The Compound and Friends - The Dumb Money

Episode Date: September 26, 2023

On this TCAF Tuesday, Leif Abraham and Jannick Malling join Downtown Josh Brown (CEO, Ritholtz Wealth Management) to discuss the story of Public.com, and "The Dumb Money" events and meme stock craze of January 2021. Then join Downtown Josh Brown and Michael Batnick (Managing Partner, Ritholtz Wealth Management) for another episode of What Are Your Thoughts and see what they have to say about the biggest topics in investing and finance! Thanks to Rocket Money for sponsoring this episode! Go to https://rocketmoney.com/compound for more info. Watch this episode on YouTube: https://www.youtube.com/watch?v=FKnTZZCgJQc Check out the latest in financial blogger fashion at The Compound shop: https://www.idontshop.com Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Josh Brown are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ Learn more about your ad choices. Visit megaphone.fm/adchoices

Ladies and gentlemen, welcome to The Compound and Friends. It's Tuesday night. We have an amazing show for you. First up, I talked to Yannick Malling and Life Abraham of the Public app and public.com. And they were in the midst of the GameStop short squeeze in January of 2021, which is now the subject of a big movie that's opening up called The Dumb Money.

And I saw the movie and it's got some great performances from Pete Davidson, Seth Rogen's in the movie, Nick Offerman, and just a lot of great acting and a lot of funny scenes. And it basically tells the story from the perspective of the traders who are on one side of the short squeeze, the Wall Street bets crowd, and then the hedge fund managers who were on the other side of that historic short squeeze. So I talked to Leif and Yannick about what it was like trying to run the app. There was one moment in time where Robinhood actually cut off the buy button for GameStop and all of these traders started to open accounts at once on Public. And there was one moment where they were opening five accounts per second. And keep

in mind, Public is like a venture-backed startup at that point. They don't have the capacity for this, but they also don't want to miss the moment. So we get some really great inside stories from that period of time. And then we play What Are Your Thoughts with Michael Batnick. And Michael pitches some stocks. We get into what's going on in the bond market, a little bit of a preview of the PCE number, inflation number that's coming out at the end of this week. Apple launched a new phone this week. Lots of stuff going on. So please enjoy the show. And that's it for me. I'll send you right there now.

Welcome to The Compound and Friends. All opinions expressed by Josh Brown, Michael Batnick, and their castmates are solely their own opinions and do not reflect the opinion of Redholz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast. Hey, everyone. Downtown Josh Brown. I'm here with two friends of mine, Life Abraham and Yannick Malling. They are the guys behind one of our favorite sponsors and favorite companies, Public. Public.com and the Public app.

Welcome, Life. Welcome, Yannick. Thanks so much for joining us today. Nice. Thanks for having us. Hey. Good to be here. All right.

Yannick, this is audio. Give me a bigger hello than that. Hello, Josh. It's great to be back here. Well done. All right. Guys, we're going to talk about Dumb Money. So for those who don't know, Dumb Money is the film that tells the story of mostly January and February of 2021, which I think is going to go down in history as one of the most notable Wall Street slash investing trading moments of all time. You had a record-setting

number of new investors start to check out the stock markets in 2020. As a result of the pandemic, it was literally the only game in town. And many of those investors probably by now have learned enough to have become better investors. But in those relatively early days, let's just say there was a lot of experimentation. There were a lot of wild ideas going around, and people had way too much time on their hands. And we end up with things like the dumb money movie and a whole lot of other stuff in the aftermath. But I want to talk about

where you guys were in that moment. So take me back. It's like 2020. You have the app. You have this brokerage service. You've got a much more famous competitor out on the West Coast, which everyone knows is Robinhood. But you guys are starting something different even from the early days. What set you apart from Robinhood even back then before we get into the events of 2021? Yeah. I mean, we always talk about how the first generation of these trading apps was a little bit more focused on speculation overall, so to say, hence why you're seeing, you know, dealing with options trading and stuff like that for people who are profiling you to the markets. And so we early on kind of had this point of view

to just more focus on investing over trading for lack of a better wording. And so a lot of the decisions we've made throughout building the product and so on have been kind of been guided by that as well, right? And so as we went into the kind of GameStop craze, we had a little bit built already. We were like a year and a half in the market at that point.

And so we had a little bit built that perception for us at that point already. But then obviously throughout the craze and a few moves that we made throughout that as well, as well as going off PFOF, PFOF AutoFlow. And so I wish we could talk about a little bit more of how the decision played out. Came definitely obviously more to effect throughout that. But from the early days, the DNA of public was, we're not trying to build the super trading app. We're trying to build the app that's going to onboard the next generation of investors. That was the ethos. It's not to say that nobody was allowed to trade or discouraged to trade, but it wasn't

the central focus of what you were doing. Yannick, do I have that right? Wonderful. Yeah, 100%. We started with, yeah, you're spot on, obviously. We started with also fractional investing, right? So that was actually like, we were the first to really do that back in 2019, I think, when we launched, when nobody really knew what it was. We actually had to run, we were the guys that had to run around and explain to people how you can buy, you know, just $1,000 of Apple stock or Google stock or Amazon stock at a point in time where at least Google and Amazon were trading at higher price per shares than that. So it was- Yeah, and the fractional trading was really not to, the fractional trading was to encourage to, the fractional trading was

to encourage people who were starting with small dollar amounts that they didn't have to default to a mutual fund. They could own stock in some of the high-flying, exciting companies that they loved. And it wasn't like, oh, you don't have enough for a hundred shares, get lost. And that was an innovation that eventually everyone ended up copying. Yeah, absolutely. But it's actually interesting because that was obviously where your mind immediately kind of went to. What we saw, though, was that even if you come in and you want to start building up

a portfolio with just, say, $10,000 for sake of the argument, right? Then Google trading at $2,000 at the time, I think, time i think had to be 20 40 60 or 80 percent of that portfolio and so yeah what we found is that it was really a way for people to control the diversification in their portfolio much much better it was a way for them to dollar cost average over time and so you've seen user behavior where people just really they don't start with like moving over all the savings up front and then and don't come back. It's quite the opposite. It's more they begin a journey and then they just keep adding funds to their portfolio. And if you think about it, that makes sense also in a mobile world where you're sort of always on and you always have your account in your pocket. And you can then, with fractional, always add a little bit more money into your

positions when the markets kind of start to move. Yeah, it's interesting. So my generation was taught about round lots because I come from the generation where stocks were quoted in 16ths and 8ths of a point and quarters of a point and halves. So it was a points world, not a dollars world. And in a points world, you're thinking about round lots, 100 chairs, 1,000 chairs, 500 chairs. This new generation, they think about it more in terms of, quote, I add $500 to Apple every month. Exactly. Okay. So that's- And so there's a whole layer there that you don't need to educate people

around, right? That's right. Because why do they need to understand lots and stuff? Round lots are important in an old school brokerage world. But today people think in terms of how many dollars do they put into the S&P 500 or the Apple, not how many shares they buy. Okay. All right. So you guys are like, you swam in front of the wave that, you know, there were, there

were open questions in 2019, 2018. Will like the millennials ever fall in love with the stock market? Like where, where are they? What's taking them so long? Forget about Gen Z. This is like, we have people in their twenties and thirties who have shown zero interest in investing. So you guys saw it coming. You paddled out in front of that wave, but then it all hits at once. Like you have 20 million new investors want to be onboarded, like almost at the same moment. And that's 2020. And we get through 2020, you guys have obviously benefited, you've built something that a lot of people, you know, served a lot of people as their first experience as investors.

But I want to fast forward to January of 2021. And that's where you guys start life. That's where you started this tweet thread. And I'm just going to get you started. You said next week, dumb money is coming to theaters, telling a dramatized story of what happened in January of 2021. During the GameStop craze, public was in the midst of what happened in January of 2021 during the GameStop craze. Public was in the midst of the event in real life. This is the story of how we experienced it. Okay, so tell me, it's January 2021. You guys are minding your own business. What's going on? Exactly. And I can literally just give you a little bit that rundown on how I did it in that Twitter thread. So on January 28th, which was a Thursday, at around 6 a.m. Eastern Standard Time, Yannick is getting a call from our CTO, Tobias, who's based in Copenhagen.

So we have a few employees in Copenhagen as well. And his call was basically like, hey, guys, so you know how yesterday was our best day ever by about two X, which was like the first kind of run up that we've seen. Best day in terms of just for public, right. And the history of the company basically. Right. And then, but then it was like, so guys, what's happening because we've already have more signups today and it's, you know, and the markets haven't even opened yet. And that's kind of how that day started, right? By around 8.30, we heard that our competitor on the West Coast was turning off the ability to purchase certain stocks that were trading heavily throughout that time, including GameStop and so on.

And that was the moment where we obviously knew like, okay, we are going to be this alternative that's going to be in the market today, so it's going to be kind of nuts. And that's when we headed out to an office. And I mean, yeah, I think I can pick it up from there. Yeah, we basically all hung down in some offices. And so, I mean, this was actually, this was still a little bit, COVID was still fresh

in people's minds, right? If you recall. And so we didn't actually officially have an office, I guess, at the time. So we were sort of meeting, working out of Dick Parsons' office, who was one of our early investors. Who's Dick Parsons for the audience? Dick Parsons is one of the most prominent businessmen, I think, in the history of America. He was, I think, the CEO of Citibank, CEO of Chairman, the Clippers, I think, Time Awana. So just an all-around, all-around kind of one of these.

So you guys have office space from him and you get the team together somehow. Very little team. I mean, we're talking me, live. I think our CEO was in there, obviously. Actually, a couple of advisors, investors that wanted to. It was like an all-hands-on-date moment. We knew, right? But it's like a good thing.

