The Compound and Friends - Why Americans Hate Joe Biden’s Economy

Episode Date: November 15, 2023

On this episode of TCAF Tuesday, Michael Batnick and Downtown Josh Brown are joined by Rob Copeland to discuss his new book "The Fund: Ray Dalio, Bridgewater Associates, and the Unraveling of a Wall Street Legend." Thanks to YCharts for sponsoring this episode. Sign up for the YCharts year end webinar with Michael and Ben here: https://ycharts.zoom.us/webinar/register/1316977225613/WN_ZwvEURfASPK06-zAxVKEWA#/registration 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. What a difference one benign CPI report can make. Just an explosive rally on Wall Street. We had a CPI print that basically said absent shelter, there is no inflation really anywhere worth speaking of. I know shelter is a really big component, but even that is headed in the right direction. And energy prices fell substantially. And we just got like a Goldilocks inflation report from the Bureau of Labor Statistics. And stocks went wild, specifically anything that has a dividend, anything that's been beaten down because of concerns about how high interest rates would go. Small caps went crazy. It's been beaten down because of concerns about how high interest

rates would go. Small caps went crazy. It's just been a hell of a day. We're going to talk about it with Michael Batnick in an all-new What Are Your Thoughts segment. But before we go there, we spoke with Rob Copeland this week as well. Rob is a Wall Street Journal reporter who's been covering hedge funds, specifically Bridgewater. And we talked to him about his new book, which just came out, called The Fund.

And The Fund is a wild collection of stories from inside the world's most successful hedge fund, largest hedge fund, however you want to phrase it. Ray Dalio, the founder, did not want this book to come out. I have nothing but respect and admiration for Ray. I don't really know how many of these stories are true. The books seem to be very heavily sourced. And Rob is a serious reporter. He claims to have spoken with hundreds of people to put this thing together.

And it really, you know, it's a document. There are a lot of stories in here that you haven't heard before. And there's a lot of stuff in here about culture. And when building a culture in a very specific way around the whims of a founder can go wrong. And I really think the book is worth exploring and reading. And of course, forming your own judgment as a result, but really well done. And the discussion that we had with Rob was interesting. So you'll hear that you'll hear what are your thoughts, you'll have fun, you'll do the subscribe, and the liking and all the things and we really appreciate it. Thank you so much for listening. I'll send you there right 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 Ritholtz 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, everybody. Welcome to The Compound. I'm here with Michael Batnick, and we've got a special guest today. His name is Rob Copeland,

and he is the author of what I would assume will be the biggest selling book on finance, at least of this fall and winter. Everyone's talking about it. It's called The Fund. Thank you, Michael. And it is the story of Ray Dalio, founder of Bridgewater and the Bridgewater Fund, which the book is called The Fund. And I think Bridgewater at one point, maybe still,

was the largest hedge fund in the world. Do I have that right? They're still calling themselves that, yeah. Okay. By AUM, are they or are they close or they still are? They're close. It depends. Some of their products, we could argue about whether it's a hedge fund or not.

Okay. All right. we could argue about whether it's a hedge fund or not. Okay. All right. Michael and I read the book and there's a lot of wild, crazy stuff in here. And I think a lot of people expected there to be. It's not crazy in the sense that like it's illegal or it's completely unexpected action.

It's really more about how people within the company seem to interact with each other and some of the stranger cultural things that had been rumored about or blogged about online. But this is really the first time that somebody has extensively spoken with, I think you said, dozens or hundreds of people who have been at the firm. So this is really now going to supplant all of the other writings about Bridgewater and I think effectively become like the inside story, the de facto insider story. Do you see it that way? Was that what you set out to do when you started writing? Definitely.

First of all, and I appreciate the compliments. And I hope it's the biggest selling finance book of the fall, the winter, the spring of the decade. Let's just keep going. I would say what I really wanted to do was to show people that this version of Ray Dalio, that he spent so much money promoting and that so many people have just taken hook, line and sinker is really not the complete version of Ray. And if you talk to really anyone around Ray, current or former at Bridgewater, they really never believed that version of Ray. And to me, in a way, it made my life easier because he's made himself so famous and the truth is so, so different from what he's made it out to be. Why was this so important? Other than the commercial benefits of having a bestselling book, why was this so important for you to show the other aspect of him that gets left out of the literature and the celebrity?

Why was this something that you wanted to personally pursue and spend this much time on? Well, to be honest, it's a little scary to me how much we, and not just with Ray, but with a lot of really successful business people now, how much they're selling, not just that they're good at making money, but they're good at improving our lives. And Ray Dalio and the principles are all about how you should ignore your instincts and you should really become a different person and you should listen to him just because he's rich. And that to me is something that we should really probe deeply, as Ray would say. And the other thing I would say is, you know, I've been thinking, I've been reporting around Bridgewater for close to 10 years. When I started, he might have been someone that you and I knew, but it wasn't necessarily someone who was world famous. And then he writes this book, Principles,

and then he gets all these titles, the Steve Jobs of investing, all these things. He just became more and more famous. And I really felt like an obligation to tell people what he's really like behind closed doors. I remember coming across Ray Dalio in a book that I read in 2016 by Adam Grant, the professor at University of Pennsylvania called Originals. And I remember being so impressed with that snippet of Ray Dalio about his radical transparency and him urging his employees to call everyone out and seek truth, including Ray Dalio himself. But after reading the book, it almost feels like, or not almost, it does feel very much like there was this radical transparency, but only of sycophants. Anybody who disagreed with Ray Dalio, raise your hand. And if you raised your hand,

and not that you would raise your hand in public, you were gone. If you disagreed with him, raised your hand and now that you would raise your hand in public, you were gone. If you disagreed with him, you left. And so it was just left with however many employees that were either drank the Kool-Aid or were afraid to not drink the Kool-Aid for fear of whatever may come, which was often tears and much worse. Well, not even if you raised your hand, by the way, there's a person in the book who is told by his colleagues that they just feel like he hasn't bought in. It's not even anything he's done. It's just he's now, it's like the energy coming off him. But I love that you brought up Adam Grant, because to me, Adam Grant and sort of this

cohort of people who have just bought the Ray Dalio story and they they write about him, and then they get on his payroll. Adam Grant is literally being paid by Ray Dalio to, quote unquote, develop his principles tools. So I'll say about Adam, I reached out to him for the book. He told me he was too busy to talk, which is his right. And then I heard many months later from one of Dalio's attorneys that Adam Grant had been telling them all sorts of things about me. And I just said, this guy didn't even talk to me. This guy is, what are you talking about, a Wharton researcher?

He's literally on the payroll. He's literally coordinating the attacks on me. Rob, I know that you had to fight through a lot of legal, potential legal issues and a lot of pressure. Obviously, Ray didn't want the book to come out. And Ray is wealthy and powerful and connected. And I know he fought tooth and nail. He didn't speak with you. speak with you. He didn't want to speak with you for the book because based on your reporting for the Wall Street Journal, he had a pretty good idea of the types of things that you were going to uncover. And I guess what he would have assumed would be the direction, let's say,

that you were going to take the book. Do you think that the book would have been different had he said to you, you know what? I wish you weren't doing this. There are a lot of sleeping dogs that I would rather let lie, but I get it. You're going to do it anyway. I want to have a voice in this book. Do you think the book would have been materially different had he taken that tack? Or do you think it pretty much would have come out the same, but maybe you would have gotten some reaction quotes in each of the chapters. Well, he did say he would be interviewed for the book,

but he had a condition, which is that I had to print his interview, uh, unedited in the book. And I responded to him and I said, Ray, I don't remember that interview with me being printed unedited in, in your book. So that, that sort of, uh, ended that one right there. Would it be different? I'm not so certain it would, because this is really the story of Ray Dalio through everyone else's eyes. I think we've heard Ray Dalio's version of the story over and over again. And I would have loved more information. I would have loved some cooperation from Bridgewater. But what I would have really loved is just the unedited recordings of so many of these things that happened at Bridgewater, because they did record almost everything at the firm. I'm not sure I want or need Ray Dalio's memory of them years later. Let's just see what it was like.

And I think that would have been an improved book. Honestly, more information is better. Rob, one of your sources said to you, the great thing about Bridgewater stories is I never have to exaggerate a single thing for it to be totally insane. I could only imagine some of the stuff that was left on the cutting room floor that didn't make the book. Can you give us something that might not have made the book or maybe something that's in the book? What was your favorite thing that you're like, this is just either so petty or so out there?

I really can't believe. It's got to be the piss case. There is it? The piss case is crazy to me, but I don't know. By the way, that quote that the person said to me, if I can just paint a picture for you, he told me that while having a lovely lunch on Greenwich Avenue. I was just like, we are the worst people ever. Like it was like we're ordering $8 Arnold Palmer's. The, the great thing about Bridgewater stories is they're, they are always insane and they're true. The piss case has another element that several people told me that I just

couldn't get comfortable with. So I'd like to just point out that it may not be that what I'm going to say may not be true. I, um, which is that someone told me that they actually sent out the urine or the liquid that was found under the urinal for testing. For DNA? Exactly. I believe it. I believe it because that totally makes sense. But I couldn't quite get there on that. And there was enough crazy stuff. The other thing that I really left out was just how many interpersonal relationships there are at Bridgewater, just how many incidences of people really just going all in and, you know, cheating

on their spouses and marrying someone at Bridgewater and just making their whole life about Bridgewater. And the reason I left that out was I tried not to put things in that, that frankly, might be true at a lot of financial firms. You know, people meet their spouses at the office. So many people told me stories like, oh, this person destroyed their life, and then they just made new Bridgewater babies. But I mean, maybe that's the sequel. Well, there are people that would sign up for this, even if they read the book. Because one of the things that you talk about, they have secretaries making $200,000. They have people working in security and valet parkers and people who are making more money

doing that at Bridgewater than they would from doing that job pretty much anywhere else. And that's not even to speak of the traders, the portfolio managers, most of whom are making seven figures a year, some of whom are making eight figures a year. I think that it would be fair to say, despite all these crazy stories and anecdotes and some of the examples of people running from rooms crying, even if you accept that all of those things happened and are true, there are still a lot of people that still work there, have never left, could very easily get a job somewhere else. They choose to stay and they're willing to tolerate that aspect of the founder and the firm for the financial rewards,

or they might actually appreciate being part of this very inward looking, I don't want to say the word cult, but they might appreciate being part of this lifestyle where they work with this intensity and then they socialize. How do you wrap your head around that concept? There are people that actually like this and aren't leaving. Well, I would say, as you guys know, asset management is a great business to be in if you're the asset manager. So there's a ton of money. You're right. People ask me all the time, well, why don't people just leave? And like you said, they're getting paid a ton of money. It's also what Ray is selling the employees on and the world on

is the promise of self-improvement. He's telling you to change your value system. He's telling you your instinct is wrong. And I agree with you. I intentionally don't use the word cult in the book, except I'm quoting other people talking about it. But that's a big appeal. And it's tough to leave when what you're leaving is the opportunity to do nothing short of, according to Ray, improve your life for the better. So people have financially improved their lives for the better. You cite examples of people who joined the firm having worked at law firms, telecom companies, government agencies. They financially improved their life almost overnight by taking the job. Oh, absolutely.

