Did the Market Just Top? (EP. 434)

Summary

Animal Spirits Podcast: Did the Market Just Top? (EP. 434)

Date: October 15, 2025
Hosts: Michael Batnick and Ben Carlson
Theme: The episode explores the perennial question of whether the market has just hit a peak. Michael and Ben break down the dangers of market timing, look at recent volatility, explore arguments around "bubbles" in tech and AI, discuss wealth inequality, the “investor class,” market sentiment, and the role of leveraged ETFs and private credit. They wrap with assorted cultural and personal recommendations, maintaining their trademark blend of accessible expertise and irreverence.

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Main Theme and Purpose

The episode centers on whether the recent downturn marks the top for markets or just another blip. Michael and Ben walk through their analytical process, stress the unpredictability of market peaks, debate bubble narratives, and reflect on long-term shifts in investor behavior. Along the way, broader themes like earnings, concentration in large-cap stocks, wealth inequality, and changing investment trends take center stage.

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Key Discussion Points & Insights

1. Can Anyone Really Call the Top?

• On the Futility of Top-Calling:
  Ben: “People are going to try to call the top. I don’t think anyone’s going to be able to do it. If they do, they’re just going to be lucky.” (02:37)
• Past Examples and Counterpoints:
  Michael brings up Michael Burry's 2005–06 bearishness—spot-on, but atypical and different from trying to call a broad market top.

2. Market Valuations and Earnings Matter Most

• Valuations Alone Aren’t Sufficient:
  Ben references a forward PE chart from the dot-com era to show that valuations can look “peaked” many times before the actual top.
• Earnings Surprises Drive Bear Markets:
  Michael: “Bear markets happen when the projected earnings are way higher than what actually happens… If you give me one indicator for the future, it’s where do earnings come in relative to where people think earnings are going to be?” (06:51)
• Timing of Market/Earnings Peaks:
  Ben: “History shows the stock market is not very good at predicting tops in earnings.” (07:45)

3. Volatility and Complacency

• Recent Calm and Abrupt Moves:
  Michael notes 33 straight days of S&P 500 trading in a 1% range before the Friday drop.
  Ben: “It’s been frankly way too easy since April. We hadn’t even had a 3% drawdown until now.” (08:34)

4. Market Concentration and the ‘AI Bubble’

• Concentration is Typical of Bull Runs:
  Market cap weight of the top 10% of US stocks at all-time highs. Ben and Michael reference Mobison’s work showing concentrations increase in bull markets.
• Are We in a Bubble?
  Ben, on tech valuations: “These companies are just bigger and better than companies in the past. That’s it.” (19:48)
• Comparison with History:
  Michael: “Valuations today compared to the tech bubble, Japan bubble, Nifty 50—they’re way lower. But today’s giants dwarf prior bubbles in size.” (19:44)

5. Wealth Inequality & the Expanding Investor Class

• Stock Market Participation Rising:
  Ben: “A majority of low earners have an investment account… More young and low-income Americans are investing than ever before.” (24:47)
• Debates on Inequality:
  Michael: “Wealth inequality will never be better than it is today because of compound interest… But more importantly, the absolute level of wealth for the bottom X percent matters most.” (26:35)

6. Leverage, ETFs, and Risk Appetite

• Rising Use of Leverage:
  • 25% of new ETFs over the last six months involve leverage.
    Ben: “This is why people need a slap on the wrist—a little more than a Friday flush eventually.” (32:13)
• Degenerate Themes Outperforming:
  Retail-heavy, “degen” stocks (memes, speculative tech) crushing professional strategies.

7. Cash on the Sidelines: A Fallacy

• Context Matters:
  Money market fund levels are high, but as a percent of market cap, they're not rising.
• Household Health:
  Ben: “Households have a dollar in cash for every dollar of debt—the most deleveraged since the early 1990s.” (38:21)

8. Private Credit & Alternative Investing

• Skepticism about Systemic Risk:
  Michael: “I don’t think private credit is a bubble...there will be more blowups as it grows, but it’s not systemic.” (50:49)

9. Crypto & Leverage Blowups

• Extreme Leverage Amplifies Volatility:
  Massive crypto liquidations occurred on a single risk-off day.
  Ben: “There was literally one down day in the stock market and it evaporated crypto.” (47:58)
• Lessons in Speculation:
  Michael: “If you make millions on 50x leverage, you can go to zero on the same thing.” (49:06)

10. Household Wealth: House Rich, Cash Poor

• Rise in “Millionaires” Driven by Real Estate
  Many recent millionaires are “house rich,” with wealth tied up in illiquid assets.

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Notable Quotes & Memorable Moments

• On Calling the Market Top:
  Ben: “If you've been saying it for 24 months, then get out of here.” (03:01)
• Bubble Skepticism:
  Michael: “This idea that there's going to be an 80% washout and these stocks won't recover—I view that as highly unlikely, actually.” (22:10)
• On Wealth Inequality:
  Michael: “If Elon Musk sold all his stock and set it on fire, inequality would go down, but it wouldn’t make anyone’s life better.” (26:35)
• On the Accessibility of Investing:
  Ben: “People who don't make a lot of money have the ability to invest in multi-trillion dollar corporations...It's a miracle.” (27:41)
• Leverage Mania:
  Ben: “People really want this stuff, huh? See, this is why people need a slap on the wrist...a little more than a Friday flush eventually.” (32:13)
• On Crypto Leverage:
  Michael: “You're using 50x leverage on crypto—I mean, come on, use your head.” (50:05)
• Market Participation Expanding:
  Ben: “There are way more people invested in the stock market. Among newer investors, 45% has put $5,000 or more into their accounts.” (24:47)

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Timestamps for Important Segments

• 02:22 – The futility of trying to call market tops
• 04:33 – Why forward PE ratios don't tell the whole story
• 06:51 – Earnings' primacy in market direction
• 08:45 – Recent calm and sudden market drops
• 12:14 – Market concentration and its historical context
• 18:19 – US dominance in global corporate scale
• 19:44 – Tech, AI, “bubble” talk, and company size
• 24:47 – Stock market participation among low-income/young households
• 32:13 – Leverage and speculative ETFs
• 37:20 – “Cash on the sidelines” fallacy explained
• 38:21 – Household balance sheets and resilience
• 47:23 – Crypto’s leveraged unwinding
• 50:49 – Thoughts on private credit and risk
• 53:09 – Private vs. public company revenue comparison
• 57:34 – Hollywood’s struggles & flop “Tron” movie example
• 58:37 – Discussions of phone/social media addiction and solutions
• 62:13 – Abnormal Returns’ 20th anniversary shout-out
• 63:13 – Book & show recommendations

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Recommendations & Culture

• Book:
  Both hosts recommend Breakneck by Dan Wang—on US/China competitiveness, lawyers vs. engineers, and the contours of progress. (63:13–65:49)
• Shows:
  Ben shouts out The Lowdown (Hulu, with Ethan Hawke), Michael lauds Black Rabbit and talks horror movie favorites (67:16).
• Personal:
  Michael tries a “brick” device to restrict phone/social media use; both reflect on Twitter addiction and the importance of being present with family instead of “doomscrolling.” (59:04)

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Tone & Speaker Dynamic

• Accessible, Irreverent, and Data-Driven:
  The hosts balance technical analysis, intuition, and market history while trading light jabs and self-deprecating asides.
• Critical but Positive:
  They challenge negative narratives about wealth inequality and bubble-mania without dismissing real dangers.
• Quotable & Conversational:
  Recurring segments like “no crying in the casino,” slap-on-the-wrist warnings, and debates over semantics (e.g., “when does a bull market start?”) keep things lively.

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Conclusion

Did the market just top? The answer, as Michael and Ben frame it, is always colored by hindsight. Instead of obsessing over calling turning points, they urge listeners to focus on earnings, think historically, ignore maximalists and perma-bears, and appreciate that new market participants and resilient households are positive secular trends. Bubbles may or may not be at hand—but, as always, the future belongs to pragmatic, long-term investors.

Transcript

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Not representative of all clients and not a guarantee. Investment Advisory Services offered by Stash Investments llc, an SEC registered Investment Advisor. Investing involves risk offer is subject to tncs welcome to Animal Spirits A About markets, life and Investing Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing and watching. All opinions expressed by Michael and Ben are solely their own opinion 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.

[A]

Welcome to Animal Spirits with Michael and Ben, you wrote a post last week, some bubble questions. Did I grab the right post? Is this the top? Okay, maybe it is. When did you write this? Was this, was this prior to Friday?

[B]

I think I wrote this Friday. And you know you have one bad day in the stock market and you feel like, oh, I need to change my whole thesis. But I think it's still. We talked last week about the melt up and I just. My whole thesis here is I don't think anyone's. People are going to try to call the top. I don't think anyone's going to be able to do it. That's, that's the, where I stand on this. And if they do, they're just going to be lucky.

[A]

Well yeah, somebody will call the top. But.

[B]

Right, but everyone keeps trying to do it over and over again and I don't think you can. If you've been saying it for 24 months, then get out of here.

[A]

Well, counterpoint, I generally agree, but people were bearish in 05 06. Michael Burry famously was very early and very. Right.

