Animal Spirits Take Las Vegas — Podcast Summary

Date: November 15, 2025
Hosts: Michael Batnick & Ben Carlson
Location: Live at FPA (Financial Planning Association) event in Las Vegas

Episode Overview

In this lively episode, Michael Batnick and Ben Carlson bring their signature Animal Spirits energy to a room of financial planners in Las Vegas. The episode focuses on the evolving landscape of portfolio management, zeroing in on two dominant trends: the impact of Artificial Intelligence (AI) on markets, and the growing prominence of private investments like private credit. Throughout, Michael and Ben toggle between skepticism and optimism, offering a nuanced, practical perspective for advisors navigating client concerns amid market concentration, rapid innovation, and shifting investment opportunities.

Key Discussion Points

1. The AI Boom: Bubble or Paradigm Shift?

• Client Anxiety: Advisors are getting flooded with two main questions about AI:

  • "Are we in a bubble, and what should I do?"
  • "Are we underinvested if this is the next major wave?"
    (02:18)

• Market Context:

  • The S&P’s last 3-year gain is 88%—high, but not unprecedented.
  • The "AI trade" survived a major bear market (2022); fundamentals justify much of the run-up so far.
  • The hosts compare the moment to both the dot-com bubble and earlier tech booms—drawing distinctions:
    • Today’s tech giants deliver massive real profits, not just "potential."
    • AI infrastructure is capital-intensive—Meta’s new Louisiana data center alone is nearly the size of Manhattan (04:00).
    • Market cap concentration is at extremes: The 'MAG7' (top 7 tech firms) equal the rest of the S&P 500 combined in size (12:01).

  “For most of the 2010s, everything was in the cloud or software. Now it’s physical… it’s way more capital intensive.” — Michael (04:22)

• Bubble Check:

  • The “bubble” debate is unsatisfying—nobody can definitively call it in real time.
  • Market is strangely risk-on/risk-off: AI enthusiasm climbs amid aggressive Fed hiking and market unease, making this a “weird” bubble if it is one at all.

  “If this is a bubble, it’s one of the weirder ones we’ve seen.” — Ben (08:21)

• Unwinding & Risk:

  • Companies are collectively planning $1+ trillion in data center spending this decade.
  • OpenAI is cited as an example where exuberant investment ramps up expectations—if growth doesn’t materialize, watch out below (11:00).

2. Market Concentration & Fundamentals

• Mega-Cap Math: Apple’s iPhone segment alone out-earns entire Fortune 500 companies.

• Market’s current structure: owning an S&P 500 fund now means heavy tech exposure, sometimes more than clients realize (13:43).

  “If you own any type of market cap-weighted fund, you’re going to have a lot of tech exposure—whether you like it or not.” — Ben (13:43)

• AI Saved the Cycle?: The 2022 bear was "saved" by the AI play. Unlike dot-com, today’s run-up is largely justified by real earnings growth (e.g., Nvidia’s profits matching price gains).

  “The big difference between now and the dot-com bubble… the fundamentals for these companies have matched the price growth.” — Michael (14:18)

• CAPE Ratio and Valuations:
  Cyclically adjusted P/E ratios (CAPE) remain high, but comparisons are hard—as profit margins and corporate efficiency are at levels unmatched in history.

  “Corporations are so much better run today than they were in the past in terms of how efficient they are and how well they can handle shocks.” — Ben (22:37)

• Forecasting Dilemma:
  The hardest question: What’s already priced in? How fast can expectations outpace reality (Cisco/tech bubble analogy)?

  • "I do think the S&P is going to 10,000… it’s just a guess. Who knows?" — Michael (17:26)

3. Advising Clients Amid Market Mania

• Behavioral Challenges: Many clients with large, concentrated wins in big tech stocks struggle to sell on time—behavioral biases and capital gains taxes make it easy to stay too long (28:04).

  “I know I need to diversify, but it’s hard to get them to say, 'let’s hit the sell button.'” — Ben (28:04)

• Drawdown Reality: The “Magnificent Seven” stocks have seen 40–75% drawdowns, even in recent years—volatility is still real.

