The Compound and Friends - The Next Trade In AI, Dan Toomey on Gen Z in the Workplace

Episode Date: January 31, 2024

On this episode of TCAF Tuesday, Josh Brown is joined by Dan Toomey of Morning Brew to discuss how he makes finance funny, and why Gen Z is the way they are. Then, on an all-new episode of What Are Your Thoughts, Josh joins Michael Batnick to discuss: earnings, Tesla, semiconductor stocks, return to the office, and much more! Thanks to YCharts for sponsoring this episode! Visit: https://go.ycharts.com/compound and get 20% off your initial YCharts Professional subscription when you start your free YCharts trial through WAYT! (new customers only) 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. We had a riotous lively show on YouTube. It's what are your thoughts? It's Michael. It's me. It's earning season. And we just, we get that way. It's exciting. It's exciting, especially this week. This is pretty much the only week that matters. And we're going to explain why that's the case, both mathematically and from a sentiment standpoint. But before that, I spoke with Dan Toomey. Dan Toomey is one of the funniest people on the internet doing finance-y flavored content. And you've probably been sent one of his video clips

or you've probably seen friends of yours sharing them on Instagram. Maybe somebody has sent you his YouTube. But Dan's doing a lot of funny stuff. And he's got some upcoming stand-up shows in Brooklyn. And I wanted to just give him a chance to introduce himself to you guys because I'm a really big fan of his stuff. So I'm going to talk to Dan a little bit about being a 20-something financial-flavored podcaster slash comedian in New York City. And we have a lot of fun there too. So stick around. It's a great show. I want to thank our sponsor before we jump into the break, YCharts. So I was actually with Sean of YCharts out at the

T3 event in Las Vegas. And Sean won a whole bunch of awards. And I shouldn't say Sean. YCharts won a whole bunch of awards. And it's really amazing in just a few years, the amount of penetration that YCharts has been able to rack up in all different categories for financial advisors. They just have really gone from, I think, something originally built envisioning individual investors or traders. They've really made themselves indispensable to the industry. So I was just really proud to see the representation that YCharts had in the awards categories at T3 and just the respect amongst other wealth management professionals.

Like YCharts is part of the stack. So we're proud to have them as a sponsor of the show. And if you've never tried YCharts before, you're in luck. 20% off your initial YCharts professional subscription when you start your free trial through us. And the way to do that is to do go.ycharts.com slash compound. That's go.ycharts.com slash compound. Okay, here comes the show.

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 Redholz Wealth Management may maintain positions in the securities discussed in this podcast. All right, guys, I'm with Dan Toomey. Dan is a social media superstar. He is a host of, what's the morning brew show called?

It's called Good Work. Good Work, okay. And the YouTube channel is Good Work. Yes, sir. Okay, and you're also a standup comedian with a—you're minoring in finance. You're majoring in stand-up. Do I have that right? Yeah, that's correct.

Is that the way your parents explain it to their friends? I don't think my parents—I don't think I exist to my parents' friends, actually. I think I just kind of—I think, yeah, I'm the lost child there. I just kind of show up at Christmas parties, and they say I'm the help is how that usually works. So Dan, you came to my attention because so many people were DMing me your stuff on Instagram or Twitter or wherever. People are just like, I don't know if you know of this guy or if you heard his show or if you've watched any of his videos, he's hilarious. And these are people that I think are funny. And yeah, like, like you have, you have like this, I don't want to call it a cult following because that's kind of cliche, but you do have like a finance following people that know finance and know New York city. And they just, they, they love your, your stuff. Are you,

were you surprised when you started putting stuff out how quickly it would catch on? Or tell me a little bit about your origin. Yeah. How did it start? Basically, it's funny because I started at Morning Brew. So I was super unemployed after I graduated college in 2020 and needed a job. Morning Brew was hiring for a podcast host that was going to do something like The Daily Show,

but about business. And I was making these TikToks. I remember the ad. I remember the advertisement. Oh, we all remember it. Yeah. And I applied, but I sent in a video, even though that wasn't like part of it.

And then I heard back from Alex and he was like, hey, we didn't want this at all. But we'd also don't make videos here at Morning Brew. If you want to come here and just like start that, Hey, we didn't want this at all. Uh, but we'd also don't make videos here at morning brew. If you want to come here and just like start that for us, we would be down. Uh, and at the time I was working over the overnight shift at a news station. Uh, and I was like, that sounds a lot better. So I left that and started up a morning brew and I was around like three years ago now. So, you know, for the, uh, I want a cult to be a part of New York finance, huh? That's awesome. Uh, but it's definitely, I'm glad that it resonates with the

target audience. Like definitely when we started, I hadn't worked in finance or I covered politics before. So, um, it was good that it resonated with like the preexisting morning brew audience, because if it didn't, that meant that I was going to get fired real quick. Uh, but you know, it all worked out, which is good. But so I think it's transcended just the morning. I mean, the morning brew audience is huge and, and shout out to Alex. Um, but I think it's transcended because it's so spot on your, a lot of your stuff is very satirical of, I think, less finance and more the type of people who work in finance and the type of things that they say. And in some ways, like the way they live their lives in New York City. Yeah. Yeah. Yeah. But it caught on because there's a versamilitude there

that I think people look at it and say, this guy knows, and you can't, you can't fake it from the outside. So you must have a lot of finance bros in your life. You know, it comes with the haircut, Josh. You just kinda, it's, it's like, you know, it's like swingers to a single person. They see you and they think that you speak the language and they're like, you want to join? Um, but you know, yeah, I grew up a lot of like, of my friends ended up majoring in business and working in business. I have some family members that work in business, obviously. And a lot of it, too, like I'll say a lot of it just came from when I first joined Morning Brew, come from like a journalism background. I was kind of used to dropping in on a subject and then just having to do a bunch of research about it, uh, up to the

point where I was comfortable talking about it. And so I just did that over and over and over again. When I first joined Morning Brew, just inhaling business news, like every morning. So gradually I got to, you know, kind of figure out a lay of the land. Um, I, I, and, and so gradually, like I, I kind of learned, you know, what the world was like. And so I could kind of like speak the language a bit with people. So I want to play a clip of something that you did that I think it's almost at a million video views. Uh-oh. It's not a long clip, but I will be making deep, uncomfortable eye contact with you while it plays.

So bear with me. I expect nothing less. Yeah. I want you to react to your own work as viscerally as you can. Duncan, if you please. Hello, anytime you spend money, there's a decent chance that private equity is involved.

For example, just the other day, I was eating a Cinnabon inside of a David's Bridal while playing a Guitar Center ukulele in a little ritual I like to call Wednesday. I had absolutely no idea I was actually funding three different private equity firms. Though private equity is one of the most powerful industries in America, it tends to operate behind the scenes. But unfortunately for them, the Good Work investigative news team specializes in

bringing things that are behind the scenes out into the front of the scenes. So let's do the news. Alright, you have the cadence down. I've done 12 years of the scenes. So let's do the news. All right, you have the cadence down. I've done 12 years of CNBC. You have the cadence down of those like investigative specials where they'll send the reporter out on the street and they're doing a deep dive into whatever.

And then you go on to just make one of the most hilarious things I've ever seen about, maybe the only, about private equity and its reach into the world. And what was so great about it is how timely it was. You didn't do that like out of the blue. That's in response to your generation's, I think, viral belief system that for some reason it's weird that Vanguard and BlackRock are investing in all these companies and Blackstone and other private equity firms are taking a lot of them private. So tell me a little bit about like, what was the

inspiration to make that video and the response that you got? Yeah, the inspiration came from, we had wanted to do, you know, it kind of started with our first episode that we did for Good Work, to do, you know, it kind of started with our first episode that we did for Good Work, which was about consulting. And that was kind of our first foray into like exploring an industry that we didn't really know a lot about. And consulting was just kind of this big, like mammoth, opaque thing that we want to explore. And then after we did that, we're looking at other options.

And private equity came up because it's just such a mammoth operation, but we didn't know a lot about it, but we knew that there was a lot of ownership in a bunch of different fields, but we didn't really know how it operated. So that began a two month research process where we've talked to a bunch of journalists that we didn't even like get to show their interviews in that video. And gradually just came up with this big piece of just like, so do they own everything? Like kind of like our stupidest question is what leads us throughout the whole thing. Because it often is the one that people are asking the most.

And, you know, I talked to a lot of former like private equity and a lot of current private equity associates for the piece. And gradually, yeah, it was just kind of a way for us to both provide like a holistic, you know, image of what the industry looks like and kind of the state of it today. I thought it was a really interesting time to be doing a piece about private equity, too, since deal flow was starting to tighten up at around that time as well. And there's a speculation of will private equity be as successful as it has been over the past 10 years with interest rates rising. So it felt like we've been very fortunate where a lot of the pieces that we've done that have performed the best have come at very interesting times for the industry itself.