[B]

Yeah, but I think that's a little different. That was like calling the, the housing market to crash. And I think if you're saying, listen, AI bubble is going to crash someday. Like everyone has been saying that no one can take credit for that anymore. Everyone said, everyone said it. So it's. No one said it.

[A]

Well how about this? We discussed this last week and we'll do it later in the show. Calling your shot. Who cares?

[B]

Right?

[A]

Like it's very easy to say this is the top without any repercussions.

[B]

Right. Is anybody saying it over and over again?

[A]

Right, but the, but like making money. That's what we're talking about here. Is anybody going to successfully nail the top? And actually.

[B]

Okay, that's the good point. Yes, that's the. Are you going to pull the John Paulson and actually profit from this?

[A]

Right. So I don't think the market, I don't think the market will allow that for, for too many people. Again, get to that later in the show. But the chart that I pulled out. Ben, why did you choose the forward PE ratio? Because I guess you're saying like evaluation is your thesis. Things are overvalued.

[B]

So chart kid Matt did this for me. I said hey, I'm thinking about writing a post on picking the top. And he said, how about this? He said, look at how many times it looked like valuations had peaked during the dot com bubble. Cause they rolled over and they came back up and they Rolled. And part of this is just the market rolling over. Right, but the point is how many people thought that that was the top every time valuations rolled over.

[A]

Yeah.

[B]

And then they kept moving higher.

[A]

Yeah. Okay, so here's, here's what I took away from this. I'm looking at. You have a table in here showing the bare market since 1990. And at the peak in 2000, at the March peak, the forward PE was only 22 times. Got me thinking. Well, yeah, the forward PE was a bit elevated, but it was wrong because the E fell out through the basement. So I had chart kid make me a chart which showed what is the forward 12 month EPS versus the actual EPS. And you could see the bear markets happen when the earnings are way higher, when the projected earnings are way higher than what actually happens. You saw this obviously in the dot com bubble. You saw this in the GFC. You saw this in 2020, quick as it was. And that's all that matters here. So I don't, I don't care how high the forward PE gets now. @ some point, it matters when it matters. And the higher you get, the less margin you have, the worse the downside is. But it doesn't matter until earnings actually disappoint.

[B]

Right. So that's a good chart because it shows that most of the time estimated earnings and actual earnings are right in line with one another. And you're right, it's when people get ahead of each other. And as we talked about last week, the earnings are going to roll over almost concurrently with the stock market. So to your point, you have to almost wait for the earnings to roll over before you start. No, no, no.

[A]

The stock market will, will roll. Will go first.

[B]

Remember our chart last week showing that they basically happen within days of each other?

[A]

Really?

[B]

Yes. I'll, I'll put the chart in for. You made this for me. Keep talking, I'll find it.

[A]

No, no, but, but the point is. But you get earning. You only get earnings four times a year, Right. There's four seasons. So I'm saying that whatever. That by the time the earnings rear. Rear their ugly head, the stock market will have rolled over. Not always, but anyway, the point is. The point is this where a lot of talk about, is this the top? Is this the top? And again, maybe it is, maybe it isn't. But earnings, that's it. That's all that matters. If I give me one indicator for the future, it is where do earnings come in relative to where do people think earnings are going to be?

[B]

Um, look at the Chart I just put in there. Remember this from last week? You must not be paying attention. It shows that earnings in price essentially top at the same time they were within.

[A]

Wait, hold on. This is, this is. There's two examples here. This is 2007 and 2019.

[B]

Yeah, these are examples. But it, but every time in history it's like this where the earnings. And we, we did an aggregate as well. But these are just examples to show it's within like 12 and 20 days for the last two big crashes that earnings in.

[A]

I need, I need to, I need to, I need to zoom in because.

[B]

The point is that the stock market is not going to front run this.

[A]

Well, how about this? I agree with you.

[B]

It's going to wait until it sees earnings, it goes down. Like you. You're saying.

[A]

I'm not, I'm not saying that it's going to front run it by 180 days. I'm just saying, let's say that the market rolls over in February and we start to get earnings in April. That's all I'm talking about. You're gonna have like a 50 day window. Close enough, close enough.

[B]

I'm saying history shows the stock market is not very good at predicting tops in earnings.

[A]

Okay.

[B]

That's what the data shows.

[A]

I know, I'm just. My point is I wonder how this EPS is calculated because you're using a daily series for the price. This EPS is not a daily series, Ben. That's what I'm saying. The. The EPS is smoothed out. Right. There's a time this match. That's all I'm saying.

[B]

But I get what you're saying.

[A]

Close enough.

[B]

Yeah.

[A]

I had this in the doc for our conversation with Scott nations that we didn't get to. And it's not to suggest that like I was calling for Friday by any stretch of the imagination, but the chart was this. The market has been very calm and so Friday's hiccup, which obviously we'll get to in a second, you know, things come out of nowhere, happen all happens all the time.

[B]

Yeah, it's been, it's been frankly way too easy since April.

[A]

Yes.

[B]

We hadn't had, we hadn't even had a 3% down cycle. We had the 3% down day on Friday. We hadn't had a 3% drawdown at all since April.

[A]

So Matt made a chart. The number of days in a row where The S&P 500 has stayed within a 1% trading range. So just really boring stuff. It's been 33 straight days the last Time we had a stretch like that was 2020, huh?

[B]

Oh yeah, probably after the crash.

[A]

Yeah, but those are wild times.

[B]

No, but if you remember after it, once the summer hit and started going, we didn't have. It was just a slow methodical move higher, like big chunks.

[A]

Okay. Anyway, to your point about the 3% decline. So Warren Pies, this is just delicious for the eyeballs. The market was stretched only the seventh 119 day stretch without a 3% pullback. So he plots all the previous ones and the strongest ever. So what, what was the market up? I can't say. It doesn't matter. 119 days without a 3% pullback. So people got complacent. Whatever, whatever. Friday Trump tweeted something about 100% tariffs on China. Bespoke has a chart showing sometimes the.

[B]

Stock market and investors are looking for an excuse to sell. Yeah, that's what Friday felt like to me. Yeah, like okay, this time let's, let's sell a little bit.

[A]

Yeah. Maybe, maybe take some risk off the table. Nasdaq hits a 52 week high and then finishes the day down more than 2% from that high. So it's happened plenty times. I don't know. Looks like around 20 over the past 35 years was at the top. I don't know. It's happened, it happened a million times in the run up to the dot com bubble. It happened in the recovery. It did happen at the peak of the GFC. But then over the last 10 years which has been, you know, pretty much up to the right few, obviously few bear markets in between.

[B]

Throw these words in my face. There's no way that was the top.

[A]

Well, how about this? Although it's one's going to get, it's.

[B]

Going to get crazier.

[A]

I agree. It looks like there was, there was, there was 10 of these, give or take, just eyeballing this in the last 10 years, one of them happened at the top.

[B]

I mean Even in the 90s there was a few corrections along the way, but.

[A]

So everything fell on. On Friday we had 424 stocks in the S and P that were down most decliners since July. What happens next week, next month, next quarter, who the hell knows.

[B]

But little slap on the wrist, it was necessary. Even if a little 7, 10% flush here would be perfectly within the realm of like reasonable. We, we deserve it after.

[A]

I love that we even have to say that out loud. A 7% decline would be normal. Yeah, obviously.

[B]

It just seemed pretty easy there for a while. Can we talk about The AI bubble now.

[A]

Sure, let's do it. It's been. It's been 13 minutes.

[B]

There's nothing else to say about it, though, at this point. So let's, let's move on. We don't need to talk about it. Let's talk about wealth in quality.

[A]

There's still some new stuff.

[B]

All right, where did you get this chart from about market cap weights? Because to me, this, this shows.

[A]

This is great. I had never seen it like this. It goes back to the auger and 30s auger infinity. Can't remember who tweeted it, but they're showing. So the charts that you usually show to. To demonstrate market concentration are like the top five stocks, the top 10 stocks, whatever. This is showing the market cap weight of the top 10% of largest US stocks and credit to them. This is really great.

[B]

Oh, okay, I read this wrong. Okay, I see.

[A]

Okay. Going back to. I guess this must be the Dow, some sort of combination, because it goes back to the beginning of time and it's the highest ever. It looks like it's like almost 80% now. Mobison wrote a piece a year or two ago where he said, actually, concentration generally is what you see in bull markets. Like, be careful what you wish for, because look at, look, when concentration bottomed, it bottomed and it declined dramatically in one of the worst bear markets ever. The 66 to 82 bear market got as low as 50% or below. 50% now is treacherous.

[B]

So that. Yeah, that period in the early 80s and early 90s was. That's the outlier historically.

[A]

Early 80s. Yeah, that's. That was the bottom 82. Which begs the question. Let me just skip ahead a little bit. There's been. I got like maybe half a dozen emails last week. Michael, why do you keep saying the stock market, the bare market in 2022 lasted for two years. Like, what are you talking about, dude? Fair enough. I think when I, When I say it, I mean, like, two years is. It was like almost two years. But if I must defend my honor.

[B]

Yeah, that's from peak to peak. Right? I. I'm with you.

