The Compound and Friends - Nvidia's AI Woodstock, Office RE crash, avoid equal-weighting Nick Colas and Jessica Rabe

Episode Date: March 19, 2024

On this TCAF Tuesday, Downtown Josh Brown is joined by Nick Colas and Jessica Rabe from DataTrek Research to discuss a unique market moment, finding outperformance in emerging markets, cap-weighted vs equal weighted, and Elon Musk's next big business. Then, at 32:16, hear an all-new episode of What Are Your Thoughts with Josh and Michael Batnick! They discuss the Woodstock of AI, office real estate, the mania in options trading, solar stocks crashing, and much more! Thanks to Public for sponsoring this episode. To learn more about Public's new options trading offering, visit: https://public.com/ Check out the latest in financial blogger fashion at The Compound shop: https://www.idontshop.com Instagram: https://instagram.com/thecompoundnews Twitter: https://twitter.com/thecompoundnews 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. 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. Public Disclaimer: Options are not suitable for all investors and carry significant risk. Certain complex options strategies carry additional risk. Options can be risky and are not suitable for all investors. See the Characteristics and Risks of Standardized Options to learn more. For each options transaction, Public Investing shares 50% of their order flow revenue as a rebate to help reduce your trading costs. This rebate will be displayed as a negative number in the “Additional Fees” column of your Trade Confirmation Statement and will be immediately reflected in the total dollars paid or received for the transaction. Order flow rebates are only issued for options trades and not for transactions involving other assets, including equities. For more information, refer to the Fee Schedule. All investing involves the risk of loss, including loss of principal. Brokerage services for US-listed, registered securities, options and bonds in a self-directed account are offered by Open to the Public Investing, Inc., member FINRA & SIPC. See public.com/#disclosures-main for more information. *Transfer offer Terms and Conditions apply. 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. I am your host, downtown Josh Brown. Thank you so much for joining us. This show is brought to us by public.com. If you activate by March 31st, you can earn a rebate of 18 cents on every options contract you trade. All you have to do is go to public.com and activate options to get a lifetime rebate. You don't even have to place your first trade right away. Meanwhile, if you want to switch from a current brokerage account,

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in podcast description, US members only. All right. The show tonight is going to be incredible. I mean, we just, we packed it. I don't know how else to put it. We have Jessica Rabe and Nick Colas from Data Trek Research. We look at a whole host of topics. They are two of the smartest people I know. I just have so much fun bouncing questions off of them. Why have emerging markets been such a terrible asset class for so long? And is this going to change? What about equal weighting a portfolio?

Why is this even a strategy that exists for equity investors? And so much more. We talk about Starlink and SpaceX and Jessica and Nick are the best. And then it's an all new edition of What Are Your Thoughts with Michael Batnick and I. We take a look at Jensen Wang's keynote for NVIDIA's GTC event, which happened this week. at the office real estate market and where is the crash? Where's the pain that seemed very obviously on its way? We also take a look at options trading in general and all kinds of other topics. And I think you're going to have a great time listening. So I won't keep you any longer without any further ado. John Duncan, do the honors. Take us in. John Duncan, do the securities discussed in this podcast. Hi, everyone. We are live from the compound. I'm downtown Josh Brown checking in again with Nick and Jessica, who are the co-founders of Datatrack Research.

Datatrack's morning briefing goes out to 1,000 institutional and retail clients, maybe more than 1,000. I can be corrected on that. Nick and Jessica also have their own excellent YouTube channel, which you can find a link to in the description below. Nick and Jessica, welcome back. What's going on, guys? Hey, how are you?

Thank you for having us. It's always my pleasure, of course. How are you? Thank you for having us. It's always my pleasure, of course. You wrote about something fairly unique just took place on February 27th, which was just after the last time that we spoke. The S&P 500 hit a two-standard deviation return over the prior 100 days. Nick, tell us about why that's so unique and what you think it portends.

Yes, it is absolutely unique. And when we were talking last time, we knew we were in a pretty strong rally. But when we ran the numbers right afterward, it was pretty crazy because we hit an up 20% 100-day trailing return on the S&P. And that sounds high. It is high. That's like over a year's worth of normal returns. So that bears really close watching.

And it's two standard deviations, like you said. It's only happened a couple of times in the past 10 years, as you would expect with an unusual observation like that. The first time was in 2019, right after that big drop into late 2018 on the Fed talking about high neutral interest rates. And then it happened at various points in 2020 and 21, going into that top in early 22. And the next time was now. So really unusual, really worth talking about today. And went back and looked at, OK, if we just had this huge move, what should we expect going forward? And there's not a lot of analogs, obviously, when you get a big move like this. But the closest one-ish is 2019, because we came off of a lot of concerns about rates.

And then we got some good news on the Fed pivot in December. And that was kind of in the meat of this move. And so over the next 50 days, you can be expected to be up around 5%. But it kind of tails off from there. It gets pretty dull. That takes us through the next two Fed meetings. And hopefully, we get a rate cut or some visibility on our rate cut between those two meetings at some point in the near future. Past that, the market tends to churn. So the basic message from the analysis is it's probably, you know, we've had a big move. Don't expect the same

to continue. Might get a few more points, but we could be flat for a little bit after that. It's no reason to sell, but it's a reason to have reasonable expectations about what we're going to get in the future. I think this is really important for all investors, regardless of what level they're at. Expectations. After you've seen a market demonstrate this much strength, you often see people taking more risk, not less, because it's just so rewarding. They almost can't help themselves. so rewarding, they almost can't help themselves. And if history is any guide, and we don't have a ton of historical, we don't have a ton of historical analogs to this, as you pointed out,

you should be getting less excited about the very, very, very short term, and not more. Can you, can you for the folks that are listening,, that aren't sure what you mean by standard deviations, can you give us a definition and what it means to have a two-standard deviation move inside of this compressed of a period of time? Sure. So standard deviation is just a measure of how much stuff moves around, in this case, stock prices. We know stock prices are volatile. That's kind of what they do. But over the medium term, call it 100 days, you can expect a 4%, 5%, 6% average return. That's kind of normal.

Two standard deviations means that we're way outside of normal. So put it in sort of human terms. The average American male is like 5'8", 5'9". Two standard deviations above that is like 6'4", 6'5". So if you're walking down the street and you see a 6'5 dude, you're going to think, huh, that's a tall guy. That's unusually tall. The same kind of thing here. This is an unusually strong rally.

And you don't expect to see another 6'5 guy walking down the street two minutes later unless you're walking into a football team, right? It's that kind of vibe. So you mentioned the fact that we would need another catalyst once the rate cuts start. And so if right now people are expecting maybe the first cut to take place in June, given how strong the economic data has been and really the lack of any sort of urgency for the Fed to get looser right now. So let's say hypothetically that's June, July, cut one, cut two. And maybe that's overly optimistic. What do you mean by we need another catalyst

aside from that for the rally to continue? Yes. So only two things move stock prices, as we've seen over the last years. And it's been true for 100 years. It's earnings and interest rates. We interest rate picture, we think we understand pretty well. So the market's maybe a little bit hesitant going into Wednesday's Fed meeting about what Powell might say about when the first rate cut might be or if he says anything at all. But past that, we kind of know we're going to get some rate cuts. That's the baseline assumption right now. So that's already in the market. The next thing that has to show up then is corporate earnings. And corporate earnings have been really flat for the last two years, like $55, $56, $57 a share per quarter on the S&P.

They haven't really moved. And the market, Wall Street analysts expect big increases in earnings in the back half of the year. That's not going to probably happen in a stable environment. When the economy chugs along at 2%, 3%, it's really hard to get earning surprises to the upside. That's just tough because the street kind of figures out where things are going. They're expecting some growth, but more growth than 2% GDP growth would imply. So what does that tell us? We're going to need some more cost cutting coming out of big companies. We've seen some already. Probably going to need to see more because corporate managements understand in a stable environment, the only way to grow earnings and improve your stock price is to

reduce your costs. So that probably leads us to a back half of the year, incrementally higher levels of unemployment. Sorry to interrupt you. So you think that CFOs and CEOs are going to look at the estimates that are already out there for their earnings and possibly do more layoffs just in order to hit those targets? Or you think it works in reverse where the targets are going to have to come down because companies are not going to play the game and try to beat by a penny? Or is it somewhere in the middle? It's somewhere in the middle with a bit of a nuance. So the way corporate, I was a sell-side analyst for a decade. I covered the auto industry. So I had a lot of conversations with CEOs and CFOs about how this dynamic really works. And a bit of it is earnings expectations. And you're

right. The street's got to bring their numbers down. They're way too high. They're thinking $65 a share in Q4 from $55 a share in Q1. That's not going to happen, obviously, in this kind of environment. But the other part of it is companies look at it and say, how do we generate earnings growth? And earnings growth sufficient to cover our cost of capital. It's a very academic discussion. But the bottom line is companies look at their earnings power and say, OK, we got to keep improving. That's what American businesses do. We got to keep improving earnings. How do we do that if growth on the top line is not so great? Well, you do it with cost saves. And we see some of that going on in tech,

but I think it's going to expand to other sectors more aggressively as we go through the year. We're seeing a little bit of it now. I think we'll see more of it later on in the year. And by the way, that's the Fed's bet as well. They think unemployment is going to go up. That's the dynamic that pushes it there. Right. So this goes into, for me, this goes into the be careful what you wish for bucket. When people are looking at rate cuts as a catalyst, the rate cuts are going to come if unemployment meaningfully ticks up to the point where the Fed really feels like they're maybe too tight. Unfortunately, that's going to coincide with headlines about potential for recession. The two things will happen together. So I'm not sure how the market takes those headlines, if and when they come, even if they come with the rate cuts finally starting. Yes, I think you put it exactly right.