It was the same thing with investment banking, too. I know like the future of Goldman was like a big talking point towards the latter half of last year. I think also perfectly also privately timed. Yeah. Although, you know, they, they, what they like killed it in, uh, in, what was it? Earnings last week or they had, they had a pretty, yeah. So, so this year, you know, I guess good for David Solomon, but, um, you know, no earnings are down. They were not as bad as feared. That's, that's how you kill it. That's, that's the secret to killing it on wall street is setting the bar low enough that you can jump over it, not quite step over it, but jump over it, but not jump too athletically. And that's, that's what they did. And it was, and that's enough. That's enough. Hey,

I'm going to teach you one thing about wall street that maybe nobody's taught you yet. Uh, this will be really valuable. There is actually no such thing as good or bad, only better than expected or worse than expected. Got it. I need to adopt that. I need to adopt that mentality for, uh, uh, for YouTube analytics. That sounds, that sounds a lot healthier. You so, but you deliberately made the private equity and other videos, but you, the choice was we're going to do this as a, as, as comedy and it worked 850,000 video views. Had you done that straight? Like, hi, it's Dan from morning brew. And I'm going to tell you about private equity. It's probably a 3000 view video. So there's, there's an instinct there. That's really smart. I think if you want to be heard these days, you either can outrage people

and turn them against each other, or you can make them laugh. And I like the choice of making them laugh. And we try to do a lot of that too. Um, but were you surprised that that many people were interested in that topic? I mean, the, the inkling of the overall channel is that we're going to take these really dry. So the channel is run by me and another guy, Henry Stockwell. Um, and this is the good work, the good work channel on morning. Correct. Okay. Yeah. And, um, you know, I had always loved, I had always wanted to work in late night. That was my dream was to do something with news and comedy. But when we were given the channel, the challenge was, okay, how can we find a format that is news and comedy but it's not some dude at a desk? Because that's, you know, what are you going to compete with?

It's so played out. Yeah. And also there are people who are doing it much better than us. So we, you know, there are a few things that we were inspired by to kind of create the overall feel and character. But the hope was, I mean, that was the video that took us the most amount of research. Because we really didn't want to be wrong in the video. Like, any of the broader claims, like, we were like, if we're going to make jokes about it, we cannot be wrong from, like, our main— It's not funny to be misinformed.

It's funny to be informed and then find the thing that's funny about the truth yeah and like when we play up the whole reporter voice um a lot of it is just it's funny because it's like the voice that you are used to hearing facts from and then they just say something like absolutely absurd and i think my favorite joke in that episode is we make a joke about abraham lincoln's bisexuality we say, like, you mean to tell me he didn't swing both ways? His wife was named both Mary and Todd. So it's like stuff like that that, you know, you just love. But packaging that all around actual information, I think it's like it taps into the part of your brain that you're like,

OK, I'm used to a newscaster saying this information to me. It's kind of easy to consume it that way. And then the humor just adds another layer to it where you're more down to listen. So did Saturday Night Live call you the next day or did people in private equity call you and say, hey, that was a little bit too close to home? What did you hear? The most responses I get are usually from people who work in the industry that I cover. And they're like, yeah, kind of. And they all love it.

Like somebody from BC, like again, the consulting video, BCG invited me to their Christmas party this year. And I was like, no, I'm not going to go to that. They were like, do you want to come here and like tell us some jokes? I was like, no. They want you to come in character. Yeah, I was like, I'm not doing that for you guys. But usually it is people in the industries that we kind of clown sometimes. Yeah, so a million years ago before you were born, there was a site called Deal Breaker.

Oh, yeah. Deal Breaker where Matt Levine comes from. And Matt Levine, even before Matt Levine, it was really carried by Bess. And she was just incredible in this really timely moment where the world was falling apart in finance. This is like 2006, seven, eight, nine. Deal Breaker became a site that people were checking like five times a day.

And Deal Breaker was breaking news about layoffs at Lehman and Bayer. Like before even like the managers at these companies were instructed to do these layoffs. So they had like this just funnel of information from Wall Street. Like Bess has to put this up and she would and put it up hilariously.

And I think they were probably the first site to do like this really great blend that you were doing of like wall street culture mixed with comedy with like enough fact that it's like worth people's serious people's time, but enough comedy that it kept them engaged and it wasn't, you know, boring. And there's a vein there in a mind, if you keep going, that I think is like really in demand and really lucrative. Oh, hey, if there are any Wall Street people listening and they want to tell me about stories

that they think I should cover, I'm all ears. That would be great. You're all ears. Yeah, yeah, please. Please tell us more about any layoffs or anything. Can we do some Gen Z stuff? Sure.

Although, yeah, go ahead. Let's see. Let's see how good I am. No, I like, so I'm a fan of Gen Z. I like Gen Z. Oh, yeah? Yeah, I do. Okay.

Why? This is, what I like, all right, what I like about Gen Z, no, truthfully, Hold up the notepad. No, they wear their hearts on their sleeves. They hold literally nothing back. And my kids are teenagers.

I guess they're Gen A. I don't even know how it works anymore. No, I think they're probably Gen Z too. I'm like very old Gen Z. I'm like, I'm 25. So I'm like very, very old Gen Z. You're an elderly Gen Z. I'm an elder.

I'm an elder Z. Yes. I'm an elder millennial. So I think so, so it works. But like, I, um, I like that. They just, they say what they think and all these things that go viral amongst Gen Z or things that my generation would have kept to themselves. So there's a really big story at Axios today about how Gen Z are like live streaming themselves, getting laid off. Like in prior generations,

if you got even millennials, if you got fired, whether it was a layoff or something specific to you, it was a really private, quiet thing. You kind of went dark on social media for the weekend. And this is not that this is like, Hey everybody, this prick that I work for just scheduled a catch-up meeting, and I haven't spoken to him in six months. They're probably firing me. It's in five hours, and I'm going to film it. That's like a whole new thing that we haven't seen before. And what it's forcing companies to do is like really put their culture on display in the way that they let people go and how humane they are and how civilized they are about, unfortunately, this needed process. What do you think of that?

I don't know. I think I need to get fired and then we'll see how I respond to it. I might be team mole rat. I might be team just disappear for a while. That'll tell us if you're Z or you're Y. That's how we'll know. I have only older

siblings too, so I grew up in a millennial household. I feel like... Look, you grow up in an environment where I think I was in high school when I first got a smartphone and that was late. Like that was weird. So you grow up in an environment where you're a middle schooler and you have a smartphone, which has a camera on the internet on it, which is probably the most like dangerous tools that you could give somebody that age. Yeah, blow up your life.

Yeah. And then they start to document everything. But in the process of like people blowing up their lives, people just get a lot more comfortable sharing whatever. I mean, if you go on TikTok, you're going to see a lot, Josh, but the reason why podcasts scare me is because I feel like a lot of the times people will go on to any sort of media and that they're like, I've got to be unfiltered. I've got to give my take. But sometimes when you're unfiltered. That's my problem. But sometimes when you're unfiltered, you don't have time to actually develop an know, think through your thoughts, you know? So I'm, I'm like half like empowerment. That's great. I'm glad that we can all like be our true selves

online. But also part of me is like, man, I'm 25. If I had a video of 22 year old me just kind of saying whatever on camera, I would be like, ah, I wish I didn't have that technology. So I go back and forth on it. There's people that have that, right. There I didn't have that technology. So I go back and forth on it. There's people that have that, right. There's people that have that right now because they said or did. I mean, I guess that's just the new reality. My theory on that is everyone will have

so thoroughly embarrassed themselves by the time your generation or the bosses of companies that it'll almost be irrelevant. Like there will be nobody that didn't. Yeah. There'll be like nobody that didn't. Um, and by the way, Duncan's going to edit out all that stuff you said about Scottish people, uh, anyway. So I don't want you to worry about that. This is a New York post. They knew what they were doing with the sheep, Josh. They knew what they were doing. They knew damn well. Uh, this is a New York post last week. Gen Z workers give Manhattan

uh this is the new york post last week gen z workers give manhattan a shady new nickname why would i come here for fun do you know what gen z refers to manhattan as did you see this uh no what did they say what did they say i have to prepare you this is one of the greatest things i've ever heard just just me wait just manhattan in general not like a certain section of it specifically manhattan okay what does gen z refer to manhattan as work island there's a whole tiktok uh i guess some subculture going on people that are on their way to work island uh yeah this is the post when gen z is not busy bashing elders for their antiquated antics, the domineering demographics, I guess there's not a Gen Z writing this,

seems to enjoy rebranding things to their liking, whether changing the problematic name of a fashion staple or redefining what it means to be a virgin. 20-somethings have a penchant for putting a cheeky spin on everything. From now on, Manhattan is work island. Why would I go to work island for fun? So these videos are getting hundreds of thousands of views

and it's a whole collection of people. Basically like if Manhattan is work island, then Murray Hill is the capital, et cetera, et cetera, et cetera. I don't know. I feel like that's a little unfair. What do you think? Well, I don't know. It's good to know that little unfair. What do you think? Well, I don't know. It's good to know that George Will is writing for New York Post right now.