[A]

Okay, but. No, but a lot of people are like, what are you talking about, dude? So the stock market peaked in on the first day of 20.

[B]

January 2021.

[A]

No, 2022.

[B]

Oh, sorry, 2022. Yes, it was the first day of.

[A]

2022, and then it bottomed in October of 23. Now the question is this, and I know this is semantics and no, boss, in October 2022.

[B]

We're a bunch couple of Old, middle aged guys here. It battled in October 2022.

[A]

Okay, all right, fair enough. My bad. I have the chart right here. What am I doing? Apologies. Top. Top January 2022. Bottom October 2022. Question is, when does the bear market end? And now listen, I'm. I'm sort of teasing here. I'm open minded, different opinions, all good. And I think that this is more of an art than a science because is the bottom of the bear market. And we've had this debate a million times, so forgive us for rehashing this, but is the bottom of the bear market the beginning of the bull market? I would argue no, because In March of 2009, nobody was like, hey, look, it's a bull market. And even fast forward to like 2010 when you were already doubled off the lowest still, nobody was like, oh, it's a bull market. Now I'm sure JC was like, oh, it's a bull market, bro. But does a bull. Does a bull market start when the bear market ends? Does the bull market start when you're 20 off the lows? Right. Because like, oh, I guess if you're just using the inverse. Does the bull market start when you're in a. When you're back within 20% of the previous highs, does that reset the bull market? Does it reset? Does it reset?

[B]

It. It depends.

[A]

Okay, so it, it depends. You're right. So does it reset? Like let's say you have a 50 bear market. Is the reset when you've recaptured half of the losses or does the bull market officially begin when you've retaken the new highs?

[B]

Okay, so here's the thing.

[A]

So that was my posture in 2013, the bear. The bull market officially instance. But there's a lot of room for debate here.

[B]

Yes, sir. Like the bull market didn't start till the 1980s, but the stock market bottomed in 1974.

[A]

Exactly.

[B]

Choppy period after.

[A]

And nobody says 1974 was the start of the bull market, but the market.

[B]

Bottomed in 2009 of March and then shot off like a cannon from there. That's the start of the bull market. So it's different. That one for real was the start of the bull market. It's a 16 year bull market. Okay, my definition, other people disagree with me. My definition, the. This is a 16 year bull market. Just like it was like a 20 year bull market in the 80s.

[A]

The reason why I'm even getting close to saying it was a two year bare market is because if you let's. First of all, the, the which market are we talking about? Let's just use the S and P and we can use the equal weight. So The S&P 500 made a new all time high two years after the first peak. Right. It was like January to January. Okay. It was January 2022 to January 24th. That was the round trip. So that's why I say two years. If you look at the equal weight, January 2022, by October 2022, when the equal weight bottomed. I'm sorry, I'm sorry. I'm using 2023. The. So everything bottomed on October 2022. But by October 2023, which is 22 months after the peak, almost two years, the equal weight was still in an 18% drawdown. So that's 20 months. 22 months. Close to two years.

[B]

I feel like we're making a case to Judge Judy here in court. That would be a good show. Actually. There should be a. We should have a judge show where like we hash these debates out, but.

[A]

Two years later, the average stock, the equal weight, was in an 18% drawdown from two years prior. Is that not a two year bare market? I mean, it's close enough. Listen, I get it. There's plenty of room for different.

[B]

Josh can give me royalties on this. We'll have Judge Josh on cnbc. He can wear the, the robe. He'll have his gavel. And then people come argue about this.

[A]

Because, because if somebody says, listen, the bare market ends when you make a new all time high period. Well, that's just there.

[B]

There's, there's gray area. It's. Yes, but I'm glad you laid out your case there. Okay. Chart from Charter. I feel like there's a lot of stuff in America that we get wrong that we're really bad at and people are very good. You mentioned last week all the negativity. I'm trying to be positive here. There's a lot of things that you can point out that we're bad at. The education system's not great. And we do this wrong. We're not good at this. We're really good at producing the world's best companies. So this is. They have the world's 100 largest public companies. We have 60 of them. Okay. In North America, there's two in the Middle East, 17 in Europe and 21 in Asia Pacific. The rest of the world has not figured out how to make gigantic corporations like we have. Right. We're, we're really good at that. For all our faults, we're very, very good at this very, very good. And I don't think that's going to change anytime soon.

[A]

All right. One thing in AI. Ah, sorry too. Look, this is the updated chart.

[B]

You did this, not me.

[A]

From Goldman on.

[B]

I tried to keep this an AI free podcast because you complained last week.

[A]

HyperCaler, CapEx for AWS, Microsoft, Google Meta. And who's that new symbol? Is that, is that Oracle?

[B]

I think people are running out of ways to show this chart differently.

[A]

Look at this.

[B]

We've, we've shown a variation of this chart once a week for two years now. Yeah, right. I'm starting to come around to your side. I can't believe you put this in here. Shame on you, sir.

[A]

I know, My bad. So another one from Goldman. And we've done this in the past, but sorry. Valuations today compared to the tech bubble, the Japan bubble, the Nifty 50. And if we're just looking at the, the 24 month forward PE 27 times today versus 52 for the tech bubble, versus 67 for the Japan bubble, versus 35 for the Nifty 50. Here's the thing, as you mentioned earlier, 24 months, I mean, we don't know what's happened. 24 months is number one. Although it just shows you that the expectations were way higher, were way higher in those previous periods. But the big obvious thing that is so different today than the prior episodes is the size of these companies. These companies, the, the giants today dwarf the size of the previous bubbles. Dwarf.

[B]

So did you catch, did you catch Howard Marks on CNBC yesterday?

[A]

Nope.

[B]

He came on and he said, listen, I don't see signs of a mania. Obviously there's overvaluation. And, and he's like, these companies are just bigger and better than companies in the past. That's it. That's my whole. That's, that was his whole thing is like, they're just better companies.

[A]

Yeah, that's what I mean. I agree.

[B]

I'm looking at the Nifty50 here. I just have to say, who do you think came up with the name Xerox? Do you think that someone said, hey, I bet you can't come up with a, a company that has two X's in it and someone. Oh yeah, like, who would, who would come up with that name today?

[A]

That was, that was a winner in, in Scrabble. Although were there two X's in the Scrabble board game? I don't know. But speaking of board games, Kobe is obsessed with Monopoly.

[B]

Okay. Did you get the kids version or the real version?

[A]

No, the Real version. And we pl. We've. We've played it for four straight days. And he, he, he's going to be the Monopoly man for Halloween. And I see no signs of it slowing down. This is my new.

[B]

Because I got my kids. Because I think real monopolies. It's so tedious and long. So we, we had the kids version, which is way faster and way easier.

[A]

All right. I love Monopoly, so I have no problem. It's. It's not that long.

[B]

How many times have you started a game of Monopoly and not finish it? I feel like that's 75% of Monopoly games is like, ah, screw it, you're going to win. Let's not finish. I've never finished a Monopoly game.

[A]

Not me. Big Monopoly guy. The game's usually, well, it's just for the two of us. It's 30 minutes or less.

[B]

Okay. If you want to bring Logan in, get the kids version. It's. The kids version is actually kind of fun. I, we play that all the time too.

[A]

Okay. All right, here's another good one. The top 500 median stock free cash flow yield. This is from Morgan Stanley Research talking about, like, debate about whether we're in a 1990s style bubble. And the free cash flow yield would suggest. Would suggest not at least compared to 2000 where the free cash flow got as low as 1.2%. Now it's 3.4%, but, well, that's the difference.

[B]

Back then, those companies, they didn't produce enough profits and earnings.

[A]

This is the chart. This is the chart. The S&P 500 forward PE normalized by profit margin. And this is the key part. In 2000, this thing was double where it is today. And it's actually about at the average over the last 20 years. So the forward PE normalized by the outsized margins. And when you look at that, to Howard's point, to Howard, Mark's point about like, these are great businesses, it looks reasonable.

[B]

All right. At this point, Judge Josh bangs this gavel and says, all right, it's not a bubble. Right. You made your case. I feel like you just went through and made your case. This is not a bubble.

[A]

It's not a bubble. It doesn't mean that stocks can't fall 50%. They always can. Right. But this idea that there's going to be an 80% washout and these stocks won't recover, I view that as highly unlikely, actually.

[B]

Okay, so this guy, I just. So this guy, Robert Kiyosaki, I can't quit him. He sold 33 million personal finance books, 33 million. Barry told me this this morning. He says, reminder. I predicted the biggest crash in world history was coming in my rich book. Rich dad's prophecy. That crash will happen this year. Baby boomer retirements are going to be wiped out. Many boomers will be homeless or living in their kids basement. Sad. And he goes through all this other stuff about Silver and Sage, by the way.

[A]

Reminder. This guy, this guy's been saying this for the last 10 years.

[B]

Oh yeah, I just. Are we sure this is not, Are we sure this is a real person? Yeah.

[A]

So there's been videos of him like berating people in the audience. Remember that?

[B]

I just. How is he? How is he one of the best selling personal finance authors of all time?

[A]

It makes sense.

[B]

I don't, I don't get it.

[A]

It does. Some things can't be explained.