It's not a bad thing because you're like, all right, lightning has struck. Now how do we capture this electricity? A hundred percent. But to tell you the truth, I think at that moment, you're not even starting to think whether it's good or bad. I mean, you've got no time to think. You just act, right? And it's just complete execution mode immediately.

You've got no time to think. You just act, right? And it's just complete execution mode immediately. And so we went there. And then to life's point at around 8.30, you saw the whole thing of buying and some of these other stocks. And that was sort of like when all hell really broke loose. We could see signups come in at a pretty rapid clip from basically since we woke up, up until that point.

So you guys got 400 million media impressions during the course of this week. How many accounts are being opened? Leif, I think you said five new users every second. Obviously, it fluctuates throughout the day, but at the peak, it was about five new users a second, which is quite rapid. This is you. You said our Twilio account was still on a debit card with $50 auto refill. Our CFO was calling vendors desperately trying to get us on invoice plans before the cards would fail. So this was not premeditated. You just were there at the right time. But if like your systems broke down,

some of these users would never come back. Like you really had to get, like if they were going to be onboarded, it had to work right now. And that must've been super stressful. Like a big piece of it was like, obviously our ability to serve as customers was the main key to just kind of get as much momentum

out of that time as possible and so we had like our engineers on this like 24 hour long zoom call um and they were just like going on and off this call just to like try to keep the systems up like code reviews were happening in real time while they were on the zoom call together and so on just to make sure that we're keeping the systems up but there's one moment where, so throughout 2020, to your point, was already a lot of growth. I think we grew 13x throughout that year. And one of our senior engineers, Klaus,

who is this very prominent Danish man who will very loudly tell you his opinion whenever he is asked or not. And so Klaus was literally looking at us and was like, so guys, if we double the user base, our systems will crash. You know that, right? Like we actually have to refactor the entire system from scratch. And so he said that and then was like, well, we're actually going to double the user base in like 48 hours at this rate.

And so that's why everyone was just going on the Zoom call to just like figure things out in real time. And to everyone's credit, right, they pulled it off, which was quite awesome. Yeah, the app stayed up. I want to back up like why there was this rush all of a sudden for people to create public accounts. So, you know, and I saw, by the way, I saw the movie over the weekend.

But for people that don't remember this episode or the specifics of it, what happened was you had GameStop, you had a lot of stocks, but like GameStop was $4, then it was eight, then it was 20, then it was a hundred. You had large hedge funds that were betting against it. And every time it went up 10 points, they owed multiples of money more in terms of like margin calls. You short the stock. It's borrowed money. And the more it goes up, like in theory, you could short a stock and your risk could be unlimited if you don't close it out.

The amount that you owe just balloons. So the stock goes from a hundred to 400 in like a couple of days and Robin hood, like there's a whole conspiracy theory, obviously, but Robin hood, as you refer to your competitor on the West coast, they remove the buy button. Like this is not in, no one's disputing this. They, they limited the ability of retail investors to continue to push the stock higher. Now, why did they do that? That's the subject of lawsuits and settlements.

We don't have to get into all that. The important thing is you guys are sitting there like, hey, our platform is open for business. We can execute trades. And we are not in a situation where you can't, you know, do what you want to do on our platform. And some of this stuff is technical and some of it is legal and there's like net cap requirements and all sorts of things that brokerages have to live with. But do I basically have the story right for why all of a sudden you had this huge influx of new people discovering you? Yeah, totally.

Exactly. Okay. Anything you want to add to that or anything I got wrong there? When we look back to that, we always say that luck save us the prepared. And so a big part of that was really the sense of like, yes, first off, we've built a lot of goodwill in the year before of the people that already knew us. And I think that goodwill was just like accelerated throughout that time, right? Like to your point, there were a lot of conspiracy theories floating around of how the system works, like how market structures work, the relationship between brokers and market makers with payment for auto flow and all that kind of stuff.

there were a lot of openings to basically ensure for us to, to make sure that people know that if you're a customer of public, you are the customer of anyone else that we're trying to, you know, do everything right for the people who are using the platform and so on. And so I think that was obviously just like a massive piece, right? We actually got a lot of love throughout that week just for fast, transparent communication. So just like, what is the tweet going out? What's the email, the message going out to users throughout the day at certain times or something happened, et cetera.

And just this very clear, open communication where people were just understanding what's actually going on and so on to also just counter all the potentially wrong narratives that are floating out with all these conspiracy theories and so on that i think was a super important part to also you know make sure that you know people trusted us throughout that process because i think it would have been very easy to just throw us into the pods with everyone else, so to say, at that time. I was going to say, you guys seem to have put a lot of emphasis on transparency and just explaining what was going on to your users, and they seem to appreciate it.

Were you nervous at all of, in that moment, getting thrown in with other apps that were struggling or, God forbid, like getting the attention of Dave Portnoy by accident. Like there, there are, or, or,

or regulators or like a politician. Cause like pot, there were politicians just like accusing people of crimes and stuff. Like, just like in that moment, anyone could have said anything about anyone. It became the thing that everyone had to jump on. But I actually think, let's take it back a little bit to what something you said before,

right? You said, you know, in 18, 19, everybody was like, we're the millennials, we're the guys who stock market. I think one of the things that really helped in addition to COVID and then meme stocks, et cetera, was the whole demystification of the stock market, right? People talk about democratization. They really was the whole demystification of the stock market. People talk about democratization. They really also talk about demystification.

And so if I were to draw a chart of demystification, that's gone up. And as that's gone up, more people have joined the markets. Everybody starts to understand how it works. But then suddenly, there was this moment in time where for a second, everyone on the customer side was like, wait, do we really understand nothing here? Like this is, and then you're just back to peak mystery, like what the F is going on. Yeah. And that's exactly why we over-indexed so much and just like clear, transparent, honest

communication and try to actually be a resource to customers as well as anyone else that wanted to talk to us. We did get a lot of calls behind the scenes those days as well from God knows who, to like some all kinds of folks to like get our read on things because we were, I guess, very concerned that suddenly the long term effect was this was going to be, oh, no, the stock market's only for the highly sophisticated and it's never going to work for me. And it is as we always thought it was going to be. Yeah, the rigging.

So, all right, that's a really big part of this. The psychology of the millennial generation here in America, you think about their formative years. So when they're in elementary school, the dot-coms blow up and maybe they hear their parents talking about how much money they lost in pets.com and AOL and whatever. And then like seven years later, that same generation is like in high school or graduating college. And they see their parents lose their house and they don't really fully understand what caused it, but wall street's involved Goldman Sachs,

Lehman AIG. They hear about, you know about the Fed probably for the first time in this era. So there is this suspicion that finance is this f***ed up thing where every five years, your parents either lose their retirement savings or lose their house. Like that, right? So that's part of like the whole, when will the millennials ever get interested in stocks? So then they do, and like six months into it, the buy button is removed from the most popular app. So you could understand like that rigging

and you know, a big part of, I'm not gonna get into the movie, but a big part of the movie is to like give you the backstory for why people, regular people just felt so grossed out or so in the mood for revenge against traditional Wall Street. And actually this happens to you guys temporarily.

Like if you tweeted that Thursday, 11 a.m. Apex, our clearing firm, had to halt the buying of three stocks as well, including GME. Our hearts dropped. The base of our success that day was our ability to service customers. But for those three stocks, it suddenly went away. Luckily, by 2.30 PM, they were back. Okay. So most people don't understand what a clearing firm is. And we don't have to explain that today, but basically your brokerage firm is built on top of the technology provider. And I'm, I'm friendly with bill from apex shout to apex, but like some of this stuff is out of your control.

Like this is the plumbing of the brokerage business And not everything that happens is in the control of the firm that is servicing customers. So that must have been a really frustrating moment for you guys. Yeah. And I think the system, it depends on who you are, right? So our competitor on the West Coast is self-clearing. So they own that part of the stack as well. We work with Apex. And what happened throughout that time was just a very unprecedented you know thing right so just imagine you have you know very unilateral flow into very specific stocks where the volumes are just crazy crazy crazy suddenly and because that price went up so much you had this thing that that tiering firms have called the bar the value at risk

and you can think of that as basically collateral they have to hold while these trades are settling. And so that price, that money they had to hold just went up. I'm sorry, because Life, they're the house. Yeah, in a way. They're literally clearing these trades, meaning they are matching buyers and sellers. They're literally clearing these trades, meaning they are matching buyers and sellers. But there are gaps in between when a buy order finds a willing seller and vice versa. Therefore, they have to be capitalized in order to carry out that activity.

