at 5,000,

helped by a kind of Goldilocks scenario of falling prices and rising corporate profits. It's like the worst term ever. Goldilocks, yeah, it's scary. Like, just don't say it out loud. It's like Candyman. If you say Goldilocks three times, 100% we're having a recession,

depending on who says it. Okay. I don't like that. Goldman is at 5,100. They made the change after the Fed's surprise statement on December 13th, that the equivalent of three interest rate cuts were on the table for next year. Meanwhile, we're pricing them like seven. Lower borrowing costs tend to give consumers and businesses more spending power, which could help corporate America's bottom line. Plausible, yeah?

Yes? Okay. Here are the bears. JP Morgan, price target 4,200, which is below where we are. Marko Kalanovic sees a struggling consumer with depleted savings, a potential recession, and geopolitical uncertainty that could push up commodity prices like oil and push down global growth. Again, also plausible. Plausible, yeah. Who would fight with that?

All right, last couple. Lee Farage, the head of multi-asset strategy at State Street, more optimistic on the consumer, but points to a different challenge for investors. Quote, if I'm right, the economy stays stronger, but then that's a double-edged sword for equities. This is your bear case, Mike. The prospect of robust consumer and business spending poses an inflation risk

that could force the Fed to hold rates higher for longer and even pause cuts. That's going to be a headwind for equities. I wouldn't be surprised to see a fairly flat year next year. If we're up, it's going to be the Magnificent Seven that are the drivers again. What are your thoughts? So let's throw this chart on John from the chart of the year. So the question is, this is just phenomenal. Central banks hiking and

cutting and the black line is just the net policy moves. So massive, massive hikes and summer cutting, more cuts are implied by the Federal Reserve chart off. So the question is now, like a soft landing is not enough. Rate cuts are not enough. Because all of that, that's consensus now. Everybody thinks that happens. And so if-

Rate cuts are not enough for what? For stocks to keep going up or to stay where they are? For stocks to have another 20%. I'm saying the market with 50% a year in the NASDAQ, 26% for the year for the S&P. We know. It's forward-looking. I think it's already looking ahead to those rate cuts. So if we do get a pickup in spending, if inflation picks up again and the Fed has to pause,

I don't know if that's not bearish for the market. It very well might be. You know what? I think that we're getting very close to an un-inversion. And I don't have this as one of my predictions, but I think the two tens will un-invert before the end of the first half of the year. So I'll just, I'll throw that out as a prediction. We're now at negative 35, which is the closest we've gotten to break even in a long time. And if you get a couple of rate, if you get a couple of rate cuts,

like in the first half of this year, and the long ends, let's say the intermediate term bonds hold up, I don't care as much about the long end, but at least the 10 year believes some plausible economic growth story for the US, I think we could see that on inversion happen. And you don't need a ton of cuts for that to take place.

A lot of people are now saying March cuts, like that's becoming consensus. I just think directionally, if you get that on inversion, people are going to be feeling pretty okay. So I don't know you need a lot of cuts. I think you just need enough. I don't know that people know what's going on with the yield curve on a day-to-day basis. No, no, no. People on wall street. I agree. I don't,

I don't mean like, like average ordinary people, but that could prolong the site. My point is if we can do that absent, like a recession, it kind of prolongs the cycle because that's what it should be. It should be lens. It should be borrow short, lend long. That's how the world should work. So hopefully that's one prediction of mine that actually comes true. And directionally, it looks like we're headed there. I always thought that was nonsense, by the way, that the borrow short, lend long piece as if banks have to follow the yield curve. Like as if they're not a massive- They don't have to. Right, it's not-

They don't have to and they don't, but it's just conceptually speaking, short-term money should be cheaper. Long-term money should be more expensive. Agreed. All right, let's move on. So really just an incredible rally for small cap stocks, mid cap stocks, equal weight.

Yeah, how about that? Through November 9th, these things were flat on the year. Shit, look at this rip. To start November, they were down 6% or so. And I bespoke tweeted this. I forgot to grab the data point. But small cap stocks just had their best two-month change in a very long time.

And we're going to go through some data and then I'll throw it back to you, Josh. Wait, can we put that chart back up? If, if, if you were long, small cat, if the Russell 2000 total return this year is plus 18.82%, it did not feel that way. Like if the actual lived experience of being in this trade, there's no way you felt emotionally like you made 18%. This is a rollercoaster like none other. This is incredible. I was talking about feelings, how the market felt in 2023. And I think the Russell is a way more emblematic of this experience. But I was talking about this with Ben on tomorrow's animal spirits, but even the NASDAQ 100, when you look back at the record books,

did 2023 feel like a record year? Because it was. I think it was the second best year or fourth best. I mean, it was crazy. Did it feel like NASDAQ was up 50% in the 100? Did it feel that way? I think it's the best NASDAQ year since 2009. Did it feel that way?