[B]

I came because you said we were being too negative last week. I came with the positive. So here's the two negatives. People always say, to be clear, I'm.

[A]

Not pointing fingers at you or I, I know, I'm just saying society. And there is a lot of negatives. Tons.

[B]

But here's the thing. There's ways that you can make good news look bad. So one of the things is while the stock market is going up, and that just means the rich are getting richer. Right. But. Au contraire. That's true. But more. This is from the Wall Street Journal. More working class Americans than ever are investing in the stock market for the first time. A majority of low earners have an investment account. And more than half of those new investors have entered the markets in the past five years. So Americans with incomes between 30 and $80,000, 54% of them now have taxable investment accounts. Half of those investors have entered the market in the last five years. And this is from a survey from BlackRock. So yes, the rich are getting richer, but the stock market is. The tide is lifting. A lot more boats now. There's way more people invested in the stock market. Among newer investors, 45% has put 5,000 or more into their accounts. 40% of the new investors planned since January 2020 plan to hold their investments for at least a decade for long term goals, including retirement. This is great news. Yeah, the stock market is going up and yes, rich people are getting richer, but that's always going to be the case now there are way more people invested in the stock market. And people always say, yeah, the top 10% own most of it, but it's close to two thirds of All American households own stocks now. So this boom in the 2000s has been phenomenal for I think Robinhood has 26 million customers and I think they said something like half of those. It's their first ever brokerage account.

[A]

JP Morgan said something similar in their earnings this morning.

[B]

Okay, so listen to that. This is, this is from Jason. So the Wall Street Journal had another piece. Now people have been saying, like, listen, this, this stinks. The fact that young people are being boxed out of the housing market. And I agree, a lot of them are really angry and probably have a right to be, but they say, where have all the young home buyers gone? Check the stock market. A JP Morgan Chase report found that 37% of 25 year olds used investment accounts in 2024, up from 6% of the age group in 2015. A six fold increase in the number of people investing in the stock market over the past decade suggests a shift in the way people think about building wealth. So they're saying, listen, most of the Gen Z people who are boxed out of the stock market or the housing market are using those down payments to invest in the stock market, as we have been saying. So the numbers now bear this out. There's way more young people invested in the stock market and there's way more low income people invested in the stock market. Both fantastic leaps forward in household wealth. Right? This is very good news.

[A]

You mentioned earlier how good we are at producing these giant corporations. One of the side effects of those giant corporations is wealth inequality. And it is a real issue and it is a political issue and it is a societal issue. Obviously the way that these rich people can impact the conversation, the elections, it sucks. And I think we all agree it sucks. But there is the other side of it, which is the rising tide lifts all boats, not every boat. But somebody had a good email on this topic. They said, I don't think wealth inequality matters. I don't think wealth inequality matters. Okay, do they really mean that? I would think it does matter. All right, whatever they said, or maybe I'm misquoting that. I don't think wealth inequality matters. Okay? But the absolute level of wealth for the bottom X percent does. If Elon Musk sold all of his stock, withdrew all of it in cash and set it on fire, inequality would go down, but it wouldn't make anyone's life better. Conversely, if Elon's wealth goes up by $10 billion tomorrow, it makes no one else's life any worse. Because we are not in a zero sum game economy. Wealth inequality Will never be better than it is today. Oh, I wrote this. Wait, did he write this? I'm sorry. This is a horrible red email. One of the worst. Put this in the Louvre. Wealth inequality will never be better than it is today because the compound interest. Sure, a bear market will make it better, but who gets hurt worse in a real bad, bad recession? Elon or the bottom 10? That sounds like him, not me. Fair points in there.

[B]

Are you arguing with yourself and Chatgpt?

[A]

I don't know. I don't even know. Did I make this up? Did I write this? Did I write this myself?

[B]

Here's the great thing about the corporations. You can now invest in the entire, all the corporations for pennies on the dollar in an ETF or a mutual fund or whatever and own these corporations and take part in their profits of their growth. That's, that's the.

[A]

It is a miracle.

[B]

It's a miracle.

[A]

And it's funny.

[B]

People don't make a lot of money, have the ability to invest in multi trillion dollar corporations and all their growth and earnings.

[A]

It's amazing. We could literally own Nvidia. And for all the, for all the hoopla for private market over alternatives which we're going to get to later. I'm in the penalty box. How many times have I said which we're gonna get to later in the show? I think this is my third time. But why would you want to. Why would you want to alternative to Apple or Amazon or Nvidia?

[B]

That's a good, that's a good question. How many, what, what percentage of investors can pronounce Nvidia correctly?

[A]

I think most do. Sometimes you still get the Nvidia, but.

[B]

I'd say most are yes. When you catch one of those, it's like Chipotle, Chipotle. When people can't say Chipotle, Chipotle. I went to Chipotle today.

[A]

It grinds my gears. Did I say that? I went to a Chipotle Chipotle recently and I think My ball is 12.65. Are they back?

[B]

You did say that. You said you're back. Deflation.

[A]

Stock looks okay. I feel like the stock might be bottoming. This piece of garbage. Where are we next? Ben, We've been jumping around.

[B]

You got this one. You said fiscal stimulus with a hell of a drug.

[A]

Now we're not going to fix wealth inequality. But the, the, the, the baby fund stuff is great news. That's great stuff and it really is. You got to be in the investor class, right? That's it. And no I think nobody likes the K shaped economy. Like obviously we, we wish for more people participating. The upside of the economy and the way to do it it's through assets. Because the people that are investors have so much money because of the bull market.

[B]

Yeah. And that money is going to keep growing because those people don't. Aren't forced sellers. Most of the. Most of those people who have the assets are not forced sellers. So anyway, this is why Robert Kiyosaki is not going to be right about baby boomers being homeless. The ones who own all the stocks. They're not. Just because of bear market hits does not mean they're going to be forced to sell their assets.

[A]

By the way, we didn't even read the rest of the tweet which is whatever we'll put in the show notes if you really care. But like it was, it was crazy. That's by Silver and Ethereum. Because everything's going to crash. What do you think is gonna happen to ETH in a. In a global depression? Whatever.

[B]

What's this? What's this? Flows 1 Because this Treasury ETFs have the biggest flows.

[A]

This year there was a lot of throat clear. My point was there is so much money in the system that the year to date category ETF flows the top four. It's not everything we're talking about. It's Treasury Bill ETFs. Okay. Crypto isn't there. It's precious metals. It's the value factor and it's thematic funds.

[B]

I would have never guessed T bills are the top category by a lot. In a million years. I never would have guessed that.

[A]

By a lot. All right.

[B]

It is funny the value stuff. So we have a talk your book coming out next week with Victory Shares and they have these value Momentum ETFs. And we talked about how. How Momentum has been outperforming by a wide margin over the value factor. But there's way, way more money in value. And look at it. I can't. Until value is the fourth biggest, people cannot quit value investing. Money just keeps flowing in there regardless.

[A]

How much? 36 billion. Where is Momentum? 12. So yeah, checks out. All right. This is weird. Not sure what to make of this exactly. From Deutsche bank via the daily chart book which is just a go to every day, all day. The key story for September was not rising positioning but booming fund inflows. Not just into equities 122 billion. But also bonds. 98 billion. Indeed. The combined inflow in September was the largest monthly inflow since early 2021.

[B]

So the bond thing is, I still think baby boomers repositioning and rebalancing.

[A]

Yeah, that's explainable. It's just so much money.

[B]

Everyone has money.

[A]

All right, let's get crazy. Also from Todd. He has the ETF asset class launches as a percentage of the total on a rolling six month period. I don't know if it's an underappreciated story in the stock market, but if you're not like online and really into it, you might be missing the plot here. The leverage and the degen economy, as Lindsen calls it, just continues to plow ahead. So over the last six months, one out of every four new ETFs involves using leverage.

[B]

People really want this stuff, huh? See, this is, this is why people need a slap on the wrist like this, this kind of stuff getting out of control is like, this is why we need a little more than a Friday flush eventually. And it sounds like crypto. I'll do a you and say we're going to talk about that soon.

[A]

But I think that this is, it's such a small piece of the market, even though the numbers are gigantic in terms of the market caps of a lot of these companies and the call options are on a relative basis. Doesn't matter.

[B]

No, I, I guess not. But it, it's an interesting trend that there's just way more leverage in the system and there's a lot of people who, like Corey Hofstein has been pounding the table on this for a while. Like there's ways to use leverage very intelligently. Right. And I'm obviously a lot of people, most people aren't probably, they, they are being degenerates with this. But people are obviously more comfortable with it and they want this stuff. Otherwise there wouldn't be all these new ETFs. All right, I want to talk about one of the beautiful things about markets like you can still. I've talked about this with bitcoin before. Almost everything that bitcoin and crypto people have told us have predicted about the world and what will happen has been wrong. But they all stayed long and they still made money. And I think a similar thing is happening with gold. Okay. Everything the gold bug said would happen, the dollar is going to crash and the Fed is going to ruin everything and the financial system is going under. Everything they said was wrong for most of them. And they're still being wrong about why gold is going up right now, which get to in a minute. But they, they stayed long and they made Money, right? Gold's up 50% this year. So I showed this chart last week on S Compound. Do you see this one? It's. It's gold in S and P by decade. And in every other decade, one has been up really big and the other one's been down. Or like the relative spread is in Y. The 2020s are the first decade in modern economic history that gold and. And stocks are both booming at the same time. Never happened before.