It's particularly with the backdrop of that chart we had up, which is we just had this huge rally. You know, what can we expect from here? And sort of your reasonable case is another 5% maybe. But that's going to come with a little more churn than this straight shot we had from October through to February. So before we move on from this, than this straight shot we had from October through to February.

So before we move on from this, guys, I feel like the NVIDIA AI-related mega cap stock situation sort of makes this much, much different than what we saw in 2020, 2021, and in 2019. So the catalyst in Q1 2019 was the Fed reversing course from saying we're nowhere near tight enough to, oh, actually, here's three rate cuts. Very cut and dry. You can understand why the market would have a two standard deviation move. The 2020-2021 bull market, sort of the tail end of that, that looks like the end of a mania. Also, like in hindsight, you can absolutely understand where that comes from. This time around, it seems like we've got five or six companies. They're all customers of each other.

Microsoft is the biggest customer of NVIDIA. Meta is the second biggest customer. So one of them announces something positive. They all rally. Then the other one announces something positive that is absolutely tied in with the first company's positive news, and we rally all over again. That phenomenon makes this somewhat different. I guess it's always different. But any thoughts on what that might mean when we think about this huge move that we've just seen?

Yes, it's an excellent point. And you put the dynamic right. We're seeing it even today with Google and the Apple news. So that whole storyline just continues. Look, the thing I worry about most, honestly, is that we have another up 20% over the next eight, nine months, because that is the sign of a bubble forming. The dynamic that you outlined is exactly the dynamic. I mean, I lived through the late 90s, covering the auto industry and seeing tech stocks rip, and then worked for Steve Cohen, seeing the top of the dot-com bubble form and then pop. Those are fun on the way up and horrible on the way down. Let's

hope we don't get to that dynamic, but I agree with you. We're kind of halfway there. Yeah. I remember this cascade where WorldCom would say, hey, we just signed up 20 million new customers for our new broadband internet service. The whole NASDAQ would rally. Then Cisco would announce all these router and switcher sales that you know were coming directly as a result of that. Market would rally again on the same note. So it was almost a merry-go-round where it's the same spending, but we're rallying on each

company announcing it separately. So you worry that there's some element of that. I want to move on to equal weight versus S&P 500 market cap weight. Jessica, you asked the question, I guess rhetorically, is the equal weight S&P 500 cheap or broken? The RSP, which is the equal weight index ETF that most people reference, has just underperformed the SPY or the IVV,

which are both the same index, the market cap weighted S&P 500, by over three standard deviations on a one-year basis going back 20 years. And we have this chart on screen for those joining us via YouTube. Walk us through what's going on here. Sure. Yeah. I have three main points on this topic. It's super important. As you just outlined, and you can see in the chart, the equal weight S&P

500 has recently underperformed the more commonly cited market cap weighted S&P by 18 percentage points over the prior year. So yeah, that's three standard deviations long run mean. In other words, this is extremely unusual. This has never happened. Yeah, this is unprecedented over the last 20 years. So our point number two on this is we dug into why the equal weight S&P is performing so badly. And it's important to understand that this version of the index weights companies, not sectors equally.

So I think you have a table of the weightings. The equal weight S&P is not a neutral index. It still makes explicit sector calls. on a neutral index, it still makes explicit sector calls. So as you can see in the table, for example, it's really overweight industrials, but it's very underweight tech relative to the cap weighted S&P. So the equal weight S&P is more heavily exposed to cyclicals. So you think that that is a very big factor in the degree of underperformance, uh, that even though we're, even though we're equal weighting the stocks, we still have more stocks in the, in the, in certain categories. And so basically it becomes an, uh, becomes an industry debt

more than it becomes anything else. Is that, that's what we're saying? Yeah, exactly. And if you, uh, I think you have a table of the performance data. Another thing we found that's really important is that most or seven out of the 11 equal weight S&P sectors have lagged their cap weighted counterparts over the last year. So of course, this underperformance is especially evident in tech heavy sectors like communication, technology, consumer discretionary, sectors with big tech companies that have the capital to quickly leverage new disruptive tech like Gen AI. But what you can see on that table too is that it's not just tech. Equal weight S&P sectors

are also lagging in older line groups like financials and consumer staples. And herein lies an underappreciated and important lesson, which is that sector returns have been more concentrated in larger names over the last year. Investors are clustering around larger cap stocks. As you would expect them to, given the dynamics of interest rates, it's not a secret to anyone that larger companies with bigger balance sheets and higher credit ratings are going to have an easier time in the next year rolling debt, borrowing money, et cetera, than smaller companies. And stock market investors are clustering accordingly. And you point out that's happening in every one of the 11 sectors? Yeah, so exactly. Just think about even ex-tech, think about like Eli Lilly

driving returns in healthcare with their new weight loss drugs. Right. So there are gigantic companies in real estate, in industrials, in financials, in consumer staples. Some of them are more dominated than others by the largest companies. But if you go down the list, you can see that the smaller names tend to underperform the larger names over the last year. over the last year. Yeah. And you see that index construction really matters. That's why we do favor the market cap weighted S&P. Number one, it's more exposed to tech in general and big tech, but also favors winning names by giving them more exposure, unlike the equal weight S&P. So we think that's a feature, not a bug. You asked the question, should a long-term investor be chronically underweight tech and big tech? Meaning, should anyone have equal weighting an index as their investment strategy? And your argument is no. You say the RSP is at best a trader's tool to play cyclical bounces.

It should not be a replacement for a cap-weighted S&P fund. So I agree with that, but can you say more? Yeah, definitely not. There's two scenarios in which the equal-weighted S&P outperforms the cap-weighted S&P. One is like you just said, off a cyclical bottom like in 2009. Another is when growth underperforms like in 2022. We're not in either scenario now. So we definitely favor the cap weighted S&P. Can we put up that original chart? There are very few prolonged stretches here where equal weight does better than market cap weight. They tend to be short and sharp. And then that outperformance looks like it tends to fade away. Am I overstating the degree to which this is not a good investment strategy, guys? No, we really view it as a trade.

It's a trade, not an investment. So if you think you're coming out of a cyclical bottom, another way to express this would just be to buy cyclical sectors or buy small caps outright, not trade your cap waiting for an equal weight. Okay. We agree on that. Nick, I want to ask you about emerging markets. So this is for the first time in a while, I'm hearing people talk about emerging markets positively again. I think it has something to do with non-Chinese Asian markets. And obviously, India is the latest exemplar of a darling in the EM space, but you're making a different point. You're making, I think, a very strong point that just emerging market investing in general as a long-term portfolio allocation has not been great. Yeah, that's absolutely right. I mean, we have the saying money has to go somewhere. So there's always going to be pockets of EM that work and some work structurally okay. So for example, China has not been going. So the

S&P is up 10%, 12% on average over the last 10 years. EM is up 3% on average over the last 10 years. And this is just using SPY or IVV and then EEM as the proxy. So those are average total returns. And then you go down the list of EM markets and you see China, you know, only up 1% a year for the last 10 years. Horrible. Which is terrible. China only up 1% a year for the last 10 years. Horrible. Which is terrible. Horrible. And you're not even adjusting this for volatility. No. If you were to adjust that for volatility, it's a starkly negative number. It's horrible. Look, I mean, there are some winners, right? You can see now down the list, Taiwan, mostly because of Taiwan semi-inv tech. That's done okay. 11%. Hasn't beat the S&P, but it's done okay, respectable. India does look a lot better. It looks like a better,

longer-term winner. But again, you're taking currency risk and you're taking political risk in India. You don't take that in the U.S. And so you end up with a situation where those are the two best, Taiwan because of tech and India because it's a legitimate growth economy and that works fine. Everything else on that list is plus three to minus three. That just doesn't work. Wait a minute. Here's the trouble with that. How many people 10 years ago would have selected Taiwan and India as the long-term winners and not China and not Brazil or some of the other traditional EM countries? It's almost like throwing darts. We're talking about maybe 20 country markets that are defined as EM. And can you tell me in

advance which of these are going to be the top two or three? Because if you don't get those right, overweighting your EM allocation, you end up with perhaps one of the big losers as an overweight, which a lot of people did with China. Yeah, think about how hot the BRICS idea was a decade ago. That's just obviously- Two decades ago, but yeah, it was around. Yeah, the first decade was fine. The second decade, not so much. And that's the decade we've been living in. And look, you got to ask yourself the question, what's going on here? Because these economies do grow. The economies grow. That part of the structure is correct. What's not correct is that you're not investing in GDP when you buy a stock market overseas. You're investing in the companies that that economy creates. And the

economy creates great companies in America. We have a particular form of capitalism that spawns and creates and grows managements and ideas and technologies on a global scale. And that's why the US stock market's done so much better. And so looking forward, you ask yourself the question, OK, are any of those EM countries better positioned now than they were a decade ago for what creates earnings? And the short answer, I think, is no, absolutely not. And so for answer, I think, is no, absolutely not. And so for us, what if somebody tells you what if somebody tells you they disagree because of the growing middle classes in some of these countries and the trajectory of consumerism?