Yeah. All right. But then there's like the consequence of that is they're involved in this system of constantly being raided by others slash raiding others and informing on people who seem to be going against the founder's principles. And so like, it's a, it's a trade-off, but you know, I just, I thought it was interesting that there are people who can't take it and don't want to. And then there are people who go very far and stay and they're fine with that. And, and there are people there are people who are able to go home at the end of the workday. And Jim Comey getting paid $7 million a year 10 years ago there and say, well, this is a really well-paying job.

Sorry, finish your thought. No, please. So you spoke with obviously hundreds of former Bridgewater employees and I'm guessing some current Bridgewater employees. There wasn't much in the book in the way of how clients felt. And I think your book said that most recently they managed $130 billion in client assets. So surely the clients must at least be happy enough to the tune of $130 billion in the various vehicles that they have. $130 billion in the various vehicles that they have. How do you think some of the clients feel about the inner goings at Bridgewater? And maybe having read your book, how do you think they would

react to it? I'm sure this is, you know, what you wrote is really the culmination of a lot of coverage. This is not necessarily shocking or breaking news, but how do you think the clients feel in general? Well, there has been a lot of client turnover. They have lost money and they have replaced it with others. And if I can give Ray, honestly, not being sarcastic, if I can give Ray credit for something, he is truly a marketing genius. And there's no other hedge fund I know that could have the really insipid investment performance they've had for the last 13, 14 years and continue to attract all of this money. I did talk to a lot of clients. You're right that the book isn't necessarily a

client-focused book. Ray and Bridgewater have a wonderful pitch, and that is, it's a head's eye wind, tails you lose. When they make you money, they say, we're going against the grain, et cetera, et cetera. And when they don't, they say, well, you don't even want us to be swinging for home runs every year. And that's a killer argument. He's not the only person on Wall Street to make that argument, but he might be the most successful. Well, some of the strategies, though, are positioned to zig when the market zags because clients have plenty of options if they want the upside of the strategies though are positioned to zig when the market zags um because clients have plenty of options if they want the upside of the market they can certainly buy the index they can buy uh long short people who are leveraged and and picking the best style like there's a lot of

different ways i think from the beginning uh especially like all weather, they kind of, they kind of position as we're, we're trying to survive in every type of market environment, not necessarily race a multi-year bull market. And that pitch resonates with pension funds and institutions who already have the other bases covered. Like, isn't it, isn't it, isn't it like, I guess, worth mentioning, like, if that's what they set out to do, there are a lot of market environments where they succeeded to do it. 2008, 2009 being like a pretty good example. Just 2008. But the, but yeah, sorry, not to, unfortunately you're talking to someone who

has in his brain every year of pure alpha up there. But Rob, Rob, to to, unfortunately, you're talking to someone who has in his brain every year of pure alpha up there. But Rob, to that point, the book was so heavy on what happens at Bridgewater, but very light on specific returns, even though you discussed how they did at various points in time. Why didn't you talk more about the performance? Because as a reader, I was sort of left wondering, like, you know, they had good times, they had bad times, but overall, I mean, there were, there were our reports that they made more money for their clients on an absolute dollar spaces than any other hedge fund ever. Now, obviously it's a function of their size, but why didn't

you get into the specific, the specific numbers? I'm curious. Well, that's a, that's a fair question by the way. And you're right. They have made more by some metrics than any other hedge fund. I think if you actually asked them to do this and they didn't, I'd love for them to dollar weight their returns. Let me know how the returns were. Well, that's not their fault. We know how that goes. Fair enough. Fair enough. But what Ray has become so famous for, honestly, to me, is more than just investing. Like, I'm thrilled to talk to you guys about the investing for as long as you'd like. But he's really, when he's getting interviewed by Gwyneth Paltrow, and she's saying, you

should run for president, it's not because he's a great steward of capital. It's the philosopher king angle that puts him in that situation. He sought – that was sought after from the early days. The Steve Jobs comparison was very deliberate. You talk about how he kind of planted that seed, and then when that seed was planted, he amplified it. So I totally agree with what you're saying there. Rob, I want to get back to some of the Philosopher King stuff, which certainly is worthy in and of itself of the book, which obviously principles was a large portion of the book. I want to make sure that we hit on the Walter Isaacson stuff. I thought that was wildly fascinating.

But getting back to – you said raised a marketing genius. And early on in the book, this is one of the first things I said to Josh was this guy knew the playbook and he played the game earlier and better than anyone else did in terms of getting people to allocate. So here's a quote from the book, page 47, a chapter, pure alpha Dahlia talked up a coming depression in 1988,

a three year recession starting in 1989, back to depression in 1990 was still beating the drum of depression in 1991. and had tweaked his call to, quote, a modern-day version of a depression, like a hangover after one of those great parties, but one that never goes away, end quote, in 1992. Quote, the US economy is behaving essentially as it did in the 30s. Dalio said, which, by the way, he's still pounding that drum. He loves the 1937 analog. Quote, this is not a recession.

It is a depression. And part of his pitch, and listen, I don't even necessarily think it's- All the bond guys do that. But it makes sense. It's fair. I don't think it's total bullshit. It's like, listen, if you're a pension fund and you've got hundreds of millions or billions of dollars invested to stocks and bonds, here's your slice that's going to be uncorrelated. Should any of

the stuff that I'm saying come to pass? Like that in and of itself is not too outlandish. And also let's talk about sort of the process in the system. What he said was sort of irrelevant because a lot of it was really driven by whatever machine they created. That's true. So I did something that I hope no one else ever has to do, which is that I read every single media article that Ray had ever been quoted in. I think I got to the early 80s and then it was microfiche and I just couldn't imagine myself doing that. And it was a big reveal for me, honestly, even his unofficial biographer, that he had really been making the same call over and over and over again. that he had really been making the same call over and over and over again. We should say, by the way, I actually obviously gave Bridgewater the chance to comment on all of this.

And I told them all of that. And they basically said I had been cherry picking, you know, the quotes from over the years. And I said, well, isn't that really the point that he's called it every which way? So no matter what happens, he can say, I saw it coming. By the way, he also loves to say that he's not seeking attention. Please, it's like a Broadway show. Please, not me. As he enters from stage left. But he had been seeking attention from the very first second.

He was on Oprah. Guys, that took me so long to get. I'm so glad. I had heard rumors he was on Oprah, but you can't just get her archives. I had to find the right person at Harpo. It's not on YouTube. It's not on YouTube. There was rumors that Bob Prince, his longtime partner, has a copy. He wouldn't give it to me. No, that took a lot. When I actually saw that, and I saw this guy who claims that he wanted nothing else but to quietly become a billionaire, and he's on Oprah and the lady, I just, that was, that cost me $250, by the way. Oprah actually asked me for money for that claim. Is one of the big takeaways that everyone in asset management wants attention because it's less a financial business

and more a communications business. And once you start from that premise, there is this asymmetric benefit of constantly predicting crises, which is that when the crisis doesn't happen, no one's really mad at you, especially if you're invested anyway and it's systematic. But when the crisis does happen

and they remember you saying this is about to happen, the reward relative to the risk of being wrong is like 10 or 20 X. And even if you lost money, even if you didn't nail the crisis in your portfolio. So even if you got the call right and lost your existing investors' money, you still win. You still win. You get to tell people, I saw it coming. You get new investors. Yeah, yeah, yeah.

I mean, you see that, right? Well, and for the 2008 crisis, he even begins to change history. This was a real reveal for me. Yeah, he was bullish. He's bullish. He also called it every which way. He said, this is the big one.

But then he says, this is not going to be a financial crisis. When he goes and in his books, he goes back and he gives himself credit. He just quotes himself saying, this is the big one. He leaves out the part where he says, this is not going to be a financial crisis. I can't blame him, honestly. I don't know what I would do if I were so committed to promoting myself as like the seer. But it is remarkable that he gets away with it. He can just change history.

Rob, I want to ask you, though, from Ray's perspective, he's written this somewhere. I think it was a subtweet about you and one of your Wall Street Journal articles maybe years ago, or maybe it was just a comment on the media in general. But one of the things he said is that – and I remember this because it kind of stuck with me. He said one of the reasons why we don't have any heroes anymore is the media's motivations now are different than they were, which we could debate. Innovations now are different than they were, which we could debate. But I think he's talking about like mid-century, you know, guys playing for the Yankees. They were horrible people. Like Mickey Mantle, they were all drunks, probably a lot of them hitting women, movie stars, politicians.

But there was some distance between what the media was reporting versus like their real life. And obviously as time has gone on, that distance has shrunk and we have social media and TMZ and Twitter. And I think he, like, he was kind of talking about like, yeah, there's probably things about me that aren't perfect, but does everything have to be examined to within a millimeter? Like, can we have some mystique about anyone?