No. Well, yeah, the last two months did. November, December definitely felt that way. But the whole year, no. And a lot of NASDAQ stocks were not really participating up until more recently. It's worth pointing out. But so even the equal weight ripped it to the end of the year. All right, but let's just get to some more charts of the Russell. So this shows the percentage of stocks, not that are above their 50 day, but that are 5% or more above their 50 day moving average. And this goes back extended, like overbought over 80, 80% of Russell stocks are 5% or more above

their 50 day. That's crazy. That's wild. That's wild. It's a free-for-all. So to say that a pullback here would be perfectly, perfectly, perfectly normal is an understatement. Jonathan Harrier does some really great work on some patterns. And what we're showing, what he's showing is that 90% of the small cap 600, 90% of those stocks crossed above their 50 day moving average three times this month. What does that mean? They went, they crossed above, went below, crossed above again. Yeah, yeah, yeah.

So 90% of S&P small cap 600 stocks did that? Yeah. I mean, so it's funny. We talked so much, we spoke so much earlier in the year about lack of participation. How is only seven stocks? Well, that's, you know, 500 plus of the 600 small caps. Yeah. So, all right. So anyway, so he says that's happened 11 times since 1999. Now I wish it happened 700 times. It's only 11, but still a year later it was higher a hundred percent of the time. So I'd rather see that. Look at the photo returns after the, yeah.

Yeah. It's good. We'll take it. It's good. It's a good sign. We'll take it. It's just underlying strength, right? Yeah. All right. Let's do my meme. I made a thing.

I don't do this often. I thought this was funny. What do you think of this? Like, all right, it's for people listening. It's the Vince McMahon meme, but I went five tier instead of three. At first, it's like cash yielding 5%. Then he gets more excited. S&P returns 25.

Then he's like lean back in his chair. NASDAQ up 50%. Bitcoin up 150%. He's climaxing in the chair. And then look at small caps right now, and his eyes are white beams of light. What else could you ask? What else could you ask for out of financial markets at the end of the year? NASDAQ up 50, S&P up 25, small caps ripping, Bitcoin up huge, bond market stabilized, risk-free rate of return above

the rate of inflation in bank accounts. You want more than that? What do you need? I heard somebody complaining, where's the IPO calendar? All right, shut up already. Give it a minute. Let us get frothed up a little bit, and then we'll be ready. A little foreplay. bit and then we'll be ready. Little foreplay. Jeremy Schwartz shared a great chart looking at the dividend growth of the Russell 2000

and the S&P 500 compared with their stock prices. This goes back to the winter of 2020 and just a massive gap. I don't know necessarily if this is meaningful, but I just thought it was interesting. Russell 2000 dividends just continue uninterrupted, marching higher, and just, you know,

obviously they flagged big time the S&P over the same time period. Wait, so what is the point of it? What is it saying? Like dividends have grown, but stock prices haven't? So small cap prices down while dividends are up 40% of the last three years. How could that be? So are these stocks just so cheap on like a yield basis, like a dividend yield basis? Oh, your Denny – I saw a chart floating around today that max seven are trading at like 30 times earnings and the mid caps are like, I don't know, 14 or –

Yeah. Still, you know, reasonably priced. All right. Let's talk about JP Morgan. What a year. We have charts on this. How did this happen? Let's do the charts.

This is market cap. So JP Morgan Chase finishes the year at about a $500 billion market cap. It is so far separated now from all of the rest of the banks. It's its own category of stock, which we've talked about before. But it is challenging. One back, please, real quick. It is challenging those old market cap highs of 2021, early 2022, prior to all the bullshit. But I think the multiple is actually lower because they buy back a lot of stock.

And the dividend has been increased as well. So this has just been an incredible comeback for the largest bank in the country, maybe the largest bank in the world. Next chart. So I'm showing you now JP Morgan versus Bank of America, Citi, and Wells. I could have thrown Goldman and Morgan on here, but they're not the same animal. This is a 10-year total return chart. JP Morgan Chase up 300% over the last 10 years. Compare that. Bank of America, about half that gain. Citigroup is only up 27% in the last decade total. Not annually, total. Wells Fargo up 44%. So over 10 years, that's actually a terrible return.

So over 10 years, that's actually a terrible return. But so JP Morgan just has absolutely separated itself. This is, I forget where this came from. Oh, it's a Bloomberg piece. JP Morgan is worth more than Bank of America and Citi combined. So the pink and yellow are B of A and Citi, and J.P. Morgan is distancing itself from even a combination of those two banks, which is really incredible. Let me read this. J.P. Morgan is on track for the biggest annual profit in the history of American banking.