Yeah, sure. I don't know, man. The thing about Gen Z, I feel like every generation is just going to bash the one below it for not working hard enough, right? Yeah, that'll never change. I'm sure boomers got it. It's like, you didn't fight in a war. You think you're a real man? I don't know. But the thing about Gen Z— The boomers got it. You know, it's like, you didn't fight in a war. You think you're a real man? Like, I don't know.

But the thing about Gen Z. The boomers didn't even get that. They got a stare. Yeah. Like a disapproving stare. Just cold-hearted. That's what I'm going to give my kids. I'm just going to stare at them.

Good old-fashioned stare parenting. We need to bring that back. Less talking to our kids. I think you just stare them down, you know? Yeah. So the boomers gave that to their kids. I think you just stare them down. You know? The boomers gave that to their kids. We went through the 60s. We had

wars. Gen Z is more like... You guys got roasted more by boomers than Gen Z has, I feel like. Millennials, they really tore into you guys. I feel like Gen Zers, we're too confusing for boomers. It's not like, you know, they don't want to, we just kind of freak them out.

You know, we're listening to like Lil Nas X and doing like TikTok dances. It's terrifying. Yeah. I think that, I think with millennials, the thing that you could say about millennials, millennials, the thing that you could say about millennials that's a compliment and is true is that they are the first generation that had to teach their parents how to do things. So when I was growing up, there was nothing I could teach my parents. What am I going to teach my father? Honestly, literally nothing. Millennials had to teach them how to do all this internet shit. They couldn't do any of it.

Like they literally, they couldn't figure out Netflix with the DVDs and how does this work? The iPhone, et cetera, et cetera. So that's a weird place where it's a whole generation of kids that taught their parents how to do things. And you can understand then where that sense of entitlement comes from.

It's like, oh, fine, dad. I'll show you. You know, most kids don't teach their dads how to fish, how to ride a bike, how to, okay. So there's some element to that, but the Gen Zers, I don't know what their Mark's going to be. Hey, well, this is what I'll say about Gen Zers. You know, I think that while we are often, there's a lot of this talk of work life balance with with Gen Zers and then prioritizing, you know, having a steady work life balance, having a good mental health. But what I also say about my generation is that that does not always come at the expense of a work ethic. I think a lot of Gen Zers are trying to find a work life balance that is complemented by a strong work ethic where it's, you know, you're working smarter, not harder. So you'll look at a lot of these people who are trying to find the quickest way that they can work for themselves, which does result in a lot of people, like, doing ads. I mean, I'm looking at this from, like, a content creator perspective,

but I have a lot of friends who are starting businesses in their early 20s uh way before i mean like my dad would work with people who had worked at the same company for the last like 50 years and i think now a lot of uh which there can be some hypocrisy to it as well right where you're saying i want to work for myself but then you're also trying to guess what you what algorithm youtube will be promoting this month so it's like, are you really working for yourself at the end of the day? But I feel like there is a lot of the, you know, there's still a lot of hustle there, man.

It's just trying to find the right balance. And I think that when you are working for yourself, there can be a bit more of a sense of empowerment there for Gen Zers, which I think that they're trying to achieve a lot earlier than past generations. At least, yeah, is what I've seen in my experience. I totally agree with that. And the statistics on people starting businesses. And also on that, I should say, like and subscribe and follow Morning Brew, which is my sugar daddy, because without them,

I would not have a paycheck. So I'm like, yeah, everybody should work for themselves. By the way, Morning Brew is great. Well, what Morning Brew really figured out, and I've spoken to the founders about it, in college, it was just like all these kids that are on the verge of doing their first job interviews and they don't know what to wear. And they don't know what is the news source I need to get up to speed on to sit in this interview

and sound like I'm intelligent. There's guidance counselors in high school. And then, of course, there are career people working at colleges that are supposed to be prepping you. But you tend to have information really land with you if it's coming from people of your own generation. And that was just a brilliant insight. And I think it enabled them to really speed up audience development.

It's just like, wow, this information is actually useful. I would say if you look at the stats of the amount of people starting businesses since COVID, it's through the roof. And a lot more of that is younger people than what most would suspect. It's not just people that have been working for someone else for 20 years. It is a lot of people saying, yeah, I have hustle. I have work ethic. But I kind of want to build my own thing.

And you see that probably everywhere in content and in comedy. Well, that must be strange. I mean, as a parent, do you see that in your kids? Like you said, they're in their teens, right? Yeah. Do you see that as like what career goals does a teenager have? Like I wanted to be in the NBA. Like what are your kids?

Do they want to work in finance or how does that work out? Well, this is something interesting, and this probably started when you were a teenager. High school became college. So my kids are choosing electives in high school. Like they're, they're setting up their schedules. Yeah. Specific to what they want to study. And if you make a choice in ninth grade, it sets you down a certain path with math, with science, with history. Like they, they kind of like are being forced at a younger age to decide things that we weren't we didn't have to like we just had here's your schedule now they're creating schedules with a guidance counselor with a parent

and maybe even with a college advisor at 16 years old it's pretty incredible so i wouldn't want to put i would not put my future in my 16 year old self that'd be the word that'd be such a i mean what that sounds so stressful. I was, I was nervous enough doing like AP European history that I was deciding my career path. At least like the, you know, in high school, it was just kind of like, what are you working towards? It was like, shut up college. And you're like, okay. Like, I don't know. I found that helpful, but it's, it's, it's, yeah, it's like, uh, it's, it's way more intense. And, uh, thank my oldest just got into college. Thank God. Oh, nice. Congrats. It's like a, it's way more intense. And my oldest just got into college, thank God.

Oh, nice. Congrats. That's great. It's like a weight lifted, but now all our focus is on the 14-year-old, and it's game on, and he is not handling the pressure well. As a youngest child, I hope you're ready for him to hate you, because I certainly got to that point with my parents. Right, but when he gets his acceptance, it'll all, it'll all be worth it. Uh, let's talk about the, let's talk about the shows. So in addition to, um, good work and the videos and the podcast, you are on stage. What are you doing? Yes, sir. Uh, I'm doing, doing, doing standup and taking

my clothes off for the right price. Josh is what I'll tell you. Uh, kind of what's necessary, Price Josh is what I'll tell you. Uh, kind of what's necessary, right? Yeah, no. In this economy and this economy. So, so, so are you doing any of the stuff from, uh, your morning group content on stage or is it like radically different? It's, it's not, uh, it's not like the character that I play at good work. We actually did our first live show for Good Work at New York Comedy Fest this year, which went great. So that I kind of reserve that for, you know, that that persona for when we're doing an actual show for the channel. And then stand up is more just about my life. And, you know, a lot of family stuff. And just anything that I kind of think is funny outside of the business world is kind of where the you know, it goes into the standup or like my personal Instagram that, you know,

I kind of focus on. All right. So you had a show coming up in Brooklyn. You're doing two of them. One at seven o'clock for people my age and then one at seven 30 and then one at nine, nine 30. Is that okay?

Do you look at, do you look at the first one, like the warmup for the second one or you really bring it for both? We will, we will see last it for both? We will see. Last time I forgot to eat that night, so I was dead by the 9.30, and my knees buckled after I got off on stage and I passed out. So actually, that might move tickets for the 9.30. If you want to see me pass out, then go to the 9.30.

Or if you want to see Josh there, go to the 7.30 show. This is February 8th at The Gutter. All right, so The Gutter in Brooklyn, and it's called that because it's a bowling alley, so calm down. He's not literally performing in a gutter, although it might be close. Hey, I won't say no. I won't say no to stage time. All right, so when is that, February 8th?

Yes, sir. All right, very cool. I told you offline I'm going to do my best. I would love to watch. A lot of things I would love to do. Just in reality, they're harder to do than they should be. Sounds like you're going to make it. Sounds like I'll see you there, Josh.

You know, I would love to be there. I would love to be there, but oftentimes I'm not there. In fact, you know what? I'm probably not going to go, but it's okay. I can't wait to – it'll be a fun show, though. I'm doing my taxes that night. Anyway, we want people to go out and see the show. And, Dan, we want people to follow you so they can find you, the Good Work channel.

That's the name of the podcast, and it's the name of the channel on YouTube? Yeah, just the channel. I am too terrified to have a podcast, but it's the Good Work on YouTube, and then you can follow me on Instagram at dhtomey. That's where I'll be. Dude, thank you so much for coming by and doing this with me. Thanks for having me. Really appreciate it. Have fun.

Probably maybe. See you in a couple weeks. I'll take that as a promise. All right, all right. Sorry we're a minute late. Things have been crazy. Things have been crazy. Michael was at the New York Stock Exchange By the way

Can I get some hands up For how good Michael looks today Oh thank you Michael's having a glow up now This is going to be a new thing for him I'm told Look how glowy my lips are Tailored Bang

It's Vaseline on the lips season My guy It's almost Valentine's Day I don't know what season it is? It's Vaseline on the lips season My guy, it's almost Valentine's Day That's what you have going on I don't know what that means I don't want to find out what that means But let's keep moving Alright

Very big day today, very big week this week Arguably the only week that matters In terms of earnings season Which we're going to get into We have so much to do But I want to, before we even do the sponsor, just a quick earnings check because it's that time of year and we had some big names report seconds ago.