And obviously that's self-serving because he's the subject that's being investigated in this case. But is there any resonance of that to you? Had there ever been a point in covering this guy that it's like, all right, maybe it's enough already and let's just let people be imperfect, let people have flaws. And yes, he's getting away with stuff, but so what he's also doing these things and those things. And he's providing jobs. Like, how do you, how do you feel about that, that conflict or is it not a conflict for you at all? No, no. I think that's a real, I really appreciate the question because I cover and I've covered for my whole career. Really. I like to say I cover really

successful people, people who are trying to be successful and people who used to be successful. So there is, there is a limit to, to that. I, there's almost nothing in this book about his wife. Um, I, she's never had a job at Bridgewater. I, Iwater. I did not go around asking about that. I only asked about his son to the extent that his son used to work at Bridgewater and that he's talked publicly about how the principals has helped him through what his son passed away. I agree, there should be a limit. I also believe that when you put yourself out there and you tell people you have discovered the holy grail, I think you are inviting scrutiny. And particularly the way he describes this management system and the principles, I don't think that that's off limits. And I actually, truly, if you read the book, well, I know you guys are,

you're almost through and Michael's finished it. I very rarely mentioned the name of a junior level employee, unless you were on the management committee or up. I just, I really thought about that very carefully. Rob, I want thought about that very carefully. Rob, I want to ask you about this. Help me square the circle. So you wrote, the secret to Bridgewater's vaunted investment process, as Jensen explained late into that evening, was that there was no secret. Dalio was Bridgewater and Dalio decided Bridgewater's investments. True, there was Jensen and Prince and the rest of the so-called circle of trust and

moniker that suggested an image of some grand investment meeting in the mines. But though more than one person may have weighed in functionally, only one investment opinion mattered. There was essentially no grand system, no artificial intelligence of any substance, no holy grail. There was just Dalio in person over the phone from his yacht or for a few weeks, many summers from his villa in Spain calling the shots. So you say that and I'm like, from his villa in Spain calling the shots. So you say that and I'm like, man, unbelievable. But then you also say a little bit later on that Dalio's sort of calls were as much as 10% of the portfolio. So if that's the case, it does seem that at least the vast majority of Pure Alpha, if that's what we're talking about here,

really and truly was, for the most part, systematic and non-discretionary, not just raise whims, I'm bullish, I'm bearish. So which one was it? So you have to think, what does Ray Dalio consider a rule, quote unquote? And my findings in talking to a lot of people are that if Ray thinks of something and he says the euro is going to go up, he's going to consider that a rule because that's a rule from his study of history. You see how crazy that sounds. So his intuitions became part of the machine? Correct. And he could, that 10%, as much as 10% is me referring to him overriding those existing rules. Okay. Okay.

Now, when you say this to people at Bridgewater, they look at you like you're dumb and they say, of course. To them, that's not even a reveal. They're like, well, of course, it was just Ray's rules. We told you. We literally called them Ray's rules. Jensen. Oh, I'm sorry. Jensen doesn't come off great in the book.

And he's now the new Ray. Well, he comes off better than Bob Prince did. He comes off better than many, but do you think the quote-unquote system or the machine is as influenced by the whims of Greg Jensen as it was the whims of Ray Dalio? Or do you think things have materially changed? They have changed one thing very importantly, which is now they have an investment committee. If they want to do those overrides, no one will ever be quite as influential as Ray was in the sense that Jensen and Prince just did whatever he wanted for decades, literally. I still think that describing it as systematic is meaningfully misleading. Systematic to me implies a quantitative system where a Renaissance technologies type approach.

system where, you know, a Renaissance technologies type approach. Also, if you look at how Jensen has described it, he's still describing it in ways that make no sense. He's still saying, oh, it's 50% human intelligence and 50% machine. It's like, stick to your story. There's a funny thing. It's human artificial intelligence. What don't you understand? Exactly.

There's a funny thing. I'll let you behind the scenes here, which is, you know, they sent me, their lawyers sent me all these letters and they kept using this number 98. They kept saying the system is 98% XYZ. It didn't matter what happened, what description it was. It was 98% of the rules, 98% of the risk, 98% of the trades to the point where while I was reading these letters, it was just like, you would just say it's 90% of anything at this point. The number is always 98. It's never 97, never 99. They can keep their stories straight. So you don't spend, at least as far as I've

gotten, you don't spend much of the book talking about the system itself or you talk a lot more about the principles, like the way that the employees are supposed to carry themselves and think you talk a lot more about that than you do try to peel back the onion and get into like the investment machinery. Like what makes them make this decision to buy or to sell? You don't really spend a lot of time on that. And I understand now, cause probably there's not much of a system there. Um, and yeah, what investment machinery? The book would be very short.

Right. But I found that interesting because it would seem to me that from all the coverage while you were writing the book, it sounded from the outside like the lawyers were trying to stop you from revealing trade secrets. It turns out, though, based on the book itself, it wasn't about that at all. It was cultural secrets and anecdotes that could be embarrassing that they were really trying to squelch. Do I have that right? Yeah, let's be clear. The lawyers were trying to bully me and my publisher, just as they've bullied former employees for years. So I'm really lucky not to get all jingoistic here, but in the United States of America,

it really is an incredible place to be a reporter and a journalist. It doesn't work. You can send me all the letters you want. We'll read them. But the reveal of the book for me is that, you know, is that Ray Dalio is unprincipled full stop. The, the reveal on the investing is once you realize that he lives in an alternative reality, it's like, well, of course the investing also wasn't as he described it.

How, of course. Rob, did you, I was, I was, I was surprised by some of the emails that you revealed in the book from Ray responding. And some of them were more, say, humane, for lack of a better word. Like, I thought he came off decent in some of them. Was that your sense? He's absolutely a human. I've spent time with him. He's been kind to me in person.

The thing about, you know, like bad blood, the Elizabeth Holmes book, which is great is that Elizabeth Holmes in that book is a villain from the first page. Yeah. Ray's not a villain. I don't think of him as a villain at all. And what's really sad is many, many times the people that he hurt the most are people who he also, you know, hugged and loved. And so that's, that's really complicated. If you talk to people at Bridgewater now, even now, they just have this sort of sadness to them because there is a genuine, I believe, effort on Ray's to pass along what he considers to be his lessons. And I wish he could see himself the way that so many other people see him.

Rob, it's ironic that Steve Jobs was such a big touchstone for him. And you tell this story about him sending employees to every Apple store in the area. He wanted them to buy as many iPod touches as possible so that everyone in the firm could have one. And then of course he would upload the audio principles onto them. But still he really had this affinity for Jobs and Jobs was a son of a bitch. Even the people that knew him the best and loved him and respected him and admired him from up close, they would not shy away from sharing how difficult he was as a person with his family, with his coworkers. Do you think that that affinity that Ray Dalio had for Steve Jobs is more meaningful maybe than just, oh, I really love

Apple's products. Like you think there's more going on there subconsciously maybe? That's a big question, honestly. I would say, I would point out one meaningful difference, which is that Steve Jobs let everyone around him talk, talk to Walter Isaacson and encourage them to tell Walter those stories that we read.

Ray Dalio has threatened people and paid them a lot of money not to say anything about him at all. So I'm not sure he's quite as open as Jobs. There is a big question, I think, of like, can you be successful and as successful as Ray Dalio and not have this side of you? Only Steve Cohen has not noticed. How many people are on that list of uber success that don't turn into maniacs?

Buffett? I think it's a short, yeah, that's pretty much the list. Right, like Thomas Edison was not a nice guy. Steve Jobs was not a nice guy, you know, for the most part to people that he didn't have to be. Like it's, I guess maybe that's what I would love to just hear from you. Not that you wrote judgmentally,

but what would you be like if you got to a place where people were throwing billions of dollars at you and mostly it was because of your principles and not that you would have concocted that, but I almost feel like you get to a certain point where you can't turn back. Like, it's not like he could have said in 2011, hey, guys, this whole principles thing, it's not real.

You know, it's just me, Ray. You know, we're picking gold. We're buying bonds. Like, you get to a point where you almost have to start believing in your own mythology. I'm just a trend follower. I don't know. Yeah, follower. I don't know. Yeah.

Like, I don't know. How do you, like, I guess my question to you is like, what would you be like if you were dropped into his seat and all of those things were going on because of stuff that you had done in the past? But the thing is, sorry to cut you off. I know this is for Rob, but the thing is he did it. He cultivated this the entire time.

It's not like he woke up a billionaire. Like he built it. He built this image of himself. And also not like he woke up a billionaire. He built it. He built this image of himself. And also on the Buffett quote that I just said, I know Buffett's personal life is a whole other story. So I don't want to act like Buffett's the picture of personal and pure success either. Speaking of the jobs thing though, Rob, did you get a chance? Wait, wait.

I want to hear how Rob answers that. I'm curious. Did you ever put yourself mentally in that position? I've actually spent probably an unhealthy amount of time putting myself mentally in Ray Talia's position. I honestly would hope that I would be able to hear the truth of what people were telling me. A big shock of this book for me, of the research, was all these emails that people had sent him in writing that he had replied to. So I knew this, he couldn't claim that he hadn't where they're saying, Ray, you're harming people. Ray, our, our health insurance premiums are going up or

we're prescribing too much therapy, all this stuff. And that he just could not, not only did he ignore it, but in many cases doubled down and is still going on TV and still just apparently loving the attention that he was getting. I would hope that I have, I have some close friends from actually some of my best friends from, you know, growing up or some of my biggest fans while I was writing this book. And I would hope that I have people in my life who would, who could grab me by the neck and just say like, you're being a dick. And then I would I would listen to them. Eventually you'd probably have to tell me more than once, but you know what I mean?

Like there's a certain, you hope that you surround yourself. Well, I have my, I have Michael for that. And he's probably once. No, but it's,

I need it probably once a week. He'll, he'll say, you know, it wouldn't have killed you to say whatever you said this way or whatever. And he's not always right, but he's almost always right. But it's not even the point right or wrong. It's somebody in your life that you do business with, but that you're also, um, friendly enough that you respect their

opinion. Um, and you like, you need people like that around you at Bridgewater. The people around him were paid not to do that. Well, he was pretending. They were all pretending that they were giving him that feedback. Yes, yes. But that's like Bob Prince knew better than to give feedback. Right. So go ahead. Well, I would just say Bob Prince didn't just know better.

Bob Prince became a billionaire. Bob Prince's wife gave him his Rolls Royce or a Bentley. It's in the book. He becomes a helicopter pilot. Like Bob Prince had great fun him, there's a Rolls Royce or a Bentley. It's in the book. He becomes a helicopter pilot. Like Bob Prince had great fun with all this money and was apparently able to ignore all of the pain going on around him. Well, I thought the Bob Prince stuff, we'll leave it to people to read the book,

but that was fascinating about how the money sort of owned him and all of that dynamics with him and Ray. So the reason why so much of this book is about the culture and the people instead of the financial aspect is because that's the image that he's worked so hard to cultivate. The book Principles, which almost became sort of a New York Times bestseller. I forget what happened there or what the story is there and allegations of how many books he might've bought, which is whatever.

