Animal Spirits Podcast: "Buy the Porsche" (EP. 426)

Date: August 20, 2025
Hosts: Michael Batnick & Ben Carlson
Podcast Theme: Markets, Life, and Investing

Episode Overview

In this episode of Animal Spirits, Michael and Ben explore the challenges of covering markets during a “boring” but surreal post-COVID period where everything seems to be running on autopilot, especially with AI-driven hype, lopsided stock returns, and an unrelenting housing problem. They dig into the cyclical market narratives, real-world economic adjustments, the pressures and opportunities created by AI—both for investments and jobs—and the philosophy of personal money decisions, humorously captured in the "should I buy a Porsche?" discussion. The episode delivers candid takes, playful banter, and solid data with a mix of actionable insights and self-aware skepticism.

Key Discussion Points and Insights

1. Market Malaise & Cycles: Boredom and Uncertainty

Timestamps: 01:29 – 04:51

• Ben confesses market boredom, noting “it’s been like a slow, steady grind higher,” and laments the repetition in market narratives, wishing they could “fast forward and just like check back in three years” to see what played out (02:05).
• The AI boom is identified as the dominant “kernel of truth” that has investors overexcited; Michael references Sam Altman's quote:

  “When bubbles happen, smart people get overexcited about a kernel of truth.” (04:51)

• They consider that all discussions—AI, housing, big tech—seem stuck on repeat, with little true resolution.

2. AI, Market Hype, and Investor Behavior

Timestamps: 04:51 – 08:38

• A candid assessment: the AI excitement is warranted but probably overdone ("Is AI the most important thing to happen in a very long time? ...yes. Are people overexcited? Yes," Michael at 04:51).
• Referencing Howard Marks’ memo and the dot-com bubble, they stress it’s pointless to try and time market shifts or short a bull market (“...do not short a bull market ever if we're using the dot com analog…” Ben at 07:09).
• Contemplate outcomes: AI could change the world even if stock prices crash; the “hilarious” possibility is if AI delivers economically, but tech stocks run flat or lose value for years.

3. Market Structure, Earnings, Buybacks, and Small Caps

Timestamps: 08:44 – 18:24

• Discuss why the stock market continues rising: strong earnings, reduced tariff uncertainty, contained inflation, the Fed poised to cut (08:44–09:08).
• Record S&P 500 earnings and revenue beats, substantial buybacks led by Apple, and whether buyback cash should flow into new investments instead (10:39).
• The Mag 7 stocks cycle in and out: now outperforming again after lagging earlier in 2025 (12:09–12:37).
• Small caps are declared “not dead,” with discussions about cyclical outperformance and the challenge of being a contrarian in a TINA (There Is No Alternative) market (14:13–16:18).

4. Healthcare, Contrarianism, and Risk Appetite

Timestamps: 16:18 – 18:49

• Healthcare stocks underperformance is explored: once on par with tech but now shunned, presenting potential for contrarians (“...this sector is pricing in a lot of bad news,” Michael at 16:18).
• Question whether the rise of “perma-contrarians” is over—most have been burned out by the persistent bull market and high risk appetite, which likely takes more than a 30% drop to break.

5. K-Shaped Economy and Consumption Splits

Timestamps: 20:08 – 24:21

• Fast food vs. sit-down restaurant sales signal bifurcated consumer health; higher earners keep spending while lower-income groups cut back (“...top 20% are still spending way more and the bottom 20 or 40% are cutting back,” Michael at 20:56).
• Wage growth data normalized: pandemic-driven wage spikes are stabilizing, but a higher base remains for lower earners (“...it’s just things normalizing,” Michael at 24:16).

6. Tariffs and Business Absorption

Timestamps: 24:21 – 25:54

• Most tariff costs so far have been absorbed by US businesses rather than passed directly to consumers (24:50), but this is expected to shift soon. Speculate on carve-outs for companies like Nvidia and Apple.

7. AI, Entry-Level Jobs, and Job Displacement

Timestamps: 25:56 – 29:15

• Share an email from a young analyst let go as AI outpaces his value, reflecting anxiety about white-collar job replacement.
• Ben:

  “I can't go to the place where AI is going to take all your jobs. I don't think it's productive. ...But...the entry level jobs, that does worry me.” (27:46)

• Advice for newcomers: avoid grunt work—AI will replace it. Focus on creativity, communication, and value-added skills:

  “If you're going into a role that you know can be replaced by a computer, then it will. And don't do that.” (28:59)