[A]

Hmm.

[B]

It's kind of surprising, right?

[A]

Yeah. That's good. That's good stuff.

[B]

But then all these people I, I tweeted this and some guy said, measured in gold, not dollar terms, isn't the S and P down 16% or something since 2020? And I. Then I see, then I see a chart from Bloomberg. Denominated in gold equities have been falling since2020. A chart from Goldmark chart. Ounces of gold to buy a new house media new single family home priced in gold is now at all time lows. This is the dumbest thing I've ever. This is so dumb. You cannot, you cannot price speculative assets and speculative assets. What if we price gold in S P500 points? Guess what? Gold is not up 50% in S P500. This is the dumbest thing I've ever heard.

[A]

Price.

[B]

People, stop this. This is dumb.

[A]

Price gold and oclo. What are we doing here exactly? Gold's crashing when you pricing price it in oclo.

[B]

I just like, listen, take the win. If you own gold, you're long. You've made a ton of money. But the reason gold is going up is not because of fiat dollars or something. Someone tweeted the other day that like gold makes up like 3% of the world's like currencies or whatever.

[A]

People just take it too far. Like central banks are buying a lot of gold.

[B]

That's the thing. Central banks are buying gold. That's why it's going up.

[A]

And there is it. There is uncertainty, political uncertainty, economic uncertainty, dollar uncertainty that is leading gold higher. But you don't have to then price the S and P and gold, right? Like you're most like the. A lot of the thesis has is it's not, it's not all wrong. A lot of it has played out. But then you go crazy when you're pricing. Why not price cattle in gold? I mean.

[B]

What do you mean? Yes, just take the win. Take the win. You don't have to make it crazier.

[A]

If you want to sell Your S&P 500 index fund and take that money to the bank. You're going to get dollars. Like your bank will take dollars. You could pay your mortgage with dollars. You can't pay your mortgage with gold. You price it in dollars because that's, that's the unit of you don't go.

[B]

To your local brewery and say, here's a gold coin, sir.

[A]

Yeah.

[B]

Fill my beer mug.

[A]

What do you mean? My gold coin used to buy me three beers, and now my gold coin only buys me one beer. What do we. What's going on here?

[B]

And the bartender is going to go there. Get out of here, weirdo.

[A]

It's bizarre. It's bizarre. This is also bizarre. We, we. We've spoken a lot about, like, measuring sentiment and having conflicting reports, which is why I think, like, a lot of the work that JC and his crew do about, like, building a composite sentiment reading is the best way to do it. I don't know what's in here per exactly, but Goldman Sachs Global Investment Research US Has a US Equity sentiment indicator. Now, again, I don't know exactly how they're measuring it, but, like, based on this, it looks like nothing to see here. I mean, if anything, people are, like, not excited at all.

[B]

If it's based on surveys, then let's throw it out the window because then, then it doesn't matter anymore. I've said sentiment is broken. The vibes are broken forever. That's my case. All right, Eric, Soda at Spilled Coffee has a good one about the cash on the sidelines fallacy. Did you see any of this? So this is one from Charles Schwab, and it shows.

[A]

We've showed. We've. We've made this chart in the past.

[B]

Have we? Okay, but this is the whole thing about all the money. I think the, the 0% interest rates in the 2010s kind of broke people's m. Brains on money markets because no money was going in there at all for the whole 2010s because rates were zero. But he shows it as a. As a total net assets, as a percentage of the S and P. And then there's not so much cash on the sidelines because stocks are going up, so cash should be moving with it. And then US Money market funds as a percentage of S and P as well. His whole thing is saying, yes, there's seven or $8 trillion in money market funds, but if you look at it with where the stock market is, that actually makes sense because the percentage is actually going down because stocks are going up. So if you hold cash constant, it's not like that money's all of a sudden going to come rushing in. And I think we mentioned a couple weeks ago, like if a richer society, there should be more cash on hand. It makes sense. Yeah. So it makes more sense than people are saying you were credit to you. You were early on that one saying that this, this money's not coming out of money market funds. That's, that's staying put. I think you're right.

[A]

Is this next chart from Dan Greenhouse? Same thing?

[B]

Yes. That's. Yeah, that was in his piece as well. Yeah. All right, here's a good one for you. Households have a dollar in cash for every dollar of debt. The most deleveraged since the early 1990s. This is from bank of America. Households are still in good shape and have the ability to borrow even more money if and when the next downturn hits. I continue to believe that, that whatever, whatever downturn is unless the AI bubble totally inflates to like epic proportions and then it just pops and. But even the, the dot com bubble popped and the 2001 recession was very mild, extremely mild. It helped that we had a housing bubble to prop people back up, but that could, that's probably what'll happen this time again. We'll probably get a housing boom the next time that the economy slows anyway. I, I think whatever happens, as long as it's not some crazy exogenous shock, households will be able to weather it by borrowing more money.

[A]

You know what's coming around the corner, Ben? We got earnings season, which is my favorite season because as I keep pounding the table on, I care a lot more about what companies have to say than what journalists have to say. A lot more companies are, have no reason to.

[B]

That's your new tagline. Listen to the companies, not the, not the investors. Right.

[A]

I'm not saying they're not going to lie to you because, you know, there's some companies that do some shenanigans, of course, but unbalanced companies are not incentivized to not tell you the truth. Now again, sometimes they cover stuff up is what it is, but they're not going to paint a rosy scenario in the aggregate when the facts don't warrant that. But they're gonna call it like it is.

[B]

This is also why, as someone who's a long term person, a lot of people email me and ask for my thoughts on the should, if, if we shouldn't have them report quarterly anymore, because I'm a more long term person. But I actually totally disagree with that idea. I think we. We need to have them report quarterly because I think opening it out longer opens up the possibility of shenanigans.

[A]

Me, too.

[B]

That's. I think that's my problem with that idea. Anyway.

[A]

What's this chart from? Oh, the Delta stuff.

[B]

I didn't put this in here. Okay.

[A]

I listened to the Delta call this morning, and a few things in there stood out. Delta is now 60% of the industry's profits. Kind of wild. They're killing it.

[B]

I mean, they're by far the best airline. It's not even close, right?

[A]

Not even close. I only fly Delta if I can.

[B]

The. The last time that I do too. And I. I have one of the platinum Delta credit cards and I. It's the only one I fly usually. And I was on a flight with my kids. Where were we? I can't remember the last time we flew as a family. And the flight attendant came up to me and I felt kind of like George Clooney on Up in the Air. And they said, hi, Mr. Carlson, just want to thank you for being a Delta platinum blah, blah, blah, blah, blah. And being so loyal to us as my kids are like, what was that about? Are you like a celebrity? So they thanked me for being a.

[A]

On my flight home from a loyal member. Austin. Not to brag. The flight attendant came up and shook my hand and said, he's a big fan. So I've. I forgot his name, but if you're listening, thank you, sir. That made me feel pretty good.

[B]

He sneak you a free drink?

[A]

I've been drinking on flights.

[B]

Okay.

[A]

Credit to me because I. Who doesn't love drinking on flights?

[B]

Getting a drink on it. I feel like what percentage of people in first class get a. Get a drink? When asked when you get 80%, I.

[A]

Almost always do, but I haven't been doing it because, you know, busy.

[B]

Responsibility.

[A]

Responsibility. Growing up. What else was. Wait, what? Hold on one sec. There was. They also said that corporate travel is all the way back, higher than 2019 levels.

[B]

See, that's the one. I never would have thought. I. When people were predicting how the pandemic is going to change the world forever, I would have said, yeah, with ZOOM meetings and such, corporate travel is never going to get back to the same levels.

[A]

Same. All right, so this chart shows, I.

[B]

Think that there's some people in some businesses that just. They like the face to face interaction, but they just. I think some people just love that lifestyle, being on the road. The guys in the, in the polo shirts and the jeans and the boots. Right. Those guys have to be on the road drinking their Miller Lights at the bar and, you know, talking about the Astros or something.

[A]

So the premium cabin revenue is about to pass. Main cabin, which is pretty wild. And Glenn Howenstein, who's the president, said, I've equated it to this. The car that you drive today, is it better than the first car you had? The answer is probably yes. And you don't see many people going back to cars that are worse. Once people get used to traveling a certain product, whether it's Comfort Plus, Delta, Premium, select, whatever, they tend to not go back. Their retention rates are in the mid-80s there, so. Yeah, that's true.

[B]

They didn't. They didn't have Comfort plus and stuff in the past. That. That's a relatively new thing.

[A]

Luxuries become necessities.

[B]

But they. I. I'm sure that they're also able to jack the prices up on those. And people will still pay them. People who have more money, right? Yeah, I'm guessing that's. That's part of it, yeah. IMAX experience.

[A]

Somebody emailed us about going to Disney, and they said that Disney's charging 200 bucks to meet Santa or something like that. Listen, people will pay whatever it is. But I did say, my wife. We're not doing the meet and greet with the characters this time. What a. What a piece of sham that was. You get a crappy buffet. No, we're really not. We're really not. I'm. That's it. We. You get this crappy buffet for a hundred thirty ahead.