And that's why that's so important. And those capital requirements just skyrocketed throughout that time. And that's why, obviously, Apex was able to solve it incredibly quickly compared to some others. But that was really what happened there. That was just unprecedented. And so it really came down to how well connected are these firms, even just within the industry, that they even have access to capital fast enough and so on. But obviously, back to your point like explaining a regular retail investor how that stack works who are all the different parties involved you know you have the brokerage you have the clearing firm you have the market maker and the exchange etc etc etc

and like getting people to truly understand all that and the different requirements all these have and whatnot like forget about it. And that's really where, wherever you see intransparency, you're going to see a lack of trust. And that's why it was always so important to have very transparent communication, to try to explain to people how these things work, et cetera, et cetera. But it's tough. It's very, very tough. No question. So my personal feeling is that the majority of investors who live through that period will take away the right lessons and they'll realize that like investing done well is not that much fun. Like that was a lot of fun for the people who are very online and in on the message boards and they felt like they were part of a movement. And I like I totally get that. And if I were 21 years old at the time,

I probably would have been all over that, all over that whole Wall Street bets thing. Okay, but I think most people in the aftermath, conspiracy theories aside, the ability to buy GameStop temporarily was broken on certain apps. That served as almost like a fire break, like the fever broke. And then in the aftermath, GameStop stock got crushed. And then of course, we're three years later or whatever. And most of the value that had accumulated in

that stock is now gone as the fundamentals have taken hold. But I think like most investors, and you guys could probably confirm this, are like, okay, that was fun, but I'm not going to do that again. And I actually think the silver lining is that people had a really important, formative investing experience. And they have since pivoted to take what they're doing with their money a lot more seriously. You guys as a business have taken some important lessons from that moment as well, including the way that you're compensated and your business model. So could you talk a little bit about what's different on public now than back then and why? I mean, one of the most obvious things that we've done throughout that

time, and we actually introduced that literally the weekend after the GameStop craze started happening, was that we moved off payment for order flow. And that was, again, just a way for us to very clearly align our incentives with the ones of our customers and to just make it very clear on whose side we're on, so to say, right? And that you know that you're a customer of public. So you're leaving a lot of money, sorry, like you're leaving a lot of money off the table by not selling order flow to Citadel and Virtu and the various high-speed trading firms. Do you get credit for doing that in the eyes of your users?

Like not just like, hey man, that's cool. But like, do you feel that that's a strategic advantage in some way that you're basically removing a huge conflict from the relationship? A thousand percent. Yannick, you feel pretty strongly about that. Okay, say more. A hundred percent. That was never, I guess.

I mean, I guess it was a bet at the time because we didn't know how people would react. But if you think back to that time, what had happened, and you kind of touched on this earlier, like it was a mass educational event around what's a short squeeze. And then a derivative of that became later, like what is payment for order flow? And like, how does incentives actually work in this whole industry and we had talked about since the first time we were in a meeting with investors back at our series a there's something strange here over the next i mean i think we were saying like over the next 10 years with social media with more transparency to your own point millennials are kind of a little bit skeptical they want to understand stuff a little

bit better maybe and like they ask more questions all this will be, in the fullness of time, we always said all this will be kind of uncovered. Oh, wow. And then because we thought that it was just going to be like a slower, gradual, like, because if you look at what happens in any industry, it always goes towards higher, more better technology and more transparency.

Like those are the two trends, generally speaking, that I think a lot of people- All right, so GameStop sped that learning curve up from 10 years to one week. It happened in 48 hours suddenly, right? And so you had some stuff happen, but then it just like that whole educational curve just completely spiked, right?

So how soon after that episode did you guys remove payment for order flow as part of your revenue? I think it took us about a week to a week and a half to be completely offered and execute orders on exchange. It's pretty quick. So yeah, it was very quick. It was very quick.

We made the decision, I think, that weekend, actually. And then it took a little bit. The engineers were sort of busy on just keeping the systems alive. So any new feature ideas at the time were not very welcome. just keeping the systems alive. So any new feature ideas at the time were not very welcome. Now you also did something that does not exist anywhere in finance that I'm aware of.

You instituted a business model where tipping is encouraged. Meaning if there are users on the public app and they're getting a lot of value out of being there, whether it's because of executions are good on their trades or they like the community aspect or whatever, they can opt to tip you, like tip the company public, like as a way of saying like, you know, keep this thing running.

I like what you're doing. That's something that came out of this same decision. I guess you guys said to yourself, like, let's make the bet that people who are using our site or our app and they like it will be happy to pay us and we'll let them decide what it's worth to them. I don't know of that anywhere else in finance.

That's a pretty radical idea. But do I have that right? Like the idea behind it? Yeah. And it was specifically on like equities trades, right? And I think generally speaking, especially in like startup land, like this idea that everything has to be free, we generally believe that's flawed. And that people are generally completely fine to pay for a service if they recognize they're getting a good service. And that the transparency of understanding that they're the customer is often way more welcome than the intransparency of not realizing if it may be screwed over.

And, um, uh, and so I think that's really, yeah, nothing is free. Nothing is, nothing is actually free. There's a trade-off. Somebody is getting paid for something. Otherwise, why are we doing anything at all? Exactly. And so, and so that was just like a very, you know, just like direct execution of that. Right. But it's not like, it's obviously not the only way of how we make money. Right. You can think of it as like instead of P4 for an equity straight, say it's the option to tip for like the option to pay for your order execution, you can say.

Right. And so that's what we that's what we introduced there. Obviously, at the time, like specifically at the time, it was also this notion of, we often called it internally, the protest sign. So when you were basically tipping, you also were able to post your trade, because there's a social component to public, right? You're able to post your trades back to the community. And then your trades would have this little tip icon, basically, of like, hey, I've tipped on my trade. And so we call that the protest sign internally, where it was like, hey, are you supporting stand transparent markets you know like are you in support of the transparency of it you know if so then then you tip for your trades therefore it's going to be a little bit this like

community notion of like you know hey like i'm not sending my trades over to the market maker i'm actually tipping for my trades and that's like the the little like digital protest sign that came in form of this little tipping badge on the on the traded specifically that that notion was obviously way more present throughout that time and now it's much more just like a part of the way the public app works um but yeah so i want to i want to just finish by asking you guys do you think that like and so here we are toward the end of 2023. Do you think that on balance, the events of January 2021 were a good thing for your generation? I was going to say my generation, but it's not your generation. Like a lot of money has been lost in AMC, in GameStop, in Bitcoin. in amc in gamestop in bitcoin like we we are all aware that you know there were a lot of good ideas or a lot of bad ideas there was a lot of reckless activity but like on balance would you say like

looking back on balance it's actually a good thing that things went the way they went because blank like what would be i'd love to mean, the very first thing I would say is that I would say all the things you just described are signals of the end of the bull market more than anything. And that the ends of bull markets just lends itself to speculation, right?

Everything points out to the right. Yeah, it gets wild. It gets wild. It's easy. Every generation. It's easy to be right for lack of better wording, right? And so therefore,

it just creates more reckless behavior, to say though i would say that what happened throughout the time very specifically is that a lot of people that had not considered the markets or even thinking about how investing works were suddenly mass educated around basic principles of investing even people that started their journey in crypto we still only happen a lot might start there but they end up buying the s&p 500 they end up buying the six months treasury bill right now which is by the way the number one asset here today on public for example right um and so you've seen that like yes um definitely on certain trades a lot of people got burned no question but on the other hand also a lot of people got burned, no question. But on the other hand, also, a lot of

retail investing is a little bit like learning by doing. And those learnings don't go away. And so they will not suddenly stop investing, but they will just use what they've learned and deploy

it in building a certain portfolio, and that's really what we've seen and deploy it in building a different portfolio into, you know, diversify their portfolio, et cetera, et cetera. And that's really what we've seen mostly. We've actually seen still from those cohorts, right, from those people that signed up throughout that time, they're still nowadays from some of the most active cohorts we have. Not because they're trading new stocks every day, right,

but because they're actually building portfolios. And I think that is a very encouraging thing generally to see. We went from NFTs to T-bills in 18 months. I was about to say, what do you think the most bought asset is year to date, Josh? And what do you think it was in 2021?

What, the most bought asset in 2021? Yes, I mean, that one's obvious. It's not a trick question. In 2021? No, no, no. It's what the movie is about, right? Yes, I mean, that one's obvious. It's not a trick question. In 2021, no, no, no. It's what the movie is about, right? Exactly. GameStop, okay. What do you think it's been year to date?

I would say probably a T-bill. Six month T-bill, that's right. And so I think to live's point that just underscores, and you've seen those cohorts, by the way, they didn't actually lose all their money in 2021, as some might think. We've seen much more flows from them in 2022, in 2023. And so I think you are talking about a phenomenon here where a lot of people just pulled into the market earlier than they otherwise would have. But they didn't actually go in with all their kind of savings. The vast

majority didn't. Maybe the top 1% of Wall Street bets did that, but the 99% really didn't. They were sort of along for the ride for fun. Wait a minute. They also didn't have it. And then they discovered. This is like, to me, this is the best part. When do you want to make your biggest investing mistakes? When your portfolio is at its smallest or its largest. So a lot of the people who first started investing in that era, they might've made mistakes, but it was largely funded out of their current income. They didn't have seven-figure portfolios to blow up. They will someday. And now they have had this formative experience.

So they will know what not to do when they do have their peak portfolio size. So for me, that's the really good news. You blow yourself up at 18. It's a best case scenario. Better than at 48. That's, by the way, and that goes for anything in life. That's when you should make all your mistakes. Right.

In your love life, in your finance life, you know. I'm with you guys. I just want to say thank you so much for joining me today. I know it's been quite a whirlwind from those days in 2021 till now. You survived, you've thrived. The public app is doing great. Happy, happy customers.

And I'm one of them. And thanks so much for all that you do for the community. Really appreciate it. Cool. Thanks for the community. Really appreciate it. Cool. Thanks for having us. Thanks, Josh. Now stay tuned for What Are Your Thoughts? Yup We're back

I know you guys missed us last week Cause we missed you Last week We were on last week? Yeah two weeks ago I don't know We were on last week Somehow it's uh

October I have no idea what's going on It's week four I know I have no idea what's going on. It's week four. I have no idea what's going on. All right, yo, shout out to all the gangsters in the live chat. We love you guys.

Thank you so much for coming. Everyone's here on time. Dave Wilson, Midwest Cannabis. Cliff is here. Sean's here. Random Trends in the house. Who's buying the dip? Somebody.