  “These stocks can and will get dinged… you can also see unbelievable volatility.” — Ben (30:14)

4. Private Investments: Credit & Equity

• New Asset Class… or Not?

  • Private credit is the “hottest” new thing but still small compared to total fixed income. Its appeal surged after 2022, when both stocks and bonds disappointed.
  • Rise is partly due to regulatory changes post-GFC that forced banks out, opening the door for asset managers (Blackstone, Apollo, KKR, etc.) to fill the gap (32:22).

• Sales Machine:

  • Asset managers need this to get bigger—high fees, margin growth. Massive marketing push now hitting the “wealth channel.”
  • Advisors MUST be ready for client questions—transparency is rising, and headlines stoke anxiety (“Just look at 1929!”).

  “You don’t need to be an expert, but you can’t tell them, ‘don’t worry about it’—your job is to worry. That’s why they hired you.” — Michael (35:11–36:09)

• Market Realities:

  • Private asset fundraising is slowing, suggesting some froth has cooled.
  • If more money chases alternatives, expected returns will compress—these are not “wild west” opportunities anymore.
  • Illiquidity and yield are easy to “sell” but can be dangerous if misunderstood.

  “If that’s your only criteria, well, just take the one with the highest yield. That can get you into trouble.” — Ben (34:42)

• Regulatory Advances:

  • 401(k) plans may soon include private assets—potentially a risky expansion.
  • Advisors need a clear rationale for their stance on alts, not just “no.”

Notable Quotes & Moments

• On AI’s Uncertainty:

  “When you’re in a bubble, it’s impossible to tell in the moment… There aren’t certainties like that in these environments.” — Ben (09:14)

• On Market Narratives Ending:

  “It's going to end when their narrative changes… after an earnings call where the company says, uh-oh, we weren’t expecting that.” — Michael (18:33)

• On Behavioral Dilemmas:

  “I think trying to time it—there’s more mistakes made trying to time this type of environment than just having a portfolio that’s durable enough for you to ride out whatever happens.” — Ben (30:32)

• On Private Credit Hype:

  “I don’t think that in 10 years we’re going to look back and say: holy cow, remember private credit? Wasn’t that crazy?” — Michael (30:50)

• On Advisor Communication:

  “We wanted to be as transparent as possible… clients can just talk more about their financial plans and what’s going on with their own circumstances and their lives than the headlines.” — Ben (43:32)

Key Timestamps

• AI investing climate and client questions: 02:18–06:05
• Capital spending by tech giants and market comparisons: 06:28–08:21
• Bubble vs. new normal debate: 08:21–11:00
• Tech concentration & MAG7 significance: 12:01–13:43
• How fundamentals compare to dot-com bubble: 14:18–15:24
• Discussion of profit margins, CAPE ratio: 21:12–23:56
• Private credit and private investments breakdown: 31:08–43:09
• Advisors' communication and transparency strategies: 43:32–44:53

Tone & Style

Michael and Ben keep the tone energetic, witty, and relatable—peppering in self-deprecating jokes about "hedging" ("Grand Rapids hedge"), Las Vegas outcomes, and the contradictions of modern investing. Their approach is skeptical but open-minded, coaching financial planners to balance realism with clear communication, patience, and humility.

Useful for Advisors

• Client Communication: Be proactive, transparent, and nuanced—clients need context and education, not just product pitches.
• Portfolio Construction: Expect market concentration and AI enthusiasm to remain challenging and evident in client portfolios; behavioral coaching is critical.
• Alternatives Education: Don’t ignore alts—understand enough to answer questions and construct a rationale for your approach, even if that approach is “pass.”
• Risk & Return: Remind clients that volatility still applies—even to the hottest names—and that nothing is truly without tradeoffs.

This episode serves not just as a market commentary, but a practical field guide for advisors helping clients through hype cycles, big new ideas, and the ever-evolving risk/return calculus in today’s market.