So he became obsessed with Steve Jobs. And now is he working on a documentary of himself? Maybe he is, maybe he isn't, but did you, he, so he read the bio by Walter Isaacson, who also just did the Elon Musk one. And he desperately wanted Walter Isaacson to do for Steve, to do for him what he did with Steve Jobs, which is write a book, a biography. Or what he just did for Elon Musk. For Elon, right. Did you, did you get a chance to speak to Walter Isaacson about that interaction? I did. I did. And I will say, I asked Walter Isaacson, who I give him credit for talking to me. I said, did you get paid for that speech? He goes to Bridgewater. He gives a speech

in the book. I said, Walter, did you get paid? And Walter said, I don't remember. in the book. I said, Walter, did you get paid? And Walter said, I don't remember. And I said, I would remember. I was like, I think I'd remember. So he cultivates not just Walter, but a lot of other important people and pays them to basically aggrandize him. And it's, I think Walter's very fortunate that he didn't write that book. I'll say that. So as we – by the way, thank you so much for your time today. Really appreciate it. As we wrap up, my – we'll get to Michael.

But my last question is there's like this – how could I explain it? There's this feeling in and around the firm that despite the fact that Ray Dalio has retired as the CIO and is allowing the investment decisions to be made by others and by committee, there's this feeling like if he wanted to or, quote, felt like he needed to, he could be back in five seconds like he never left. Faster than Bob Iger. Like, is that like how large he looms over that culture and the history? I mean, he is the founder. He did lead this company to be, you know, the largest hedge fund ever. Like, what's your take on how, how realistic that

is? Yeah. I mean, guys, give me, give me a break. Like, I don't care whose title is, is, is whose Ray Dalio is the, is Bridgewater. He in one, in one sentence, all he has to do is go on any television program and say, uh, I think they need me back. And there are no, in fact, if the returns, if the returns start falling, what do you think is going to happen? Well, he's say, I think they need me back. In fact, if the returns start falling, what do you think is going to happen? Well, he's already, I actually reported this in the Times, he's already suggested to the board that he needs to start his own fund inside Bridgewater to help them and to compete with the people that he left behind. I mean, look, this is a guy who's been talking about retiring for 20 years, retires, and then basically immediately within three months starts talking about coming back to some degree.

So Rob, last question for me. So A24 is making an Elon Musk movie, and I'm not a big fan of all of these business biopics that are coming out, but the Bridgewater story is one of people. And so I think it actually would be very fascinating. Who, who plays Ray Dalio? Have you thought about who plays Ray Dalio in the movie? I think it exists. It's a severance on Apple TV. Oh my God, dude. Well, we've sold it to Amazon. Amazon is developing it. Uh, the Amazon is developing this. You think it's a movie or it's a series or you don't know? I think don't know? I think it's a series.

But I also have told them, I hope it gets made. So, you know, you can make it a cartoon so far as I'm concerned. My first thought, this is obviously not going to happen due to his history, but Kevin Spacey would have been in an alternate universe. A great right now. Steve Buscemi. He's from Long Island. He does the side part with the hair. A great Ray Dalio. Steve Buscemi. He's from Long Island. He does the side part with the hair.

That's a great call. He's like, you know, tallish and lean. It's Buscemi. It's got to be Buscemi. Rob, who have you thought about? So I've thought about Henry Winkler because I think it needs to be kind. Well, it depends where you,

it depends when you – fair enough. But I think the right person to play Ray Dalio needs to be instantly trusted. Well, you need a young Dalio too. Like – well, you don't need it, but it would be like you need Chalamet to be 70s Dalio. No, Chalamet plays me. Oh, Chalamet's you. My bad. What about Russell Crowe?

Could he pull it off? As what? That's Dalio. He's got some more size than Dalio. I don't know about that. Well, I'm going to watch it. If it comes out, and I hope it does. Rob, congrats on the book.

It was fantastic. Really well done. Thank you both for having me. Yeah. So let's let everybody know, what is the official publish date? Is it out now? We got an advanced copy, but is it out right now? It's out now.

The Fund, Ray Dalio, Bridgewater Associates, The Unraveling of a Wall Street Legend. They only have two copies left at the Westport Connecticut Barnes & Noble, so they're getting more. I'm not surprised about that. Rob, it's been such a pleasure. Thank you so much for joining us. Good luck with the book. Good luck with the eventual series. We'll be watching for that.

And thank you for giving us such an amazing backstory inside look at how you did it. And we wish you all the best. Thank you. Thank you. All right. Hey, that's it from us, guys. Thanks for listening. Thanks for watching. We'll see you soon. All right, my gangsters and my gangstarettes. Let's see who's in the chat tonight. Let's see. Let's see. Cam Rackham is here. EH, Cliff's around. What's up man hey sean short 51 what's happening uh who else is in here dave wilson charm city capital jose de la rosa says

greetings greetings jose thanks for joining us all right we have a lot of stuff to do tonight we have an action-pack show, still getting earnings reports, massive CPI report, big rally on the street. We're going to get to all of it. But first, a word from our sponsor via my co-host, the one and only Michael Batnick. Michael, who's sponsoring the show tonight? Michael Batnick It's our friends at YCharts. Did you know that Ben and I are doing like a year-end review, a wrap-up. It's a strategy session.

I'm going to watch this. It's a strategy session. It's December. Oh, my God. It's December already. Well, we're coming up on December. I'm sorry. All right.

It's taking place in Sao Paulo, apparently. What does that mean, though? You and Ben are going to Brazil? We're going to Brazil. We're going to Brazil to do, to do, to do the webinar. No,

no, no. What that means. I don't know what that means, but we'll be doing it and it's been great. And why charts it's, it's everything I do. It's like my oxygen for charts. You got,

you know what I've, I've done this year end wrap up before with why charts. It's great. I always have a lot of fun with those guys. You guys are going to kill it. I'm definitely going to be watching that. How do people register for it? There's a link for the webistration.

There's a link for the webinar in the show notes, in the YouTube. What are you going to do? Like the year in charts and just like everything that happened this year? So many charts. All right. Dope. I love it. Just chart of the year. love it just chart of the year

I don't know I'll be watching everyone in the chat seems to be really excited that you're going to Brazil for this carnival here we come we have to get to the bottom John's in Brazil right now we have to get to the bottom of why I said that

I was surprised that you didn't know who Virgil Abloh was prior to us coming live. Are you really surprised? You're eight years younger than me. You didn't know what Kith was. And you're a Knicks fan. I feel like I have to tutor you way too much on fashion. You should be hipper than I am.

Like I would expect that you would be. I don't know what we're really yeah like a little bit i can't believe you don't know ronnie feig and kith the guy is doing the city edition jerseys for the next he's like you're a knicks fan has all of this gone completely over your head he designed the logo in the middle of the floor you have season tickets to the next well i see how are you not like, all right. I stay in my lane. I stay in my lane.

We'll figure that out. Okay. What are we starting with tonight? I don't know. Anything happen today? You know what? Pretty quiet today. Let's start with October CPI.

This is a showstopper. Basically, the way I read it is absent shelter, there is no inflation. And in fact, inflation was transitory. There were all these supply shock issues, labor market issues. They've been sorting themselves out. And here we are in a non-inflationary environment, absent shelter. Don't give me that bullshit. I was team transitory.

I was wrong. It was not transitory. It was. It just was like slowly transitory and not quickly transitory. I was wrong. It was not transitory. It was. It just was like slowly transitory and not quickly transitory. You were right. Ben and I were arguing. No, we were not right. Ben and I were young about this today.

Yes, if you look at a history textbook of CPI 20 years from now, you could say 20 years from now is transitory because it didn't lift through it. But here's the thing. As everybody who's watching and listening knows, the prices are not going down. So who gives a shit? Yeah, the change in the pace of prices, I guess maybe – no, it wasn't transitory. Bullshit. The prices are what they are.

They're not going back. So stop. No, no, no. But that's – nobody was saying transitory means the prices will go down. No, but nobody was saying transitory means the prices will go down. Everyone understood that by transitory, they meant the supply shocks would subside and the rising prices would slow. I don't think everybody understood that. So you think people thought that they would go back to paying like 2019 prices for Starbucks? Yes, I think the average American thought that.

Yeah, that's fair. Yeah, I absolutely think that. I mean, they don't understand how the world works, but I do agree with you. Yeah, most people- That's what the expectation was. Most people are not financial professionals. Let's throw this trot up, John. So to Josh's point, pretty remarkable.

Inflation- Look at this. Yeah, pretty good. What else do you want? Pretty good. Let's look at some of the categories because you know where there still is food- Hold on. Wait, Mike, stop. Explain to people, go back. Just explain to everyone, the listeners,

the watchers, what this chart is. The first chart is month over month. And this is really what people feel, right? You feel volatility on a month over month basis. Yes. And for the first time in God knows how long, was it three years? There was no change at the headline level. There was no change in prices. 0.0 from September to October. To October. And if you look year over year, this continues to trend in the right direction.

Whether you're looking at all items or core, which is less food and energy, it continues to go in the right direction. That's great. It really is. It's a great thing. However, you said inflation has gone everywhere. Not really. I mean, food prices are still going up. The cost of food is still going up. So October, food was up 0.3%. Food at home up 0.3%. Food away from home up 0.4%. Eating is still really expensive fine i i see you're eating and i raise you energy prices

tumbling uh gasoline minus 4.9 percent from september to october so like like what do you like what do you want you know what i mean that's all i'm saying i'm not saying like every aspect of inflation is in check and perfect i'm saying balance, the cost of living is slowing to the upside and gradually, I hope, going to be in a place where, yes, we won't get back the prices of 2014. However, the lack of acceleration will eventually make people feel better. Eventually, that's the key point. The problem is people get used to their wage increases very quickly. You get an 8% raise.

Great, wonderful. But holy shit, they can't get over how expensive everything is. So month over month, CPI is flat. Year over year, which matters less, I agree with you, like to regular people, but just for the record. Matters for the Fed. Yeah. Year over year inflation is 3.2%, which is still significantly higher than the stated

2% annual inflation target. However, keep in mind that is down from 9% last summer. That is a very big fall in the acceleration of prices. Shelter went up in October. So this is still the issue. I think that issue will sort itself out. I don't. What do you mean sort itself out?