It looks like they're all negative other than Starbucks. So Microsoft down, Alphabet down, AMD down. Nothing crazy. Microsoft had a double beat, but the stock went up a lot. AMD, there's some questions about the guidance wasn't bullish enough. And Alphabet, like flat out, had a disappointing revenue number. So that's right. Am I missing anything major?

Not yet. And the reactions seems very normal. Nothing alarming at all. Yeah, nothing crazy. And Starbucks. Get a quick eyeball on that. Is that still higher? Is it green?

Oh, wow. Yeah. This thing's beasting, bro. I thought Starbucks was being weird. I thought China was going to zero. I thought Starbucks was a China. Wow. What do you know?

What do you know? All right. Let's do the sponsor. White Charts. Tell us about it. On the compound and friends. Remember Neil Dutta? uh well what do you know what do you know all right let's do the sponsor white charts tell us about it uh on the compound and friends remember neil dutta he saw my white chart sticker he goes you guys like white charts yeah do we like yeah that wasn't that wasn't scripted at all he was genuinely curious you know a couple of months ago i was talking about actually just a

month ago one of my new year's resolutions was to see how much time i spend on my phone ago, I was talking about, actually just a month ago, one of my New Year's resolutions was to see how much time I spend on my phone. I want that to go down. I'm guessing six hours a day. This week it said nine hours, but that can't be right. I genuinely don't... It can't be right. Because I was at

four hours a day. Anyway, I want to report how many hours a day do I have Y charts open on my tabs? All the hours. It's always open. It's always open. It's like a fifth append tabs all the hours it's always open oh yeah it's always like it's like a fifth appendage yeah it's the first thing that i it's the first thing that i click into when i have a question about something or i'm curious just on the fly um we wanted to bring back some survey results that wide chart shared last year uh one of the biggest findings aside from advisors saving 29 hours on average. 26 million in new AUM surveyed advisors saw during the past

year for using YCharts. So do you have any color on where that number came from or how they figured that out? I don't, but you know I'm a pro survey guy, so if the survey says it, got to be true. All right. 20% off your initial YCharts Pro subscription when you start your free trial through us. What you want to do is go to go.ycharts.com slash compound. Very simple. Check it out if you haven't yet. We use it all the time. You're going to see a whole ton of YCharts charts on the show tonight.

Okay. Earnings so far. ton of wide charge charts on the show tonight. Okay. Earnings so far. I think that, um, I think that there's a really good case to be made that this, I know we always joke around like, oh, it's the most important earning season ever in this particular case. I think this one is really important because right around now, according to someone very intelligent, Uri and Tim are at fidelity is historically where you need to see our good. See, uh is historically where you need to see earnings growth take the baton from multiple expansion. We've obviously had a ton of multiple expansion, especially in NASDAQ names, especially in growth names. It's not that we haven't had any growth on the bottom line, but now that should be the story

and you should not be expecting higher and higher PE multiples. Michael, do you want to set this up? Let's set it up. All right. Chart on please, John. So this is from Urien over at Fidelity. The black line is the S&P 500. And underneath, you've got this really nifty chart that shows how much of the gain came from multiple expansion, i.e. the price to earnings ratio versus earnings per share growth. And for much of the recent, recent part of the cycle, which is the rise to new highs, as we've been discussing in nauseam at this point, it's been all multiple expansion. Now, can that continue indefinitely? No. Can it continue for longer than you may think? Sure. But it would be really nice. It would be really, really nice if the advance, the next leg higher in stocks is driven by earnings growth as opposed to just

people becoming more optimistic about the future or inflation coming down or whatever, what have you? This is a quote. So far, we've got 93% beating by an average of 8.24% on earnings. The growth estimate coming into earnings season is only plus 1% year over year. If history is any guide, that will improve to plus 4% or so. So as things progress, the number goes higher is, I think, the big takeaway. So none of these numbers are overstatic. For calendar year 2024, the estimate is for 10.7% earnings growth. And that number will come down to a more trend-like 7% growth, but at least the starting point is high. For 2025,

it's 12%. So this falls well within the typical range of what we see for earnings expectations and beat rates. And so far, everything just seems pretty normal. What are these earnings reaction charts? Can we put these up? Yeah. So I think at this point, a muted reaction to beats is not super surprising. You would have to have absolutely blowout. And more importantly, forget about the earnings. You would have to have guidance come way up for stocks to have an even bigger gain. Because again, we'll get to this later in the show. We just had a historic run in the stock market. I don't know if you know that, but we just had a historic run. So what this is showing you is, this is from Bank of America, when companies beat on both the top and the bottom line, the one day later, they are having a less strong move than historically.

So over the last couple of years, again, all normal stuff, the market had a crazy reaction. So if we can just, if we can go sideways this throughout the next couple of weeks, I think that'd be a win. When you hear people say, oh, the beats are not being rewarded this quarter. They already were. Well, forget that. Just generally, not just – I understand the markets just had a huge run up. But just generally speaking, when you hear people expound on the average S&P 500 company's reaction to an earnings beat, is there any – do you think there's any signal there other than telling you maybe what the current environment is? Does that mean anything for the rest of earnings season necessarily?

Can't that change a week later? It can. It can. So the fact that companies are not having a positive response to earnings beats tells you nothing because the market discounted that. We just had an incredible run. Now, if we were in a bear market and stocks were beating and still selling off, that would be alarming. In that case- I totally agree with that. That's worse. I mean, obviously it's worse. Yeah, that would be alarming, but this is nothing with nothing. What if this is one of those things that works in only one direction? Meaning what if we're in a market environment like this? You've had stocks with – by the way, AMD, which reported tonight, it went up, I don't know, 160% last year and then went up another 20% in January.

So people are upset that it's like red in the after hours. Like what? It almost wouldn't matter what they had to say after a run like that. But so what if this only works in the opposite direction where you have a company, you have companies that are coming out and they're reporting worse than expected expectations and the stocks are not going down. That to me is like one of the best. I love that setup. I mean, that's not where we are, but that's a great setup. By the way, credit to me telling, not that I told you to sell AMD, but you sold it with me

last week. Put it up, put it up, pound it out. 181. Oh, wait, but to the point, the reason why I sold AMD- By the way, now I want it to go to zero. That's how my mind works. I think you know that about me. Stop. The reason why I sold AMD was because it just kept, it was, when you see a stock and it's going up at like a 45 degree angle, and then for three months, it just goes straight up. It felt like a blow off top and it wasn't the short term. This thing is up 78% in the last three months. What do you expect it to do after? Seriously. That's right.

Oh, yeah, Poppy. I don't do 81 RSI. That's not how I go into earnings season. I just don't do it. I don't do vertical stock charts into earnings season. So even if this thing went down 8% tomorrow, I'd say, okay, big deal. It's up 78% in three months. Hey, we have something to promote.

Yeah, we do. We're trying something. Guys, we're trying something new. It's going to happen on Monday, February 5th, this coming Monday. And I hope you like it. We are, look, the financial media, here's how the financial media covers earnings reports. They say, well, the report comes out five seconds ago. Okay, what's your reaction?

And I understand that. It's like sports, of course. However, I think there's room to wait a few days, digest what actually not only came out in the earnings release, but then what happened on the call and what happened over the next two or three days in the markets and what did analysts say?

I think that life cycle, which typically is like two to five days, that's the better story and nobody does it. The TV, they move on. I get it, no disrespect. Twitter, forget about it. If it didn't happen five seconds ago. We're going to try something. We're going to bring on really smart people and dissect the biggest week of earnings each quarter.

So if it goes well on Monday and you guys tune in and you share it with your friends and the comments are popping off, we'll do it again. But it's called Great Quarter, guys. And it premieres on Monday, February 5th. I don't know the exact time we're going to throw it up. But I hope you like it. We're going to get into all of these reports in much more detail. Am I selling this right? Detail.

Yes. Detail. What in the world? What? What in the finance has gotten into you? It's actually finance. So for the first show, we're going to be covering Google, Microsoft, Meta, Apple, and Amazon. And to Josh's point, there is room for sober analysis after the fact. Forget about what the market did in the after hours. So Monday morning, we're going to drop it on YouTube before the market opens at like

seven o'clock and it'll be on TCAF Tuesdays for the next week. So I'm really excited about it. I'll be on cough syrup. Oh, if you're subscribed to the channel, you will get the alert. So for those of you watching that haven't subscribed yet, do yourself a favor. All right, let's keep moving. What do you got? Let's talk about Tesla.

So Tesla, the stock is in trouble. You could say that the business might be in trouble as well. Let's throw some charts on. I've heard that before though, Michael. Yes, you have. Yes, you have. So Tesla is now- Hold time out.