[B]

That. That is one of the worst things about Disney. The food is awful. I don't think they care really. But the food is not good at Disney, right?

[A]

No, not.

[B]

My wife got after me a little because I said I didn't want to go. Disney on a podcast a couple weeks ago. Apparently, she still listens to the show occasionally. You got Stand By. I stand by my take. Yeah, we're going in Thanksgiving. She Every. Every week she calls me, hey, you want to do this at Disney? I'm like, I don't know. You take care of it.

[A]

Wait, Thanksgiving at Disney? That's a great idea.

[B]

Yeah. I thought. We thought so.

[A]

Let's talk gambling. This is a Great tweet from Dali Bal2. So on Friday, as the market was having a not so great afternoon, was OKLO positive on the day? I think it was. Yeah, it was. This guy tweeted, I was wrong. O is the perfect stock. No revenue, no product, hence no exposure to anything.

[B]

If I'm being Honest, I have no idea what OCLO does.

[A]

They're trying to build a nuclear energy something something. Oh, that's what they're doing. All right, so this was making the rounds. The Goldman Sachs basket breakdown, view to date performance. And they also break it down by the April 8th to today. All right. Drone stocks are up 370%. Quantum computing stocks are up 315%. Memes are up 123%. Nonprofitable tech is up 111%. Most short are up 98%. So retail is kicking the out of professionals and I got to say, like.

[B]

Using all degenerate themes for the most part.

[A]

I'm not mad. I, I, you know, I'm not wagging my finger. Yeah, I think, I think most, most people understand that. Like, you don't think there's a lot.

[B]

Of hed in these trades now too, though?

[A]

Just probably the on to this stuff. The smart ones are.

[B]

All the momentum traders are in these, in these stocks.

[A]

And you know what? People get wrecked. They get wrecked. This is, this is the market, right? Like, no crying in the casino. And also, if I was a younger man, I'd be balls deep in these names. Come on now.

[B]

Okay, I, I wouldn't, but I know you would. The people who are. Yeah.

[A]

All right, so last week, I believe last week I said, or maybe two weeks ago, I said, the market is cruel. Like, even if we know that a lot of these names and I guess we can't know, but even if we strongly suspect -900 that the odds are against most of these companies sustaining their valuation, it doesn't mean that the shorts are going to make money. It's just not that easy. So credit to this.

[B]

I can't imagine wanting to short this stuff and like get in front of that train and time it perfectly. No way.

[A]

I mean, I can imagine it. If you really understand the businesses here and you genuinely know that these are pieces of shit. Now, I don't know that. But if you are one of these people that have domain expertise.

[B]

Yeah, but using a fundamental thesis in a mania is. Come on. No, no, dude, timing is all that matters there. And you.

[A]

I get it 100%, right? Anyway, my point is I want to shout out this one guy. Credit to this guy at Common Sense Play tweeted. I'm closing my short on Ionic and Rigetti Market makes no sense. They will drop 90%. But taking the L on this trade, that's a pro move.

[B]

Yeah. Good for him. Good on him for admitting it. Right?

[A]

Yeah. The market. The market just, it Just won't let you make money this way. And maybe the longs will get liquidated, but the short stuff we will too. That's just the way it goes.

[B]

All right, let's talk about crypto. I am a tourist here, but it sounds like on Friday people were like brought out in body bags from crypto. And it's weird because bitcoin was down, I don't know, 5 to 10% Ethereum. It wasn't like a huge.

[A]

Hold on, hold on, hold on. The, the Ethereum and Solana were down at one point, I think each more than 20%. The altcoins fell, some of them fell like 90%.

[B]

That's what it sounds like. It was the altcoins and stuff. But it says the biggest crypto liquidation ever from Coindesk amid market chaos. And they talked about all this stuff and people were trying to figure out, and they say it was 20 billion, but it was probably way higher than that because of Binance and all this stuff. And a lot of people are pointing to this old post from Brian Armstrong from Coinbase on at the beginning of September. He said, we just bumped up the max leverage from 20 times to 50 times on international Perpetual Futures. A bunch of traders asked us for this update, let us know what else we can add. I don't know if that was the reason, but it sounds like a lot of people were just extremely over levered and it didn't take much of a fall.

[A]

Yeah, that was the reason it was leverage.

[B]

So it was just an insane amount of leverage and people got taken out and bought again. It just, there was literally one down day in the stock market and it, it, it evaporated crypto. But I guess, and a lot of people are saying a lot of these altcoins like literally went to zero. Yeah, it is.

[A]

Why Bitcoin? Bitcoin at 110,000, I mean it's still a healthy, healthy, healthy number. And yet look at this chart from Wall Street Journal. They show the total liquidations on crypto derivative exchanges. It makes the FTX, I mean you can't even see it. This was 19 billion. FTX was 2.

[B]

So there must have just been an insane, insane amount of leverage in the system. And these, this is a good thing. No one, you talk about no crying in the casino. No one should feel sorry for these people. But it sounds like people were up millions and millions of dollars and probably lost millions.

[A]

Okay, I, I, you could simultaneously feel bad for people, like it sucks that this happens while all like just being a human being, like I'm, I'm sorry that happened to you. While also saying, what did you think was coming?

[B]

Yeah, exactly right. Like if you, if you make millions of dollars going 50 times leverage, you can go to zero on the same thing.

[A]

I think that's just, could you imagine being, I, I, I'm not laughing because it's not funny being one of those people that got wiped out from the Trump Tweet. And then 24 hours later, Trump says, don't worry, it's all good with China. We're gonna make, you know, it's gonna be fine. I mean, Yep.

[B]

Taco Sunday. I, I don't know. It's the whole thing. Warren Buffett said before, you don't want to get rich twice. If you got rich once and you made 5 or 10 million bucks in crypto, I don't know, cash, some of it out.

[A]

Hopefully there are people that, that saw this, younger people, because it's always younger people. You know, eventually you do this long enough, you know, you get burned. Hopefully young people saw this and said, okay, maybe I should rain.

[B]

But it's insane to me that people were able to put 20, 30, 40, 50 times leverage on and make that much money. And at that point, it's just a game. It's not even real life.

[A]

Well, you know what? Somebody tweeted Long Term Capital Management was using, I think, 25 times leverage and they got wiped out doing fixed income arbitrage.

[B]

Right.

[A]

They're talking basis points. You're using 50x leverage on crypto. I mean, come on, use your head. All right, let's talk private markets for a second. BlackRock reported this morning, I think they brought in $8 billion in private credit. It was the largest private asset, private investment gatherer that they reported lots of demand. So they, they, they had a report a week ago, today's private credit opportunity. And I, I think I'll, I'm on the record. At least I'll go on the record. I don't think private credit is a bubble. I don't think that first brands blowup is indicative of everything. I, I'm sure that there are, you know, that it's not the only one, but I don't think it's like a systemic, all private credits are fraud. It's good bluff. I'm just, I just don't, don't.

[B]

As the space gets bigger, there's going to be more blowups like there has to be because it's, it's, it's casting a wider net and there's more businesses and there's more loans and of course, so the, these, the stories about private credit are going to be amplified because people have been warning about it.

[A]

Yep, no doubt. And there's a lot of journalists that are dying for this, dying for this to be a juicy salacious story. And the first brands one is and I'm going to talk about it tonight with Josh. But this chart made me laugh. Private credit assets offer a unique correlation to the public markets and they show the correlation of the Prequin Private Credit versus the Bloomberg AG and they show it at negative 0.02. Come on. How is this negatively.

[B]

If you don't report the nav correlation.

[A]

Is zero, how is this negatively correlated to bonds? What are you talking about?

[B]

Well, it's essentially a zero correlation. Meaning like there's, yeah, that's, oh, by.

[A]

The way, I think I, I, I said this last week on the show. I tried bottom fishing in the aries private credit BDC and I got stopped after 5% loss because I'm not that brave. But I, I think I should be back, I think I'm going to get back in. I, I, I don't believe that this is going to be like the unwind of the century.

[B]

Okay, good luck with that. I, I, I, my whole thing is just, I think people need to just temper their expectations with private credit. The returns have to go down. But even if they, if, if they go down, let's say returns go down 20% and they go from 11 or 12 to 8 or 9. Is that still, is that the worst thing in the world?

[A]

No, that's, that's, I think that's probably my base case. If I had to guess what's going to happen. Yeah, returns gonna be compressed because more money coming in and that's the story of capitalism. All right, this is a great chart. So we've mentioned this data point. 90% of companies in the US that generate a hundred million dollars are privately held.

[B]

Right.

[A]

I've never seen it put this way. Kind of a face blower here. I would have thought that like the 90 or the 8020 rule applies that even though most of the companies are profit, you still have more revenues with public companies because Nvidia and Walmart, you know. No, not true. $40 trillion in annual revenue for private companies in the U.S. damn, that's a lot of money. And 35 trillion for public companies.

[B]

So that includes like all small businesses. So like my, my tailor at the mall right next to my office. Sioux alterations, small businesses.

