B (2:42)

Yeah.

A (2:43)

Did I need to listen to that book? Nope. But I did. It was. Okay, here's what I learned. Did you know. So I was taught in school that World War I, that the sinking of the Lusitania brought us into World War I. Is that how you learned it?

B (2:58)

No. The Franz Ferdinand guy getting assassinated. That was it.

A (3:02)

Okay. Obviously you're not a historian. That's what. Or you're not listening. That's what started World War I. Yeah. Why would that bring the United States into World War I?

B (3:11)

Oh, okay. I didn't know what that. That's what you meant.

A (3:13)

Okay, so that's. I was taught that. Okay. They sank a consumer craft. A consumer craft. Whatever. Civilian craft. A civilian vessel. Took us two years to get into the war after that. So it wasn't like, boom, things moved.

B (3:30)

A little slower back then.

A (3:31)

Guess that's what we're trying to say here.

B (3:32)

All right. No, but that's.

A (3:33)

Ben is having. Ben is having none of this small talk.

B (3:36)

Shoveling snow is. That's an all time dad thing to do. I love getting out and shoveling the snow. I don't mind it.

A (3:42)

It's been years, so. I know, obviously, Michigan.

B (3:44)

I do all the time.

A (3:44)

Yeah, I. I finally. I finally pulled the trigger, though. I did. I bought a. I bought a. A snow Joe. It's a battery powered smallish snowblower because those things are gigantic. Those are like the size of cars. How do people. Where do people put them?

B (3:59)

We have garages, but yeah, that. Your battery powered one. That's never gonna work when there's a real snowstorm. Good luck.

A (4:04)

Wrong. I actually. The reason why. I saw a neighbor using it and he was blown like there was no tomorrow.

B (4:10)

All right. Yeah, they do have electric ones now. I guess that makes sense.

A (4:14)

All right, well, this morning as I was making my final voyage, Ben to the driveway, I listened to Joe and Tracy. Had the CEO of Pimco on the pod on odd lots. And they were talking about what's going on in Japan and everything else in the. In. In the world. So Manny was saying that, man, I forgot the context, but he made a comment about like debt to gdp and he said, well, like, what about like household net worth to GDP or something like that. So it sparked an idea I had. Short kid, look at this. And we're going to talk all about the U.S. trade and, and waning confidence and gold later in the show, but I want to start here. So Matt made a chart showing government debt as a percentage of gdp, AKA the Buffett indicator. Ben, you're familiar with this?

B (5:12)

Yes.

A (5:13)

All right, so it's at 121%. It's going up into the right. Not necessarily the, the, the. The direction you want to see it go. But Matt had another line on there showing. All right, what about hashold debt as a percentage of gdp? Because unlike households, government has the ability to print some money. Sure. They can't do it recklessly. We're living through some of the recklessness of fiscal policy and inflation and the limits of that. But look at this, Ben. Household debt as a percentage of GDP has gone down in a meaningful way. The consumer has delivered over the past 15 years.

B (5:53)

And it's the important thing to recognize here is that from the 70s through the mid-2000s, these two lines were kind of moving in the same direction, and they've completely shifted, and that changed. I was going to talk about this later. Better bring it up now. It makes sense. Matt Klein wrote about this last week, and he's saying what we're seeing with the wealth effect this decade, really and probably since the great financial crisis is unlike anything we've seen in previous cycles. So he said that household assets, this is American households and Nonprofits assets are 53% higher than the end of 2019. Okay. A lot of that is obviously home equity stock prices, by contrast, liabilities are only 28% higher. Now he's saying this. This is not normal. Usually they kind of go up at the same time. So he said the $66 trillion of net wealth that was added in the last six years is equivalent to more than three times all of the personal consumption expenditures of 2025. So he's saying that the wealth we've had on top of the. The fact that it's growing way faster than liabilities is worth, like three years worth of spending. Like he's saying this is. We've never had this kind of wealth built without the liabilities following along with them.

A (6:57)

Mm.

B (6:58)

It's kind of crazy. So he, he shows. Listen, like in the 2000s, we just borrowed our households, borrowed their faces off. They had all these gains in housing. They took the heloc, they cashed out, refis, all that stuff. He said it's not happening. This Time. So he's saying, I wonder if lower rates could actually be inflationary. Because when people do finally turn that, that spigot opens and they finally start borrowing into houses for whatever reason, there's not gonna. There's gonna be so much more demand. Cause there's so much wealth sitting there to borrow against.

A (7:28)

Does not sound like a controversial take to me.

B (7:31)

No. Anyway, but your point is the balance sheet, we talked about this last week. They're so much better than probably than they've ever been.

A (7:39)

And guess what, Ben, Collectively, that was just the appetizer. I haven't even shown you the entree yet. Look at the next one. So, same chart. Debt as a percentage of GDP 121% compared with US total debt. So same numerator as a percentage of household net worth. And this has grown sideways for the last 15 years. So in other words, for as much as the government is printing money and adding debt, household assets, AKA the stock market of real estate, I suppose, has kept pace with that face blower.

B (8:17)

Yes. So you're right, that hasn't gone anywhere basically since the great financial crisis. There was a slight uptick, but after that it's been steady.

A (8:25)

So I don't know if the Buffett indicator is a thing of the past. You know, I feel like he hasn't been. He hasn't commented on this in a while.