This isn't a bear market for two full years. I don't think that's appreciated enough. This stock peaked in Q421. It is the only of the MAG7 not within 10% of an all-time high. Do I have that right? Sounds about right. Did you know? I don't think this looks very magnificent.

I don't think this looks very magnificent. Did you know that Tesla, relative to the S&P, that chart peaked at the end of 2021? And in fact, so was Tesla up 1,000% in 2020? Yeah. It's the year. And then they had to get added to the S&P 500. It was up so much that the committee couldn't ignore it anymore. They had to add it.

All of the outperformance since then has been taken back. John, chart on, please, the next one. So this is showing you it's in a 53% drawdown. The market cap peaked at $1.2 trillion, which is unbelievable. It's now at $600 or so billion. But the next chart, please. Wait, how many dollars in market cap did Tesla lose? I'm sorry.

Go back. $600. Do you know how much money that is? Like in USD? $600 billion. It's $600 with a lot of zeros. Oh my god. That's so much money. That's bigger than most publicly traded companies that have ever existed.

Next chart. Yeah. So this is Tesla divided by the S&P. Gross. And you see 2020 was just totally absurd. They put this thing into the S&P just in time for it to be a net detractor. Big deal.

Can we go to the comments really quickly? Because there's some insight here. First of all, this hit the tape right before we started the show. Elon's $55 million pay package was just invalidated by a judge. Now, I'm pretty sure that'll be appealed and he doesn't believe in judges and whatever, but he's not accustomed to not getting his way. The board would never take away a pay package from him. This only could come from a suit or a court.

That's one. Two, Tesla is struggling against BYD, which is one of the bigger EV manufacturers in the world. It's Chinese. They don't have the game on Smash the way they used to maybe two years ago. Patrick is pointing out, batteries are not charging in freezing weather, was a big hit to Midwest sentiment toward buying a Tesla. I sort of agree with that. I feel like if somebody gets stranded because their battery won't operate, and in the Midwest, it's like, I don't know, six months out of the year, it could

be negative 10 degrees, and somebody gets stuck somewhere. How many people do they tell that story to a hundred, at least a hundred. Okay. That kind of shit gets around fast. And that's not a Tesla only issue, but Tesla has almost all the market share in EVs. So that kind of problem becomes synonymous with the brand. Um, so you with the brand. So you have a lot of negative stuff. And then last conference call was another wreck. That's two in a row. The takeaway, nobody was excited after the call. The takeaway was, why is this guy putting microchips in people's bodies and not making the cars go for him. So that's the sentiment around the stock and around him personally is pretty tough right now.

So anything you could think of that could turn this around? Like robot stuff? Well, it's not all bad. Model Y is the best selling car in the world. That's kind of wild. Yeah. Not the best EV, the best in the world. You don't think it's in the stock?

It trades 20X to multiple of every other automaker. So an analyst at GLJ Research said, Tesla's resulting guidance show it's nothing more than a struggling car company. Morgan Stanley put out a note about GM. Adam Jonas. But obviously, this is very relevant to Tesla. EV forecasts still look too high. Even better than Tesla.

Even better than Tesla starting the year out. Whatever. We don't have to get to the GM part of it. Roger Weatherford saying the Model 3, Y, and X all look the same. There's something to that. Because whenever I get an Uber these days, it's almost always – if I'm not getting a truck, it's almost always a Tesla. And I don't know the difference. I know what the S looks like because that shit is hot.

I don't know what these other three – I couldn't tell you one from the other. Do you know the difference? I know the model – Is Y the crossover? I know the Model S is the big one S is, uh, the big, no, that's the, that's the good one. Uh, Duncan just got a new one. Duncan got the Y Duncan got the Y and the three Duncan only got that because he loves Elon's politics. I, he does. I think the model three is the smaller S and the Y is like the, it's kind of like a vanish. It's like van shaped. Yeah. I don't want to step on too much of this because we're going to talk a lot about this on great quarter guys, but I would just say generally betting against Tesla has not really been a great

strategy except for the last two and a half years. It has before that. No. And in fact, and in fact, the worst things were for Tesla, the better of a time it was to buy. In like 2018, people were pretty sure they were going to miss all these debt payments and go to zero. And that was like one of the greatest buying opportunities in history. So I totally get your point. And I wouldn't say that this is like forever dead money or so damaged that it can't recover. I'm just saying I don't remember the sentiment being this negative around the stock for the last couple of years.

It's pretty black right now. It had a really, so it had a really rough 2022 and it had a good 2023 now. Mike, it's in a 50% drawdown. What are you talking about? It was, I'm talking about this. How many large cap tech stocks can you think of that are in a 50% drawdown with the stock market at an all-time record high?

I know that this is start and end date dependent because it had such a bad 2022. Do you know what Tesla stock did in 2023? I bet you it did not perform the NASDAQ. You are dead wrong. stock did in 2023? I bet you it did not perform the NASDAQ. You are dead wrong. What did it do? Tesla stock. How much was it up in cap?

Dude, Tesla stock was up 100% in 2023. Really? Yes. I wouldn't have guessed that. So how much? So it must be down a lot year to date. It's having a rough year. Yeah, year to date, it's down 23%.

And the thing is, again- What's this about options activity? Hold on. I'll get to that in a sec. But again, just talking about expectations and pulling forward the growth, it was up 10x in 2020. And it's working off all of that froth. Understood.

And that's not easy to do. Yeah. But it is not the only company that went up that much and is still building on those gains. I don't want to have to use the N word on a live broadcast, but I mean, there are more and more Nvidia relax. There are, there are more companies that are large cap tech that had huge years and are continue to build on them. This one's not. That's all I'm pointing out.

Tesla is such- Which one of these things is not like the other? True. It's such a polarizing stock. It's unbelievable. It made up 11% of all activity in the US options market. Was that last week? More options traded for Tesla than for the Qs, which is really inexplicable.

That's wild. So there's more options activity in this one stock than for the whole index ETF. I wonder if that's true for all other stocks that are in the Qs. Do you think any of them trade as much options as, as Tesla? Probably not. No, no, no way. Right. No way. Yeah. Okay. Uh, is that all we have to say on this? We'll say, we'll say more on Monday. We'll say more on Monday. Okay. Fair enough. Um, are we going to do this Dan, Dan Ives stuff or we'll do this another time. Okay. We'll skip it. All right. Um, I think that, uh, I think that this is the part of the show where I pitch you stocks. I think that if the AI opportunity is going to be as big as everyone

seems to think it will, we're really talking about something much more substantial than GPUs. We're talking about a top-to-bottom remaking of corporate America because everyone is going to want to capture the opportunity and utilize AI to build profitability, build companies, innovate, et cetera, et cetera. I want to share something that – this is just like one example, so it's not like the main point here. Can we put this picture up? Blackstone is building this. This is a Bloomberg article. Blackstone is building- Is that Roswell Field? It is indeed. That is a bed, bath, and beyond. Blackstone is building a $25 billion empire of power-hungry data centers. The private equity giant says landlord QTS could be one of its best investments ever, but the resources need to grow. Okay. This is in Phoenix. It's 60. The land itself

is 60 football fields. That building that you're seeing is one of five, what they're calling bunkers. 30 miles away, there's another complex going up on 400 acres, which is three times the size of the mall of America's footprint. Like this is how Blackstone private equity firm, the huge real estate involvement. This is how they're playing the AI revolution. Like Blackstone is not making microchips. So they bought this data center called QTS in 2021. They paid $10 billion for it. They are the largest private equity firm in the world. And they're utilizing this QTS to build out the infrastructure that's going to be required for all of this AI and just this next generation. And then there's a lot in the article about the power needs,

which we're not going to get into right now. That's another opportunity. But what I want to just make the point is that you can't just be like, all right, let's all do generative AI. And then like, it just happens. The amount of infrastructure that's going to be necessary in order for everyone to be able to access these tools and utilize them 24 hours a day all over the world is in itself a huge opportunity, like an absolutely huge opportunity. So I want to talk about a research report that Dan Dolev and Sean Kennedy put out at Mizuho because they put out some names that are pretty under the radar.

They're in an area of the market that not a lot of people pay much attention to that I think could get very red hot as we all look for new ways to play AI. So let me just quote from the report. Basically, they're looking at IT services, which is there's about six or seven stocks in the sector. They call this the picks and shovels of AI. Dan and Sean say IT services, a $1.3 trillion market, which is 30% of IT spend has increasingly outpaced global GDP growth should accelerate to a 9% through 2027 versus 7% to 8% over the last five years. AI is having its iPhone moment. We expect we'll drive a $450 billion AI services sales opportunity. The best way to think about IT, Michael, these are like us. These are financial advisors, but to the, uh, to the CTO of fortune 500 companies. So when Pepsi says, yeah, we're going to do AI, they have to hire somebody to implement it. Like Pepsi can't just like start building AI tools for its business. These are the companies that get hired. They analyze the marketplace. They determine the

best way to build what you want to build, who to hire, what equipment you need, where you want to put your infrastructure, who you need to hire, who you need to sign contracts with. They're like basically giving advice. So it's a very CapEx light business model. And when they hit one of these cycles, the earnings expand like crazy. Profits expand like crazy because the phones are ringing off the hook. So I want to show you a couple of these stocks really quickly. The first is Accenture. Dan and Sean have a buy $426 target. It's a $373 stock right now. We expect the recovery in IT spending over the next two years to drive growth acceleration. Accenture's significant exposure to fast-growing markets like cloud, which is 50% of revenue, should result in growth outperformance.