Somebody. Nick Kaspersky, what up? Jay Luther. Hamager.'s buying the dip somebody somebody nick kaspersky what up jay luther hamager i bought the dip today old testament's in the house having a drink feeling that all right all right hey everybody welcome to an all-new edition of what are your thoughts my name is downtown josh brown here with my co-host michael say hello to the people hello hello hey i have a I have an announcement to make. We are bringing the show, The Compound and Friends, to Charlotte, North Carolina. A live event. It's going to be early, let's say late afternoon, early evening in Charlotte.

Will there be barbecue? Hell yeah, there will. Location, TBD. But it's Tuesday, November 7th. And we are going to give you guys a chance to be the first to hear about the details. All proceeds of the event will be going to No Kid Hungry, which is our favorite charity. And it's really exciting to be down south and doing this live for our friends in the North Carolina area.

So if you want to get the details before everyone else, the thing that you want to do is send an email to askthecompoundshow at gmail.com and we will blast that information out to our list first before we put it anywhere else about how you can get a ticket. And it's going to be one hell of a night. I can promise you that. All right. We have a sponsor tonight, Mike. We sure do. Rocket Money. Rocket Money is a personal finance app that finds and

cancels your unwanted subscriptions, monitors your spending and helps you lower your bills all in one place. I think I might've told you this or might've told the audience list. I discovered that I was already paying another company that was like the same type of subscription, you know, five, five years subscription. I swear to God. It's so meta. But I also discovered, so I get emails when there's like large transactions. I'm like, wait a minute. Didn't I just get billed for this? Yeah. My, the guy that I, that I work out with, uh, I, every, I was, I was being charged every 20th of the month and all of a sudden there's like three

charges in the last week and a half. I'm like, Hey buddy, I got the cops watching you. Who's the guy that you work out with Ben? I hate working out. I absolutely hate it. I pay a guy to watch me work out so that I actually do it. I hate it. It's hysterical. So that you show up, I actually do it. I hate it. It's hysterical. So you show up? I hate it.

So you go to his gym? No, neither. Zoom. Oh, for serious? For serious. Okay. So anyway, I saw, I saw, I got multiple emails like in the, in the weekend. I'm like, oh, what's going on, buddy?

And he blamed the software. I'm going to, well, I'm going to let it get slide for now. I'm working out with him on Friday and we'll see. I'm going to judge his reaction face-to-face or zoom-to-zoom if it really was a soft throw if he was trying to pull one over. I'll give him the benefit of the doubt. He's a good guy. One more time on the call to action. Rocketmoney.com slash compound.

It will save you money, save you hassle. Give it a shot. I love it. What do you have to lose? Worst case scenario, you find some stuff you're paying for for no reason. And come on. Because you know what? In this economy?

I'm not a line item guy with my credit card. I see the bill. It comes in, goes out. Yeah, this looks about right. Yeah. But all right. All right. Before we get the show started with the topics, I just want to give a public service announcement.

Today was an ugly day. Try it on, please, John. Today was an ugly day on Wall Street. Wait, are you jumping in front of my top? I am. All right. I'm cutting the line. Do it. Today was an ugly day. Try it on, Ghibli's John. Today was an ugly day on Wall Street. Wait, are you jumping in front of my time? I am. I'm cutting the line. Do it. I'm cutting the line.

Just right across the board, I think it was a 90% down day, which means 90% of the issues, not just the S&P, but that trade in the New York Stock Exchange were down. It was pretty ugly. Chart off. USAZAR is saying, I joined that, quote, I pay a guy to watch me. What did I miss?

I hate working out. If I don't pay somebody to hold me accountable, I won't do it. I hate it. I'll watch how much, how much you pay in this guy. I'll watch you. What are we, how much are we talking? I'll get the nugget to watch you. So, okay.

Uh, season seasonally, this is lining up the old bar cell roche biome yeah what else you gotta say wise guy no put that shit show back up i want to see this thing yeah it's i've been i've been in transit all day what went up today like a little bit of health like a little bit of pharmaceutical yeah really nothing now mandalise had a good day i took this at 3 15 so it's probably even worse by the close. But seasonally, this has lined up. I know we joke sometimes about seasonality, but the end of September, for whatever reason, the whole cell rouge biome, I don't know why it works, but it tends to work.

And then next chart, please. We get a 5% pullback more than three times a year on average. This is good. And yet, almost every time, and I'm probably guilty of this myself, every time stocks go down a little, you think they're going to go down a lot and maybe they will, maybe they won't. But just, I urge a little bit of calm and relaxation. Although I will say, chart off, objectively as somebody who we do a lot of content, down markets are just more fun.

Now, I don't like bear markets. This is not a bear market for the record. But when stocks are just going up slowly, it's boring. There's not much to talk about. I could see the Business Insider headline tomorrow. Like, Michael Batnick wants people to lose money. No, I don't. I'm saying the quiet part loud.

I agree that down markets are more fun because there's more to talk about and more people pay attention. So as long as you're like, you don't have like nerves of jelly and you're not like out there doing stupid shit just because the market goes down. I think for most people, like down markets are not like enjoyable because obviously your account is lower, but it reveals a lot about like what's really going on in the markets. When it's 72 and sunny, you don't learn anything. And where your personal risk tolerance is. You only know where your line is when you go over it.

So how many, if you had to guess, how many 5% pullbacks have we experienced or even 10 have we experienced since we started doing this show in, I don't know, 2019, 20, 25. I mean, whatever. It's a lot. Yeah, they happen all the time. Right, but we're here every time it happens, and we do the show, and we calm people down. And it builds your character.

That's right. Right, if you, so. So man up. All right, woman up. All right, so now I lost my train of thought. Oh, let's talk about deflation. Obligatory. We're going to get, I think, the most important economic data point of the week on Friday. Not important to me, but important to the people that swing a lot of money around. This is PCE.

The Fed pays more attention to personal consumptions and expenditures than they do to CPI. attention to personal consumptions and expenditures than they do to CPI. That is their preferred measure of inflation. I think the major difference is that PCE underweights the housing component relative to CPI. Are there any other like really big differences between the two that are worth pointing out or not really? Am I, what am I, an economist? Yeah, I guess not. Okay. Just a guy. Just for those who are going to be watching at home on Friday, the number that people are expecting is 3.2% year-over-year growth in personal consumption and expenditures. And then, of course, there's a core PCE as well, which is stripping out some of the louder, noisier components.

And that's going to be – I think that's going to determine how we go out this weekend. Like if we're going to have an extension of the sell-off in stocks, it'll be because of that. And the reason I feel so strongly is I think the proximate cause of this week and last week's sell-offs were what's going on in the bond market, which we're going to get to in a minute. sell-offs were what's going on in the bond market, which we're going to get to in a minute. We did get August new home sales today. New home sales fell 8.7% month over month, which is big. That was worse than expectations. And 5.8%, I don't know how to read this. Was it 5.8% a year ago that they fell and now they fell 8.7%? Or I don't like doing a negative number and then saying higher. That's weird to me, but maybe I'm just reading it wrong.

The housing market is thoroughly, thoroughly broken. It's just like it's frozen. 30-year fixed mortgage rates hit 7.19% last week. This is all you need to know. That is the highest rate for a 30-year fixed mortgage going back to July 2001. We also got S&P Case-Shiller Home Price Index for July. The Case-Shiller Home Price Index measures the 20 largest metropolitan areas, the housing market. That was actually up – it's prices. was actually up one, it's prices.

That's not transactions, that's prices. It's up 1.1% improbably year over year and up 0.6% month over month. So July versus June. So is that surprising to you? No. Bespoke, I'll get to the know why in a second. Bespoke tweeted, half of the 20 cities tracked by Case-Shiller saw home prices hit new highs in the latest release,

including New York City, Miami, Detroit, Chicago, Charlotte, Boston, Atlanta. The reason why it's not surprising is because there are no homes and there's still too many people that need to get into homes. And interest rates. I mean, they change the arithmetic, but they don't change the calculus. People need houses. I was talking to Joe Favey today, our friend Joe Favey. I love Joe. And one of the things that we were talking about, now this doesn't necessarily impact the stock market in the short term, but it does matter. Why haven't interest rates impacted the economy? What the hell is so funny? Nothing. Nothing? Oh, yeah? No, no. I like laughing. You have 100% of my attention. Go ahead.

Why is it taking so long for higher interest rates to impact the economy? Well, it certainly has impacted the housing market in unexpected ways. You probably wouldn't think that the mortgage rate going from 3.5% up to 7.5% would be in line with all-time record prices, but it is. But the reason why it hasn't impacted the economy, why does it take so long? We keep saying it takes a while. The full impact has not been felt. Why? Consumers, how many people are getting a mortgage right now as a function of the overall pie? Most people already have a mortgage at much, much, much, much lower interest rates. Is it one third of home buyers on a house outright?

60% of mortgage holders have locked in rates at less than 5%. So the consumers aren't being really hit by mortgage rates. I'm with you. I'm with you on that. And that's undisputable. by mortgage rates. So I'm with you. I'm with you. I'm with you on that. And that's undisputable. But please, the median existing home sale price in August rose by 4%. What the hell is that? Like with where mortgages are, is this cash buyers? Like I don't even understand how that's possible. It's smaller down payments. It's smaller down payments that is help from parents. But again, number of transactions for new homes or even existing

homes, it's tiny compared to the overall pie. It's on the margin. So the consumer is not being impacted there by housing prices. Now, yeah, for people that are getting a mortgage now, they're going to have less disposable income, obviously. It's a tiny slice of the population. Okay. And then on the other hand, hold on, last thing. On the other hand, corporations, as we've discussed a million times of the population. Okay. And then on the other hand, hold on, last thing. On the other hand, corporations, we've discussed a million times, the effective interest rate that they're paying versus where current rates are, it's a mile wide. Microsoft, how much money do they borrow in 2020 and 2021? Literally two and a half percent rates. I don't know. So on animal spirits, we were looking at a chart from SockGen at net interest expense for corporations going lower. I'm like, how the hell is that even?