And of course, India would be like an example. People might say they might say Taiwan. I'm not sure. I mean, they might even look at some of the frontier countries and talk about Saudi Arabia. What would your response be to that? Yeah, look, at a macro level, obviously a fair point. But again, it comes down to what is the stock market reward?

It rewards global scale, earnings power, and growth. And so, okay, you're playing a middle-class growth in India. That's great, solid investment idea. And you can probably outperform the local market by investing in those themes, but can you outperform the US? And I think the answer is no, because we're creating all the technologies that drive the world economy with very few exceptions. One of the things I hear people talking about now when they're talking about emerging markets is just over-weighting a smaller number of countries, not worrying about what they'll miss out on, and really just focusing on what they truly believe to be true. So you hear a lot of bullishness about Mexico because of the reshoring and the friend-shoring trends. And, of course, the Mexican peso and Mexican stock market,

these things look better than they have in a long time. And there is a political story to be told for why like the setup is different than maybe it was 10 or 15 years ago. So I guess that's one way to do it. But from an, at an index level, just the fact that these countries are non-correlated, I guess it doesn't mean that you're automatically going to be rewarded for taking that risk.

And you certainly weren't over the last 10 years. Yeah, that's true. And not to be cheap about this, how many GPUs is Mexico buying? Yeah, I guess if we knew how many and where they were going. I think this is really timely because people are getting excited about it again. And it's been a long time. So we don't know what that will mean for flows. But I would be shocked if we see big flows to EM anytime soon. I think most people have fallen on the side that you have. And they're pretty disenchanted with EM as an asset class. The last thing we're going to talk about is SpaceX and Starlink. So just as like an overview for people that aren't aware, SpaceX is Elon Musk's rocket startup.

aren't aware, SpaceX is Elon Musk's rocket startup. But then buried within that is a story about doing a lot of things that historically we've not been able to do in a cost-effective way because these are rockets that take off and then land again and can be reused. One of the reasons why people are so bullish about SpaceX, in addition, is the Starlink subsidiary, which is a satellite internet technology. Most people have heard of it because of the battlefield situation in the Ukraine and the deployment of Starlink so that people had internet and can function. And that's obviously a very small use case, uh, military. The big picture here though, is, uh, it's a really, it's, it's got, it's a technology that has the ability to leapfrog a lot of our existing infrastructure. Um, Jessica, what else did you want to say on this? Yeah, no, we, we fully focus a lot on, uh, disruptive technologies at, at data track.

We have a disruption section in our daily report. The reason why we wanted to talk about it is because SpaceX just had a successful third test flight of its Starship rocket last week. So we thought that's a good launching point to talk about Starlink. Like you said, it's SpaceX's satellite internet service. Definitely doesn't get as much attention as some of Elon Musk's other businesses like Tesla or SpaceX, but it's still really important. And the reason why we think it's so important is because it's a classic example of disruptive innovation. It started by addressing an underserved community, rural internet users,

with a good, albeit not great offering at first. But then over time, it moved up the value chain as it continues to launch more satellites and improves the service. And it's expanded its offering now to other use cases. You brought up military, also enterprise, aviation, and others. And the reason you also brought up, no one's been able to do this before. And yes, the reason why SpaceX can build something like Starlink, as opposed to going bankrupt like all of its predecessors, is because of its breakthrough technology of reusable rockets

that dramatically cuts the cost of access to space. However, SpaceX does need Starship in order to launch a greater number of larger and more powerful Starlink satellites. That's going to help Starlink scale more efficiently and quickly. Is the Starship also going to be kind of like a for hire, towing things into orbit for governments or other corporations? Or is that exclusively going to be used to build the Starlink network? It's going to launch Starlink. They're also betting on it bringing people into space. Okay.

To send them to the International Space Station and things like that? And eventually Mars, et cetera. So Elon has publicly stated that he's in no rush to bring Starlink as a spinoff from SpaceX public until the cash flows are more consistent, which sounds like the kind of thing that could be like many years from now. But then you'll also hear rumors of late 2024 or early 2025. So maybe he doesn't even know yet. Maybe nobody really knows yet because there is no answer. What are your thoughts on the potential for a Starlink spinoff IPO? Yeah, so Starlink is actually a major reason why SpaceX has such a huge valuation of around $180 billion.

Starlink reportedly did recently break even on cash flow, so it can technically IPO at any time. But Elon Musk has said he's in no rush to do so. He took this year off the table for what it's worth. Ron Baron was on CNBC at the end of last year saying he thinks that it could potentially IPO in 2027 just because there's a lot of investors in the name who are going to want an exit. However, when it comes to Elon Musk and capital markets, of course, he's very unpredictable. Well, I was going to say two things. There are many shares of SpaceX out there already. They're sitting in SPVs where private capital has been able to acquire. There are some asset managers that have been able to get their hands on shares of SpaceX.

That's probably something we'll see a lot more of in the near future as the anticipation continues to build, especially if they keep hitting milestones like the one you just described. Yeah, definitely. I agree. What made the test of the Starship so exciting, do you think, this week? it, it checked a lot more accomplishments off the list and also it also lasted a lot longer. So everyone agrees that it was just a huge success. Still, still have a lot to work on, but huge success. Okay. All right. Very cool guys. I want to, I want to say thank you so much for joining us again. And for people who want to watch Nick and Jessica,

how many videos are you guys putting up? What's the cadence? I think you're once a week? We're running about once a week. We owe the system one Monday, today or tomorrow. So we're working on it now. Okay, very cool. So the YouTube channel is youtube.com

slash at Nick Colas and Jessica Rabe, or you can click on the link that we have below on both podcast and on YouTube. And of course, you could subscribe to Nick and Jessica's research at datatrekresearch.com. Guys, thanks again. We'll see you soon. Thank you. Thank you. It was a clear black night, a clear white moon. Michael B. was on the street trying to consume. Should I keep going? No, what's pandy?

What's, oh, pandemonium club. This is my shit right here. You like it? No, you're not sure? You're not sure what to say? If you like it, I like it. Dude, this shit is fly. You don't even know.

As somebody who is not in the hip-hop community, I don't really expect you to be into it, but you can appreciate the craftsmanship, certainly. If you like it, I like it. All right. All right, hey, everybody. It's downtown Josh Brown here with Michael Batnick, as always. Michael, say hello to the folks.

Hello, hello. All right. It's a big show here with Michael Batnick, as always. Michael, say hello to the folks. Hello, hello. All right. It's a big show tonight. We have so much to do. But before we get started, I did want to tell you about something public.com is offering to the investing and trading community. Michael, Options Trading is live on public.com right now. And if you activate an options trading account by March 31st, they will pay you 18 cents on every contract you trade. That's pretty good, right? This is tempting. I have to be honest. I haven't traded options in quite a long time. Oh man, dust off your boots. Get back in the saddle for this. I've told this story before, but literally one time I was buying,

I wanted to buy puts on, or puts or calls, I can't remember, it doesn't even matter, on Groupon. Let's just say I wanted to buy calls and I bought puts by accident and I said,

I guess I'm bearish now. Let's have some fun. Oh, you like talked yourself into the trade that you accidentally had there? I pressed the right button. I was like, whatever. It's all fun and games anyway. Something tells me you would probably want to do things differently if you get back in the game.

Look, there are people that love to trade options, and we're going to talk about options later on in the show. And if you do, might as well be doing it in public. So I have to read this mandatory disclosure here. Paid for by public investing. You must activate your options account by March 31st for by public investing. You must activate your options account by March 31st for the revenue share. Options are not suitable for all investors and carry significant risk. Full disclosures in podcast description, U.S. members only. All right, let's say hi to some people on the stream. It's been a while. All the regulars are here tonight.

James Sykes, Sean Grealish, Jay Luthor's in the house. Dave Wilson, I saw Cliff earlier. Jerry Gould is here. Giancarlo is here. Rachel is here. Who else? I mean, pretty much everybody's here, right? Jay Dogg.

Speaking of Giancarlo, are you watching The Gentleman yet? Love it. I'm in episode four. I'm sad that I binged. I consumed it too quickly. I should have let it marinate. It's so good. It's absurd.

Yeah, I just love Guy Ritchie. I don't like everything he does, but I think he knows his own formula now. Can you believe this guy? He's unbelievable. Take the call. Let's hear this bullshit. You know, I feel like we're back in our natural habitat. It's been a few weeks, right?

Yeah. Where we were both like, yeah, yeah, yeah. It's, it's been a lot of schlepping around for both of us and it's not over. We're going to be away next week again. All right. Tonight we have to, we have to begin with, I mean, this is the number one thing I had CNBC on in the background today for a few hours. I think there was an NVIDIA mention like every segment. I honestly don't think they went to commercial. And that's not their fault. So before anyone jumps all over CNBC, they don't invent this shit. They're doing this in response to what people care about.

There must be people on CNBC.com punching in NVIDIA ticker symbol, like literally by the millions. Dude, it was on VH1 today. That's how hot it was. Yeah. I mean, this is what people want to hear about. And with good reason. I think it's the most important stock in the world doing a major reveal of a new product that literally could change everyone's lives. So don't get upset that it's wall to wall Nvidia, just accept the fact that this is the moment. This is, this is their moment. Anyway. Uh, let me set the stage. Is that okay, Mike? Can we do that? Okay. Um, Nvidia held its GTC event in San Jose and obviously the place was packed. The entire world is paying attention. People that

two years ago never even heard of NVIDIA or Jensen Wang had camera crews like in the parking lot. There was like celebrities there. Yes. 11,000 people. Yes. So Jensen opened it up with a two-hour marathon keynote presentation on day one. And the biggest news that everyone's talking about is a gigantic GPU platform called Blackwell capable of ushering in a new era of computing. And if you're an NVIDIA shareholder, you look at this and you say, okay, how are they going to maintain their 80% market share and their lead in AI? This is it. John, let's play that clip. Hopper is fantastic, but we need bigger GPUs. And so ladies and gentlemen, I would like to introduce you to a very, very big GPU.