Next one is the Glob. This one I do know, Globent. By the way, these are tiny stocks. Accenture is not a tiny stock. Accenture is the biggest one. This one's like $11 billion, I think. GLOB. The company is based in Luxembourg, was started in South America, but it's New York Stock Exchange. GLOB is a $240 stock. Their target is 283. Same story here. These are going to be the picks and shovels for AI. Nobody can do this without help. These are the companies that are going to get hired. One more, EPAM, E-P-A-M. That is both the company's name and the ticker symbol. You can see that this thing got killed in 2021 and 2022. But this is another way to play corporations that are going to need AI-related advice. And I just want to, what did I want to say on that one? Nothing in particular.

Look, I think when you look at some of the biggest winners that, and we've talked about them on the show, Supermicrocomputer, which I think went up like $300 a share. I know you don't like dollars, but it's important. It went up like $300 a share. I don't know if you've looked at it lately. When you think about Arista Networks, what those two companies have in common is NVIDIA is not going anywhere if those companies aren't in the mix because you have to build out the accoutrement of AI. You can't just stick a GPU in the ground and hope an AI service grows to show for that. So this is another area. I think that the amount of IT spending that Sean and Dan are talking about,

I wouldn't know if they're going to be right, but directionally, it feels like it's going to be right. These companies are going to have their work cut out for them for the next five to seven years, and I think should be pretty reliable earnings growth stories. So just a couple of more names on your radar. What's also interesting, last thing, especially EPAM and Globant. Because they're so small,

they offer small and mid-cap managers a way to get exposure to AI. They can't buy NVIDIA. If you're a mid-cap manager, you know your investors are calling every month, like, how are we playing AI? These are the types of companies that fit. You can no longer buy AMD

and NVIDIA. They're not in your universe. So they're fairly unique. There's not a lot of pure plays on IT spending in the small and mid-cap indices that are going to have that much involvement in the trend. So I don't own any of these stocks. That might change. Just something I wanted to put on everyone's radar. And shout out to Dan Dolev and Sean Kennedy for sharing that research. Essential looks amazing. Doesn't that stock look so good right now? Yeah, it's been overbought a lot, which is a good thing. It's a good thing. An overwhelming amount of demand for the stock is a good thing. I wouldn't buy right this second. It's just,

it's so extended, but at any point- Put up the Globant chart again. This, I mean, this looks like, you can see the downtrend has been snapped, but it's not carried away yet. And this looks like a breakout. Yeah, it looks good though. I don't know what that,

I don't know what that December high is right at the end of the year, but it looks like we're going to, looks like we're going to challenge that. Yeah, it looks good. So we're going to, we're going to keep an eye on these, and we'll keep you guys updated on them for sure. I feel like JC would love this chart.

Got super overbought at the end of December and then worked its way, worked its overbought condition off over time. Very, very healthy. Apple, Duncan shared this with us before the show started. Apple podcast for creators. Coming this spring, Transcripts will make your show even more accessible. Your audience can search within the episode.

I mean, this is really awesome. Chart off, please. I was talking with Ben on Animal Spirits after I made my 2024 production list about Apple having a rough year. Somebody emailed us and was like, if you're sleeping on Apple and you don't think that they're going to be involved in the AI game, you've got something else coming. Yeah, they're not. They're not making splashes.

Tim Cook won't even talk about it on earnings calls, but they're definitely not asleep at the wheel. My friend showed me this the other day. You could search on your iPhone. We were talking about one of the burger spots that we had in the city. You could search cheeseburger in your pictures and it will show you all of the pictures of cheeseburgers that you've ever taken. Did you go to Gotham yet?

Uh-uh. You didn't take Ben there last night? Where'd you go for burgers last night? No, we went to bar. We went to bar pretty pretty. The pasta place that we went to after the Irishman. Yeah, yeah, yeah. Uh, bar pity.

I'm, I'm, I'm dying to go to Gotham Burger Social Club. I think I know the guy used to DM me back in the day. Can we just talk about that? Gotham Burger Social Club. Not you and I. Have I been there? I think it's the same guy. It was him and a group of friends and they were Wall Street guys. And every week they would meet somewhere for a different burger. And then he started making Oklahoma smash burgers. Do you know what Oklahoma burger is? You know what that is? I have never been here. Oh, we were just talking about going here, weren't we? No, it just opened last week. Of course you've never been there. Yeah. Well, I'm confirming. See, I'm confirming. I've never been there.

Do you know what that is? Like an Oklahoma style smash burger? Stop asking me. Just tell me what it is. No, I'm asking you. i'd never heard of this i didn't even know this was even a thing it's like uh oh with the onions yeah they like shave the onions and then they like like white castle but this is all i see on instagram these days this is all i see yes yes we gotta go uh we have to go so i think i know this guy i think he used to dm me and invite me like seven years ago. And now I guess he started his own actual burger place.

We're very far off the topic, but this is hilarious. So, so eater like this food magazine, whatever covering says the burger is made by pulverizing one or more beef patties at a flat top grill. What a great description. Pulverizing. Well, I'm in. I will. I would pulverize this burger.

Let's do it. I would pulverize this burger. Let's do it. I would pulverize this burger tonight. All right. Anyway, we're talking about Apple and the AI. They're building shit. Nothing to say of the Vision Pro, but they're building. Okay, that's super insightful. We were talking about all the spend on AI, asshole.

Were you not here five minutes ago? So Apple's building shit? They're building. All right. Get back to the office. Remote work. Put that chart back. Put that back on.

Remote work. Just because you're wearing a sports jacket doesn't mean you can start yelling at me, sir. Get back to the office. You're fired. That's not how it works. Remote workers bear the brunt when layoffs hit. So, all right. Workers logging on from home five days a week.

Five days a week. What is this? 2020? We're 35% more likely to be laid off in 2023. That's a big number. The way you're dressed today, you look like you laid off 15 people. Dude, get back or you're fired. So this is obvious. And we're going're talking about layoffs in a second when a hiring manager here's a quote when

a hiring manager gets news that they have to cut 10 of the staff it's easier to put someone on the list you don't have a close personal relationship with it duh no shit uh i don't understand hold on so you're have to lay somebody off that you've never met before. That happens all the time. If you're told, hey, we're doing layoffs, it's way easier to lay off somebody that you never see. Agree. Duh. There was a movie about that with George Clooney. Up in the air.

And Anna Kendrick. Up in the air. Great movie. Is that her name? Anna? Yes. Wasn't that great? And who else was in that?

What's her name? Who was the female lead? Was it Vera Farmiga? Vera. I don't know. i'm turning with my dad the conjuring woman and uh and the departed right so he just like gets on an airplane shows up somewhere and lays off 600 people and then gets back on a plane and goes and does it somewhere else. And it's like a job. Remote workers are also more likely to quit. So 12% of fully remote workers left their company and began a new job within two months. So yeah, it's enough.

It's not five days a week anymore working from home. Listen, we have fought this battle along with every other company. The upside to this world that we live in now is that you can find talent anywhere. You can hire people and employ people who have a less demanding cost of living in different parts of the country. You have a lot of flexibility. The downside is exactly what you're pointing out, Michael. You have people that are really less connected. I don't care how many Slack channel shit you send to them. It's really,

really hard. And I don't think we're going back to 100% office attendance. I don't think anyone thinks that anymore. Nope. So now the question is like, what are the best practices to do hybrid, to have people in person, have them remote, travel, see people where they live, bring them to where you work. It's the puzzle and people will get really good at it. I hope we're getting better at it. Not to brag, but I feel like we've gotten really good at it. Yeah, but not perfect. Next chart. This is from Torsten Slack, office occupancy rates moving sideways. And this is-

Yeah, this is like it's not changing anymore. It's just like this is the new status quo you're saying? This is it. This- Look at this shit.

I think this is permanent. What is the index? The percentages? 50%. It's office occupancy rate. Wait, what's the highest? What's the orange? Oh, Austin, that makes sense.

Okay. The average, the age of the workforce, I think plays a really big role in this and not in the way that a lot of people might think. You think young people are more likely to be in the office? Yeah, they want to be, and you can control them. You can make them like young people have overall, if they're making a good wage, they, first of all, they don't want to sit in their house.

Who the hell wants to do that at 22 years old? You don't have a baby that you're taking care of. What the hell are you doing at home? But also like they kind of need to move up in a company. They need to show their face. You can't get a promotion. You can't get it. People get promoted if,

if their bosses like them. And you can only like somebody so much on Zoom. That's right. 100%. So that's why a city like Austin has a higher occupancy rate than, let me see who I can make fun of. Who else is on here? What do you think is the bottom? I can't say.