Its earnings from the first nine months alone would rank as the company's second best year ever. from the first nine months alone would rank as the company's second best year ever. Analysts predict by the end of this month, its annual net income will be 36% higher than last year, while the combined earnings of the next five largest banks rises about 1%. JP Morgan stock has soared to a record, gaining 26% in 2023,

outpacing every major competitor. The 24-member KBW Bank Index and 50-firm KBW Regional Bank Index are both down. What's the lesson for investors from this? I don't know. What do you think? I'm torn, but I think it has to do with quality. I don't think JP Morgan.

So obviously they benefit a great deal this year because of, uh, they were basically handed Republic bank. Like they, they obviously get a boost from that, but they also had their own organic growth. I just think in some sectors, the most important attribute of a company is quality. And over time, the highest quality company in the sector will eventually outdistance all of its other competitors. When you say quality, is quality synonymous with brand? Because as like, so maybe a little, I think JP Morgan's in the case of, oh, so this is another conversation, but maybe every sector you would define quality slightly differently.

And if you're talking about banks, you would say balance sheet strength. So like he, I mean, how much of this is Jamie Dimon? I mean, obviously a lot of it. He didn't do anything. They didn't do anything nonsensical. All of it. All of it. With their deposits.

In this sector, at this level, the person calling the shots is the risk manager in chief. And the person who decides which risks are worth taking and which aren't. And you know that stat that people were talking about with Bank of America this all year about their mortgage bond portfolio? JP Morgan just didn't do that trade in 2020. It was free money and JP Morgan, quote unquote, free money. JP Chase just didn't take it.

Bank of America took a lot of it. And that's why they were upside down, even if just on paper, in 100 billion plus worth of mortgages. And JP Morgan wasn't. And that seems to be one of the things that has separated the stock. Citigroup can't figure out things to do.

It can't grow. If the curve disinverts and their bonds become less underwater, wouldn't you expect the laggards to outperform? Or not necessarily? Yeah, and maybe they will. And pick a timeframe. I'm sure I could find a timeframe where,

but this is, I'm showing you 10 years. The decisions made, the decisions made in the post-financial crisis period by Jamie Dimon have set this bank apart from its peers. Wells Fargo had that huge scandal where they were pushing the salespeople and all the branches to do whatever it took to sign up new people.

So they just started opening up fake accounts for existing clients. Like that's an incentive system that sunk the bank. They paid probably record numbers of fines, maybe more than any other bank ever as a result of that. That's in that stock. Bank of America, we just talked about. Citi, they have all these international branches. They're number three or number four in every business they're in. They're not number one in anything that's meaningful.

Like the decision-making at these banks. So yeah, quality is management. But in the case of banks specifically, I think Fortress balance sheet or not is the question. And it won't matter in some years. In some years, the banks taking more risk will look better. But over 10 years, I think in this sector, quality beats, quality leads to growth is a reason JP Morgan is there waiting for all these failed things to come their way that they can benefit from. And I think that's the thing that separates the big winners in, in, in financial space. Uh, look at insurance. It's no different Berkshire Hathaway. It's no different, right? It's the same concept. Uh, so that's, that's my take there, but I just, I can't believe how well this stock did considering all of the obvious headwinds that we've been talking about for the last 18 months. Remember the credit crunch? That was a big thing in 2023. That didn't happen. Yeah. Well, it happened over a weekend. I was busy at

my kid's basketball game. It took place. All right. Let's talk about the momentum that we've seen the past couple of weeks. Obviously it's been an incredible run really November through December for the stock market. Jason Genford, a sentiment trader, tweeted, and I'm not exactly sure what this means, but it's meaningful. For the fourth time only since 1950, the McClellan Summation Index for the S&P 500 is set to cross 1,500. I think this is like a sort of an advanced decline dispersion measurement. But basically, everything's going up is what this is showing. The only precedents are the ends of bear markets in 1970, 1974, and the early 2010.