I don't know what this chart is saying, but it's kind of wild. What I didn't factor in is that that is net. In other words, Microsoft has, I'm making this up, $100 billion on its balance sheet. Big borrower. Big borrower, right. Yeah, but they have so much more cash on the balance sheet. So they're earning so much more in their cash than the money that they have. They borrowed at 2.5%.

They've got cash that's earning 5%. Yeah. It's very unusual.5%. They've got cash that's earning 5%. It's very unusual. Weird times we live in. So let's do September consumer confidence. Got this number. The index fell to 103 in September. It was 108 in August. The expectation was 105. So worse than expected. Consumer confidence fell 10 points to 73, which is a five-month low. Wait, what the hell is this showing? Hold on. Consumer expectations, consumer confidence. What is present situation? I don't get this. Like when they do the survey, they ask people about their current situation.

And then they ask people about the future. So like the present situation is a sub-index of the bigger index. This is a series from the conference board. It doesn't matter. Directionally, my take is, and we're going to talk more about the consumer in a second, but directionally, I feel as though this is like where the rubber is starting to meet the road. And I'll put a pin in that because I know there's some other stuff we want to do here. One thing that's funny is that we have a rate hike probability now for November, which is being widely debated. So 74% chance of what exactly for November?

No hike. No hike. 25% chance that they hike by 25 basis points. Okay. I'm in the no hike camp, but don't go by me because I was in the no hike camp for a lot of this year. Hang on. You just said where the rubber meets the roller. What do you talk to? And then you just stopped and you just pivoted. Well, because here's why. We don't know. Well, I want to do the consumer stuff later. But I would just say, like, what are we going to judge?

What is the Fed going to use to judge whether or not they should hike rates again in November? Right? So here's something that's funny. It's possible that we don't even get the data because of the government shutdown by which they will need to make that judgment call. So this is Greg Valliere at AGF. September 30th is the deadline for a deal in Congress. And he says, quote, Biden administration officials have confirmed that the Bureau of Labor Statistics would not report the September jobs report on October 6th and September inflation data on October 12th. Also jeopardized would be the initial third quarter GDP data. on October 6th and September inflation data on October 12th.

Also jeopardized would be the initial third quarter GDP data. So they won't even have the data if there's a government shutdown, apparently, because work will stop on that. I don't even know how that mechanically works, but that would be really funny if the Fed just doesn't get the data. They use stock prices, credit spreads. They'll be fine. There have been 14 debt ceiling-related shutdowns in modern history. This is the part that I really wanted to get to for the listeners, the viewers.

Eight of those took place during President Reagan's administration. Most of them lasted a day or two. And John's going to scroll through some of these as I'm talking. And I think the reason why- I remember that one. That was that was a big one this one you weren't born for this is 1981 this is thanksgiving some of these are comical this is cbs news they kind of give you like the reason why they happened and you know a lot of this is like oh this one's funny. Go to this one with Reagan sitting here. So that's Tammy Wynette. And the reason why they had a government shutdown is because the Republicans were all going to be at this barbecue for Ronald Reagan.

And the Democrats had a $1,000 a plate fundraiser the same night. So they just like, instead of finishing, they just like went away for the weekend and like went to parties. And then the following Monday, they just like went away for the weekend and like went to parties. And then the following Monday they signed it or something. But a lot of these, if you look at the history of these shutdowns, some of them are, some of them are just like, so absurd. Like Reagan wanted more missiles, but the Democrats wanted more money for school lunches. And so they would have like this two or three day episode where they just like, didn didn't they didn't continue to fund the government.

And then eventually they did. So most of this took place in the 80s. We had a few of these episodes from 1990 to 1995. And that's under Bush and Clinton and then nothing until 2013. But like it's become. So here's my point. It's really hard to scare people. Who have been through this already.

Several times. Like that all of a sudden. They need to liquidate their portfolio. Because of a government shutdown. I don't think anybody does that anymore. No. But this is my point. It's hard to like scare people with the same thing.

Like if you look at these past episodes. 2018 with Trump. They did this thing about immigration. And Trump demanded 5.7 billion. people with the same thing. Like if you look at these past episodes, 2018 with Trump, they did this thing about immigration and Trump demanded 5.7 billion to pay for the wall across the US Mexico border. And then at the last minute, they signed the bill. So it's like, this is a game that we've been playing for a long time. I understand there are reasons to be bearish right now. And there are reasons to take less risk. I don't think that this is a valid one. What are your thoughts?

No, no, no. I hate the game. Hate the game. I completely hate it. Okay. All right. You're up. All right.

Let's talk about some risks to the economy. This is fun. All right. This is from the Wall Street Journal. The U.S. economy has sailed through some rough currents year, but now faces a convergence of hazards that threaten to create more turbulence among the possible changes this fall. A broader auto worker strike, a lengthy government shutdown, the resumption of student loan payments and rising oil prices, each on its own wouldn't do too much harm. Together, they could be more damaging, particularly when the

economy is already cooling due to high interest rates. Biden was picketing with the UAW this week and Trump's making noises about how he would handle it, presumably with like a table full of McDonald's. But it's bad. Like the workers strike, I think it's not its own problem. It's like a symptom of the bigger problem, which is just this huge catch-up in employee pay. And it affects all industries. It's no different than the writers' strike in Hollywood versus the streaming platforms. We're just in this moment where there's just been this huge uptick in prices for everything from insurance to healthcare to now gasoline again. And this story is not going away. And it has not yet shown up in margins, corporate margins.

You know, all these pay hikes and all of these strikes and demands. It's like it really hasn't had a big impact, maybe because there's very little unionization at companies like Apple and Alphabet. Like that's not like a challenge that they're reckoning with. And a lot of the earnings in the S&P are coming from companies like that. And maybe that's the reason why this hasn't spilled over into a bigger story with respect to S&P 500 earnings. But I feel like it's coming.

What else did you have? Does this give a leg up on Tesla compared to the other giant automakers it's got? I feel like between Biden and Trump, depending on how involved they get with this and how long it drags on for, they could crash the domestic automakers. They could do a ton of damage if they instigate this to go on for longer. And that's not saying I'm taking a side or I have a strong point of view on who should get paid what. I'm just making the point that it does seem to favor the Tesla story versus the other

automakers. General Motors found strong support of like 31, 32 several times over the last, I don't know, going back to when is this, June of 2022. And it's basically on the edge right now. And that stock sucks. That stock's been within the same 10-point range since 2011. All right. I want to talk about leading economic indicators. So this chart shows the year-over-year change with the year-over-year change in real GDP. Now, it doesn't really track exactly, but there's a pretty big gap between the year-over-year change

in blue going negative and real GDP just does not respond. The next chart, please. This breaks down what are some of the underlying components. You've got- Leading economic indicator components. So within the financial bucket, you've got leading credit index, you've got the S&P, interest rate spreads, and then you've got the non-financial components, consumer expectations, ISM, index of new orders,

building permits, average weekly hours. So it's quantitative. It's not, you know, these aren't, I know there's surveys underneath it, but it's a quantitative measure. And the upshot is this. This has been down for 17 consecutive months. Going back to the mid-90s, the only other time that we've seen anything like this was during the GFC.

Now, I'm definitely not trying to be alarmist. I mean, this is wild. I mean, they're not showing us consecutive advances. They're just showing declines. Conse it might- Consecutive monthly declines. Right. But if you, if you like overlaid this and let's say in red, you saw consecutive advances, it might, it might calm you down a little bit. I don't know. This, that does not look, that does not look great. I gotta be honest. The Wall Street Journal today did a story. This was their big story of the day. Americans finally start to feel the sting from the Fed's rate hikes. And the gist of the

story is borrowers shopping for mortgages or auto loans are experiencing sticker shock. New 30-year fixed around 7%. That's up from 3% two years ago. That increase can mean a home buyer has to pay hundreds of dollars more a month compared with two years ago. Wait, Josh, pause for a sec. So you're talking about people getting less for their money. So Michael McDonough has a great chart that Ben and I spoke about in Animal Spirits today where he shows, so the average monthly mortgage worth 30-year fixed, 20% down is $2,300 a month. Pre-pandemic, it was $1,000. So from 2019 to today, it's up 130%, $1,000 a month to $2,300 a month. Pre-pandemic, it was $1,000. So from 2019 to today, it's up 130%, a thousand bucks a month to $2,300. So he flipped it on his head and said, okay, what is a $2,300 down payment? What does a $2,300 monthly mortgage payment get you today

versus what it would have bought you in the past? And pre-pandemic, it would have bought you, I'm sorry, just in the beginning of the pandemic, it would have bought you a $700,000 house. Now it gets you 400. So your money is going a lot less than it used to. And for people that are in this situation, it's hell. Here's Mark Zandi, chief economist at Moody's. He estimates, he says, buying a home or a car right now is, quote, completely unaffordable for the typical American household because you're mixing higher borrowing costs with higher prices.