It will sort itself out in the CPI report. Josh, it will sort it. Hold on. It will sort itself out in the CPI report. Josh, it will sort it. Hold on. It will sort itself out in the CPI report. It will not sort itself out in terms of rent going down or home prices going down. Is that what you mean? I think rents will fall. I don't think you're going to get a real benefit to purchase a home because we have this supply issue that the Fed really can't fix. Correct. So last week, we saw the 30-year tumble from 8% to 7.6%, and mortgage applications went crazy. So if, heaven forbid, and I'm kidding, but if rates fall, if mortgage rates fall from 8% to 6.5% or 6%, prices are going to skyrocket again. That's not great.

That's not great. I mean, it's possible. We should rule out that possibility. But I do think 18 months ago, we were talking about stuff like ports being choked with shipping containers, that there wasn't enough labor to move that stuff. We were talking about finished Lincoln Navigators sitting in dealer lots because they were awaiting a chip. That aspect of inflation, none of us have ever experienced it before in our lives. And I don't think that's going to make a return. So Sam Rowe had a chart showing, I guess the New York Fed did. The New York Fed's global supply chain pressure index, that is well below 2019 levels. So all of that stuff is over. That's in the past. So I think we could say like mission accomplished

on that aspect. And that was the part that we knew was transitory. Correct. We knew that was. Correct. We knew. But we also were worried about this wage hike spiral and what that would do to rents. And it had a huge impact. It's been very problematic.

I don't want to be the guy. I forget which college football player dropped the ball at the one yard line. Was that Washington State? I can't remember over the weekend. It doesn't matter. I'm not a college football guy. He thought he scored a touchdown. Yeah.

But then they ended up getting it back, though, and winning the game. I don't want to be that guy and prematurely act like we scored a touchdown. It would really be remarkable if the Fed pulls us off despite themselves. You know what I mean? They didn't think they could do it. They did not, in my opinion, and I think probably most people watching and listening, they did not handle the situation great waiting until March, 2022 when inflation was already, whatever it was before they started hiking rates.

Like they, they were so far behind. And if the economy manages a soft landing, it's not because of anything that they did. If the economy manages a soft landing, it's not because of anything that they did. Like they accidentally pulled off the greatest soft, the most improbable soft landing of all time. It's pretty funny. You know, who's not getting bailed out, at least not yet by today's lack of inflation. And that is the incumbent president in the white house, Joe Biden. One of the things, so you and I are too young to have lived through as adults, not just as investors, but just as like people.

We're too young to have lived through a period like this. But people in the 1970s were incredibly disillusioned between the scandals of Nixon and, you know, he obviously did what he did, but really just like the general malaise and Carter and Ford, and these guys were all not, none of them are going on Mount Rushmore anytime soon. But inflation, it turns out, plays a really big role in how people feel. And they hate it more. I think they hate it more than a weak job market.

Honestly, when you read the polls, so financial times, I think Josh, I'll take it a step further. I think people might hate inflation more than higher taxes. Yeah. Depends on the people, but maybe that's how bad it is. That's how bad it is. Right. It's up there. Like it's, it's up there. It's at that level of, of badness in the, in the minds of, of, all right. So a Ross school of business at university of Michigan and financial times, this is a poll. We don't do a ton of this stuff, but this was, this was like eyeopening to me because I have never seen anything like this before. Only 14% of American voters believe that they are better off financially now than when Joe Biden took office. I want you to keep in mind that that's

during a period of time where we have added 200,000 jobs on average per month and GDP has grown. You have 14% of American voters think they're better off financially which i think means that 86 don't that i mean that's that's extraordinary look at the spread look at the spread between republicans and democrats between heard a lot between heard a lot like in general do you think biden's economic policies have hurt a lot it's like four percent for democrats and 65% for Republicans. Truly hilarious. Fine.

So that, so that part you have to expect. Yeah. 70% of voters chart off thought Biden's economic policies had either hurt the U.S. economy or had no impact, including 33% who said they believe the president's policies had hurt the economy a lot. And obviously it's a lot of Republicans saying that. Only 26% said his policies had helped. So like half the Democrats will not say

that they are in better shape or that the economy is in better shape as a result of Biden. Meanwhile, Biden enacted a massive stimulus plan within weeks of his inauguration. Outside of a stimulus. I honestly, I mean, I don't pay attention to politics, but what are his economic policies? I don't even know what they are.

I don't know if he knows what they are. I don't think he's following it that closely, to be honest with you. A lot of this is like just relying on like the stock market not to crash and inflation to come down. I don't really know like that his policies really mean anything, but still just the fact that you have job growth and you have the level of home prices and the stock market, that's how pernicious inflation is. Let me just do the rest of this. So you're right. This has less to do with Joe Biden and much more to do with inflation. Right. I don't think any president who's sitting in the White House at this moment would look

much better. I agree with that. Because that's how bad inflation is. But this is important. In 1980, Ronald Reagan, he was running for his first term, famously asked voters, are you better off now than you were four years ago? And that set the stage for a huge victory over Carter. He crushed him.

Landslide. A similar poll conducted for the FT four years ago showed that most Americans felt they had not improved their financial position under Trump, but their pessimism was far less pronounced. In November 2019, only 35% of voters believed they were better off under Trump. So that's like versus 14. What's this other- But wait, hold on. Let me take that back for a second. Actually, actually, I believe that if Trump were in office right now, they would be doing an incredible job messaging how fast inflation was falling. And the- Oh, that's a good point. I can see that.

The percentage of responders who thought that they were much better off or somewhat better off would be way higher if Trump was in the White House than Biden, way higher. Yeah, the only person worse at selling the Biden economy than Biden is Kamala. But like between the two of them, like nobody, they're just not getting through. They're not, nobody is hearing about job growth.

Nobody is hearing really much about the Inflation Reduction Act or the CHIPS Act. These are things that actually created jobs and are helping people. And you don't have to agree with them to acknowledge that there are a lot of people who are benefiting. And they're really bad at selling it. I'm not like a partisan. Like, I don't give a shit, honestly. I only care about the stock market.

And I'm the president of the stock market. But I'm just saying, like, these guys are terrible. All right. Asked what was the source of their biggest financial stress? 82% of respondents said price increases. This is all inflation. It's all that matters. It's all that matters.

Three quarters of respondents said rising prices posed the most significant threat to the US economy in the next six months. They still think, they still think that that's the biggest threat in the next six months with inflation literally crashing. Three quarters of respondents say that that's what they're most worried about. This is a failure to communicate, is it not? I think so. Is the election a year from now? I think so. When is the election? A year from now?

No, seriously. When is the election? Yeah, it's usually November. Yeah, right? It's a year from now. Yes. All right. It's going to be one of the worst, most dispiriting elections we have ever.

This is literally the anyone but these two guys election. And this is what we're facing. For the love of God. All right. Number of US households with net worths between 1 million and 5 million has grown to nearly 13 million as of 2022. So this is just one of, now obviously this is people with money, but there are so many, there's so much empirical evidence to show that the economy is at least doing okay. At least doing okay. Wait, 13 million households have net worths between one and five? Pretty amazing.

And that number around the time of the financial crisis was, looks like 5 million, right? Here's the good news, Josh. So now it's 13? Here's the good news, Josh. So now it's 13. Here's the good news. What really matters to the market is not who's in the White House or Congress, the House or the Senate, it's earnings. This is from Bank of America.

So profits matter more than politics. They show the percentage of years where total returns were positive based on political party versus earnings. And political party, 43% for Republicans, 57% for Democrats. Again, that's probably, in fact, not probably, that's noise. But look at the profit cycle. 67% of the time, the market is high when there's positive earnings per share growth,

and only 33% when there's negative earnings per share growth. Oh, they're saying like, you might think that it matters Republican or Democrat, but that's almost an even split. What really matters is whether or not there's positive or negative earnings per share growth. I would have guessed that. Yeah. Other than it's controversial, I'm just saying. Yeah, I think most people would guess that that trumps whether or not, this is a bit,

this is a little bit of a chart crime because they should have done the first two bars in red and blue and the second two bars in like a green and some like fine, whatever. Let's talk about the reaction within the market today. A hell of a day. So 93, chart on please, 93% of stocks in the S&P 500 were positive today. It's the highest reading since March of this year. So we'll take it. It was broad based. Look at all this green. Look at all this beautiful green, John. What a day. What a day. Next chart. And you know what else? What else?

The stocks that were the hardest hit were leading the charge. And I feel like that needed to happen. Like we were talking about, I'm sorry, chart off for one second. Remember we were talking about catch up versus catch down? And if you're somebody who has a bearish disposition, anytime you see negative breadth in the market, your gut instinct is always going to be to tweet that, you know, the market's going to cat, like the, the, the leading stocks are going to, the generals are going to get shot eventually. If you're a positive, if you're positive or bullish,

your mentality is going to be, all right, we have some leadership stocks. They're carrying the baton right now, but the rest of the market will catch up. And I don't know what happened in one day, but- Well, how about this? Forget about if you're bullish or bearish. If you like using data, you would have said, because we showed this chart, I think, who did this? It was Warren Pies. There was a lot of people earlier in the year. When you're in a bull market and there is a divergence, typically the rest of the market catches up. Yeah. Yeah. Especially when there's like a washout in breadth, like that washout sets the scene for a big rally. And we also did the thing about small caps from Dietrich, where they had that huge four-day move

like a month ago. And we talked about what usually results from that. Well, we just saw it. Today was a stupendous day for the small cap area of the market after a lot of pain. Next chart, please. So this is from Mike Zaccardi. All right. So there we go. Percentage of stocks, S&P at a 50-day high. This looks good, of course, right? We'll take it. 23%. All right.

This is from Mike Zaccardi. Holy shit. Look at this. The Russell 2000 beat the S&P 500 today by 3.47%, which is almost the largest single-day outperformance since the great financial crisis. Wow. Look at this. Eric Jackson tweeted, this is from Morgan Stanley.