So again, we don't have a million examples of this. But just very simply, what I want to say is people get nervous about this stuff. And I understand. But just to bring a JC-ism into this, an overwhelming amount of demand for stocks is not bearish. Now, it might be short-term, but that's not a bad thing. amount of demand for stocks is not bearish. Now it might be short term, but that's not a bad thing. Is this similar to a breadth thrust? Like that starts a new bull market? Is that a similar phenomenon? I think so. You said like a lot of stocks going up all at once. So here's the S&P 500. We showed earlier the Russell 2000. This is the S&P 500. It's just

the percentage of stocks above their 50 day. Again, sort of LOL to the it's only seven stocks stocks thing. And I guess it was, look at, look at, look at earlier. It was really only 10% of stocks were above their 50 day during the washout, but this is about as good as it gets. This is as good as it gets. I agree with that. That's a great take. Like, like this is when people talk about a great market, you're in it, you're in it, or you are, or you are up until the 31st, uh, at least you're, we just had as good as the market could get. The S and P went up nine straight weeks. Yeah. The only time that's happened, uh, or I'm saying the last time that happened was 2004. Like this just doesn't happen. So maybe try and enjoy it while it lasts. Cause it's not going to last forever.

Jim Cramer came on CNBC this morning and said, sell something like you should be selling. You should be selling across the board, no matter how good you think things are going to be this year. It doesn't matter. You've probably already gotten paid for a lot of how good things are going to be this year. Like I thought that that look, it's obviously generalized advice. That's probably not like great advice for everyone. But as a rule of thumb, when you're in a market, that's as good as it gets, like recognize it, maybe pay a little, you know, pay a little, pay a little tax. One thing, Josh, that 2023 had going for it, that 2022 doesn't is everyone was bearish in 2022, in the end of 2022. When I say everyone, all of us, everyone. And I looked at, just to use the AAII Bulls Bears

as like a sort of proxy for this. In the 10 years where you had, chart off please for a second. Thank you. In the 10 years where you had the highest reading of Bulls, the average return the next year was 2%. And where this is, in the 10 years where you had the least amount of bulls,

2023, going through 2023 was one of those years, you averaged a 16% return. Now, here's where we are. You don't have enough bears right now. We don't have that tailwind behind us. Here's where we are today. Charlin, please, John. So 2022, as I showed, nobody was bullish.

Yeah. Less than 30% of AII bull reading. It was like 25%. So this shows AAII bull readings at the end of December, and then the next year's S&P returns. So it's slightly negatively correlated. In other words, less bulls is good for the stock market. Coming into 2023, it's like 42% and 46%, which is basically right around the long-term average,

maybe slightly, slightly above. So certainly not euphoria in the market, at least according to this, but we don't have that tailwind that we had going into 2023. Put this chart back up. Look how f***ed up 2007 was. So you weren't around then. I remember it really well. And so you had the bull percentage reading very low at 30%. And then you also got a horrible year in 2008. And that's not a run of the mill bull market. It's a full blown global crisis. But that's interesting. That's one example where the consensus was bearish and right. And you could kind of understand why you had a lot of things blowing up before the stock

market blew up. Like you had hedge funds going under, you had a lot of private equity deals from a couple of years prior blowing up. Like you just, there was, there was some shit going on in 07 prior to like the real thing blowing up a few months later. So that's, that's an interesting outlier. So out of the top 10, or the top 10, like least bear, least bulls. So I guess top 10 most bearish. The top 10 least bulls, so I guess top 10 most bearish, that was the outlier. Yeah.

2007 was the outlier. Every other year was 20% – not 20, double-digit gains. Absolutely. All right. New Year's resolutions. No, you go first. Are you a rest guy? I have two. I have two questions.

First is what do you want to do more of in 2024? Like a positive resolution. Like what's something that – what's some shit that you're on right now that you're like, I need to be doing more? I want to get back into reading. I brought a horrible book on the airplane today. I was so mad at myself. I read like 50 pages. I was like, ugh.

Out of all the – I just grabbed one off my stack and it was terrible. I threw it at the airport. Was it Morgan Housel's book? No, I don't name names. It was not Morgan's book, obviously. So I want to do more reading. Did you leave it on the plane? Did you leave it in the pocket?

No, I threw it out. I didn't want to make somebody else do it. You put a book in the garbage? I did. I know, man. You know how bad that has to be? It was pretty bad. It must have been really bad.

All right. Matter of fact, I think maybe the only time I've ever done that, it was bad. All right. So we digressed. So you want to read more books in 2024? I want to read more books. All right. Good. And what did you do this year that you're not going to do again in 2024? All right. Here's what I would like to do less of two things. I would like to be on my phone less when I'm just sitting on the couch with my kids. What's your average hourly? What does Apple tell you? I'm on five hours a day. That's not that much. It's not that much. A lot of that you're doing for work.

No, but the thing is, I scroll too much when I'm with my kids and I hate it. It's not quality time. I agree. No, it's garbage. It's garbage. I'm not on my phone during the day when I'm with my kids and I hate it. It's not quality time. I agree. No, it's garbage. It's garbage. And I'm not on my phone during the day. I'm only on my phone when I'm done with work. And I hate it. I really, so I want to like either put my phone in a drawer or leave it.