He estimates the typical American household would need to use 42 weeks of income to buy a new car as of August. That's up from 33 weeks three years ago. The National Association of Realtors calculates the typical american family can't afford to buy a median priced home i don't know what the salute let's throw this chart up real quick john this is average monthly car payment during the second quarter the focus on the red so that's a 700 that's a 700 average monthly payment for new cars. And that's on top of everything else that's gone up in price. So I don't know what it says in the country

when the typical American family, I guess typical by income, can't afford to buy a median priced home. We have a severe, severe imbalance here. And I don't know what the solution is. We're not just going to start like government funded home building. And the home't know what the solution is. We're not just going to start like government funded home building and the home builders themselves they're building, but they're not like pricing things to move. They're, they're going to do what's best for them. They're publicly

traded companies. They're focused on profitability. So they're not just, you're not going to, you're not going to get some sort of Marshall plan where toll brothers and KB homes come out and just start erecting hundreds of thousands of houses. It's not going to happen. So this is where we are. And this is where I lead in. I think that's why consumer confidence, which we put a pin in before, is basically crashing. This chart comes from BookVar. So we talked about the consumer confidence index. This is what it looks like. This is crashy to me. So I mean- First of all, it's not crashing, number one. Number two, this trend that you're talking about

has been in place for a while now. I think this is just gas prices. Fine. September consumer confidence, 103 down from a revised 108.7, two and a half points below the expectations. It's the lowest level since May. The components were mixed, slight increase in the present situation, but more than offset by an almost 10 point month over month drop in the expectations component. And again, lowest since May. I feel like it's not done. I don't think a stock market bounce in October is going to change the direction that we're headed in. Consumers are pissed, and with good reason. And the underlying causes of them being pissed are not all of a sudden going to evaporate. So I think this is a story that's going to be with us through the end of the year. What do you think?

Well, two things. I'm looking forward to seeing the household debt and credit report, which comes out from the Federal Reserve Bank of New York. If you look at credit card delinquencies, mortgage delinquencies, auto, it's up a little bit, but it's really nothing with nothing. It's basically where it was pre-pandemic. So I'll be looking out for that. Number two, J.P. Morgan's Guide to the Market has a chart showing the household debt service ratio. Now, you're talking about feelings. I'm talking about facts.

The household debt service ratio, which is the debt payment as a percentage of disposable personal income, is 10% off the lows of around 8%. In Q4, 07, that was 13%. So the facts are that people are much less levered and sensitive to interest rates than they were 15 years ago. Yes, unless they have to buy something. Yeah, fine. I agree. If you're in the market for home right now, it's brutal. I said it's hell, and it really is. All right. Got a new iPhone. Are you getting it? The iPhone 15 came out on Got a new iPhone. Are you getting it?

iPhone 15. Absolutely. Came out on Friday. There were pre-orders already. The analysts seem to think that this thing is selling as well or better than most phones in recent history. Did you have to go to the store? How does this work? You don't have to go to the store. You can buy it on Apple.com.

Do you have a phone broker? Can you give me his number? I usually go to Verizon on Sunrise Highway. It's a corporate-owned store. It's not like a guy. And we'll probably get one because I have four people using iPhones. And in any given year, somebody's up for a new one. Wait, I thought you said you did get one.

I did not get one, but we'll probably get one. You did not get one. No. So there's four of these. There's the Plus, the Pro, the Pro Max, and then the lower cost base model. JP Morgan last week said that lead times for the more expensive Pro and Pro Max models

are higher than for the lower priced options. Other analysts are agreeing with that. Question for you. When you get a new phone, so I just roll it into my phone bill and it's like, it's nothing. It's like 15 bucks a month extra, right? When you buy it or whatever it is. Yeah.

Are interest rates going to impact how much this costs? I don't think so, but I wouldn't know. I've never borrowed money to buy a phone. So I- Why? You just buy it outright, not to brag? No, I'm up so the the deal that you have with your cellular service provider is that you're like up for a new phone when you're up and you're right i

feel like i feel like you're always up you got it right well that's my point i have four iphones going on in my house so somebody with each line each line that you're paying for from verizon that phone has like a time where it's like, oh, you're up for a new phone. But also, you know what? So we'll just share it. I feel like there's like three years between every new iPhone release, right? It's not. It's like 18 months.

Fine. But it does feel like you're always up for a new one. I think I'm on a 13, honestly. Ew. I don't think – I know. Gross. All right. This is Goldman Sachs. We view the extending lead times for the iPhone 15 Pro and iPhone 15 Pro Max as a positive indication of consumer demand.

You wouldn't know it from the stock price. And for increasing price mix, but recognize that there is little transparency into available supply and potential supply constraints are a risk. Goldman's target for Apple is 216. There's this thing going around where they're saying the new phone heats up. Did you hear any of this shit? I saw some stuff. All right. So Apple made this phone out of titanium.

All right, dude. Nobody cares. You're not a scientist. I didn't say I was a scientist. I'm making the point that this might become an issue if it really goes around and people hold back from buying it until they hear more. So Apple made the phone out of titanium, which does not cool off. It's like a thermal situation apparently. I'm not a scientist.

And it does not cool off the phone the way older models did. And initially, people were blaming the fact that it's an Apple-designed chip. They designed a chip with TSMC. And people are saying like, oh, maybe it's the Apple chip. What is it? What is it? An element? It's an element. It's some sort of an element, Michael, you see. It's elementary. But other than that, I haven't heard anything negative about it. I haven't gotten one myself yet. So people are going to buy the iPhone because they always do because people always find money. I don't know how. I don't know.

Are you worried about the consumer? Like the way that I look at the consumer, maybe this is probably like a very crude way to look at it. Well, as a scientist, I'm sure you can understand. I look at Discover Financial Services. Yeah. And I look at Capital One. And I look at Ally. And none of them

are looking too good. American Express, on the other hand. I know. Well, that's the Apple consumer. Yeah. You're looking at fucking Discover Card

and talking about iPhones. It's two different people. Yeah, I know. No, I know. And Amos doesn't look great either, to be honest. All right. Let's do this.

Let's do this action mode. What is this shit? They added action mode, and my favorite way to use it was with the 3X lens. This is so sick. I can start recording here, and I'll punch way in. Let's say we want to get a Michael Bay shot of this statue. So as I'm walking, this looks completely shaky. This looks like this is going to be unusable.

But trust me, just try to keep it in the center approximately and action mode. We'll do the rest. Oh my God. This is going to save the economy. Holy cow. How do they do that? Holy cow. Do you know that the iPhone does more revenue than the McDonald's, Netflix, Pfizer? Nick Beats is asking, is there a mudroom mode? I don't know what that means.

Me either, but I like it. I mean, how crazy is that? Yeah, just in case I'm about to make a student film for my class at NYU. No, I think that's cool. Especially if you're filming like your kid playing soccer. You know who needs that, Chris? He's got, his Instagram is an abomination. He needs that.

It's the worst thing I've ever seen. If you're filming your kid playing sports and you're running down the sideline tracking them and they score a goal, and then you could like use that action mode to take out all the shakiness and maybe like put like music behind it. You might actually make a video of your kid that somebody else wants to watch, which most people

can't are not capable of doing. All right. Let's keep it going. All right. Let's talk about real yields. So yields are up. Chart's on. Top is what? This top is nominal. Bottom is real. Ten-year nominal on top, ten-year real, or inflation adjusted below. All right. Where is this from? This is from Goldman. So short versus long-duration pair trades tracks the path of real yields.

And we're looking at, I guess this is just value versus growth, more or less. Short duration stocks have been outperforming when yields go- Wait, I'm sorry. I'm an idiot. So the light blue is the 30-year real US treasury yield, which is now positive 2%, meaning in inflation adjusted terms on a 30-year treasury, you're earning 2% above the rate of inflation. And they're comparing this to a basket of stocks? But it's actually interesting. It's short-duration assets versus long-duration. So think like, I don't know.

So the 30-year is the ultimate long-duration asset. Like Pepsi versus Peloton, for example. Okay. But what's interesting is that these have tracked pretty decently, but now it broke apart. It's breaking down. It broke down. And it also broke down in gold. Next chart, please. So you've probably seen this chart a million times.

You're looking at gold and inverted real yields. So that's the 10-year they flipped the chart upside down. Correct. Okay. So these were tracking very closely until what? Spring of 2022? So higher real yields should be hypothetically and also in reality competition for gold, right? Gold is a yieldless nothing.

And gold's hanging in there. And more interestingly, I mean, it doesn't look great, but it doesn't look terrible, with a really strong dollar. All the conditions are there for gold to get crushed, and it's not. Yeah. I think gold is like a fear hedge more than it is an inflation hedge. And I expect it to hang high so long as volatility is rising and there's so much uncertainty about interest rates um and now

we have this government shutdown like gold is the perfect asset for this moment meanwhile even though stocks have been going down the vix is not even at 20 i know it's pretty it's pretty what what what does nicola say like call me at 30? Something like that. Yeah. Something like that. All right. What are we doing? Oh, huge losses, though, for big bond ETFs this year. I know it's relative, but the ag, so the US aggregate bond market ETF, which is an iShares product, it's a $92 billion ETF. It's down 12% since the fed started raising rates. So this is a Bloomberg us bond aggregate. It's not that a lot this year though. No, but just since like the rate hiking cycle started, it's off 12%, which for, for like a pretty vanilla bond fund, that's

a pretty notable, uh, drop from, uh, from its peak. Totally. Totally. history. Totally. I'm just saying, year to date, they've been fine. All right, so this chart is from, chart back on, please. This is from Jason Gepford at Sentiment Trader. He said, absolute devastation of fixed income. The average US bond is trading at 86 cents on the dollar. This includes treasuries, corporates, mortgages, et al. Total carnage. Chart off, please.

The reason why this is, why I said they're not getting killed this year, they got killed in 22 because there was no buffer. Going from zero to five is devastating. And you had no income too. Devastating. Yeah, yeah, yeah. So going from four to five, while not great, I mean, the ag is flat year to date, even though rates are screaming higher. Now, if you have more duration, kicked right in the pants. screaming higher. Now, if you have more duration, kicked right in the pants.