Today's IWM move is a four standard deviation event relative to its trailing three month realized vol, the second largest in IWM's history. Pretty incredible. Yeah. Like we got like, right. We got, we're getting the catch up and instead of it taking six months, they're going to do it in a week. So all of this is in response to a scenario where it's hard to envision the Fed not being done. Right? Yeah. And I was doing a little bit of a heat check today,

just looking at like, uh, so, uh, real estate investment trusts were leading the rally. That's a rate story. I mean, everything in here is a rate story. Everything here is a rate story. SL Green was up 18%. Rates just collapsed. Rates just collapsed across the board. Regional banks were up 7%. This is a, this is just a rate move. Not just. I mean, it's huge. Put this thing up, the cyclicals, homebuilders. So this is homebuilders up 5.88% on the day, went out of the HOD. Metals and mining screaming 5%. I got to be honest, not to be a wet blanket, these charts kind of suck. Who cares? Well, it's showing where the leadership was, economically sensitive.

These are Dow transports up three and a half. I guess that's why they're relevant. They're not great charts because they're one day. No, you're just showing interest. We could have done a better way of demonstrating where the leadership came from. That's all I'm saying. All right. All right.

Well, life goes on. Put up the dollar. What do you want to say here? What do you want to say now, tough guy? Yeah. No, what do you? I mean, this is as expected. If you ask.

I didn't look at this, but if you said, what did the dollar do today? This is what I would have said. Of course you would have said it got crushed. This is concurrent. For the last really two years, you look at the dollar, you know what the stock market did. All right. Are we getting follow through? That's all I want to know. between now and Thanksgiving is next week. Are we rallying

into Turkey day? You know how I feel about positioning. Will we fill the gap from today? Possibly. Are people underinvested? And when I say people, I mean people that move the market, giant pools of capital. Are they trailing and underinvested? Yes. Will they chase into the year end? Yes. Will the market rally into year end? Yes.

This guy just stopped me three hours ago and he's like, what a move, right? I don't know who he is. What a move, right? Like he knows who I am. So I'm like, yeah, he goes 8% and I've been fighting it the whole way. I've been like, I whole way. I've been like, um, I've been, I've been, what is it? Whatever he's doing, selling calls or something. Uh, and all I said to him was, listen, I'm not a swing trader. I don't really know how that game

goes. I would just say wrong time of year to be fading rallies. You know what I mean? Like, like I, I get that people do that and make money. You're trying to make 1% on a down day. You have a market acting this way. I don't know if that's what you want to do now. Now, of course we'll be blood red tomorrow, but I just, um, you know how much the NASDAQ 100 is up here to date? Uh, 42. Just about.

Unbelievable. It's like unbelievable. It's unbelievable. Uh, actually, no, it's like unbelievable it's unbelievable actually no it's more the NASDAQ 100 is up 45% year to date

I mean it's crazy it doesn't happen if it doesn't go down 35% last year but still and the equal weight the equal weighted

version of the NASDAQ 100 is up 22% so alright what do you got unbelievable alright where are we going next let's talk about of the NASDAQ 100 is up 22%. All right. What do you got? Unbelievable. All right.

Where are we going next? Let's talk about... Oh, did you watch this video? Yeah. Yeah, you did? Yeah, but I want to hear what you want to say about it. This is from... Was this Tesla?

Are these Tesla robots? I don't know. Yeah, it's Optimus. That's Tesla. So we're watching, for those of you who are listening to the podcast, we're watching a robot. They put like- A humanoid robot.

It's a robot that looks like a human being. They put blue blocks and yellow blocks on a table and the robot is sorting it. The blue blocks go over here, the yellow blocks go over there. And then later in the video, we're not showing the whole thing. Later in the video, a human being comes in and starts moving them around.

And the robot is like, no, no, no. This still goes over there. This is still yellow. That is still blue. Is it too late to stop this? I don't like it. Yeah, it's too late.

It's too late, right? I don't love it. Why do they have to look like humans why do we have to do that like a like our is is the human form the ultimate form for a robot per se like why why can't you see i robot garbage cans or did you see i robot yeah i don't like any of that i don't like it i mean amazon warehouse it's gonna happen because amazon warehouses are probably already all for the the most part, run by robots. Yes, but Amazon robots look like giant arms or look like conveyor belts or they're, it's like a screen that's got like sensors in it.

This guy's building replacement humans. I don't want, I don't like that. I mean, you know, there's nothing I could do about it. I just, I, I prefer my robots to be less anthropomorphic and I would like to see them look more like objects because that's what they are. I don't, I don't like them mimicking us in form, in function. I wish it weren't too late, but I suppose it is. Did you see the AI pin from humane? Did you watch this demo?

No. Show, show this once, man. I didn't see this. So what takes place here? It's, it's basically like a GoPro and a cell phone and Google in one device. And it's here, like it's coming. So these are X, these are X Applers. Where does the device go? It's on her coat.

It's on her coat. It's like a, it's like a lapel pin. Yeah, there, yeah, there it is. Okay. So I'm okay with this. It's 750 bucks and it's V1 and like all of this AI shit, like it's the next 12 months and the next five years are going to be wild. I agree. Beyond our wildest imaginations. For me, it's going to be, and you know, I wear sunglasses

pretty much like 18 hours a day. For me, the glasses are going to be the thing when they have a form factor that you're like cool with walking around all day. Meta has some Ray-Bans. No, I know. Yeah. Like that's where I could like get comfortable with just the idea of

augmenting my vision with data. Like when I drive a car, when I drive a car, the interface with my, like my Tahoe, it's got multiple screens and it's constantly peripherally feeding me information, the temperature, what direction I'm heading, how's my oil. Like I'm okay with that in a set of glasses. I think that's cool. Like to like just be getting updates on what's going on.

So I know that's coming and I think it's great. I don't like the humanoid robots. That I could do without. So check this out. Generative, the FT did a piece, generative AI is already taking white collar jobs and wages in the online freelancing world. So there's a chart on the left showing the percentage change in monthly freelance jobs. And they annotate before and after chat

GBT launched. And then they show earnings and the percentage change of jobs is like down 3%, but earnings are getting massacred. So this shit is- You mean how much people can earn? Yeah. Is that not what I said? No, you said earnings. I was thinking like corporate earnings.

You mean like weight, like- Individuals. Like earnings is in income. So what I was thinking- Freelance workers. What I was thinking is probably the task people who do the same thing repetitively, very narrowly over and over again.

Those are the people that you could very quickly have AI take their work from them. And that's something like, just like thinking out loud, like a copy editor. And just being able to feed a piece of text into this thing and have it corrected for you saves you from having to Venmo somebody $100 for doing that. And I could completely see that. But outside of writing and like really shitty AI generated art, what else do we think is like immediately replaceable by the current version of AI? I think it's pretty narrow.

By the current version, maybe. But by what's coming, like a lot of just tax preparers, like that should all be extracted from documents and it will be very soon. Right. But it's going to be the tax preparers who train themselves to do it and they'll be able to see more clients, but they're not going away. TurboTax didn't lessen the need for accountants. Dude, this is not TurboTax. There will be people that are displaced, but I think the productivity gains that we're going to have from these things is going to be as big as some people are saying.

I think it's going to be huge. Dave Wilson is in the chat saying he'd rather talk to a robot than a human doctor. What do you think about that? I don't know. I'd rather talk to a doctor with a robot than a doctor without a robot. Yeah, but I want like a little empathy.

I don't want just like the cold, hard logic. So John Byrne Murdoch, the author of this article, summed it up as such. He said, take it together. The studies tell us three things. First, how the use of generative AI is regulated will be key to its impact on jobs. Online freelancing is about as unregulated as a labor market as you will find. Without protections, even knowledge workers are in trouble. Second, the more multifaceted your job, the less risk of it being automated out of existence. The gig worker model of performing

one fairly narrow task for multiple clients is especially exposed. And third, to get the most out of Gen AI while avoiding its pitfalls, we should treat it as an extension of ourselves, collaborating closely and checking its outputs as we would our own. It is not a separate infallible assistant

to whom we can defer or hand over responsibility. Yeah, I think that's right. That's the big takeaway. This is a tool to be used. It's not really a replacement for most people. It might replace a lot of the things that we're doing manually. We don't know what it's going to become. Of course. But just thinking logically, there is an element of dealing with another person that is important in various pursuits. But then that person, that professional, no matter what industry you work in, undoubtedly, there are things that you do manually or in your head that could be and will be done by AI. And at first, it'll be a relief. And then maybe later you'll say, oh, wow, I better add some value on top of this because this thing is now doing most of my job. And I think that that's

definitely a fear that's looming large and will probably intensify. More jobs will be created because of this than lost. Yeah. The thing is the gap in between though. Yeah. Yeah. It's tough. I agree. You don't lose a job on Monday to AI and get a new one on Tuesday. Correct. All right, let's do retail earnings.

We got Home Depot today. The earnings were not great. Not terrible. Not terrible. The guidance was not great. But the stock ripped. It went up because people are willing to look through softness this year if they think that rates

will stop going up and the housing market will unfreeze. That's how I'm reading it. What are your thoughts? Well, the guidance wasn't that bad. No, they just said big ticket, big ticket is the problem. But especially considering what comps were. So same-star sales were what, down 3% or something? And considering how hot Home Depot was, not so bad, but you're 100% right. Today's move was nothing to do with earnings or what they said. Because how about this?

If CPI came in hot today, this stock would have been down 11%. Annihilated. CEO Ted Decker said that while consumers were still committing to smaller projects, Home Depot continued to see pressure in certain big ticket discretionary categories, same store sales for big ticket items fell 5.2% year over year. So that's what's going on. We all knew that was what was going on. It's not the first time it's happened. I think that expectation was sort of baked in. The guidance Home Depot gave is earnings per share falling between 9% and 11% from a previous range of falling 7% to 13%. So they sort of narrowed guidance, but the low end got a little bit worse.