It's something dark blue. Los Angeles. San Jose? Or Dallas? it's something dark blue los angeles or dallas oh san jose actually makes sense because it's all computer shit yeah okay uh can we talk about stock market concentration oh a new topic well i think vanguard because they are the index champions so whenever the conversation turns to concentration you'll hear people blaming indexing for it, which you and I have debunked, I don't know, 9 million times. But I thought this was an interesting chart. They're showing the number of companies that explain fractions of market

returns. So since 1926, out of thousands of stocks, only a mere 72 stocks accounted for half of the market's total return. The trend holds true even when excluding recent mega cap tech boom. Year in and year out, a select few stocks have played a significant role in driving overall return. So here's what's interesting about this. The active people will tell you this is why you have to pick stocks because only a few of them are really going to go up and be the source of returns. The passive people will say the same thing. They'll say, this is why you have to index,

because if you miss those stocks, you have no returns to show for it. Yeah, guess what? I think both are fair. I think both are like reasonably fair points. Next chart. Wait, can I say one thing? Can I say one thing?

Hold on, just on this topic. You are wearing a sports jacket, so by all means. I don't love this study. Hendrik Besseminder did great work from the University of Arizona. that 4% of all listed stocks are responsible for 100% of the wealth creation in the stock market. And while that may be true in the sense that most stocks that come to market are not worth buying at the IPO and holding forever, right?

That's just a fact. We know that. Most of these stocks, if you buy them, you hold them forever. A lot of them underperform cash. But it makes a giant assumption that you buy in the IPO and you hold it forever and that there's no opportunities in between, which is kind of nonsensical. It's not the real world. I'm really glad you said that. Just one really obvious case in point is Meta. This is a stock that came public at 42 and within a few months tumbled to 18 or 12,

I forget. And then of course, I don't know, like before the split, 500. So did you buy it on the IPO? All right. Not a great outcome for the first year, but you still did well. Did you buy it three months after the IPO cut in half? You did even better. So there's a lot of return there. It just doesn't show up in the study that starts from inception or IPO. Exactly. Like one of Duncan's favorites, not to pick on Duncan, Oatly has been a really bad stock to buy and to hold. But guess what? If you bought Oatly three months ago, you're up 155%. Oh, really? Yeah. Did Duncan make money on that yet?

Well, now he's only down 98%. Okay. All right. Next chart. Difference in return if underweight, the Magnificent Eight versus the S&P 500. Oh, man. Wait, what is this? Difference in return.

Got it, got it, got it yeah you're you're screwed if you are underweight the magnificent eight you cannot have feasibly uh performed versus the s&p 500 that's the the takeaway yeah this chart makes me very empathetic towards active managers it's it almost seems not fair let me read the numbers for those listening. If you were 10% relative underweight, the magnificent eight stocks, when does this start, do we think? That's weird. Oh, this is just 2023. So if these stocks were 30% of the index and you only own 27% of them. Right.

So if you were 10% underweight last year, you were minus 5.4% versus the S&P. If you were 25% underweight, you were minus 13.6. And if you were 50% underweight, which most value managers probably were, and then some, you were negative 27.8% versus the S&P 500. If you're an active manager, you better have had a great year in 2022 if you were negative 27 versus the S&P in 2023. Because I don't know how you explain it otherwise. Here's another thing that active managers can say, 2023 notwithstanding, because that was just an absurd year. I shouldn't expect that. Absurd. Is Is that exactly a lot of stocks aren't worth,

aren't worth earning. And if you avoid the losers and just avoid, and not just, it's difficult, but that you could make that case too. And I see that side of it as well. Uh, fair. Um, John Butters at fact set did something great at the end of last week. Actually, I mentioned this on TV today because I think it's important. He asked the question, are the magnificent seven, the top contributors to earnings for the S&P 500 for Q4? And then he answers. The answer is, of course, yes, but I don't think people understand the degree to which these companies matter. So I opened the show tonight saying this is the only week that matters. It really and truly is this time, not always. Six of the seven companies in the MAG7 are projected to be the top six positive contributors to year-over-year earnings for the

S&P 500 in Q4, so the earnings season that we're in right now. NVIDIA, Amazon, Meta, Alphabet, Microsoft, and Apple, so leaving out Tesla. In the aggregate, these six stocks will report year-over-year earnings growth of 53.7% for Q4. If you exclude those six, the blended earnings decline, which takes actual earnings and estimates, would be negative 10.5% for the S&P 500. Ew. How insane is that? Wow.

If you pull those six stocks out, the S&P is a year-over-year decline of over 10% on earnings. One more thing. Wait, so it's not the index pushing those stocks higher. It's the earnings. It's the earnings. Quote, this is Butters, and I'm going to show you some charts. In aggregate, these four companies are projected to report year-over-year earnings growth of 79.7% for Q1 of this year, excluding Meta,

Amazon, NVIDIA, and Alphabet. The remaining 496 S&P companies would be projected to report year-over-year growth of 0.3%. That's for the quarter we're in right now. So it's just remarkable how important these companies are, not just for Q4 numbers, but even going forward for this quarter, they are all of the growth. Let's do some charts. So this is showing the 53.7% earnings growth that you're getting out of the top six versus the minus 10.5% earnings growth you're getting from the other 494 for the current quarterly earnings that we're getting. Mike, this is nuts. Next chart. Mike, this is nuts. Next chart. This is showing the big six, their contribution to earnings growth year over year. The big one is Meta. The second biggest one is NVIDIA. And then Amazon and Alphabet bringing up the rear. Last chart. This is Q1 2024. So again,

Amazon, Google, Meta, Nvidia, 79.7% earnings growth expected for the quarter that we're in. The other 496 companies, 0.3% earnings growth. I don't get it. I don't get it.

These four stocks are expected to grow their earnings by 80% year over year. This is the contribution to the overall S&P's earnings growth. Yeah, it is. No. What do you mean no? It's not the contribution to the earnings number.

It's the contribution to the growth. No, it's not. Because those two numbers should be 100% of the case. In aggregate. It says earnings growth year over year. In aggregate, these four companies are projected to report year over year earnings growth of 79.7%. Oh, yeah. That's the earnings growth number.

Maybe that's all in video. I don't know. That just sounds really odd. That sounds… Did Meta take a huge charge in quarter in Q1. Yeah. There's got to be 23. There has to be some,

there's probably some shit like that, but still either way. It's crazy. Yeah. All right. Go ahead. All right. Uh,

we're sorry. Okay. Um, we're rallying. We're doing it. All right. I mentioned earlier, like the setup for Q1 or Q4 earnings and why we should expect, uh,

why we shouldn't be surprised that the beats aren't rallying. So Carl Cantania tweeted, this is the, from the golden Goldman Sachs desk. This has been one of the most powerful short cycle rallies we've ever seen. The 19% rip in the S and P 500 over the past three months registers in the 99th percentile of market history. I didn't know that this type of move usually happens coming out of recessions. Really interesting. Really interesting. I didn't, I didn't know. I didn't know it was that, it was that big of a, of a rep. So what is that, October, November, December of last year? Or that's using January.

That must be- That's January too. That's January too. Okay, so it's- But it's just interesting that those rallies have tended to happen coming out of recessions. We had a sentiment recession. Does that count?

We did. Dietrich said something similar. He found, so a 90% gain in three months, 17 times where this happened. It was higher a year later, 16 times. And not only was it higher, it was higher by 34% on average. So again, this usually happens coming out of a recession. Hold on. So Dietrich is saying that out of the 17 times this has happened, meaning a 19% gain in three months, 16 of those 17 times the market was higher a year later.

16 of 17. That's amazing. Think about that. Well, it's not amazing if you understand that most of the time this happened was coming out of a recession, i.e. That's not i.e. That's amazing. E.g. No. I don't know what two less I'm looking for. Out of a bear market. Yeah, but also being up 34% on average a year later is wild. That's wild. Well, again. Even coming out of a recession. Coming out of bear markets. All right, so I wanted to just shoehorn this in here.

So Buccal Capital guy realized, I'm sorry, Buccal Capital guy tweeted. By the way, people always like, I see his tweets make it to Instagram, which means they're really funny. Who is really? He's not just funny. He's not. He's also like not an anonymous deck guy who just posts like nasty shit. Like he's actually he's clever and funny and smart.

Okay. No, I don't. Okay. He tweeted businesses realize they're not going to get margin increases by raising prices anymore. So how are they going to protect or raise their margins of 2024? The good old fashioned way firing people. That was Jason Cummings on Outlots. Yeah, good call. You're seeing it everywhere.

Today, we saw PayPal plans to reduce its workforce by approximately 9%, impacting roughly 2,500 employees. Obviously, really awful for everybody impacted. Good for the stock price. UPS announced 12,000 layoffs today. UPS today, 12,000 layoffs. They see $1 billion in cost reduction. The block- Amazon has had some pretty big layoff news lately. Dorsey's block lays off close to 1,000 staffers. So here's what PayPal said, and Josh and I both own that garbage stock. They said, we need to drive more focus and efficiency, deploy automation, and consolidate our technology to reduce complexity and duplication.