The seven to 10 year US treasury bond ETF, which is IEF, has fallen 15%. The TLT, forget about it. That's the long bond. That's down 30% since the Fed started hiking interest rates. We're going to get into more of this later. Last thing on this topic before we go to dumb money. So, Balchun has tweeted, people keep piling at the TLT. Another $750 million this week. Amazing camera call on ETF taking in so much money while being down so much and so consistently. This is rational behavior, in my opinion. Yeah, I agree. I agree.

Especially if you're not trading and you're buying. It's like, listen, I don't care if rates go high or fine. Yeah, I'll have some paper losses. Well, hold on. We talk so much shit about people chasing winners. This is great behavior. This is great behavior. This is great behavior. The TLT is down 30% from its high, and we're probably within one more rate hike of the end of the cycle. And no matter how much this thing is down, two weeks in a row, people are piling into it. And I love to see it. Is that financial advisors doing that?

I love to see it too. This is not your- Is that us? Are we doing that? This is not your Martingale strategy. No. Right? Where you just keep doubling, keep doubling, keep doubling. No, no, no. This makes sense.

At some point, rates will peak. And even if they don't, I mean, well, they will. You are buffered. You're already getting 5%. And if you're a recessionista, this is your trade. Like this is where scared money is going to go. Pen. Sorry.

Sorry. Sorry. The dumb money. You didn't see it. I did. So I want to give you my reaction. I don't do. So I've mentioned this before.

I don't do reviews. Like when people put out a book and I write about it, I write a book reaction. I don't like to review because I'm not a professional critic. No, like like i'll be like all right i like this i didn't like this i mean yeah what's the reaction reaction and review it's the same thing is that semantics i don't know i yeah i mean we're not different you're not a professional i'm not giving it all right let me put it to you this way i'm not giving it a grade i just want to like say what my reaction is to these things there's a lot of throat clearing. What's going on here? You okay? Dumb Money Movie had some really entertaining moments.

I just would have, I would have made the movie a little bit differently. They, all right. So I understand why they made it the way they made it. Let me back up. They put a lot of emphasis onto the regular people who were using Robin Hood and buying the meme stocks and riding the wave higher. They really wanted to show you like how, like, like why these people started to quote protest trade and why it was so us versus them. And I guess I didn't hate that part.

And America, America Ferrera, who's an amazing actress is like, she's like a nurse in a hospital dealing with COVID patients all day. And this is like her like disgust with like how the hedge funds get bailed out and blah, blah, blah. All right, fine. I'm fine with all that. I understand that's what you need to make the movie work. That was a huge – that was a story. Yeah. That was a huge that was a huge that was a story yeah but that i think so my my opinion

they spent like 50 more time on those on that storyline those storylines like 10 of those types of characters okay and i was just like man you got you got like so much else that you could do here um this pete davidson was actually good in the movie so he's like the big brother of roaring kitty and i don't know if that's a real life character. This is Paul Dano as Roaring Kitty. He was great. He was like terrific. He's, oh, by the way, he's just a silent killer. You never hear his name, but if he pops up in a movie, he's amazing in it. And you know, it's going to be good. Yeah. All right. All right. Let's pause right here. This was my real issue. These are three of the funniest,

like character actors you could possibly have brought into the movie. D'Onofrio playing Steve Cohen. He's Private Pyle from Full Metal Jacket. He's been around forever playing great characters. He played Stevie so understated. It was almost like he was whispering his lines. And it just, I felt like it could have been a way bigger character.

Offerman was wasted even more. Offerman is playing Ken Griffin from Citadel. And basically the two of these guys have to bail out Seth Rogen's character, which is, what's his name? Plotkin. Gabe Plotkin. Okay. Rogen is totally wasted uh take me off

rogan is really funny and i i've never seen him play such a milk toast like he had like maybe seven lines the whole movie you know plucking bought the hornets that's how bad they stuck it to him yeah well listen i just so it's not a critique i would just say if i made the movie what would you do three the three of those guys would be like 70 or 80 of the screen time roaring kitty 20 and i would have thrown out all these other characters that are like made up uh composite characters of regular traders that being said they told the story really well if like like i took sprinkles she totally understood the whole story and how everything happened and the exposition in this movie is tough it has to because because you're trying to describe something that's going on in the internet so you have to

like show people's phone screens they handled that really well and that could not have been easy and i bet you they had to cut out a whole lot of stuff and still try to make that work. All right. So that's your, that's your not, that's not a review. That's your reaction. It's just a reaction. It's not a review. I would see it. But here's the thing. Here's the thing that's tough about finance movies for people that are in the, in financial services. There's almost, there almost has to be a movie for us and a movie for everybody else who needs to have it explained to them. Right. So it's really hard to thread the needle. And I don't generally love finance movies. Like there's a

short list, uh, wall street boiler room, margin call. Like I didn't love the big short. Oh, so, uh, I, so I disagree with you on that. I thought the big short was, was brilliant. Um, some great, some great performances in that too. Steve Carell is incredible. Like I just thought So I disagree with you on that. I thought the big short was brilliant. Some great performances in that too. Steve Carell is incredible. I just thought the performances in big short were really good. One other thing I would say is they made the bad guy Vlad from Robin Hood. He's the villain.

Did you know that? Gabe Plotkin is not the villain. You feel bad for him. Who played Vlad? Somebody I've never seen before. i don't i i think i met vlad once i don't really have a good handle on like him in real life he doesn't do that much media but they like did all the scenes with him talking to elon and with dave portnoy crucifying him so like it it was a really well done movie i was just surprised they made the robin hood guy the bad guy where like all of a sudden the buy button disappears and everyone loses all their money

and i know that's how it actually happened um but they really made him look like a d-bag and uh he was like the villain i mean that was that was crazy i was that was what a scene oh my god but then the last thing they're like hedge funds from now on have to pay attention to what the dumb money is doing. Dude, every single character in that movie is like as wealthy now as they were prior to this whole episode. Like they're all going to be fine.

I think we all understand the sentiment, but it was unfortunate what happened because it was only going to end one way. I don't know what the market cap of GameStop was. I'm sure it was bigger than a lot of companies that had no business being there. And I understand where that mentality came from. It just was only going to end one way.

But the apes are not up. Let's be honest. I'm saying it was inevitable, of course. And they did no Bitcoin stuff, which I thought was a good choice. Thank God they left all that shit out. And I'm really glad they did because that's its own movie. And there will that shit out. And I'm really glad they did because that's

its own movie. And there will be many movies and, uh, you know, they were responsible about just explaining the mechanics of the short squeeze, which I was impressed with. Um, but if the takeaway is like, like that, we're celebrating the worst trading anyone, any of us have ever seen, like, like we're, we're making heroes out of people for doing like really reckless shit with their money. I mean, I don't know. I don't know. I guess like you want to lionize the people

that like drove up the short squeeze, I guess, because it's an us versus them, rich versus poor movie. So I kind of understood the choice. I just, I think I would have made it more a comedy. And this wasn't as funny as it could have been if they used those three characters more, just my, my personal take. Good, good, good, good, good reaction. Good reaction. Reaction. That's what I'm saying. Okay. All right. So, uh, it sort of felt like a bull market for a second. Felt like a bull market for a second. Did you know that the industrials of the Dow Jones variety made a new all-time total return high in September?

No, not September. July. Did you know that? Yeah, July. Yeah, I did know that. It was Apple, though. You didn't know that. You didn't know that.

No, I didn't know that. Don't pretend you didn't know that. But most of the industrials did not. It's a price-weighted index. Yeah, but the Dow is not weighted the same way as the S&P. The S&P, meanwhile, was only 2% from a new all-time high. Yeah. Kind of interesting.

All right, chart on, please. We're going to go through some charts. So these are the total returns since the Fed started raising rates in March of 2022. The NASDAQ 100 is up 5%. The S&P is flat. The Dow is down a little. The Russell is down more. The microcaps are down a lot, down 20%.

When is this since? This is since the first rate hike? Since the first rate hike. Now, chart off, please. You could say, we're not in a bear market. Look at those charts. You could also say, kind of amazing that the Fed took rates from zero to five and a quarter. Oh, I'm sorry.

And stocks are flat. Sebastian Stan played Vlad from Robinhood. amazing that the fed took rates from zero to five and a quarter oh i'm sorry flat sebastian stan played vlad from robin hood he is uh he's like the guy in the captain america movies oh he was he was uh he was a cam and tommy yeah all right thanks to uh he's a winter soldier thanks to christopher brown for for letting us know. I like this guy. Handsome fella. Yeah, no, he's good. They made him the villain. Yeah. All right, charts back on, please. So this is Urien Timmer. Is this really a bull market?

If indeed a new bull market started on October 13th, 2022, it is certainly testing our patience. The 23% rally remains well below average in terms of the typical recovery slope from bear market loss. So for those of you who are listening and not watching, Urien shows all market rallies from the bottoms in the past. And there's a blue line that's average.

And it's not terrible, but- Nothing special. Really nothing with nothing. Pull out the fangs and it's way worse. Well, we're about to. So next chart, please. I had Nick Maggiuli make a chart for the Russell 1000 median total return by market cap decile since the Fed started raising rates. Now, this is important.

I had Nick, because he's much smarter than me, go back to March 16th and tell me what were the market cap deciles then, not now. Because if you do it now and look backwards, you get some funky results. market cap deciles then, not now. Because if you do it now and look backwards, you get some funky results. So every decile, the median return for stocks is lower since the Fed started hiking, except for the top two, which we already knew. But when you look at it this way, it's pretty- Decile by market cap. By market cap. So what's in decile one? Is that Apple, Microsoft?