Blackwell is not a chip. Blackwell is the name of a platform. People think we make GPUs, and we do, but GPUs don't look the way they used to. This is the most advanced GPU in the world in production today. This is the most advanced GPU in the world in production today. This is Hopper. This is Hopper. Hopper changed the world.

This is Blackwell. 208 billion transistors. And so you can see, I can see, there's a small line between two dyes. This is the first time two dyes have abutted like this together in such a way that the two dyes think it's one chip. There's 10 terabytes of data between it. 10 terabytes per second.

So that these two sides of the Blackwell chip have no clue which side they're on. There's no memory locality issues, no cache issues. It's just one giant chip. And so when we were told that Blackwell's ambitions were beyond the limits of physics, the engineer said, so what? And so this is what happened. engineer said, so what? And so this is what happened. Okay. So it's two of those things on a board with a third chip that keeps them connected. And look, I'm obviously not a semiconductor architect. It's exciting because this is not a company that's resting on their laurels and taking solace in the fact that they own the market.

They're continuing to push the envelope. So you don't really have to understand what a teraflop of data is or any of that shit. You just have to understand that the company is like not done. And I think that that's really – like if you're long the stock and only casually aware of GPUs and how this stuff works, I feel like that's what you wanted to see them do. Is that a good take, do you think? Yeah. I mean – It's not a technical take.

It's an investment take. Well, I listened to an hour of it, and a lot of it is quite tactical and very mathy and sciencey. The way that he ended the call was like, this is the next industrial revolution. And we're hearing so much about it. We talk about it in video all the time. And it's weird because I feel like for most people, AI is not touching 99% of people's lives today. It's going to very, very soon, but it's not doing so today.

How many people are using chat GBT or mid journey or robots? Effectively nobody. But in the next 12 to 24 months, it's coming. How many people are using chat GBT or mid journey or robots effectively nobody, but in the next 12 to 24 months it's coming. So that's a, that's true. But then there's a little bit of nuance there. Probably it's touching a lot of our lives in ways that we can't see. So like if you use Uber, it's not a person directing that car to you. It's an AI system that knows how to get the right driver to you

in the right amount of time. And it's just a huge suggestion engine that's relying very heavily on chips and systems that you couldn't possibly understand. So Reels and TikTok are great examples of that. Yeah. They're totally powered by these chips. That's exactly right. So it's not touching your life in a way that you could put your finger on per se, and it might very soon.

But behind the scenes, this stuff really matters a lot. It's why we have the most profitable companies in the world. Saudi Arabia said they're going to be investing $40 billion into artificial intelligence. The New York Times reported just two hours ago. Mustafa Suleiman, did you see this yet? Yes. A co-founder of Google's DeepMind Artificial Intelligence Lab is leaving the startup he was running to lead Microsoft's consumer AI business in another side of Microsoft's

aggressive plans for the technology. Mr. Suleiman will report directly to Sadi Nadella. This is like the LOL part. Mr. Suleiman, whose startup Inflection AI raised $1.5 billion in funding, will be responsible for expanding consumer AI business, including Microsoft's Copilot chatbot, Bing search engine, and edge internet browser. So this dude and his team raised $1.5 billion and he's like out? Yeah. Which tells you, so it's funny, if you're an AI startup, you raise $1.5 billion, you end up turning over a billion dollars of it to Microsoft and NVIDIA anyway. So it really tells you how the importance of these mega platforms in the ecosystem. This is not going to be like the internet, the original internet revolution where you came dollars at a startup, you might not necessarily

think that you're in a position of power. You might want to move up even further in the hierarchy. I'm glad you put this weather thing at the dock. This definitely was eyebrow raising for me. So what did he say about the weather? Well, first, let's put up a stock price because we are not a tech show. The stock gapped down today, no? not a tech show. The stock kept down today, no? Yeah. No, listen, look, the stock has run up so much that you could just very easily dismiss any downward move in it and just say, well, it was already priced in. Yeah, of course it was already priced in. But if it went up 50 points today, nobody would be saying it was already priced in. So we just kind of use that as a narrative. Well, it was down 4% at the lows of the day

and it finished up 1% because of course. Well, yes. So the thing is though, that this took place yesterday. And yesterday- But after hours. So today is the reaction. Yes, right. Yes, but yesterday it went out

almost at the lows of the day. So, I mean, big deal. Anyway, I saw a bunch of price targets getting raised, like to $1,050. John, throw that up. Go ahead. Let's see. This is just for today. Susquehanna raises target to $10.50 from $8.50.

Great. Goldman Sachs raises to $1,000 from $8.75. Yeah. Wells Fargo, $9.70 from $8.40. Cowards. This is the thing that I always do. Do you do this? I always take off the last digit. And I think of that like a $95 stock and somebody says, it's going to 105.

I don't, but it's clever and it makes total sense. You should do that. That's how you can rationalize four-digit price pretend, let's pretend it's a $90 stock instead of a $900 stock. Would it go into a hundred be a big deal from 90? No. Well, percentage wise, it's the same move. Yeah. So this is my point though. Points wise, but points wise. No, no, but here's my point.

If you, um, if you were seeing $1,500 targets today, it would be much more meaningful. That's not what you're seeing right now because that's not how people are sizing up the opportunity. Well, he spoke about the opportunity. I think he used the trillion dollar word, right? Oh, yeah. Oh, yeah. All right. Let's talk about some of the highlights. And a lot of these are coming from tech radar. The weather forecasting is interesting. So when you talk about a use case that people touch and feel, this might be the killer app, ironically, for AI is better weather forecasts. So TechRadar says they launched Earth 2, which is a set of APIs that can be used to build more accurate and wider resolution models, giving better forecasts that

can save lives. By the way, it's not just like, is it beach weather? No, no, no. So they were talking about extreme weather. So the chips could see pattern recognition and hopefully save hundreds of thousands of lives. So they announced a partnership with the weather company. And this gets to another point I wanted to make. The amount of corporate logos on the screen behind Jensen throughout the course of this keynote was breathtaking. They are literally in a partnership with every company you've ever heard of. And this is a really powerful tool just in general, like not just talking about your products, but showing off how many other big companies are working with you.

And they're working with like, there's nobody I could think of that they're not, nobody big that they're not in some sort of collaboration with, which I think is kind of emphasizing the earlier point, how central they are to this ecosystem. What'd you think of the robot stuff? Because I thought that was the most interesting. I have mixed thoughts on all of this. Go ahead. What's your take? Look at this. Doesn't it look like Iron Man 3? Yes, totally. Right? Look at all the phones. Yeah, yeah. Okay. So the chat GPT moment for robotics could be just around the corner, Wang says. NVIDIA wants to be up to speed and ready to roll. Quote, we need a simulation engine that represents the

world digitally for a robot. That's the omniverse. And he keeps referring to robotics as physical AI. See what he just did with his TAM? He just expanded his TAM into a whole new universe, basically. Now he's going to call robotics physical AI. And if everybody agrees with him, then all of a sudden robotics becomes part of NVIDIA's TAM. So I thought that was really exciting. Robotics, this tech radar goes along with AI and omniverse digital twin work as a key pillar for NVIDIA, all working together. And then he had all those robots on the screen, making it look like we're friends with them,

when in reality, they just want to kill us and harvest all our energy. So I thought that was fun. This is the last one I wanted to point out. This is a little bit disturbing. Somebody asked a question about AGI. So that's artificial general intelligence. And they asked him if he thinks he's a modern day Oppenheimer. Like, is he building the next super weapon that could eradicate mankind?

So this is TechRadar, quote, he laughs off the latter part and returning to the question, asks the room, what exactly AGI is, noting that it cannot be a permanent specific moment. How do you recognize when an AI model is doing tasks better than most people, but hints that within the next five years, there could be a significant step forward? Quote, I believe that AGI, as I specify it, is set to arrive within the next five years. But he laughs, stop laughing, and says, we have no idea how we specify each other. I mean, this is the thing, the moment when you're working side by side with a robot for six weeks, the robot's observing what you do. And then after six weeks weeks you get a pink slip because it's

cheaper to put in a second robot rather than have you there all right and what do you mean relax that's not gonna happen it's not gonna happen right now no it's happening right now so it's literally in or in auto manufacturing facilities this is already taking place the robot's not walking around like a breakdancer doing popping and locking, but the robot might be just an arm with a sensor on it manufacturing things on the line. So isn't Amazon using this in all their warehouses? Yeah, the robots don't have faces and heads and hands. Oh, is that the scary part? Whether or not they have faces? No, the scary, I'm saying the scary part for people is that yes, of course, robotics and AI will create jobs,

but when, and will it create a job for me if I'm one of the first people displaced by it? No, I mean, they're not, they wouldn't bother working on a robot that could do what I do, but I'm saying that's the thing that makes people nervous about the concept. Sure. Of course. Technological progress has always made people nervous about losing their jobs. And technology has displaced a lot of jobs and it's created millions more. But this seems to be the end game of technology, right? Oh, like what's after this? Yeah. Okay. Then what? What's after robots? What's this thing from Ben Thompson? Oh, this is, eh, we can skip this. All right.