[A]

I'm sorry, hold on, I'm sorry. I'M sorry, that includes that this is the us, the EU and the uk okay.

[B]

It's still surprising, right? I feel like that private number has to be very hard to get though. How do you come up with those numbers? I'm sure there's a way to back into it anyway. Yeah, you're right. That's surprising. All right. Bloomberg has a great piece on what I think is called house rich. America is minting lots of cash strapped millionaires. So they say millionaires are on the rise, but much of their wealth is in hard to reach assets. This is funny. In the Gilded age, there were 4,047 millionaires in the US and each one is listed by name in a special edition of the New York Tribune. You imagine that like they listed just all the millionaires because that's how in the, in the paper today, the millionaire households, more than 24 million, 1 in 5 U.S. households and a third of those modern millionaires were minted since 2017. But they're saying it's mostly in houses. Right. For the barely millionaires, people with a million to 2 million, 66% of their wealth is tied up in their primary home or retirement accounts, meaning it's illiquid, they can't access it. Households with 5 billion or more at 24% in easy to access banker broach accounts compared to 17% for those closer to a millionaire mark. So basically it's saying a lot of people have a million dollars, but they're probably house rich, retirement account rich. And they can't really. It's not liquid net worth, which I mean, play the world's smallest violin for these people, obviously you're still a millionaire, but obviously that makes sense since housing is up so much. There's probably a lot of house rich millionaires. And housing really is one of the hardest assets to unlock the wealth. Right. You have to borrow against it for a HELOC or cash out, refinance if you want to take some of it out or sell. And then you have to live somewhere. So you have to either downsize or buy a place that's just as expensive. Potentially it is the hardest one to actually unlock the wealth anyway, being house rich, first world problems. But that's the thing.

[A]

Yeah.

[B]

Right. They said Gen X added the most millionaire household. This is funny. They look, look at all these increases in millionaires. Gen X added a ton. Millennials added almost like 3 million millionaires. This is since 2017. So a huge leap forward. Right. But then they show being a millionaire isn't the same as it used to be. And they show the cost of a four bedroom home in the New York suburbs driving two Mercedes E350 sedans. Which. I don't know what that is. Which. Oh, nice. Those are a four year Harvard education for two children and a two bedroom upstate New York cottage and a 19 foot sea ray boat. They show the difference in the cost. I'm sorry, this is not being a millionaire. This is being like a Deca millionaire or.

[A]

Yeah. What?

[B]

So you own a house and you own two Mercedes and you send your children to Harvard and you own a two bedroom cottage in upstate New York and a boat.

[A]

Dude. This is what, this is the thing, this is the news that they're giving us because we, we're outraged, right? We're outraged. This is, this makes people mad. Because it's nonsense. It's pure.

[B]

Right? This is the top. I don't know, 5%, 3%, 2%.

[A]

Yeah.

[B]

This is not, this is not a thing that just being a millionaire did not used to. Never.

[A]

A Mercedes, a vacation house, a Sea Ray, Harvard.

[B]

Right, sorry. That's not being a millionaire. Right, that's.

[A]

That's being in the top. That, that's like top 1%.

[B]

Yes, exactly.

[A]

All right. There was a long article and that's.

[B]

Why even rich people are a millionaire. Because they look at that and they go, why? I'm rich. Why am I not doing this stuff? Because that's. Very few people do that.

[A]

There was a long article in the Journal about how not great Hollywood is doing. They said at the end of 2024, a hundred thousand people were employed in the motion picture industry in LA. Two years earlier was 142,000. 30% fewer movies and TV shows with budgets of at least $40 million began shooting in the US in 2024 than in 2022.

[B]

It's not surprising because there's so many more streaming networks now. I would have thought it would have risen for sure.

[A]

And yet Hollywood still seems so not great at giving the audience what they want. Like for example, Tron opened over the weekend and it bombed. I'm not surprised. It cost $180 million to make. It did $33 million at the box office over the weekend.

[B]

My son wants to see that really bad. He can't. He watched both the first two Trons.

[A]

He did. Okay, fine, so George is an outlier, but I should be a consultant. This is so easy for an outsider now. Easy one. Easy in the cheap seats.

[B]

But no one, no one, no one wanted that one.

[A]

Michael, are you going to see Tron Nope. And nobody else is either. Good. Done.

[B]

That should have been a straight to Disney plus streaming movie.

[A]

Who. Tron is not a. This is not I pee that anybody gives a about. Give people more weapons and sinners like get the memo. It's over.

[B]

You will be going on the Tron ride at Disney though. Mark my words. Supposedly they could have a good Tron ride.

[A]

But the. The problem is. The problem is when these things bomb. Scott Mendelson was writing about this. They. They blame up the audience doesn't want to see movies. No, we do want to see. We want to see good movies.

[B]

We want to see this Right Again, that's. That should be a straight to Disney plus movie. Like they should have more of those as opposed to trying to be in the theater with that absolute junk.

[A]

I got a lot of emails last week about spending less time on your phone and I. A lot of it was like, delete the app. Come on, guys. I don't have the app. Think I'm that big of a dodo. What I do is I go on through the Internet.

[B]

See, that's even worse than the app.

[A]

But I did. Somebody did send me something that's an.

[B]

That's an addict move right there to.

[A]

Gone through the Internet. But I only.

[B]

Hiding the drugs in your ceiling or something.

[A]

I bought something called a brick. I haven't used it yet, but I think what this thing is is I think it like restricts websites so you have to like physically hold your phone to the device to unlock it. So I'm. I'm going to literally cut my phone off from Twitter.

[B]

You know what? You know, I finally did and again.

[A]

I was thinking about this week because after reflecting on the show last week, I really am only on it during my downtime. But the problem is my downtime is when I should be with my kids. So I'm on the couch at like 7 o' clock or 7:30 scrolling Twitter when they're like, you know, on their iPad or whatever. It's horrible. It's like the worst thing ever.

[B]

You know what I did that helped me a lot in Twitter. And obviously to your point, willpower alone is not enough in these instances. You need to have.

[A]

I don't have willpower.

[B]

Like I like one of the things I still use it for is I'm catching up on sports. College football or NFL. Because I'm out and about doing stuff all Saturday and Sunday with my kids and I'm watching highlights. But then you have the auto video feed and it goes from like a sports highlight to like two dudes fighting in an alley.

[A]

Yeah.

[B]

And it's like, I don't need to see this. So you can turn off the auto video play. So just it loops your video so it doesn't show you these other insane videos that you don't want to see. You get caught on the loop. That's helped me stay off of Twitter more like I'm just watching it for sports highlights and nothing else.

[A]

Well, you do have willpower. I don't need to be off Twitter completely. I just need to be off it from like the hours of 6 to 10. Because during the day, whatever. All right, anyway.

[B]

Yeah, you're too busy to. Yeah, you're too busy to do it during the day.

[A]

All right, here's a good one. Talking about, like the news and what we see and what causes all of the anxiety Max Roser showed.

[B]

Oh, this is a good chart.

[A]

It was great. All right. What Americans die from and the causes of death, the media, the US Media specifically reports on. So, for example, heart disease and cancer are the number one and number two killers. They're over. They're almost 60% of deaths. Almost 60%. And yet they are 6% of coverage at the Times, the Post and Fox News, give or take 60% of deaths and only 6% of coverage. On the other hand, the biggest by far, because it's salacious, is homicide. 42, 46 and 52% on the network.

[B]

It's kind of crazy. The causes of death, homicide you can barely even see on the chart.

[A]

I don't. Where does it. What is it? Is that 1%? I can't. I can't read it.

[B]

It's so small.

[A]

Terrorism, 18, 12 and 11. And that, I mean, to be, to.

[B]

Be fair, the news networks, it would be kind of weird if they're like, Jerry Smith died of a heart attack today at age 73. He was sure. 250 pounds and 100.

[A]

Drug overdose.

[B]

You're right. This is a very good. Put it in context kind of thing.

[A]

Even on, like, local news, it's all. And even like Good Morning America that Robert watches, it's always just like, oh, my God.

[B]

It's like, yes, yes. I can't.

[A]

Death, hit by car.

[B]

It is. It's too much. I pretty much just avoiding cable news has been probably better for my mental health than even Twitter. I stay away from it at all costs. I want to give a shout out to our colleague. Tata Escanta celebrated his 20th anniversary at Abnormal Returns, which is absolutely amazing.

[A]

Amazing.

[B]

The best curator in all of finance. I Still, like, every Sunday, he does the top 10 posts of the week. He has personal finance posts. He has an advisor newsletter. Every day, he's putting out the best links from everything. People ask me, have a filter in place to read the best stuff and stay up on this stuff. And I said, whatever you do, just read Abnormal Returns every day because he doesn't miss anything.

[A]

Congrats, Toddis. That is impressive. Well, 20.

[B]

20 years of doing anything is amazing. But think about how many people that we. When we started blogging back in, like, the early to mid-2010s, there was all these other people who had blogs. Think about how many of them have fallen by the wayside and just stopped doing their blogs. And, like, the fact, like, survival is a big, big piece of it. Just keep doing it. All right, recommendations. I will start. You got me going on Audible books, and now I'm hooked. And it's got me to the point where I don't listen to podcasts as much. Like, I'm like, why do I need this stupid pop culture sports podcast? So I listened to Breakneck by Dan Wang. He's been in a ton of podcasts. Yes.

