Summary of "A 25 Year Bull Market" (EP. 420) – Animal Spirits Podcast

Release Date: July 9, 2025
Hosts: Michael Batnick and Ben Carlson
Podcast: Animal Spirits Podcast by The Compound

Overview

In this engaging episode of the Animal Spirits Podcast, hosts Michael Batnick and Ben Carlson delve deep into the dynamics of the current bull market, exploring its longevity, the factors fueling it, and potential future challenges. They intertwine discussions on market behavior, the impact of technological advancements like AI, regulatory changes, and socio-economic trends affecting young professionals. Additionally, the hosts touch upon lifestyle shifts, government policies, and even share personal anecdotes about movies, offering listeners a comprehensive view of the intertwined nature of markets and daily life.

The Current Bull Market: A 25-Year Phenomenon

V-Shaped Recoveries and Market Symmetry

Michael opens the discussion by highlighting the rapid recovery of the stock market to all-time highs after declines of at least 15%, emphasizing that 2025 stands out as the fastest rebound:

Michael Batnick [04:54]: "The Wall Street Journal has this great chart showing the quickest recoveries to an all-time high following a decline of at least 15%. And by golly, Ms. Molly, is this number one."

Ben concurs, citing the increasing speed of recoveries over the years:

Ben Carlson [04:57]: "Getting faster. I've been saying this for years."

They analyze the symmetry between the duration of market declines and subsequent recoveries, noting that longer bear markets typically lead to longer recoveries. However, they observe that recent instances, such as those in 2020 and 2025, have deviated from this pattern with swift V-shaped rebounds. Michael attributes these anomalies to unprecedented monetary and fiscal stimuli, as well as unique policy impacts.

The Possibility of a 25-Year Bull Market

Ben proposes that the current bull market could extend to 25 years, drawing parallels with historical long-term bull markets like the post-World War II era:

Ben Carlson [10:11]: "I think it's possible we could just be on like a 25-year bull market."

Michael supports this by suggesting that innovations like AI, specifically referencing ChatGPT's emergence, have injected new momentum into the market, potentially prolonging the bull run:

Michael Batnick [11:16]: "If ChatGPT did not come out in November '22 to save the day, you could make the case that the bear market would have ended, the secular market would have ended, and this gave it a second set of legs."

They acknowledge the role of continuous economic interventions in sustaining the bull market but remain cautious about potential shifts should future bear markets adopt more traditional recession-driven declines.

Financial Market Insights

Concentration in Mega-Cap Tech Stocks and Diversification Strategies

Michael discusses the dominance of mega-cap tech companies in the bull market and the resulting concentration of equity compensation among employees:

Michael Batnick [00:43]: "One of the defining features of those companies is the way that they compensate and employ their employees is through equity compensation."

Ben emphasizes the low-cost basis of these concentrated positions, leading to significant individual stock holdings. To address diversification challenges, Michael introduces Cash Financials' Cash Exchange Fund, designed to help investors diversify their concentrated holdings with lower fees and modern features:

Michael Batnick [01:00]: "They started with the NASDAQ 100 focused exchange fund... They're at $500 million in assets, which is pretty wild."

Vanguard's Foray into Private Markets

The hosts examine Vanguard's strategic move into private markets, traditionally dominated by high-fee private equity firms:

Ben Carlson [47:03]: "Vanguard will pull everyone else kicking screaming to their level or close to it."

Michael highlights that Vanguard's entry could pressure existing private market firms to lower fees, benefiting end investors seeking lower-cost alternatives:

Michael Batnick [47:28]: "All right. Good one. From Verdad Capital..."

They discuss the potential implications for private equity and the broader investment landscape, pondering whether firms like Vanguard can maintain their low-cost philosophy in more complex investment arenas.

The U.S. Dollar and Currency Dynamics

Decline of the Dollar and Reserve Currency Status

Torsten Slok's analysis of the U.S. dollar is a focal point, with Michael presenting charts illustrating the dollar's decline:

Ben Carlson [20:38]: "It's like right now, what. And then he's got this great one."

They discuss the dollar's continued dominance in global transactions, noting its substantial share:

Michael Batnick [20:56]: "The FX transaction volume, the dollar is 88% of it."

Ben raises concerns about the dollar losing its reserve currency status and speculates on potential alternatives, dismissing options like Bitcoin and the Euro:

Ben Carlson [21:06]: "So something that always makes people really mad is the government debt stuff."

Government Debt and Tax Policy

The conversation shifts to government debt, with Ben critiquing the continuous cycle of tax cuts despite rising deficits:

Ben Carlson [22:00]: "But for some reason, I think rich people are like a deity to certain segments of the population."

Michael underscores the political challenges in addressing fiscal responsibility:

Michael Batnick [22:44]: "Well, neither party is motivated by it because under every presidential term, the deficit gets wider and wider."

They express skepticism about meaningful policy changes to curb government debt, highlighting the disconnect between public discourse and actual legislative action.

Workforce, AI, and Economic Trends

Employment Challenges for Young Professionals

The hosts address concerns about the job market for recent college graduates, referencing emails from a college professor and data on military recruitment:

Ben Carlson [25:01]: "Maybe someone out there knows better, but this seems to be a very strong recession indicator."

Michael counters by suggesting that data might reflect a transition from a historically hot job market rather than an immediate crisis:

Michael Batnick [25:23]: "I'm going to reject that."

Ben points to low unemployment rates among young workers as evidence that the market remains robust:

Ben Carlson [25:23]: "We're all working off an insanely hot job market..."

The Impact of AI on Employment

They explore the potential long-term effects of AI and deregulation on job markets, cautioning about increased volatility and the emergence of new financial products:

Ben Carlson [15:00]: "We're entering the wild, wild west for the at least for the foreseeable future."