It's a $30,000 or $40,000 chip. So we know Microsoft will buy a lot, and Meta, and Saudi Arabia, and Amazon, I guess, and Alphabet, and then who? Everyone? I don't know. But I'm saying like, you're not selling this to a million customers. You'll have a billion end users of the technology, but you really only have a few customers who are buying this stuff at scale because they're serving everyone else. That's an interesting element. What'd you think of the Apple Gemini team up news. Was that timed to take a little bit of thunder back from Microsoft and Nvidia? Well, I mean, Apple certainly needed it stock price wise. It didn't help.

What do you mean it did? No, Apple ended up like 1%. Alphabet had a much better day. I think Alphabet at its high was up 7% and closed up 6%. Well, yeah. I mean, it's a bigger deal for Google than it is for Apple. Bloomberg broke this news, which means somebody from Apple or Alphabet fed it to them. Apple is in talks to build Google's Gemini AI engine into the iPhone, according to people familiar with the situation. What does that mean though? How is Apple going to use it on the phone? They have a multi-billion dollar agreement where Google Chrome is the search engine for iOS. So this would be similar. So Apple would make Gemini AI, the official generative AI tool that's used within iOS. So instead of having a chat GBT button, it would be Gemini.

Mike, if you search your iPhone or if you search something in the iOS ecosystem, the default search engine is Chrome. You understand that? You don't get Bing. No, no, no. The default search engine is Google. The default browser is not Chrome. It's Safari. But Google is the search engine. Google search. Right.

But that's a deal. That's billions of dollars. Apple spends money on that. No, no. Google pays Apple 20 billion. Google spends money on that because Google wants the ad revenue and the data that come from the customers using their products. All right.

So you're saying it would be a similar arrangement. I mean, nobody knows because it's breaking, but I'm saying like this is – here's the question. Is this a signal that Apple is further behind with their own generative AI tech than we thought? Like is it a sign of strength for Alphabet or weakness for Apple? The takeaway from the market appeared to be it's more a sign of weakness for Apple than anything else. Well, Tim Cook has said very little on recent earnings calls about AI.

Yeah, no shit because they're not – I mean they're not leading the charge here. So I don't think anybody had expectations that Apple was building anything substantial. So I don't know. I don't think this is a sign of weakness. Okay. Makes sense. Has NVIDIA, I know you don't know, but is the lackluster move from NVIDIA like something that we're going to look back at and say that was meaningful?

You mean today's move? It's up 1% today. No, I know, but it's not a new high. It should have been 20. To me, the tailwind- What are we expecting at this point? It's like too much. And NVIDIA's momentum fizzling out a little bit

is look at the chart of NVDL. We've discussed this before. It's a Granite Shares levered ETF. So as the stock has gone vertical, so has the volume. I don't want to make a short-term call on Nvidia, but it certainly looks like it might be running out of steam, but whatever. I mean, it definitely, it should take a break. It's going to screw it up. Some stuff from the chat here. Jensen is the new Warren Buffett.

No, he's doing steep jobs. Nvidia is the new Tesla that I agree with. Way more people are excited about NVIDIA than they are Tesla. Maybe it has something to do with stock price. There's probably a lot of other elements to that. But I definitely would buy that. Why is Michael watching VH1? I'm pretty sure he was joking.

Is there still a VH1? I don't think so. Okay. So leather jackets in general. Should there have been tassels hanging from the sleeves of this what do you what like what was missing some motorcycle patches i don't i don't know i don't know i kind of like the jacket you don't like leather jackets did you ever own like a really high quality one though like a thin one i did not heavy i did buy one not like a high quality one i bought one from like men's warehouse probably or what was the other one like uh joseph

a bank okay my wife won't let me have a leather jacket and in hindsight it it's pretty ridiculous robin wouldn't let me wear it it looks because i think i had like uh what are the what's this part called what do you mean like you had fringes no not fringes but what's this part of the coat called like the like the flap over the collar i had a guess but it was just like a big weird it wasn't a great look yeah uh sprinkle said look there are leather jacket guys you're not one of them and i was like a little bit offended that's her that's that's that's no but she's like i don't like i don't like it like i but she's like, I don't like, I don't like it. Like, I don't,

I don't, I don't want you to be a leather jacket. You're just not a leather jacket guy. You know, not to, not to paint with too broad of a brush, but like leather jacket guys are usually really good looking douchebags. Uh,

yeah, no, I wish I could have been one of them. Didn't, didn't work. Yeah. All right. Never,

never was. It's too late. You know what? Actually for me, it's too late to like become something that I never have been my whole life. You know what, actually? For me, it's too late to become something that I never have been my whole life. You know what? You don't wear – the only coat that I think you wear are the giant, gigantic winter coats. Other than that, you never wear coats.

You just wear a gigantic winter coat. I want to look like Hagrid from Harry Potter when I put a coat on in the winter. Yeah. I want to look like an actual mountain that's moving through time and space. Okay. You're up. What do you got? I want to revisit a post that you wrote in 2014 about the Relentless bid.

Yeah. That's maybe my pinnacle. I should have stopped right after. So interestingly, I think I sort of misremembered the nature of the post because it was really describing the transition from brokerage-based business to RAA-based business. And I think in my head, I thought it was more about the defined contribution, like the every two weeks. And it really wasn't, but it was still, it aged perfectly. I mean, it was as good reading it today as it was, by the way, it was 10 years ago. Can you believe it? Yeah. All I was trying to do was explain the new way the market was behaving because it didn't

seem to be affected by news anymore. It was just under accumulation at all times. And I was trying to, in part, answer the why with a business model shift that Wall Street was undergoing, where more people were being paid to manage assets than to trade stocks. And I think I did a good job back then. You did a great job. Does it feel like it was 10 years ago? No, but people still reference it. There's a book that just came out where the author was talking about it as though it was a thing that everyone should have already been aware of. So it's one of the best things I ever did. And it's, yeah, it holds up. I agree. Okay. So let's, let's talk about it.

So I've created a version of this chart, albeit not as pretty, the CAPE ratio, and you could use anything. I'm just, I'm just picking this one. It's a lot higher today than it has been in the past. And I don't just mean like at this specific point in time, although that's true too, just look. So the bottom pane is showing the 20 year average and the average over the past 20 years is 26. I think the average for the entire period is like 18, but it's been elevated. The 20 year average has been elevated forever for the last, really the entire century, even in the bottom of 2009, the CAPE ratio barely, barely got below its long-term average for a second. So that should tell you a little bit about the structural differences in the CAPE ratio today versus in the past. Keep this up. If you were to put some measurement of profit margins up against that 20-year moving average or somewhere in between the top and the bottom pane, just put S&P 500 profit margins, which I think are now, are they 7%?

Profit margins? Yeah. No higher. For all companies in the S&P, not just tech? No, no, no. I think it's like 11. Oh, is it? Yeah. No higher. For all companies in the S&P, not just tech? No, no, no. I think it's like 11. Oh, is it? Okay.

What do you think they were in the 1930s, 40s, 70s? No, way lower. Like mid-single digits. So this was the argument that GMO made, and it resonated with me at the time, that profit margins are the most mean reverting series in all the finance because of competition. And obviously, NVIDIA and Meta and Apple busted that to smithereens. We know that now. One aspect, so a lot of people talk about how index fund flows are impacting the market. Some people go as far as to say they're distorting or manipulating, and I wouldn't go that far. But of course, how could they not be having an impact?

Of course they are. Yeah, of course they are. I was reading a post, a sub-staff by this guy, the synonymous Zach Morris. And I never thought about it this way, but it's like, yeah, of course this is right. So let me just read this. He said, when you contribute money to your 401k every month, what are you really doing? Are you saving or are you investing? I would contend most people are saving. They have no interest in risking what they've already earned, but if they don't, they are certain to lose it to inflation and debasement. If people are saving their wealth in the S&P 500 instead of money, that means the equity

market has attained a monetary premium. I think that this is at least part of the reason why stocks are trading at the valuations that they are today. Throw up this chart of defined contribution plan assets. It was a trillion dollars at the end of 1994, 1.4. It was 10 and a half trillion dollars at the end of the last year. And this is only going one direction. Mike, haven't I been saying this though for like 10 years also? Like the 401k money comes in every two weeks. It doesn't give a shit about Greece or Cyprus or whatever bullshit is in the Financial Times. It's just coming in. And we know empirically,

nobody changes their allocation. Like Vanguard, Fidelity, they will confirm this for you. People do not log in and say, oh, instead of 60% stocks, make it 30. Nobody, statistically, no one is doing. I've been telling this story forever. One of the things you can't do with markets when you're making comparisons to previous decades, you have to at least mentally adjust for the fact that there's trillions of dollars coming in completely insensitive to whatever the news of the day is,

whatever the PE ratio is, it doesn't give a shit. We decided in this country that we were going to hand people's responsibility for retirement over to them. So it's not just social security. People are responsible now to fund their retirements. And the easiest thing for them to do is set an allocation and never change it or buy a lifecycle fund. And those are the two things that they do. And this is where the demand for stocks comes from. And the younger the cohort, the more likely it is that their workplace offers a 401k as

an option. So to your point, yes, it's only going in one direction. In 2018, research affiliates who we're fans of, they wrote an article called Cape Fear, Why Cape Naysayers Are Wrong. This was in 2018. And one of the naysayers was this guy. They quoted me. They quoted something that I wrote in 2017. I heard they called you a bitch. Basically, they said, I mean, I'm sorry. They said, I said, comparing the Cape ratio from 1960 to today is like comparing Oscar

Robertson to Russell Westbrook. Same thing, same game, but things have changed. That's right. They didn't like that. They didn't like that. What was their refutation? It was a lot of words. But anyway, just throw that chart back on

from the defined contribution plan assets. So I don't think, and Josh, I'd like your opinion. I don't think it matters whether this money is going into index funds or actively managed funds. I don't think that makes one bit of a difference. Now it does like with stocks like Supermicrocomputer, obviously. But in terms of the elevated valuations, this is a big part of the reason. Now, of course, tech stocks matter. Yeah, yeah. But that's a big part of the reason too. There's a guy who has a mutual fund, a value mutual fund. What's his name?