Jack, can we throw up the chart, the dot chart? Look how many Home Depots there are. 2,300 stores across North America. This might be unnecessary. I don't know. We have one in the town next to us. I guess I like that it's that close. Maybe I go three times a year. I love it. I'm not like a building person. I don't do anything. But I like that it's there. I like that it's there. Oh, you know what I get there every year? Like a lot of those bug sprays that you attach to the hose by cutter. Like I'll go there and year like a lot of those bug uh bug sprays that you attach to the hose by cutter like i'll go there and buy like two packs of those and i do like a party spray before i have people at the pool like i i kill a million bugs at a clip with that that's why i go to home depot all right

um you know what hit it you know what hit a all-time high today? All-time? Walmart. You know what else? Costco. Yep. All-time. Yeah, I believe it. As in never been higher. Costco doesn't report until middle of December. They're a late reporter or an early reporter,

depending on how you want to look at it. Walmart is Thursday. Target is Wednesday. Target has really been the problem child in this space. And I asked Stephanie Link, she actually follows these companies really closely. I said, why is Walmart making record highs and Target making 50 tweak lows? And she said, it's just grocery. Like in other words, there's really not much different with the execution, like how these guys are running their businesses. Walmart has way more grocery, which is a great business right now because of inflation and Target doesn't have enough. I saw somebody tweet something like Walmart loves lowering prices and Target loathes lowering prices.

Maybe, but like I'm saying in this environment, like how could Walmart and Target look this different? It's mix. It's mix. It's what they're selling. Well, I got to tell you, the stock itself, while abominable as it is. Which, Target? Target made a higher low and has gone sideways since late September. So it's not going to take much for the stock to rip.

I saw the guy on CNBC, Cornell. He looked like he saw a ghost. I'd much rather be long. Retail theft. Yeah, it's bad. I'd much rather be long than short. I'd much rather be long than short going to earnings. I'd much rather have nothing to do with the stock.

All right. That's all we have nothing to do with the stock. All right. That's all we have to say on there. What do you got next? All right. So Tesla is doing to cars what Netflix did to streaming. And what I mean by that is they made it so that the other automotive companies, Ford, General Motors, Stellantis, and all the others, they had no choice but to follow Tesla off a cliff into a shitty business.

and all the others, they had no choice but to follow Tesla off a cliff into a shitty business. Now, the difference is that I guess people thought streaming was going to be that there was going to be a pot of money on the other side of the rainbow, and there wasn't. But they made it so that there was no choice. So look at this chart of Disney's market cap divided by Netflix. Disney was, I don't know, 20 times the size of Netflix. And it just was going down every single year, down, down, down, down, down until Iger finally said, all right, we got to do something. So back in 2017, on one of the earnings calls, Iger announced that Disney Plus was coming in 2019. And that they were going all in on it. And it did. They did. And it didn't stop the demise.

And there's other factors, not just streaming, but certainly there's a huge part of it. So check out what- Netflix now has a bigger market cap than Disney is what this chart is showing. Like it's been flirting with that for six years, but now it's like official. I was about to say, no, it doesn't. But yeah, no, it does.

No, it does. It does. Netflix market cap is- That's what you're showing me here. Netflix market cap is bringing in Disney. And guess what? If it's below the one line, it's bigger. Guess what?

I don't know that I would bet on Disney ever being bigger than Netflix. Do you know what this week was? What, the Marvels? This week was the, well, they don't want to talk about that. Who are they making that movie for? Who that i think is going to that i saw the coming attraction what movie did i see recently i saw the coming attraction to the marvels and i said to ben i i saw the worst trailer i've ever seen in my life but i don't know but i don't understand even if it was a well-made movie which it clearly wasn't who is that for because the like no literally nobody wants that um so and this they got rid of the junk that's the last one i think

they're gonna shift to x-men here's the problem here's the problem though here's the problem so this week i asked you know what this week is it's the one year anniversary of eiger returning okay it's hard to believe that's been a year already. And what he said on the conference call last week is that the course correction is over and now I'm back to growth plans. And that's great. And I think it might've put a bottom into the stock. Marvel's was rock bottom. Maybe not for the stock. Maybe, I hope, but they're done with that shit. They're not flinging stuff against the wall anymore. So leaving ESPN out of this discussion, are done with that shit. They're not flinging stuff against the wall anymore. So leaving ESPN out of this discussion, purely from a IP, like a creative standpoint, three Marvel movies a year is too many. They don't feel like events. You're stretching the creative team too much. You're

spreading them too thin and you're diluting the power of your own releases. So stop that. The TV shows are abysmal. And a lot of this is, there was a period of time where they just couldn't lose. That's not now. I honestly think, you have to have multiple conversations. Does the world really want this? So with the Marvels, here's a problem. It should have been Captain Marvel too, because Captain Marvel one was a billion dollar movie. But then number two,

secondarily, like, do we have to do it? Yes, it was a billion dollar movie. Most billion dollar movies get a sequel. But like, do we have to? That's the question they're going to start asking themselves before they just green light the next $300 million budget movie. And the other thing that people need to remember, and we're going to talk about the other streamers in a second. It's not just the budget of the movie. Every movie requires two and a half times that amount to be spent or to be made for it to show a profit because of how much

it costs to release this stuff. So if you're a Disney shareholder, the bottom line is you don't want to hear about endless cost cutting with no growth plans in sight, but the cost cutting was very necessary to put a bottom into the stock. And I think that's what he might've been able to accomplish. What do you think? Have we seen the lows that we'll see for Disney? For the stock? I, I, I do think so. Um, but I think I'm coming around. I'm coming around to that. Maybe I'm not in it. There's not a ton of, there's not a ton on the calendar for next year for, for Marvel. There's Deadpool. There's Venom, which is like half them, half Sonya. I don't know the splits. And then there's Craven, the Hunter. So there's not a lot of other bullshit that them, half Sonya. I don't know the splits. And then there's Kraven the Hunter.

So there's not a lot of other bullshit that's hitting next to you. Deadpool may not hit its date because of the actor's strike and the screenwriter's strike. That'll be a big movie because what they're doing is they're relaunching the Marvel Cinematic Universe with that.

It's the first of the new characters that they got in the Fox deal. So Wolverine's in that. And I'm telling you, the next thing is X-Men. They're going to kick ass on X-Men. X-Men, Fantastic Four, Daredevil, some of the stuff they haven't had access to. That's going to be how,

they're not going to relaunch Avengers right away. They have a couple of Avengers movies planned. They're probably going to start bringing back the old cast because that's what the fans want. But what they're really, I agree with you. They do have more levers to pull. And like Spider-Man will be the bridge that gets them because that's still working for whatever reason.

If they brought somehow Robert Downey Jr. back and Captain America back, it would be a billion dollar movie. But getting back to – It would probably cost him a billion dollars. You're right. Getting back to Elon sucking in the other automotive companies. So Ford Motor lost $62,000 on each electric vehicle it sold during the year's third quarter. Yeah.

But that looks – this is from the journal, I think. That looks like a business success compared to Lucid Motors, the luxury electric vehicle maker. On Tuesday, they reported losing $227,000 per car sold in the latest quarter. This is hilarious. In November, 2021, John, turn it on, please. It reached a stunning, next chart, please. It reached a stunning market value of $91 billion, despite having only delivered 125 cars in its history. This one, Rivian is now worth $14 billion. Lucid is worth $8 billion. And they lose money on every car, Lucid?

Amazing. Not only do they lose money, they lost $228,000 per car. So previous chart, John, the one that I had to skip over. So Tesla is doing fine. You know, Tesla's done fine over the last year. But look at Lucid, Rivian, General Motors, Ford. And these companies have no choice but to compete. And it's really, really difficult.

So the CEO of Ford said, a great product is not enough in EV business anymore. We have to be totally competitive on cost. And credit to Elon. He was talking about something Ernest called,. Ideas are so easy, right? Anybody could design a car. To actually do it is so hard. So going back to the Ford CEO, the key levers to deliver this competitive cost structure are scaling, vertical integration, and batteries. Batteries. They're the single biggest cost component of any EV. And then we heard this week that one out of every five public EV charging attempts is a failure. That's from a 2022 study in San Francisco. This shit is really hard, and Elon is winning.

The equipment is shit. Yeah, credit to Elon. He saw the battery thing coming a mile away. He was making his own batteries. He was contracting with Panasonic a decade ago. None of this was a mystery to him. Last time he was on about the cost cuts, should that be a sign that demand is not there or that Elon is absolutely squeezing the necks of his competitors? And it looks like the latter. Do you think the Cybertruck is going to be a bomb or, I mean, they'll probably sell it out because they're not making a lot, but- It's so heinous. Even if it wasn't, do you think that just the idea, does anyone want that? I'm sorry. I hate to like car shame people, but what type of asshole is going to buy that?

Oh, you know what type of asshole, the assholes that you follow on Twitter all day. That's it though. That's the audience. It is. The audience is for people who want to tweet a picture of their Cybertruck. That's all. It's just for people that have way too much money. All right. So probably not that important to the company.

Let's do streaming storylines. First chart, John, please. This is Disney versus Paramount, Netflix, Warner Brothers. All right. Roku, sure. Not quite the same type of thing. If you close your eyes and you pull Roku out of this and you just think about these companies,

they had a horrible year. They had a horrible 2022 as well. Huge rallies in the last couple of days. I think these were stocks that require lower rates for people to feel better about whether or not they'll be able to keep raising money, I suppose. Let's do the market cap. Wait, hold on, Josh. Let me just lay you up here. Just try to for one second. So here's a quote from John Malone. By the way, John said, oh my God, the Y-chart page auto-updated to my location. So John is in Brazil. So that's how that happened. Okay. Got it. Um, all right. So John Malone said, John Malone said, what's happening now is the fight is no longer for entertainment library

services. That has kind of settled down to where, you know, one company's making the money. It's Netflix. Warner brothers is making money, not a lot, but they're making money. And then you have Disney losing a lot of money, Peacock losing a lot of money. Paramount losing a ton of money that they can't afford. Is 2024 going to be the year of consolidation finally? Yeah. Yeah. Yeah.

So let's go to this market cap chart real quick. So it's haves and have nots already. Paramount's worth $8 billion, and they have a ton of debt. So that's actually misleading the enterprise value or the or the price that a buyer would really have to pay is not being accurately represented here warner brothers discovery has a 25 billion dollar market cap with like 45 billion in debt so like there is no real buyer uh i don't think for something like that so either so either these companies are gonna have to pay down a ton of debt, boost their cash flow, start buying back shares and running these things like profitable.

How? It's hard. Well, I think, all right, I would bet on Warner Brothers threading that needle. Paramount, Shari Redstone is already dropping hints like, oh, I would do a deal if the right deal. All right. So that ship has sailed. She owns a linear television network, CBS. Every day that you own a linear television network, it's worth less than the day before.