Michael underscores the uncertainty surrounding AI's role in future economic disruptions, relating it to past financial crises driven by unforeseen factors.

Lifestyle Shifts and Economic Observations

Changing Household Expenditures

Michael presents a chart illustrating shifts in U.S. household spending over the past century, noting significant changes in categories like healthcare and housing:

Michael Batnick [30:00]: "Americans now spend more on healthcare than groceries, on housing."

Ben elaborates, discussing how goods once considered luxuries have become necessities, driving up living costs:

Ben Carlson [34:03]: "Think about all this stuff we have to spend on now that people did in the past."

Generational Savings Habits

The hosts touch upon the saving behaviors of Gen Z, citing a story from the New York Times about a 23-year-old teacher diligently contributing to her retirement fund:

Ben Carlson [50:00]: "Brinley Beckman is 23... she contributes 3% of her salary to an employee-sponsored retirement fund."

They contrast this with Gen Z men, who are more inclined towards speculative investments like Robinhood accounts, potentially leading to differing financial outcomes.

Real Estate Market Challenges

High Mortgage Rates and Homeowner Struggles

Michael and Ben discuss the prolonged period of elevated mortgage rates and its impact on homeowners, using the example of Sean and Jennifer Glocker from Florida who face difficulties refinancing:

Michael Batnick [39:48]: "They can't refinance, so they're not carrying it any longer."

Ben highlights Cape Coral, Florida, as the worst housing market in America, with home prices tumbling 11% over two years:

Ben Carlson [45:28]: "They say home prices in that area have tumbled 11% in two years, the most of any major metro area."

Supply and Demand Dynamics

Despite declines in prices, Michael notes that the fundamental imbalance between supply and demand remains, driven by demographic trends:

Michael Batnick [45:37]: "There's just more demand than supply. And it is a demographic story. And that's not cyclical."

Ben suggests that housing markets are less sensitive to rate fluctuations if demand remains robust:

Ben Carlson [40:22]: "That's why even, like I said last week, even if housing prices fell, I wouldn't be worried at all because all it's going to take is for rates to fall for demand to come back."

They caution homeowners against gambling on falling mortgage rates to sustain their living situations, emphasizing financial prudence.

Government Policies and Consumer Impact

Tariffs and Their Repercussions

The discussion shifts to recent tariff updates, with Michael dismissing their long-term impact on the market:

Michael Batnick [37:17]: "I don't care market doesn't care."

Ben shares a consumer's perspective on increased tariffs affecting everyday purchases, like green tea from China:

Ben Carlson [37:44]: "They said, here's the price. But then in the end, it's an additional... showing it as a tax."

They debate the effectiveness of such measures in balancing trade and consumer costs, with Michael ultimately expressing indifference towards market reactions.

Progressive Policies and Personal Narratives

Michael shares a personal story about considering purchasing a dream home despite financial impracticalities, reflecting on the tension between financial logic and personal fulfillment:

Michael Batnick [42:14]: "So life is not a spreadsheet. So I'm gonna make an... decision based on more than just numbers."

Ben reinforces this by highlighting the psychological value of assets like waterfront properties:

Ben Carlson [43:42]: "Honestly, as a personal finance, I sign off on this transaction because water gives you a premium to your life."

Cultural Commentary and Personal Anecdotes

Reflections on Modern Life versus the Past

Michael and Ben explore societal perceptions of abundance, comparing past frugality to today's consumer-driven mindset. They reference tweets and historical data showing shifts in consumption patterns:

Michael Batnick [29:42]: "All right, so I am fully aligned with the fact... maybe we don't spend enough time highlighting how relatively good we have it."

Ben adds context by discussing how necessities have evolved, making modern life more expensive despite technological advancements:

Ben Carlson [34:03]: "Kids activities... Think how much more money we spend on our kids' subscriptions."

Movie Reviews and Personal Experiences

Towards the episode's end, the hosts share their experiences with recent movie releases, providing a lighter respite from economic discussions. Michael recounts his disillusionment with recent Jurassic World installments and Clown in a Cornfield, while Ben praises How to Train Your Dragon live-action adaptation.

Michael Batnick [57:07]: "I don't think I ever saw 'Ancient'... It just sucked."

Ben Carlson [62:21]: "My kids loved it. It was a very good movie."

These anecdotes serve to humanize the hosts and offer listeners relatable content amidst complex financial topics.

Conclusion

In this episode, Michael Batnick and Ben Carlson provide a multifaceted analysis of the enduring bull market, interwoven with insights into regulatory impacts, technological advancements, and socio-economic trends. They balance technical financial discussions with personal stories and cultural commentary, delivering a rich and engaging narrative that highlights both the opportunities and challenges in today's economic landscape.

Listeners gain a deeper understanding of market dynamics, the influence of AI and private equity, the complexities of government policies, and the evolving nature of household expenditures. The episode underscores the importance of diversification, financial prudence, and maintaining a balance between economic logic and personal fulfillment.

Notable Quotes:

• Michael Batnick [04:54]: "The Wall Street Journal has this great chart showing the quickest recoveries to an all-time high following a decline of at least 15%."

• Ben Carlson [10:11]: "I think it's possible we could just be on like a 25-year bull market."

• Ben Carlson [21:06]: "So something that always makes people really mad is the government debt stuff."

• Michael Batnick [29:42]: "This is also a defining story of our time. It's obviously a factor of inflation and..."

• Ben Carlson [34:03]: "Think about all this stuff we have to spend on now that people did in the past."

• Michael Batnick [42:14]: "So if you run the numbers and you go, I can afford this monthly payment even though I'm gonna have to Stop doing this, it's worth it for me. That's a trade-off."

For more insights and discussions on markets, life, and investing, subscribe to the Animal Spirits Podcast.