8. Crypto Brief: Selling & Emotional Management

Timestamps: 29:15 – 35:37

• Michael and Ben trimmed their crypto positions, citing both the need to rebalance portfolios and discomfort with outsized allocations (31:47–32:27).
• The Michael Saylor/MicroStrategy play is discussed—Saylor’s massive Bitcoin buy-ins, funded by smart money, are not as leveraged as some think (34:24–35:32).
• Reminder: Bitcoin and crypto are still risk assets correlated with tech, not safe havens—“If the AI trade unwinds…Bitcoin will get hit too.” (35:32)

9. Housing & Real Estate Perplexity

Timestamps: 35:37 – 41:59

• Housing affordability crisis continues, with rent rising and home buying stagnating; no end in sight to the “every week, same story” fatigue (36:16–36:35).
• Surging “million-dollar homes” now more common, even in Midwest markets, altering expectations permanently:

  “$1 million is starting to become more normal for the price of a house. Even in an area like west Michigan, which is crazy.” (39:45)

• Housing compared to Bitcoin: both are supply-constrained assets in demand, now “just the new level”—get used to it (40:21–41:09).

10. Generational Mindset: Money, Spending, and Life Decisions

Timestamps: 42:01 – 43:42

• Debating whether to “buy the Porsche”—a listener question sparks a philosophical discussion about spending on life’s pleasures vs. sticking to frugality:

  “You're gonna die. Enjoy yourself.” (Ben, 42:28) “But those are the two extremes…I'm on your side. Trust me.” (Michael, 42:52)

11. Younger Generation Realities: Depression & Social Media

Timestamps: 43:43 – 45:30

• Question the “data” that today’s youth are universally lonely/depressed, observing contradictory evidence in their own families and gyms.

  “I choose to focus on, no, the world isn’t ending. Everybody’s depressed. I just don’t buy that…” (Ben, 45:28)

• Stress young people’s dual online/in-person identities and how social media distorts perceptions.

12. Too Much Money Everywhere

Timestamps: 45:30 – 46:25

• Explosive IRA asset growth to $17 trillion since the pandemic, teeing up future regulatory issues and the “Wild West” of investing post-retirement (45:30–46:22).

13. Cultural & Fun Segments

Timestamps: 46:25 – end

• Quick hits on streaming (YouTube bidding for the Oscars, “Happy Gilmore 2” on Netflix), bucket hats and Crocs, the deep disappointment with uncomfortable Jordans, sports nostalgia, and the enduring value of old-school coaches and role models.

Notable Quotes & Memorable Moments

• On Stock Market Boredom:

  “I wish we could fast forward and just like check back in three years...we know it's all riding on AI.”
  — Ben Carlson (02:24)

• On AI Excitement:

  “Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes. Is AI the most important thing to happen in a very long time? My opinion is also yes.”
  — Michael Batnick (04:51)

• On Market and Bubble Timing:

  “Do not short a bull market ever if we're using the dot com analog.”
  — Ben Carlson (07:09)

• On the Porsche Dilemma:

  “You're gonna die. Enjoy yourself.”
  — Ben Carlson (42:28)

• On Entry-Level Job Survival in the Age of AI:

  “If you're going into a role that you know can be replaced by a computer, then it will. And don't do that.”
  — Ben Carlson (28:59)

• On Entry-Level Crypto Profit-taking:

  “...as a percentage of net worth it was just getting too high and I needed to rebalance my personal balance sheet.”
  — Michael Batnick (32:20)

• On Housing-Affordability Fatigue:

  “Aren't you over it? Yeah, we know people aren't moving. Houses are too expensive...I have nothing else to say.”
  — Ben Carlson (36:17)

Timestamps for Important Segments

• Market boredom & AI cycle: 01:29 – 08:38
• Stock performance, buybacks, small caps: 08:44 – 18:24
• Healthcare stocks & contrarianism: 16:18 – 18:49
• K-shaped economy / wage normalization: 20:08 – 24:21
• AI threatens analyst jobs: 25:56 – 29:15
• Crypto position rebalancing: 29:15 – 35:37
• Housing crisis & million-dollar homes: 35:37 – 41:59
• Buy the Porsche debate: 42:01 – 43:42
• Younger generation and mood: 43:43 – 45:30

Closing Thoughts

The episode captures the spirit of the present investing landscape: lots of questions, not enough satisfying answers, and a sense that “normal” has shifted permanently in ways that have both freed and haunted investors. Realism, humor, skepticism, and practicality blend in the hosts’ conversations, making this an engaging listen for investors and market watchers—especially those torn between “save and grind” and “enjoy it while you’ve got it.”

Contact: animalspirits@thecompoundnews.com
Learn More: Animal Spirits Podcast