But I don't know. I just, I want to do less. And then the other thing I want to do less. Turn it off. Go ahead. No, turn it off. Turn the phone off. What are you missing? Me and Ben?

No, I know. Oh, I know. Who's texting you? No, I'm, dude, it's an addiction. You're with your wife. Ben is with his wife. I'm with mine. Chris?

I know. I know. And then the other thing that I want to do less of, I want to, I think, I think I, I want to have, I want to drink less than a hundred days this year, which sounds ridiculous. That's not, that shouldn't be that hard. Wait, wait, wait, wait.

What do you mean? Are you drinking during the day now? How many days do you drink? No, I'm saying out of the year, I think it's – I don't know. I don't keep track of this, but I might have drank 100 days last year. Is that possible? Every three days? Yeah, yeah, yeah.

That's too much. That's not true. Every three days? No, it is true. It's like two – it's two times a week. Dude? No, it is true. It's like two times a week. Dude, it's twice a week. It's twice a week. Are you like opening a bottle for like a Knicks game at home?

No. No, you know I'm not. You're drinking when you're out, right? I'm drinking when I'm out, yeah. No, I never drink at home. Are you out three nights a week? Could that be? Two.

There's 52 weeks in a year. Okay, yeah. You probably drank 100 nights. Oh, I know I did. I would say. Yeah. Okay. That's a good one.

So what do you want to do? 95? What do we, I would, I would, I would take 90. 90. Okay. All right. I don't hate that. Uh, what do I want to do more of in 2024?

Uh, honestly, I was going to, I was going to say the books, but the truth is my number one project this year is to get myself into better shape, like number one, number one, number one. So I think what I want to do more is just like on my calendar, just literally carve out time during the day where that's like, it's part of my job. And some extent it is like, I can't be America's sweetheart on television, the amount that I am and not pay more attention to like what I'm giving. Like this is this, what you're looking at right here. This is what I'm giving. Are we running a 5k in the spring? Yeah, we are. Okay. No, we're not. We're doing the JP Morgan corporate challenge, but it's not till June.

It's not a 5k. It is. It's I it's six miles. So is that a 5k? It's six miles. Excuse me. Not six. Excuse me. Three and a half. Okay. Yeah. That's a 5k approximately. I think we could, it's in central park. I've done this before, by the way. So yeah, you did this like 90 pounds and 15 years ago. I know. So we're going to see if I could do it again. All right. Anyway, that's what I want to do more of. What did I do this year that I'm not going to do again in 2020? Honestly, I think I'm just going to take many, many more opinions of others with a grain of salt. And I'm going to be actively looking for reasons to disagree with, with people's market and economic opinions, not looking for reasons to agree with them.

And I think that I personally became very, very susceptible. Really? Yeah. I feel like you're not swayed by other people's opinions about the market. I'm usually not. I'm very much known as a maverick, but I think what I want to do less of or things I don't want to bring into 2024, I pay attention to people's opinions because I need them to help shape my own.

But I think I'm going to fall for the idea that people actually can know what's going to happen. I think I'm going to fall for it much less. I'm going to force myself. I'm really surprised to hear you say this. Like you value people's market opinions. It's not that I value them. I get like influenced by them is what I'm trying to say. So I got a Monday.

I could read what one person says and be like, Ooh, I think I agree with this. And then on Tuesday I could read someone who is very persuasive saying the exact opposite. And I could find myself getting tugged. And it's not, I mean, it's not the worst thing. It's just not productive. It's just not productive. So that's what, why is that funny?

What, say it. No, I'm not going to say it. What you said was funny. I'm just saying I, I fell into a habit where I had become like hypnotized a little bit by too much – too many people's opinions and I want to go back to formulating my own on the facts and much less of what other people are putting in my head. Okay. I like that. I don't know. I think that's an admirable, right?

That's good. So if – you'll know I'm successful based on what I'm preoccupied by three months from now. If I've, if I've made the turn, uh, you have some predictions for 2024. I thought this is really well done. You are going out of your way to caveat the shit out of this because you have, well, you know what, you know what, no, you know what I should have done. I was again, I was, I said this with Ben, you did three paragraphs of how bad your track record is and grains of salt. I did good last year. I did good.