He's in Florida. You don't have to name names. We don't name names. No, it's nothing negative. What's his name? Bruce something. Yeah. He owns one stock. He turned the whole fund into St. Joe land holdings and that's it. Like that's all he's doing now. So he used to be a really concentrated fund. He was seven stocks or something. And now it's like one stock. Anyway, there's one guy like that. You know what everyone else is doing? They're aping the index that they compete with. So to your point, it doesn't matter if people are buying active funds or index funds, buying almost the same portfolio when we're talking about this in the aggregate. Okay. So one guy is a little bit

overweight apple almost everybody is underweight apple but but they're still buying a shit ton of apple mentioned that they're a large cap uh fund the biggest actively managed mutual funds for the most part of closet index funds yeah no shit so it's so it's not relevant what category of funds they're in. I agree. All right. Why won't office buildings crash? Literally. Or are they crashing, but so slowly and politely that nobody's upset about it? Well, I think you might be looking at the wrong place because I would guess that if you look at the debt of these companies, I'm sure they're trading at 20, 30 cents on the dollar.

Without a doubt, they are. But in the popular imagination, we would have thought sometime circa 2020, 2021, that by 2024, the office real estate market would have been a complete disaster. And I'll go further. It's just not happening that way. And it was going to take the markets, maybe even the economy down with it. The banks. All right.

So let me share some stuff. Here's the bad news. According to Moody's in the fourth quarter of 2023, the national office vacancy rate rose to a record-breaking 19.6%. I mean, that sounds bad, right? 19.6%. Okay. All right.

That sounds bad, right? 19.6%. Okay. All right. The loans that are being made in this space are pondering like a 4% vacancy rate, like long-term, right? Okay. According to Bloomberg, creditors are now facing a maturity wall, 1.5 trillion of US commercial real estate debt coming due for repayment before the end of 2025. At the same time, office and retail property valuations are down and could fall as much as 40% peak to trough. So that's the nightmare scenario. But I would throw in here, of that 1.5 trillion of commercial real estate debt, it's not all office. This is really important. Some of it is industrial, not all office. This is really important. Some of it is industrial, it's warehouse. It's not some of its facility. It's not all office towers in Midtown Manhattan or, God forbid, San Francisco. All right. A couple other things. There's a working paper from researchers at a bunch of

schools like USC and Stanford. They found 44% of office loans appear to be in negative equity. Stanford, they found 44% of office loans appear to be in negative equity. This sounds bad, which means their current property values are less than the outstanding loans. Negac is bad. Yeah. Give the keys back. As a result, 10% to 20% of commercial real estate loans could default the equivalent of between $80 billion and $160 billion in bank losses. And then Arpit Gupta, a professor at NYU Stern School of Business, estimates the national office market lost $664 billion in value from 2019 to 2022. So here's my question. Is $664 billion more or less than you would have guessed from 2019 to 2022? It's a big number, but would you have guessed like trillions? I don't know. You should have asked me what do I think it is because now I can't unknow the number.

Oh, I should have had you guess. I would have made up a number like from outer space. I don't even know how big the market is overall. Yeah, I don't know. 1.4 trillion. I have no idea. No, it's a lot of money. It is. $664 billion is a lot of money because it's not like technology world. It's like real world.

It's like buildings. It's like actual money. Yeah, it's like real money. All right. In San Francisco, this is New York Times. In San Francisco, a 20-story office tower that sold for $146 million a decade ago was listed in December for $80. In Chicago, a 200,000-square-foot office building that sold in 2004 for $90 million was just purchased for $20 million.

In Washington, a 12-story building mixing office and retail, three blocks from the White House, sold for $100 million in 2018, just sold for $36 million. All right, but you're answering the question. They're being sold. There's so much money waiting to buy. It's not like, oh my God, they're just dead. Like, there's transactions. I know, but these are such huge losses from just a few years ago.

Yeah, people are taking – equity is getting wiped out all over the place. All right, so the Wall Street Journal is asking, like, what is holding this shit together? How is this not a crisis? What do you mean, though? SL Green fell – the stock fell 80% pretty quickly. Okay, but nobody went bankrupt. You have properties that are in foreclosure. Listen to me. You do not have 2008-style bankruptcies, and we had them in commercial

real estate back then. This feels worse. Those drops in prices did not occur in 2008 the way that they're occurring now. And yet, we're holding it together. Leverage. There's obviously way, way, way less leverage on these buildings than there was in the past, I'm guessing. All right. Here are some answers.

I think this is fascinating, by the way. Only 3.5% of offices sold last year came from a distressed seller. And the Wall Street Journal says a lot of that is optimism. They think rates are going to come down and bail them out or forgiving lenders. So where are all the four sellers is the question. And here are some factors behind the lack of blowups. Number one, you have a very strong economy. Most tenants are still paying their rent. Number one, you have a very strong economy. Most tenants are still paying their rent.

So pressure is building slowly as leases expire. Many companies are reducing their space by 30% to 40% when their contracts end. So we always said that was going to happen. The thing is, these contracts don't all end at once. So it's like this very, very slow motion thing. Well, that's the thing though. The market is very, very good at pricing risk that is so obviously sees coming. Who was surprised by this? Extend and pretend is another factor. What does that mean? Basically, lenders don't want to force borrowers to sell buildings into

a terrible market. So you just extend the loan? Of the $35.8 billion of office loans that came due in the commercial mortgage-backed securities market last year, only a quarter were paid off in full. So that means the rest were all worked out or sent to a special servicer. Of the roughly 600 defaulted CMBS office loans sent to a special servicer over the last two years. Lenders have realized the loss on just five, five of 600. So you had like a couple of foreclosures.

Everyone else is just, hey, let's work it out. Let's just figure it out, which is rational. And actually, there were some really smart commercial real estate people who told us that a couple of years ago, don't expect a catastrophe because nobody wins. The more likely scenario, which is better for the banks, for the borrowers, for these wealthy families that own all this shit, like is to just figure something out, not go through the courts and not pull the ripcord. So it appears that that's what's going on. So here's a bigger question.

Is it too early to say there's not going to be a crash? Like, is this a, we're going to pull up some charts in a minute. Are we just taking a premature victory lap? Hey, look, we avoided a crash, but maybe it's too soon to know. My uninformed opinion is if there was going to be a crash, there would have been one already. By the way, I mean, hold on, hold on. If there was, there was a crash. I keep saying that there was a crash. You're talking about like blood, like the equity got wiped. The equity had an 80% drawdown and that's a green at least. I'm sure the debt was as bad as how you wanted to say the

equity got wiped out, but you know, it didn't, it didn't it didn't yeah well a lot of it did a lot of it did but like it again in the last true financial crisis general growth properties was a penny stock like it literally was was finished like we just did not have that i think that's fascinating i guess there's enough money around and enough tenants are paying and enough people are incentivized to not wipe out anyone's equity. Well, also, the last time around, the banks were almost going on there. So in that case, you liquidate everything. Everything gets liquidated. Yeah. I also think there's a little bit of a flight to quality going on, where the market is being held up by the A properties and all the fortune 500 companies are crowding

into the best properties. Well, one Vanderbilt is totally full. Yeah. And the rents are actually going up in those A properties, which is making the market look better than is true. It's almost like the problem with the tech stocks holding up the whole index in 2023. So you have really, really high-end properties that are doing all the heavy lifting to make the market look healthier than it really is beneath the surface. Let's put some- Actually, that's a great analogy because one van that built is the tech stocks, and then the C buildings are non-profitable tech, right? Or dirty cyclicals. like the zooms of the world

yeah uh that's right i think that's right so sl green owns one vanderbilt they also own this magnificent thing that just opened on um is it washington square park no no what's uh madison park i think it's's one Madison is the address. I haven't seen it yet. It's similar to one Vanderbilt. It's just, it's drop dead gorgeous. Those buildings are holding up and actually going up, and all these C buildings are just destroyed.

Yeah. All right. This is office building reads the last three years. John, we have this chart? Okay. So EQC is Equity Commonwealth up. It's 1890. So you could see it's lower, but not really not terrible. Office properties, income trust. Okay. That one's in a, in a bit of a drawdown. Do we have a price? Do we have percent changes? What are we doing with

this? These are, uh, these are total return in price. Well, this doesn't help. Do we have percent changes? What are we doing with this? These are total return in price. Well, this doesn't help. Do we have another one? Well, I'm going to show you the next chart. All right, there we go. Yeah, not great. So this is total return. So in other words, you're also seeing the dividend, the distribution, and that's a really

big part of the returns. So these are some pretty catastrophic charts when you look at them. The orange one, office properties, income trust, down 90%. And I'm guessing it's worse if you bring it back even further. Brandywine is down 56%. All right. So there's a bloodbath in the share prices. Now let's look at SL Green. This is already pricing in the recovery. And you bought this. I think you made money with this, right? 80%. Not too bad.