We are doing this to right-size our business, allowing us to move with the speed needed to deliver for our customers and drive profitable growth. So you could see a year like this. and drive profitable growth. So you could see a year like this and this could, again, awful for real people, good for the stock market. I have a stop loss in on PayPal, but it's like poker. I don't want to tell the street where it is. Don't do it. You never say where your stop is. But anyway, I just thought that that quote from Jason Cummins, we're seeing it.

Yeah, 100%. The thing is, it's name brand companies doing these layoffs. So you assume that they're emblematic of what everyone's doing. But these layoffs never in the aggregate affect the unemployment number. Now, maybe the January number, which we'll get the first Friday of February, is that this Friday? I think it is. Right? This Friday is the second. Okay. So you're going to get January unemployment at the end of this week. Maybe this will be the month where those like corporate layoffs, UPS 12,000, maybe that this will be the month where they actually hit. But like so far we've had like 18 months of layoff announcements and they're not really changing

much. Um, wages stopped going up with that. We know, uh, quit rates have come down that we know, but we haven't had like a downside surprise in employment. I feel like the layoffs are over as an unemployment. They're overrepresented in our brain because they're from massive names, right? Like we saw Google do around. Yeah. That's my point. Like, yeah. So, all right, I'm going to make the case for China. And this is very simple. I bought FXI. What? I'm just kidding.

What did you say? I was fading you before you even said a word. I bought FXI last week, full disclosure. So OK, China, not surprisingly, relative to the S&P 500, at least through this vehicle, is trading at an all-time low since it began trading in 2005, I believe. We know. We know it's bad. There might be a double bottom forming in the price. Next chart. We'll see. Last time I was here, it had a furious rally from 20 up to 33. Again, we'll see. We'll see.

I don't know if this is max pessimism, because that's to say that it can't get worse. And of course, it can. But nobody, nobody, people are bailing like you wouldn't believe on China. The forward PE is basically as low as it's ever been. It's at eight times forward earnings. Steve Schwarzman recently said, China is trying to re-engage with the West to reverse the slowdown. Yeah, not a shock there. Quote, the Chinese have decided that they really need to re-engage. Right now, they have a negative foreign direct investment. This is a terrible situation for them. They want to reverse it. And last week, you saw an actual explosive frenzy of buying activity for the first time.

You haven't seen something like this in eight years. And lastly, I think it would be really poetic if the bottom of China coincides with Jeffrey Kleintop's tweet saying that there will not be a bailout of China Evergrande Group, which received a liquidation order from a Hong Kong court today, beginning a long process to carve up the biggest casualty of China's property crisis. I can't imagine the news flow getting worse. Actually, that's not true. I can't imagine it. I would think that given how bad everything is, given how loud the headlines are, how bad the performance is, there are no bad assets, only bad prices. Of course, it's not true there are bad

assets, but you see what I'm saying. To me, this is just a very obvious sentiment washout. That's all. So with international stocks, there are bad assets because there are governments that confiscate them. And then you never know if you bought it at a good price or not. I don't think that's going to be the case here. I'm just making the point. We have seen that. Russian stocks were trading at one time, at one point, and then there was a reason why, and the market was right all that time. I think if you're a true contrarian, you're just buying the K-Web right now, eyes closed, not even reading the news because I have never, ever seen anything like this. You're talking about basically these stocks are now flat since inception of the ETF. These are not bullshit companies. These are some of the biggest companies on earth.

It's BABA, it's JD, it's Trip, it's like Tencent, huge entities with millions, collectively, millions and millions and millions of employees, billions of customers, dare I say, and just massive revenue cash flow. But they're being treated as though they're uninvestable by actual buying and selling in the marketplace. And that has been going on for a while, but it seems to have been accelerating. The problem recently, that big spike that you referenced in money coming into China, it wasn't random. It was ahead of the RRR decision. So there was this idea that the reserve requirement would be lowered, which is their version of interest rate cuts, substantially

to quote, support the stock market. And China didn't do it. And I saw somebody on Squawk this morning who seems to know what he's talking about. He's been following China for decades. And he said this idea that they're seeking to look like America, and they're going to juice the stock market, and they're trying to build a middle-class consumer and all that, it's just not true. They're not pursuing this growth model anymore. They're not obsessing over GDP anymore. They're trying to just keep control of the economy and all of the fairy tales that we've told ourselves that they would one day grow up to look more like us have now at this point been completely extinguished. The Chinese tech stocks are not going to look like Apple, Google, Microsoft.

It's just not where they're going with this. So maybe the things that I'm saying are the things that are out there in the ether and are necessary to put a bottom in. It's definitely possible. So if you're a contrarian investor, take all the words that just came out of my mouth and bet against them. investor take all the words that just came out of my mouth and bet against them and maybe there's a 20 rip here uh because biden and she have a conciliatory phone call or something uh but i agree with you like this is as bad as i've seen sentiment toward china since i've been in the

business um i mean it's really i just feel like nobody can say anything positive i think uh listen i don't you know obviously i'm not even a tourist i don't know shit's really, I just feel like anything positive. I think, uh, listen, I don't, you know, obviously I'm not even a tourist. I don't know shit about this, but I just feel like the risks are asymmetric. Yeah. Could you have 20% more downside? Sure. Why not? Uh, but man, the property sector, just so you understand the property sector in China is so big.

It's like 25% of the economy, uh, is, is fed by. percent of the economy is fed by. And just for the viewers, when we say property sector, in China, you do not own property. You don't own the land your house is on. Nobody does. The state owns the land. It's 100-year leases. So let's start with that. Imagine in New York City if America owned all of Manhattan Island and they leased the land to Stephen Ross or whatever to build Hudson Yards. That's China's property sector. It's big business. But it's just – it's a very, very weird animal and it's honestly having like a very tough time. Josh, is this not how markets bottom? Like there's no bailout. There's no bailout. Like that's it. That's as black as it

gets. Yeah. They got taught a lesson and everyone, I think, I mean, I don't know the mind of the Chinese financial authorities, but I think they wanted to teach everybody else a lesson. Don't be like Evergrande because we're not going to save you. I think that was important for them. So was that the Lehman moment for the Chinese property market? I'll leave that to a China expert to decide. I'm just looking at price action and relative valuation. I cannot believe the levels that people are willing to sell these stocks at. To me, it's incredible. So I love that you brought this as make the case, and we'll follow the story.

I have a mystery chart. We'll do it real quick, and then we'll get out of here. John, if you please. What in the – Got it, got it, got it, got it. This is today. We talked about the stock, and they reported after the close. Guess what it is. I mean,

this is... See, I actually... It's not that hard. We talked about it today and they reported earnings after the close. Not that hard. You expect me to... Just take a guess. What's wrong with you?

Oh my God. Was that so hard? Look at this smarter than you thought i think it's the jacket can we get a longer term view on amd real quick for michael so this is what i was saying before you got it i mean you got a stock that goes from this is from november uh homeboy You got a stock that goes from $90 on Thanksgiving to $180. It almost doesn't matter what they report. Like nobody should be surprised that there's a little bit of a pullback here. So that's what I was trying to say. Chart off. But I am happy you told me to sell it, and I did listen.

So should we end it there? Hey, everybody. Hey, everybody. Tomorrow is Wednesday, which means when you wake up, brand new episode of Animal Spirits. And Michael, it's a special episode, I'm told. Can I tell you something? Why? Because we were in person?

No. You and Ben were at the New York Stock Exchange. Oh, no, no, no, no, no, no, no, no, no. That's a different thing. Ben and I recorded in person and he opened the show with a pretty strong, pretty strong bit. A pretty strong take? No, a bit. It was a bit. It made me laugh. He did a bit? He's doing shtick, Ben?

He did shtick. It was good. Maybe the comedy club rubbed off on him? I can't wait. No, this is before the comedy club. It was very funny. Credit to Ben. Shout out to Ben Carlson. My favorite podcast in the world. Coming out tomorrow morning, Michael and Ben, live in person together for the recording. That should be cool.

Ben's going to do an all-new Ask the Compound on Thursday. And then we have the Compound and Friends at the end of the week. And Great Quarter Guys. And Great Quarter Guys on Monday. We're giving it. We're doing that Monday. We're just v bobbing in content. Bear Choice Awards. So much.

Thanks so much for listening. Everybody have a great night. Whether you're just getting started as an investor or you're managing a multi-million dollar portfolio, Ritholtz Wealth Management has the solution for you. It all starts with building the right financial plan. To speak with a certified financial planner today, visit ritholtzwealth.com. Don't forget to check us out at youtube.com slash the compound RWM. Make sure to leave a rating and

review on your favorite podcasting app. If you love investing podcasts, check out Michael and Ben every Wednesday morning on Animal Spirits. Thanks for listening. Ritholtz Wealth Management is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Ritholtz Wealth Management

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