I think I was six and four. I had a great year last year. I know. I don't know why you're caveating. What I should have done, what I should have done was have odds for every prediction. In other words,

like the Robinhood gets acquired prediction, like I should have, like that should be like plus 2,300. You know what I mean? Like I don't actually think it's going to happen, but if i was given those odds maybe i would hit it all right read these off for us now you read them off i don't have it in front of me i'm reading your prediction okay hold on no consolidate yeah go ahead no consolidation immediate you react you react to your predictions react okay give me like a sentence on each of these because we're we're the hour is drawing

near let's go no consolidation in media streamers i just said it sir these these companies are well they're not they're not better bigger they're not better together wonder brothers and paramounts there's not what their synergies they're gonna save they're gonna cut some salaries these companies are both shit they're not better together i just don't see it. I don't see who wins here. It's just a bigger pile of shit. It's a bigger pile of shit. Did you hear what Tim Dillon said? He told me, Zasloff at Warner Brothers Discovery, he says, Daddy Zas just wants to build a company so big that nobody could figure out why it's failing. I don't hate it. By the way, did you watch Thanksgiving? Tim Dillon is in it.

He has a pretty big cameo. I didn't see it. I love it. It was funny. All right. Apple gets dropped for the Magnificent Seven. This is probably your worst take. So I don't know who is the arbiter of the Mag Seven. But what I really meant to say was I think Apple is going to massively underperform this year.

Okay. But it will still be a Mag Seven stock unless you think it's going to lose a trillion in market cap. Is that what you're – Mag 7 is not based on performance. It's based on size. Size. Okay. All right. Well, then I walk it back.

What I meant to say was Apple is going to have a – You think Netflix will have a better year than Apple? Okay. I could be convinced of that easily. I just think that big tech will have another solid year and Apple is going to fall behind. All right. Amazon gains 25%. Microsoft becomes the first $4 trillion stock. Amazon has underperformed for five years. The S and P it's, it hasn't been a new all-time high in 650 days. That's the longest streak going back to 2009. I am bullish on what they're doing with the ad

business. So they're charging $3 a month for prime members. If you don't want to see ads, they don't want you to pay $3 a month. They'd rather you not and just watch the ads. That's going to be billions and billions and billions of dollars to their bottom line. So I think this is the year that Amazon gets going and Microsoft, I don't know, 4 trillion is aggressive given all the stock that they're buying back. But I think that they're going to be the biggest beneficiary of the AI boom. And there you have it. Right, because when they buy back and shrink the float, the market cap loses its potential to become bigger because there are just less shares to spread it out among.

So market cap might be the wrong way to – I don't know. I get what you're saying. Even still. All right, so Robinhood. So market cap might be the wrong way to, I don't know. I get what you're saying. Even still, even still. All right, so Robinhood. Robinhood has 23 million accounts. The worst accounts you could have. No offense.

10 million active. Yeah. These are people that are specifically there to pay nothing for any service or anything whatsoever. I hate it. You know what actually Robinhood is working on in real life? Not getting acquired because they won't be happy with the offer. Robinhood is building this thing called Sherwood Media, and they're rounding up bloggers. They're trying to do like what we did, I guess, but it won't be good.

This audience is incredibly valuable and incredibly difficult to attract as clients. So I think that there's a lot of opportunity to do more things with them. I couldn't disagree with you more. I think this audience is very unvaluable and that's reflected in its current market cap. Nobody wants to cater to a retail audience that's paying nothing for any service at all. It's just, it's not valuable at all. I'd rather have Coinbase as users. Listen, that was plus 2,300. So. Okay. All right. Inflation gets to the Fed's target. The economy overheats.

No, no, no. Wait, wait. You skip one. You skip one. You skip one. Money stays in money market funds. So there's $6 trillion. Maybe this is a Grand Rapids hedge, but I think 5 trillion stays in. I'm not saying like it's all going to stay in, but most of it. Okay. Inflation gets to the Fed's target. They'll get to 2%. Yep. You think? So how does the economy overheat if that's the case? It's going to come down and then it's going to pick back up.

What's going to come down? The economic growth? Inflation is going to come back down. Oh, I got you. Okay. And I think the stock market and the housing market can go crazy. Do you think that's the biggest risk to year end is what happens in the middle? I don't know about the timing, but yeah. You know what, Mike, we didn't

get the IPO bubble yet, which we might, I'll talk about in a minute. But I feel like you need that before things really overheat historically. All right. Vibe recovery begins. Same thing. Let's skip that. You say no recession, stocks gain 20%. Large cap tech rolls on. The other 493 catch up. Okay. Listen, this is the hardest bet to make, another double digit year for large cap tech. They've gone up so much, they're all already expensive. Unless there's some massive, like, real AI applications going off this year, it's hard for me to picture this coming true. It would have been much easier to say mean reversion, large tech falls 20%.

Yeah, I agree. No, I agree. It's a very tough bet. Bitcoin hits 100,000. I think it fails at the old high, my personal opinion. I do not think that the ETF is going to be a sell the news event because it's not hype. Like there's going to be actual, I mean, we'll see.