So SL Green, it hasn't round tripped back to- No, no, no. It's still well below. It's still well below. And guess what it should be? But it was $16 and it's $50 right now. So the way this chart looks- Dude, pre-pandemic, it was $100. But again, they have shitty properties, but those don't matter anymore. This stock is now being valued because of marquee stuff

like one Vanderbilt, SL Green. All right. Brian Moynihan at Bank of America agrees that there is not going to be a crash. This is his quote. He says it's going to take time for the banking industry to work through issues with commercial loans. Quote, commercial real estate is a slow burn. It's a classic burn. The trading attitude, which is these assets have to move at a price tomorrow morning, isn't the way the banking system works.

We work with clients. You take a building and figure out what the ultimate end state rental roles will provide. You refinance it. Sometimes that wipes out the equity. Sometimes it doesn't. So that's Moynihan. I think it's a smart take. It's not the stock market. We don't have to reprice these things in one minute. So I think that's probably where I would leave it. Anything else on this? No, I'm good. All right, let's talk about the option mania.

So Gondra Banerjee from the Wall Street Journal, and reporters are not allowed to trade options. She said they, being the journal, gave me five days and $500 to trade the contracts on Ramadan. Part of the deal was that any profits would be donated to charity. More importantly, the journal wasn't going to make me pay back any losses. And I expected to lose big. Actually, she crushed it. Well, she lost, lost, lost, lost. And then the last trade was a huge home run. But look at this chart. Options activity has kicked off 2024 with a bang building on a record in volumes last year.

Really incredible stuff. I think a lot of people thought that this was going to reverse after 2021. I did. Especially considering 2022 was so gnarly that it was going to wipe people out. And I was right in hindsight. I said that- These people aren't going anywhere. No, people, you don't get unaddicted. And I think that for a lot of people, options are, uh, the hell of a lot of fun. It's gambling.

Well, I thought, well, I thought that what would happen was with, uh, sports gambling becoming basically legitimized in, in every state that the people who were sports gamblers until 2020 would find their way back to sports gambling and get bored with the options market. Bored? It's so much fun. No, I get it. I'm not saying it's not fun. I just thought sports gambling was more fun, but what do I know? Apparently, this is the show. Let me ask you this. So they got a quote from Robert's chief brokerage officer. He said, if I buy something and hold it for a month, it's not gambling.

If I hold it for a week, it's gambling. If I hold it for a day, it's gambling. I thought that was a valid-ish point. No, it's not. Why? If you buy something because it's got cash flows or at least cash flows in the future and you're buying it at a multiple of what you think those cash flows will be, stop. Stop. You will stop immediately. Let me finish my sentence. That's the definition of investing. If you're buying something because

you think someone else is about to pay higher for it, you're gambling and there's nothing wrong with that. That's literally what you're doing. No, you're gambling. And there's nothing wrong with that. But that's literally what you're doing. No, no, no. But that's not what he said. My point is, is if you buy- He's making a timeframe argument. Yes. So that's the thing.

If you buy something for a month, is that any more responsible than buying something for a few hours? Honestly, what's the difference? No, only if the rationale is I'm buying it because I think that there is an intrinsic value that's not being appreciated here and other people will appreciate it. And so therefore, I'm going to sell it in two weeks. But most people that hold something for a month don't buy it with the expectation that they're going to hold it for a month. I don't know about that. Now, they might get bored.

They might get scared out of it. Something else might come along that they're more excited about. Yeah're gamblers yeah so it's it's nuanced how about this but there's but there's there's levels to the shit right like there's levels of gambling and there's no doubt about it that trading zero days to zero days expiration options is hardcore gambling and buying a stock for two days is less hardcore but still 100 it's the difference%. It's the difference between, it's the difference between buying a lottery ticket. Like, like, uh, if you, all right, let me put it, let me put it this way. If you go into something, knowing that your timeframe is one day and basically you're betting that the randomness will go your way. You're not walking around telling people you're

an investor, like, obviously, why would you do that? Why would you say to somebody, I'm making an investment that expires in two hours? Now, obviously, there's all sorts of horror stories with gambling and betting, all that sort of stuff. I would guess that most people are not like blowing themselves up. I think that most people are probably just having fun.

Yeah, I don't think it's large dollar amounts. I don't think it's money that people need to eat. I also think that there are option strategies that make more sense than equity strategies. And one area where that's true is biotech. For a lot of people, they don't want to be a long-term investor in a biotech company.

They want to bet on a drug getting an approval or not, or they want to bet on a clinical trial result, or they want to bet on the potential for M&A or whatever, that's a perfectly legitimate use for options trading. Yeah, no offense to the gamblers out there. I'm one of them. I think you're giving them too much credit. I think it's just pure. Well, I'm not saying that's what most people are doing.

I'm saying that there are things that make more sense to do with options than they make sense to tie up a ton of capital in. And that's an area where I would say like, all right, you want to bet that this company's weight loss drug is going to get approved in the next three months. Here's the right option contract to buy. It's a defined loss. You know exactly what your worst case scenario is. It's whatever you put up for the calls. But if you get a good result, unlike a stock, you could make multiples of the money that you put up. That's options. That's a great use of options if that's what you want to do. And it probably makes more sense than tying up capital, owning the stock, if it's not a stock that you want to own for the long term. I don't have an issue with that.

It's hard. It's not going to work for most people to do it. But it's a thing that people do. And, you know, God bless. I don't think that we're seeing a lot of covered call selling and options being used to hedge based on all the data that I've seen. Or do I have that wrong? Actually, that's a massive part of it.

But is that the part that I've seen? Or do I have that wrong? Actually, that's a massive part of it. But is that the part that's hockey sticking? I think that's a part of it in general. You know, Jepi's the largest active ETF? Yeah. So I don't know if that's $30 billion or what. That's definitely a big component of it. Oh, so their trading is showing up in this data? I would assume so.

But they don't- It just says options activity. It doesn't say retail. It doesn't say retail options activity. Although that chart has skyrocketed too. Yeah. All right. Well, listen, I think market structure has changed in a lot of ways.

And this is one of those ways. There's just, you have this population of people that just can't get enough. And they're very short term. And they're not pretending to be investors. They're doing their game. We're not going backwards. No, it's part, listen, it's part of, it's part of their day. At this point, people open up the app, they see where their calls and puts are, they trade them, they do something else. Listen, I don't, but, uh, not everybody has to do what I do. Okay. I think this is May. Solar stocks.

This is, to me, this is like the cannabis stocks of 2024. Like the cannabis stocks last year all went to zero, basically. That's what appears to be happening with these solar stocks this year. I got burned twice with these pieces of shit. Shame on me. You traded Enphase. What else? Yeah, I lost money twice.

All right. We don't have to spend a ton of time here. Let's just roll through these though. This is something called Sanova Energy, which was a $24 stock last summer. It's now $4. I don't know. Looks like they invented the swine flu. It looks like they got FDA approval for a new form of lip cancer. Yeah. All right. First solar. What a piece of shit this thing is. This thing used to be hot.

This thing used to be hot. It's still $147 stock. I will now stipulate, I don't know about any of the reasons why these stocks are doing this. I know there's Chinese manufacturing putting pressure on prices. And I know that there are maybe some concerns about environmental subsidies going away, but that's it. I couldn't tell you the difference between Sunova and First Solar if you put a gun to my head. I have no idea, but they all look like this. Sunrun. What the hell is this? This was a $25 stock last summer.

10. Is it double bottoming? You take a shot here? Not good. Okay. Enphase Energy. This was a darling. We don't have a chart that goes back that far,

but just looking at it over the last year, this is a complete debacle, 220 to 109. I don't know. This is like, what happened here? Went from 100 to 340, back down to 100. I'll tell you, Josh, I don't think the fundamentals are doing well. Hashtag analysis. All right. Solar SolarEdge Technologies, 300 last May, 62. New low every day, almost every day. And by the way, it stopped going lower, and then it started going lower again. It just – All right.

So we're getting some intel from the pounders. Cliff Peebles says California has greatly reduced tax credits. That's part of that subsidy story. Cost of capital is really important to these companies. Well, obviously, that's a huge change, their ability to borrow money. So maybe this is the canary in the coal mine, where the first junk bonds start blowing up, but they're equities. Capitalists having trouble pushing alternative energy hoaxes. That's Jay Luther. All right, whatever.

What do you do here? Do you start researching or? No, seriously. Are we looking here for opportunities? I'm not. One of these is going to live. I told you I'm not doing that game anymore. Loss of tertiary. What is this Barron's thing?

Clean energy stocks have collapsed. So the last time I pitched Enphase Energy was like, you just got to buy these stocks when you see this, right? And shame on me. Here I am using the magazine indicator. Then I'm fading it, saying it doesn't matter. Although I will say- Wait, stop.

Put that back up. This was November 2023. But what was the conclusion that Avi Salt's been reached? Was he saying buy them? I don't remember, to be honest. Although, right after this article, these stocks did have a really nice run. I think Enphase popped 40% after this. So it's a good short-term contrarian indicator. I think they popped because it was post-Thanksgiving and all the tax law selling is done. You do love that.

Well, I know it works. I know it works. It always works. I can show you an example from every year you've been alive. And you invented Blues Travelers. I did. It's Blues Traveler. It's Blues Traveler.