Yeah. These are the 100 biggest names in the Russell. Then the next, the 101 through 201 or whatever it is. Everything lost money except the two largest categories of stocks. Correct. Since the Fed started. That's an incredible, that's a great idea you had. And nice execution by Nick. So not that the Fed's target was, you know, necessarily taking the stock market.

But, you know, it's happening a little bit. Yeah, I think people are not calling this the stock market. But it's happening a little bit. Yeah, I think people are not calling this a bull market. If you pull out the S&P 50, nobody's calling this a bull market. And if you're in this market in individual stocks, you do not feel as though you're in a bull market. Hell no. You don't. Now, I would say, I'm a glass half full type of person.

The fact that the median stock is basically up a little bit overall, since I started hiking, it's kind of miraculous. All right, next chart, please. This is from Bar Chart. S&P 500 equal weight index is more than 2% below its 200 and moving average, while the S&P remains above. This has only happened five times in the last 30 years. And the dates aren't great.

Oh, yeah, yeah. August 98, January 2000, September 07, October 18, and March 2020. Although March 2020 was the bottom, so we'll take it. Yeah, it's not great. Yeah, gun to my head. We're not done going down. Yeah, what do you know? Next chart, please.

Gun to my head. Yeah, next chart, please. Russell 2000 sectors. Hold on. You know what? Chart off. Josh, that's not a brave thing to say. When stocks are going lower, they're not done going lower.

Yeah, who thinks stocks bottom today? Nobody. Can I tell you why I don't think so? Please. Maybe it'll add some legitimacy to what I'm saying. I look at internals as a scientist. And one of the things Sean and I were doing on a halftime report today, we were looking at the percentage of stocks that are oversold. And that's one of the things during a dip or a correction that I think is worth paying

attention to. It's nothing. What do you mean? No, it's something. I'll tell you what it is. No, I'm saying stocks are oversold. Oh, yeah. Well, this is fine.

You're agreeing with me um my point is only 20 of snp names are uh at an rsi of 30 or below yeah i think you kind of want to see that closer to half before you could be like all right this is washed out like we so that's that's i don't have a prediction or a price target i'm just saying saying, I feel like we need to see more of a washout. And we, my guess, we probably will. Okay. You might be right. You might be wrong.

One last shot from Bespoke. Russell 2000 sectors, the average stock this is from 52 week high. This is gnarly. A lot of the small stocks are just getting blown to smithereens.

Ugh. Look at- The average healthcare- The average healthcare small cap health care what the hell is going on with oh russell 2000 health care or like look at look at xbi they're like pre-clinical biotechs right what's going on with that xbi looks like just looks like absolute garbage yeah just not great all right i'm gonna i'm gonna make the case now several weeks ago during the rally i was finding it harder and harder to make the case now, several weeks ago during the rally,

I was finding it harder and harder to make the case because every stock was up, right? Like it was just hard. I'm not trying to have that problem anymore. Yeah. So I've got, I've got, I've got several cases to make. I'm going to run through them real quick. Now, uh, news this afternoon, target to close nine stores across four States due to theft and crime no it's not but we spoke about this or you spoke about this like like soon they're gonna start shutting some of these stores so new york city uh uh in harlem and seattle and san francisco and portland it's it's it's horrible and this is definitely gonna be politicized what the hell and what the hell do you replace the target with like in an like in an urban center, like in a city like Seattle or New York, like when target goes

out, it's not like Walmart slots right in. Like, what do you even fill that space with? Yeah. It's just people sleeping on the floor. So I don't like, I don't like to buy stocks that are crashing and haven't even done anything remotely resembling a bottom, but target is on my watch list. I will be stalking next chart, please. This thing is down close to 60%. Uh, it looks just horrible. Um, but, uh, you know, I wouldn't mind buying this a little bit higher if it starts,

if it starts to show some signs of life. I mean, for what though? What are you for? What it's called investing. So like for a, for a bounce though, like you don't want to be a shareholder in Target, dude. I have no interest in catching it for an 8% bounce. I'll wait for a bounce and try and catch a higher low. I'll share a little trading tip with you. When you're about to punch in buy TGT, at the last minute, put an AMZN instead. Go ahead.

Continue. God, that's such a buy signal. Next chart. All right. Here's another one that, Josh, I a buy signal. Next chart. All right. Here's another one that, Josh, I know you hate. And this is a stock that I've been stopped out of that I do not own. Dollar General.

It was on the cover of Bloomberg Businessweek. Hate your job. Try working here. Why Dollar General might be the worst job in America. Yeah, I bet it is. Next one, please. JP Morgan. Dollar General's core low-end consumers already at a stress point acting recessionary today, given one diminished savings, two inflation pressure, three student loans, four fuel prices. First half 2024 macro headwinds sequentially worsening, cuts to sell

116 target. Next chart, please. This stock is down 60%, has not seen anything like this in its history. Again, I am going to wait for it to stop crashing, but this is another one on my buy and hold list. If you really want to bet on this consumer recovering, which is the bottom- That has nothing to do with it. So what's the investment case for Dollar General? That has nothing to do with it. Well, tell me what it is.

I'm asking you. Just overreaction. Is it really this bad? So it's a stock.. I'm asking you. Just overreaction. Is it really this bad? So it's a stock. To you, it's not like I'm investing in the company. I'm buying a stock that's down 60%. This is not a buy for three years and hold for three years type of thing. I'm not betting on a turnaround or management fixing it. I know the company's legitimately under the pressure. However-

I'm older than you, and I have seen many retail bankruptcies, the likes of which you and your generation cannot even fathom. God, I hate you. We had stores that were part of the fabric of this nation. It's enough of this. We had stores. Nobody cares. We had stores. Woolworths, Caldor.

Like you don't even understand that these things existed. They were so big. They were like part of the country and they just they go when they go they go i'm not saying that's going to happen to dollar general but i'm just like i'm making the point like down 60 could be down 90 do you know there used to be right aids from coast to coast right aid things just they they go no it's a fair point it's a fair point it's a fair point they don't have to bounce back it's a fair point but my point is if you look at what's going at dollar general

it is not it's bad it's bad they're underperforming walmart dramatically look at the chat mervins jc penny kmart radio shack thrifty listen thanks guys steinmart montgomery wards i was waiting i'm Wards. I'm waiting for higher low. This business sucks in good times. Okay. Waiting for higher low. Does not suck in good times. All right.

But the actual thing that I did buy, and now listen, this is just, I'm gambling. This is pure gambling. So we spoke earlier about bonds. Now, I legitimately think that bonds here are a gift, whether or not rates continue to go high, which they probably will. There's some with you on. Say more. I think if you are an investor, you can buy. I'm not saying you need to buy the zeros or be a cowboy. But if you want to buy just something simple like the ag or whatever, wherever the duration is, I don't know if it's six, six and a half with starting yields at five and a half,

you're not going to get destroyed. You might lose some, but if you're going to buy and hold bonds, you're going to be fine. Okay. That being said, I like this. I like this pitch. That being said, uh, I'm being a cowboy, not with a lot of money. I'm just playing. I bought PLT. No leverage. No, I don't even want to get, I don't even want to get the ticker leveraged uh is that tbt i'm not even what's the what it what is the leveraged uh long bond i forgot i forgot that i bought tmf it's the daily 20 treasury 3x you understand that you have just set up michael batnick versus bill ackman right uh i've literally set this this i just i just i just feel like it's like we're at reminder to our listeners this is not only not

financial advice no no this is no this is poor advice now i'm using leverage i am not going to be in this because just the the reset and the decay and all that shit this is like a weekend i'm out either way okay no listen it's a trade It's a trade. Anything can happen with a trade. I'm with you. It is a gamble. I'm buying, you know, I'm buying, whatever. I'm having fun. All right.

Let's go out with a W for you. We have a mystery chart, and I think you're going to nail it. This is like a very important consumer discretionary company. It is not just important in the United States, but globally. Okay. Its chart looks like shit, as you can clearly see. The top pain is price and the bottom pain is market cap no googling i think i know googling uh first of all would you

buy this with your own money would you buy this stock right because you seem to love these falling knives would you buy this one oh without no no absolutely yeah knowing nothing no of course not what if i tell you it's a dollar store would you get excited then no it's a it's a it's a company whose products you use and love you more than me actually starbucks no nike very good well done second guess hit that drum roll nke baby this is year to date let's put up uh i want to show you five years of this nightmare oh my god oh my god so nike is now round tripping the pandemic believe it or not this is that's pretty bad no i have no interest in this so it's cheaper than it's like five and ten year median valuation but it is not a cheap stock relative to any other stock.

And it's a tough situation because I feel like people gorged on sneakers during the pandemic, like everything else. And they're just like slowing down a little bit. You know what's hitting an all-time high? Lulu versus Nike. Yeah. And then also on the footwear front,

Hoka is like a hot brand on cloud. Yeah. Look, these are tiny compared to Nike. I doubt they're hurt. And Adidas is in bad shape right now. So theoretically, Nike should be kicking ass. But it's tough. Like Foot Locker blew up earlier this year.

I don't think Nike's bottomed. I think the stock gets to 80 before it gets to 100. What do you think about that? It looks really bad. Terrible. All right. We're going 80 before it gets to 100. What do you think about that? It looks really bad. Terrible. All right, we're going to wrap it up. Hey, everybody. Tomorrow is Wednesday, which means you get an all-new episode of Animal Spirits podcast first thing in the morning.

It will appear on YouTube later in the day. It stars Michael and Ben, personally my favorite podcast of the week. Make sure to check that out. Ben is doing a live Ask the Compound right here on YouTube. And at the end of the week, another episode of The Compound and Friends. Thanks so much for watching tonight.

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.