I think there's going to be $10 billion that comes in in the first, I don't know, 60 days. And you think that's enough for the underlying to get to 100,000? I'm not saying it's going to do it in the first 60 days. Okay. All right. Obligatory. Something comes out of nowhere and makes at least half of these predictions look very dumb.

All right. You could put that every year. Okay. Obviously. All right. What do you got? Here are my predictions. They're all going to come true.

The return of the IPO. I think the hottest deal of the year is going to be Kim Kardashian. She's going to bring skims public. John, I think we have a picture of Kim. Let's not use that. Yeah, that's a better one. Uh, so they just raised skims is, is like under, undergarments, but they are rapidly expanding into all different categories. Um, what was I going to say about this? Oh, so they just raised70 million at a $4 billion valuation this fall. They had a $750 million year versus $500 million the previous year. This company is growing faster than anything

else in apparel. And you could just picture her ringing the bell on the New York Stock Exchange, right? Like 100%, right? Okay. That's going to happen. They're saying this year. And it's not like really her running the company. There's a CEO and he's a veteran, like a garment and clothing apparel veteran. I think it's going to be hot. Reddit and Discord. We haven't had a social media IPO in a really long time.

Thoughts? Which of these do you think has better process, knowing nothing about their financials, just usage alone? Which of these would you rather bet on? Reddit only because it's so established. I wonder if Discord is more of like a time capsule of 2020. You know what I mean? I don't know what Reddit's growth is. I don't know if it's a beneficiary of Twitter falling apart or not. I don't really know what's going on there. But I just feel like that's established.

It's not going anywhere. It's been around for more than a decade. I really do think that Discord is more of like the traders. Like, I just don't know if that's going to be a thing. All right. This is from Business Insider. Discord's considered one of the most anticipated deals of the year. They turned down a $10 billion buyout offer from Microsoft. Discord.

Yeah. Well, guess what? The Raptors turned down three first round draft picks for OG and Inove, and then shit happens. They did a $15 billion valuation in a 2021 funding round. billion dollar funding uh 15 billion dollar valuation in a 2021 funding round so it's probably more like 10 now um reddit uh they were hoping for a 15 billion dollar valuation on their ipo and uh i don't know we'll say all right uh a lot i have nothing i'll say a lot of fintech though mike because these deals have been sidelined for three years now. Stripe, Klarna, Chime, Betterment. So Chime is like banking, but like the whole thing is like no hidden fees.

It's like for underbanked. For the underbanked. Yeah, I don't know if anyone's going to get excited about that. Klarna is buy now, pay later. One of the larger platforms. It's a European-based company. And Affirm became the hottest stock of the year. So Klarna has a shot. Stripe is a huge business, merchant payment, huge business,

and they've been waiting for that one for a while. Betterment's a partner of ours on one of our services, and, of course, we're rooting for them. All right. I think those will be, I think all of those will be remarked upon deals. My second prediction, Jerome Powell steps down ahead of the 2024 election.

Why the f**k would he, why? It's like walking into like, put your hand in this meat grinder again. All right. So he beat inflation he did with no uptick in unemployment like literally a mac the immaculate the immaculate no i'm sorry i'm sorry he doesn't get caught for that no no he's gonna get credit in the books he's gonna get credit in the history books yes or or no? We were there. So you don't know. Okay. We were there. Fine. He pulled off the soft landing. Yes or no?

He did. No, we got a soft landing. No, he did not. We did it despite his, despite his best efforts. Who? Sorry. He doesn't get credit for that. Okay.

All right. Fine. During his tenure, he missed the inflation. He missed it. He fixed it. He fixed it. He fixed it. I don't know. My point is he has an achievement.

Who would stick around to wait for the next recession to be the bad guy again? You'd have to be an idiot, right? I totally agree with you. And then it's going to be Emperor Trump. Trump on the first day is going to call him up and say 2.2 and uh 2.25 that's where i want rates i dare you not to do it i'll jail you they just they made me king for life so he already went through this with trump he's not doing this for another round so i think this summer he announces that he's uh out and he'll be out before the inauguration.

And kudos to him. Great, great. Alex Jones. Great idea. Oh yeah. Probably the worst person you could think of will be the next, the next Fed chair. All right. Private equity comes back.

I won't spend a lot of time on this. Private equity disappeared off the face of the map last year because of higher borrowing rates. It made a lot of deals look stupid, and the industry is not stupid, so they took their foot off the gas pedal. They kept raising money. They stopped doing deals. Private equity deal activity dropped 40% last year globally from $1.44 trillion in 2022 to $846 billion. And that was already significantly down from the year before. So private equity has sat out for like two years now. LBO deals were down 25% last year globally.