[A]

Wait, I thought I put this in here.

[B]

Oh, you did? No, I. I put this in here. Did you listen to it too?

[A]

Dude, it's so good.

[B]

Okay. It's very good. Wait, I finished.

[A]

Look at us. How old are we? We're listening to the same audiobook and we don't even know it.

[B]

I. I listened to it in a week. I finished it. I just thought his whole thing about when he first said the lawyers versus engineers thing, I thought, like, oh, that's clever. It's cute. But he really, like, point by point, kind of broke it down, like, okay.

[A]

So, dude, that was. Wait, hold on.

[B]

Just.

[A]

Just for the audience, because you're right. That hits so hard. Explain what he meant by that.

[B]

So the whole idea is that the United States is run by lawyers, right? Almost all the politicians, like, two thirds of them went to Yale Law School or Harvard Law School. And all of our politicians are lawyers. And they put rules in place to make things like protect people and make sure things don't happen.

[A]

Yeah, you can't do anything, and, yeah.

[B]

You can't get anything done. China is. Is run by engineers. They build stuff. And I thought the greatest thing about this book is that I thought he did a wonderful job of looking at the cost and benefit of the pros and cons of each system. And he looked at the great things China can do and how they can build stuff in these Bridges and like the infrastructure and everything is clean. All these parks and it's amazing. But they have like. They seem to lack common sense. I think that was what he was.

[A]

Getting, a bit of humanity.

[B]

Yes. And he. And I thought that. I don't think enough. Maybe in the 80s and 90s they talked about this more. I don't think enough has been made about how batshit crazy the one child policy was. Like, are you kidding me? And the fact that I didn't realize they literally have a department called the propaganda department. I thought he was joking, but that's literally the name of a department. So anyway. So did you come away reading that book or listening to it feeling better or worse about like us versus China in the years ahead? Because I don't. I still.

[A]

I mean, I'm not done with the book, but I feel like I've. I'm in it enough that I can conclude that it's going to be tough to beat them. Those, those. But those people are.

[B]

They seem to, they can build something. Like if we went to war with them, their production, they would, they would probably crush us, unfortunately. But I feel like they're. They have a very. They have a lot of blind spots. We do too, obviously.

[A]

Yeah.

[B]

But I feel like. Well, I think that was common sense about.

[A]

We can learn a lot from each other.

[B]

Yes, I think that was the point that like there's. But we're mere images of each other. Kind of like the fact that, like, we need us and they need. They. We need us and they need. I can't say it. We both need each other and because they like to build so much and manufacturing is such a big part of it, like that the fact that we're consumers, like we're kind of a yin and a yang with each other. Yeah, it's. It's a very, very good book. It's the best. And I'm admittedly a macro tourist on China, but man, it was a good book.

[A]

Yeah, it's really, really.

[B]

That's the best book I've listened to in a long time. Or read whatever.

[A]

Yeah.

[B]

No, can you say you're reading the book if you're listening to an audible.

[A]

They're tough. They're a tough competitor. I don't know what else you. I'm listening to a book. I know it sounds weird to say, but listen, I think you've come. You've come to come to terms with, with where we are in life. That's so funny.

[B]

I got a show for. Yeah, it's very good. I listened to the whole thing. I got a show, the Lowdown on Hulu with Ethan Hawke. It's a good. Not a great show, but it's. They basically just said, ethan Hawke, we're going to let you cook. And he. He's like way out there. He's. He's doing all sorts of Ethan Hawke thing. He's plays an investigative journalist who gets caught up in these. This crazy scheme and mystery. And it's not like a prestige kind of show. It's a little silly at times, but it's. If you're an Ethan Hawke fan, that's all that matters. It's just Ethan Hawke cooking.

[A]

I get Ethan Hawke and Jude Law confused. The names, not the faces. I'm not sure why, but they both.

[B]

Kind of came with the same. You've seen Gattaca with both of them in it, right?

[A]

I've never seen Gattaca. I know you like that movie.

[B]

Oh, really? You have to watch. That's a fantastic movie.

[A]

Okay. I really. I enjoyed the out of Black Rabbit. I finally wrapped it up. I really enjoy.

[B]

Right.

[A]

Yeah.

[B]

But it's just a lot of bad stuff happens. Right?

[A]

Yeah. I think I thrive on misery for my entertainment purposes.

[B]

And we're one episode away from finishing Task, and that show has gotten better as it's gone along. The last two episodes of Task have been fantastic.

[A]

Okay. I'm a little bit behind there when we catch up. Speaking of misery, somebody said, how come I've never done a favorite horror movie list? I'll do it next week for the Halloween season. But I'm gonna.

[B]

I thought you did this before.

[A]

Have I? I can't remember. I'm gonna. But I'm gonna exclude, like, Halloween and Scream. I'm gonna do stuff that's a little bit more off the beaten path.

[B]

Well, that is what you do. Yeah.

[A]

Yeah.

[B]

How about this? I have a theory, though. I think horror movies are the new superhero movies. I think Hollywood. Hollywood is getting lazy and all they do is do these horror movies at a low budget. I think that's the new, like, yeah, let's just another horror movie.

[A]

But you're late, though, because that trend has been in place for the last five years, and I think it's finally peaking because. A 24. Not a 24. Oh, my God. Who's the dude? Oh, was it Jason Blum who is on Bellamy's podcast a couple months ago? Oh, Megan too bombed.

[B]

Okay. I just. I just want more comedies. I don't know why we don't have comedies anymore. It's really depressing that we don't have more comedy movies. It's like no one wants to laugh. I don't get why there's not more comedies.

[A]

They don't make money. That's it.

[B]

I can't imagine that people won't want to go see good comedies again. There's a new one coming out with Seth Rogen and Keanu Reeves and Aziz Ansari, and it looks hilarious. It looks dumb, but very funny. I can't wait. I just want more dumb, funny movies again. That's what I grew up on in the 80s and 90s and 2000s. What happened? Hollywood was letting me down.

[A]

All right, so we mentioned Breakneck, which was a very easy listen because on my speed was like four to five hours. It's a 20.

[B]

What speed do you go? You go?

[A]

Well, it depends. If I'm in the shower, I slow it down to one times because it's hard to hear. But if I'm on the move, I am 1.7.

[B]

Okay. I'm at a 2 now.

[A]

Okay.

[B]

I'm comfortable with the 2. And I just. Every time, I take. I take my dog for a walk every day, you know, and put them in on that and listen to it, and I can't believe how quickly it's. You're able to get through a book. I listen to the whole thing in a week.

[A]

All right. On the flip side, though, this book took me two weeks. I listened to. I've always wanted to read this book. Team of Rivals by Doris Kearns Goodwin, one of the best historian authors ever.

[B]

My dad is, like the biggest Lincoln fan ever. He's read all the books, and that's his favorite one.

[A]

You know, it's funny. As I'm cleaning out, unpacking my. My office, I. This was in a box. I bought the Time.

[B]

Whoop.

[A]

The Time. An illustrated history of his life and times. Abraham Lincoln. Obviously, I never thumped this. It's a huge magazine, but I will. But anyway, I read the. I listened to the book.

[B]

The kind of person who just doesn't exist anymore, right?

[A]

No, it was too long. I mean, it was. It was tough. It was. It was. It took me. I mean, that took me like 20 hours. I think it took me two weeks to listen to. I'm glad I listened to it because I never in a million years would. Would have read it. But on the flight home, I mentioned last week that it's been a while since I saw a movie on an airplane. I. I said, you know what I want to watch? I want to watch Lincoln. See what Daniel Day Lewis is all about all this Daniel Day Lewis hubble hullabaloo. And it's not streaming. You have to, like, pay for it, which I would have done whatever, but it was on. It was on Delta. So I watched Lincoln. Perfect airplane movie because it's a slow drama and you're not gonna.

[B]

Not. It's kind of a tough watch. Not. It wasn't that great. I didn't think.

[A]

Exactly. Not going to watch it on your couch because it's boring, but in the airplane. Especially after reading Team of Rivals and having all these characters being brought to life. Holy shit. Daniel Lewis. I mean, hot take. He's good. He won. He won best actor that year. And yeah, great performance.

[B]

Not a great movie.

[A]

You're not going to watch this at home, but I really enjoyed it. Given the context of. Of the book. Did I learn anything? Yeah. Am I going to forget it all in about a week? Probably.

[B]

Biographers just cut 50% of the junk you put in your books, right? A lot of it's just unnecessary.

[A]

A lot of fat as usual. All right. A lot of fat on the show, you might say. We went an hour 15, read some bad emails.

[B]

I didn't talk about AI at all. You were the only one who brought it up today.

[A]

It was pretty light. Pretty light. What else is going on, Ben? Anything else? That's about it.

[B]

Thanks to the production team, as always. Idonshop.com do you have any new hats yet in yet or not?

[A]

Oh, I don't know.

[B]

Okay. Animalspiritsthecompoundnews. Com. We'll see you next time.

[A]

Don't get.