Not to me. You know what they named the band after? No idea. A line from Ghostbusters very randomly. That's so weird you say that. This morning, I haven't seen Ghostbusters

1984 in 30 years. I started watching it this morning with Kobe. Really? Yeah. Like in preparation for the new one? I just felt like,

you know what? Is that movie good? Does it hold up? And Ben said it holds up. So I figured, you know what? I like Paul Rudd, obviously.

I want to see the new one. So I went back to the beginning. That's top 10 from my childhood. 1984? Yeah. Do you know I played pool with Blues Traveler at the Paramount in Huntington like four years ago? Do you know that story?

Mm-mm. No? All right. I'll tell you sometime. John, Jack, what is it? Jack Popper? John Popper? John Popper.

Yeah. All right. You have the last one. All right. We'll keep this quick because we're going long. GMO wrote an interesting article called The Great Paradox of the U.S. Market, and here's the gist. AAA bonds, and this is how Grantham penned this, AAA bonds return about 1% a year less

than low-grade bonds. Everybody gets it and always has. In bizarre contrast, the equivalent AAA stocks with their lower bankruptcy risk, lower volatility, and just plain less risk historically have delivered an extra half a percent to 1% a year over the S&P. What on earth is that? Even holding their own? There's no risk premium is what he's saying. He's saying that companies with great balance sheets and stable cash flows that are like the AAA version of a stock should not also have a premium return.

It makes no sense. Right, because government bonds earn less than corporate bonds because they're less risky. Maybe the market is right and your theory is wrong. Maybe there is a preference for quality on the part of investors that endures. And maybe another thing to say is these started out as high quality companies and then they got even more high quality. So maybe their returns were too low in the earlier stages. And what we've seen in the last five years is a catch up. Is that a possible theory?

Because I understand the intellectual framework. Like if something is lower risk, it should not have a higher reward than other stocks. And yet, here we sit. I don't know. I wonder if it's because there's a generalization I'm reaching here. These stocks trade at lower multiples because they're just boring. They're not fun. Who the hell wants to own Colgate, Palmolive, and Procter & Gamble? They're just boring. And therefore, maybe they're just underpriced. So it's maybe a value premium type thing. I don't know. Well, we're not going to solve it today. This is quite a topic to try to end with. Meb Faber actually quoted a couple of things that Grantham said in this letter.

And this I thought was the biggest takeaway. Let's put this graphic up. He said, as for the US market in general, there has never been a sustained rally starting from a 34 Shiller PE. The only bull markets that continued up from levels like this were the last 18 months in Japan until 1989 and the US tech bubble of 98 and 99. And we know how those ended. There has also never been a sustained rally starting from full employment. The simple rule is you can't get blood out of a stone.

If you double the price of an asset, you have its future return. The long run prospects for the broad US stock market here look as poor as almost any other time in history. Again, a very rare exception was 98 to 2000, which was followed by the lowest. Hang on, with all due respect to Mr. Grantham, if you double the price of an asset,

you have its future returns? Only in theory, not in reality. Okay. And the other thing is, I wish he hadn't been saying similarly dour things for the last 15 years. It would heighten my willingness to nod my head to a conclusion like that. But I've seen too much. Make the case.

All right. Back to real estate in general, CBRE. I bought the stock. This hit the Russo list. So we're looking at technicals and fundamentals and we're trying to find the 100 best stocks in the s&p in the i think the russell 1000 we're looking for large caps uh with with the right setup this does look quite good looks fantastic it's going over 100 you know my 90 100 rule belief system all right um we're looking for stocks that are within 5% of 52-week highs. We're looking for RSIs north of 60, meaning we want breakouts in progress and we want strong momentum. And we're looking for stocks that are above the 50 and 200-day. We don't want stocks that accidentally just dribble their way into a 52-week high. We want them running for the door.

So as you can see here, there's some overhead resistance going back to late 2021. I don't think that's going to matter. What people don't understand about the business model shift here is that they're still doing transactional business. And of course, they still benefit from higher office real estate leases. But they have become a services company. They're helping companies manage their real estate. They're helping facilities, et cetera. And there is a recurring revenue component here that I think people are starting to discover. So it's a $29 billion market cap.

Gross margin is 21% as of last quarter. Look at this revenue chart. Dude, what else do you want to say? So you've got fundamentals confirming technicals. Let's put up net income. Okay. So we all understand that there's some lumpiness here. But again, back to the business model shift, services are now 70% of this company's business as of Q4. Traditional brokerage, only 27%. And then about 3% is real estate investments. So people, I don't think, have woken up to the reality of how important it is to have a strong services partner in commercial real estate. And we're in a chaotic time right now for the asset class. But as we all learned from Game of Thrones, Littlefinger said, chaos is a ladder.

CBRE is climbing the ladder built by that, sown by that chaos. And that's my make the case. Buy or sell? What do you think? Buy. You're in? All right. I mean, not literally, but-

Can I put you down for a thousand shares? I should be a thousand shares. We'll title this in your name or a joint account with your lovely bride. I'm like a 250 share. I'm in for 250. Great. What's your middle initial?

H. Okay. And your social security, sir?. What's your middle initial? H. Okay. And your social security, sir? You're not getting that. All right. I've got some charts. Michael, I can appreciate your hesitancy in giving me your social security number over the phone.

However, let me say this. The reason to work with me is my pricing and timing. If you wanted to get back to me with your social security number or wait for us to meet in person, this stock could already be trading well above where I'm positioning you in it today. The important thing here, get in right now. We could talk about the specifics later on. What do you say? The market's closed. The market's closed. Oh, you got me there. Okay. Okay. All right. I've got a chart, man. John, I've got a bunch of charts actually. So I don't even know which one's going first. John, if you please.

Wait, I have to guess at a bunch of charts? Sir, I will. What game are we playing? This is called, I throw softballs, okay? Okay. I throw softballs. All right. This is a chart of a stock.

Does this look good or does this look bad? I mean, it looks amazing, but probably short-term overbought. Okay. I would agree with that. Look at me. I'm a professional technician. I would agree with that. This is a company that's been around for decades. It has been around for decades. John, next chart. This is the purple chart is a stock that I'm describing. For reference, that's the Q's in orange. So over the last three years, it's blown it away. It's doubled the return. Time out. Why are you showing it to me versus the Q's? Is it a component of the Q's? No, I could have shown you the S&P. But is it a component of the Q's? Is that a hint?

Here's a hint. It is most definitely not. Next chart, please. This is a large company that was almost left for dead. At its lows, it was a $37 billion market cap. It's now up to $188 billion. This is a big stock, big company, big- Oracle. Big company. Nope. Last clue, this is the sector that it's in. And the sector is- Intel. the sector that it's in. And the sector is the most levered to economic growth. And it also is the sector that is the most evenly distributed. The stock is- All right. It's an industrial. It's an industrial. The stock is John Deere. No, I don't know if this is going to help. It probably won't help you.

GE. It's the biggest industrial. Right now? Yeah. Cat? All right. You were right the first time. Can you believe it? General Electric is the biggest industrial. I was right. That was technically my eighth guest. Isn't that crazy, John? Eighth guest. Show the top holdings in the XLI. How about that? It's back. Back from the dead. Oh, Uber. I forgot that Uber's in there. Yeah. Yeah. Uber, Uber, I think will one day be the biggest just because they're going to, they're going to grow earnings 40% this year, 60% next year. It could be the biggest, but no one's doing that. John, can you just throw that, the XLI chart on back for one more time, please?

could be the biggest but no one's doing that john can you just throw that the xli chart on back for one more time please there we go all right so for good reason we spend a lot of time probably too much time talking about nvidia and all the max 7 but like come on guys this is these are industrials yeah the market is not dumb things are okay ge is a really interesting story about capital allocation and like how to dismantle a conglomerate and get it to the point where like there's actual earnings and they did it. Like they, they've been selling off, spinning off, just basically taking this thing apart. And the more work they do cleaning it up, the better the stock performs. It's like, it's miraculous. It's going vertical. I mean, 37 billion in market up to 180, pretty impressive. And it's under, and it's under owned. Like a lot

of people had to just get rid of this thing a couple of years back. You just could not own it. And they're, they're fixing it. The truck's hilarious. Credit to them. I love stories like this. I, I, I'm not in the stock at all and I really haven't followed it closely, but I, I probably should have, cause this is a really great turnaround. Um, all right. Hey, everybody, tomorrow is Wednesday. Make sure you check out an all new episode of animal spirits on the podcast app of your choice on Thursday, Duncan and Ben Carlson are back for another ask the compound. If you want to ask a question, send it to askthecompoundshow at gmail.com. And if Duncan and Ben

pick your question to answer live on YouTube, we will send you a little something. An options contract. Friday, all new Compound and Friends with Michael and I and another amazing guest. Thank you guys so much

for checking in with us all week. We love you. We appreciate you and we'll see you soon. 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 building the right financial plan. To speak with a certified financial planner today, visit ritholtzwealth.com. Don't forget to check us out at youtube.com slash the compound RWM.

Make sure to leave a rating and review on your favorite podcasting app. If you love investing podcasts, check out Michael and Ben every Wednesday morning on Animal Spirits. Thanks for listening. properly licensed or exempt from licensure. Nothing on this podcast should be construed as and may not be used in connection with an offer to sell or solicitation of an offer to buy or hold an interest in any security or investment product. Past performance is no guarantee of future results. Investing involves risk and possible loss of principal capital. No advice may be rendered

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