And what else was I going to tell you? Yeah. So when the cost to do a deal, the cost to borrow money to do a deal goes from 6% to 9%, that's what actually should happen. Wall Street rewarded these stocks for the fact that they were smart to sit out. Last year was a great year. Blackstone and Apollo both went up a lot, 70 and 50%,

more than doubling the S&P 500's return. So they don't have earnings growth. They don't have revenue growth. What they have is they were responsible last year. They didn't reach. They didn't borrow money at stupid prices. They didn't do stupid shit. So that's my third prediction.

And that's pretty much all I got. All right. We're going to make the case. All right. I did this stock last year. I can't remember when. I should have updated this. I'm sorry. I bought it since I sold the stock for a loss assuredly. So Dollar General, the stock got killed. I tried to bottom fish, but I put my

hand in the cookie jar and it got smacked, but I did it again. All right. So this got hit for good reason. The earnings per share got clobbered. Some of this was management, but also just inflation hitting the lower end consumer. Next chart, please, John. So their earnings, this was, you know, stocks don't get cut in half for no reason. There's a good reason here. And my thesis for the turnout is very, very simple. I think inflation coming down is going to help these consumers. I think having the old CEO back is a good thing. And more importantly than anything else, gaps get filled.

Next chart, please. So you've got the first gap up at, I don't know, where is that? 55 something. The second one. So I'm in, I think at a minimum, the first gap gets filled. And we'll see about the second one. What are all these gaps down? These are earnings reports?

Just really, really, really bad earnings. Really bad earnings. Is there any sign that analysts are done cutting estimates? Like are they starting to- Matter of fact, I think when I bought it, there was just a barrage of downgrades in the fourth quarter. So it's just max pessimism. So we'll see. Okay. You know my feeling on that sector. I think it's too tough a business. I'm not saying the stock can't go up 20 points. I'm just saying it's not a bad opportunity. I'm holding this for three years.

I can tell you that. All right. Let's do a mystery chart. We mentioned social media stocks earlier. Here's one you might not have looked at in a long time. Oh my God. This is one of the publicly traded largest social media companies in the world. The chart looks like death.

Uh, some improvement last year worth noting. Monster run, monster run. Is this snap? It's look at you. You're so good at this. Look at this. It's in a 67% drawdown as we speak. Uh, let's, let's put up the next chart.

What do we got? Did you buy this? Yeah, I just bought it. Tiny amount. I don't have a lot. This is Snap versus Meta. So this is going back to January of 2021, it looks like. Oh, no.

It's a three-year chart. Three-year chart. Snap is down 68% over three years. Meta is up 25%. And obviously, Meta was up down huge and then up huge. Snap has not had that comeback yet

is the point that I'm trying to bring out. Buy or sell, like gun to your head. It's a $28 billion market cap. You buy it or sell it right now. Hold on. I'm looking at the chart. What are you looking at the fundamentals?

There aren't any. I'm looking at the chart. I don't know, man The fundamentals? There aren't any. I'm looking at the chart. I don't know, man. I don't know. This just had such a monster run. Okay. I think the stock could get to $25 this year. That's another prediction.

Listen, good for you. I don't think in a straight line. I just… Obviously, it does take chutzpah to buy a stock that just went from 9 to 17. So, good for you. I don't think it's a straight line. I just- Obviously, it does take chutzpah to buy a stock that just went from nine to 17. So good for you. Big user growth for the premium product. This is not an ad business.

This is becoming a subscription business. The subscriptions will become more and more important. And I think they'll get valued more highly than Snap's ad business, which is shit. But you're talking about a company basically now in the billions in revenue. And it's been a long time. They've been public forever. They have never made money. They lost money again last year. They've had a few profitable quarters. If they get that straightened out in 24, I don't think the stock's at 16. So anyway,

we'll see what happens. And again, of course, nothing on the show is investment advice for anyone. And this will probably go against me very quickly. All right. I want to say thank you for everyone. We're running a little bit over time, but we appreciate you guys coming out for the live. Make sure you leave a rating and review before you go. If you're watching on YouTube, if you're listening on the podcast app of your choice, of course, ratings and reviews go very far for the algorithm. We love your reviews. We read them. We laugh at them.

Please, by all means, leave us a new one to start the year. Thanks to John for running the show tonight. Duncan is still away. Thanks to Daniel, Nicole, Sean. We'll see everybody later this week on an all new Compound and Friends. Good night. Whether you're just getting started as an investor or you're managing a multi-million dollar portfolio, Ritholtz Wealth Management has the solution for you. It all starts with

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