It is not making a comeback. It's not cyclical. It's secular. She smashed together CBS, a linear TV network, old school TV network with a movie studio, Paramount, and then with a bunch of cable channels that haven't been cool since the nineties, like MTV and Nickelodeon. So maybe there's a deal to be done, but nobody wants all of those assets. Like nobody wants that whole, that bundle. That's a bad bundle for anyone. So I don't know what you do. What's the most valuable part of that business? I have no idea.

Probably the streaming platform, which loses tons of money, but it has a future. CBS has a lot of legacy content, has no future, like has no future where it's the same size. It is the right price. It's got to be worth something. Paramount, the movie studio has value. There are amazing titles. Like it's not all bad. But the problem is you're mixing together really played out dying cable brands like MTV with CBS, which like old people's parents watch CBS, honestly. And tons of debt. And tons of debt, and tons of debt. And tons of debt.

Warner Brothers. So it's Batman. It's Looney Tunes. It's great, great, great content library. But then it's also CNN. It's HBO. Or Matt's. No, I know.

Amazing content. But again, $45 billion in debt. You have to pay that debt down. How do you do it? You cut costs on content or you start selling really valuable franchises like Harry Potter. I don't know what the right answer is. Probably like a mix of those things, but that's not going to be easy to do. I'd rather bet on him, though, than on Zaslav, who runs Warner, than on Paramount.

You know who buys Paramount? Amazon. But, like, for what? I don't know. Like, let 10 years go by, and they'll give it to you. Like, what's the, in other words, what's the urgency? Unless you think someone else is going to get it. No one else wants it.

That's why there's been no deal. He's down 70%. There's no urgency. I mean. But my point is, you're going to get that content anyway because it's going to be in an auction. Not now. All right.

Disney buying Hulu by year end. This is a transaction that everyone knows they have to do. They own a portion of it. They'll buy the rest. I think that's a no-brainer at this point. If you're going to spend money on something, better to buy Hulu than to try to spend that money in original content and creating things that are hit and miss. Dude, they're not doing that shit anymore. They just announced $2 billion more of cost cuts. They're not flinging stuff anymore. It's over. Well, let me tell you what else is coming.

Your Disney Plus app is going to disappear. So is your Hulu app. A new app that's a unified Disney Plus Hulu is coming. And I don't know what it will be called, but Disney Plus is done. And so is Hulu. These will not be standalone apps any longer. Good. It's too much. It's too many apps.

It's too many. It's too many apps. It's too many. I totally agree. I don't know what they do with CNN. The DC Universe, they hired James Gunn. Talk about something that nobody wants, CNN. Yeah. They hired James Gunn, who basically created the Guardians of the Galaxy franchise and then revitalized a bunch of DC things for TV.

They just hired him and gave him the whole universe. There is no DC movie coming out in 2024. The first one will be 25 with the reboot of Superman. He's using all new actors, all young people. Have you ever watched a good DC movie? It's James Gunn though. If you're a Marvel fan, then you know Guardians were the best thing that they ever did. He's a genius.

I think they got the right person. I don't know how Marvel let him go. They're probably throwing a ton of money at him, but that's the future. So can they pay down enough debt to bridge the gap between now and when we're all saying how amazing the new dc movies are in 2025 that's really the that's the bet that's the bet um they can't sell themselves i was talking to you today about this reverse morris trust how they well the point is there are restrictions they actually can't like if Comcast or Peacock was like, we'll buy it. I don't even think they could do it. So, or like at least not right now. So what's Peacock's

deal? Like I'm under contract with NBC universal. I literally have no comment. All right. Uh, I should have my own investing show on the Peacock app. That's all I know. All right. The earnings recession is over. Take us home. Hey, I'm the captain now. Take us home. Take us home. So we were speaking about like this weird dynamic where we could go into a recession, but the economy, the corporations already prepared for it or already dealt with their

own recession. So we had earnings growth or earnings growth was negative for three consecutive quarters year over year. We already did that. Yeah, we did it. We did it. And Q3 earnings are tracking pretty okay. So what do you think about that? The earnings recession is over.

Does the earnings recession have to coincide with the economic recession? No. No. It doesn't, right? It does not. So there's room for people like, we had Malcolm on the show on compound and friends last week. He was great. We talked to Cam Harvey two days before that. He was great. These people have high conviction that recession is inevitable. Could you have one that really doesn't take a huge chunk out

of earnings again, given how much cost cutting has already gotten underway? I don't know the answer, but it's an interesting question. I don't know. I really don't know. It would be weird to have a recession that doesn't hit the S&P unless it already did hit the S&P in the prior year. Right. I don't know. I'm not that smart. I don't know. But here's what I wanted to bring your attention to.

Since the start of earnings season, people are like, oh, it's only big tech. It's index fund flows. It's blah, blah, whatever. Since the start of earnings season, big tech has seen positive 2024 EPS revisions while the rest of S and P and tech have seen negative revisions. It's like two different worlds. So, so, and these big tech earnings revisions positive are more important than for any

other sector because of how big these stocks are. Like they, these are the ones that matter quite frankly. Like if you tell, if you, if you tell me there are positive earnings revisions in Target, it's like, oh, I don't give a shit. What does that mean for the S&P's overall earnings picture? Nothing. These are the ones that matter. I thought this was funny. We could end with this. This is the journal. Wall Street has slashed its estimates for corporate profits in the final months of 2023, but investors are ignoring it. And the reason why is a lot of the falling earnings can be blamed on just two companies, Pfizer and Merck. Analysts cut their projections for fourth quarter earnings at

companies in the S&P by 3.9% in October. That's more than twice the 10-year average of 1.8%. But half of that is as a result of estimate cuts for Pfizer and Merck. So if you exclude those two, the cut to fourth-quarter earnings was just in line with the historical average. I thought that was interesting because we talk a lot about these exceptions and these sector things where it's like one company is the whole reason why earnings are up or down. Here's another example of that. Those are big companies, but it's a specific story. To that point, would you be shocked if there is a recession in 2024,

but earnings growth from Nvidia and Microsoft keep the index earnings positive? I think that's what happened this year, the first half of this year, to be very honest with you. I think that's what happened. I think AI say the same word. All right, make the case. What do you got? I'm going to make the case for clean energy. I don't know anything about this space, but here's what I do. I'm tired of your woke bullshit. But here's what I do know. What I know is on the cover of Barron's this weekend, and not picking on Barron's,

the clean energy crash. And yeah, these stocks have gotten obliterated. Drawdown, please, John. For solar, it's in a 36% drawdown. The ETF, clean energy, is in a 57% drawdown. Enphase Energy, which I made the case for about a year ago, LOL, whoops, I'm sorry, is down 74%. SolarEdge is down 78%. Now, these companies are facing mega headwinds. And the article- What do they even trade on? Do they

trade on energy prices or not? They're very sensitive to interest rates. Really? That's it? Amongst other things. Didn't they just get all these massive tax incentives to build shit? What was the Inflation Reduction Act? It had so much solar stuff in there. Here's what I know. Didn't help? When a sector is down in a 60% drawdown and you've got magazine covers like this, do you buy it today?

I don't know. I love this pitch. Will it be higher a year later? Yeah, it will be. Find a stock. Or the ETF. It will be higher a year later. I like that. I like that. Very well done. I have a mystery chart for you. John, if you please. Okay. Purple is the stock. Orange is the index. They're not necessarily related, but I'm going to shock you. They're not necessarily related. Well, it's in the index. It's in the index, but it's not a sector. It's an index. And the purple

is a financial company. You know what's interesting? I was going to say, is the orange the XLF? It is not. I'll let you take another guess. I'll give you more clues if you'd like. Okay. So is the orange discretionary? It is an index, not a sector. Oh, you keep saying that. My bad. My bad. My bad. My bad. Okay. This is an index that peaked in January 2000. Ignore the orange. I just told you the purple is a stock and it's a financial.

How many financials look like this right now? What the hell is going on? Hold on. Give me a second. So there was a massive draw. Don't get distracted by the orange. I'm looking at the purple. Can I get a clue or would it be too obvious?

I would love to give you a clue. It's a financial, but it's also in many non-financial businesses and investments. Berkshire? Very well. Very well done. Very well done. The Berkshire...

Great job, Michael. The Berkshire B shares. Did you know, this is a three-year look, and Buffett's Berkshire B. Great job, Michael. The Berkshire B shares. Did you know this is a three-year look? And Buffett's Berkshire is double the performance of the S&P 500. I thought he lost it. He still has it. In three years. Look at this.

The 99-year-olds are just crushing ass right now. And no AI. No AI necessary, quite frankly. That's pretty cool, right? Finally, Buffett catches a break. Hey, everybody. Thanks so much for watching. Did you know that tomorrow is Wednesday?

Hang on, hang on. Before you do that, with your high voice, I was watching Kevin Nealon. There was a special on Netflix where it's like, what are they celebrating? 60 years of the improv, maybe? And Kevin Nealon does a bit, and he goes, Hey, remember that time? Remember that time? And he does this hilarious...

I think I've seen him do that before. This hilarious bit of... It doesn't matter the language. He does like a... Anyway. We're going to have to leave it there. Hey, everyone. Did you know tomorrow is Wednesday, which means all new episode of Animal Spirits with Michael and Ben. Later this week on Thursday afternoon, we'll have an all new Ask the

Compound. Anything on Wednesday? Is there anything tomorrow, Josh? Animal Spirits. Smoke show. The smoke show. If you're a financial advisor, make sure you register for the smoke show. This is, I think, the pilot episode of something that's going to be highly influential in our industry. Unfortunately, it's advisors only. You can visit the reform broker.com and find details. No,

not unfortunately. If you're not an advisor, this is not for you. It's for this particular. All right, guys. Thanks so much for joining us. We'll see you at the end of the week.

We'll get all new compound and friends. week with an all-new Compound and Friends. Well done, Duncan, John, Nicole, new team Daniel. Well done, guys. Thanks so much. We will talk to you soon. Whether you're just getting started as an investor or you're managing a multimillion-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 and its representatives are properly licensed or exempt from licensure. Nothing on this podcast should be construed as and may not be used in connection with an offer to sell or solicitation of an offer to buy or hold an interest in any security or investment product. Past performance is no guarantee of future results. Investing involves risk and possible loss of principal capital. No advice may be rendered by Ritholtz Wealth Management unless a client service agreement is in place.