B (8:32)

Munger. There's a quote from Munger who basically said Buffett doesn't follow that. Just because he said it once doesn't mean he followed it.

A (8:39)

I mean, listen, I know that he's not making decisions based off it, but I didn't know it was never even his thing to begin with. All right, yeah, that's fine. Buffett's. Like I said it once in 1984. Why do you guys keep bringing it up? I said it once.

B (8:51)

Yeah. All right. So is this another diversification year? Kind of weird. Still thinking about the AI bubble. I looked at this just probably an hour ago. Again, this is Monday afternoon. Everything's outperforming the S and P again this year. Value stocks. So I looked at the Vanguard Value Index, Russell 2000, small caps, IFA, emerging markets are all outperforming the S and P. It's a month, but this, we're seeing it continue.

A (9:17)

It's a big month.

B (9:18)

It's January, I think. Another surprise for a lot of people, though, the fact that everything is beating the S and P again. All we hear about is the AI bubble. AI bubble mag 7. And yet we're gaining it's like the bandwagon is growing. Last year was just kind of emerging markets and international stocks. Now it's all the other stuff is outperforming.

A (9:39)

So Bespoke has a chart showing. Sorry, I can't multitask, all right? My hand was caught in the cookie jar. I tried to multitask. Can't do it. Where the hell is this damn slack? Come on. Here it is. All right, so Bespoke's chart shows they, they call it smaller is better. So again, year to date, all right, 26 days, but is what it is. Mag 7 at the bottom. S&P 100 next. Both negative, by the way. Then the 500, then the equal weight, then the 400, then the 2000, then the micro caps taking the lead. This has been. This has been a minute, huh?

B (10:17)

Okay, diversification working again.

A (10:20)

All right, one more on diversification. Here's a chart then.

B (10:23)

Hang on. This is the thing though, that when people predict like AI is going to lag and these big stocks are going to lag, this is the other side of it that no one ever predicts really that. What about the rest of the stock market? That has been sort of left for dead.

A (10:36)

Right? All right, so let me just reorder this. All right, so Urian has a chart showing the Mag 7 which has gone. Which has gone sideways for about a year. No, not a year. Six months.

B (10:53)

Yeah, six, seven.

A (10:54)

Looks like legitimately the Mag 7 has gone nowhere for. Since the summer. And then he has a chart underneath it that shows the percentage of stocks above their 50 day moving average. And it's going up into the Right. This is awesome. I think that more stocks are participating in maybe the next leg of the bull market.

B (11:16)

You kind of love to see it if you're looking for the continuation of the bull market. Right.

A (11:19)

Who doesn't love to see this?

B (11:22)

The people who put all their money into tech stocks. Guess what? If they did that, they. Then they've been doing fine anyway, so they can't.

A (11:30)

All right, we spoke recently about like, when are investors going to wake up is the wrong word. But like how long is the leg going to be from international outperformance to investors putting money in there and emerging markets. We got monthly flows into iemg, like in a material way. Look at this record since 2013.

B (11:55)

We'll talk about this later. But this is also a play on like the physical good stuff. Right? Stuff is working the hard stuff. Right. And that's more the emerging markets play, isn't it actually assets. No, I know there's More technology in emerging markets these days.

A (12:09)

Yeah, I can't remember who did that post a couple of years ago that we referenced that actually. It's not just material stocks anymore.

B (12:16)

Okay, but that's kind of the idea. But. Okay, so this is a real number, though, of money going in there.

A (12:21)

Massive.

B (12:23)

Because no money has gone in there for a long time too.

A (12:26)

Correct.

B (12:26)

Okay.

A (12:27)

And what are emerging market stocks up year to date? Did you mention that earlier?

B (12:30)

It's 8 or 9% already. It's unreal. It's a pretty meaningful move.

A (12:34)

Annualize. That. That's. That's not bad. Now we're talking.

B (12:36)

Yes. Okay. Last week we talked about how in 2025, earnings told the story. Earnings were up like 14%. The index was up 17. Add in the dividend. Fundamentals basically drove the day. And I talked about how. But sometimes it doesn't work like that. So I had Matt Char Kid create these charts for me. This is pretty good. So he's got these four quadrants here. I kind of gave him the data and I said, have at it. And he. He makes the charts look way better than I could have thought. So since 1930, and I looked at this data from Robert Shiller, because he's got it going all the way back. There's been 47 times where stocks were up and earnings were up in the same year. Right. Earnings are higher. Stocks are higher. Makes sense. Only eight times were earnings down and stocks were down. Part of that is because stocks don't go down very often. But here's the real. What do you call it? Face blower. Face ripper. 24 years, earnings were down on the year and stocks were up. 17 years, earnings were up, but stocks were down. So almost half of all years. In the past, call it 100 years, earnings and stocks have diverged. One has gone up, one has gone down.

A (13:36)

Hmm.

B (13:37)

That's pretty surprising. No, I mean, obviously the.

A (13:40)

Because the market is looking forward, so. Yeah.

B (13:42)

And earnings are reported on a lag. I get all that.

A (13:45)

It. No, it is. It is. It is not. It is not intuitive. You're right.

B (13:48)

It's still. Still surprising, though. The fundamental thing. It's not. It seems intuitive as not.

A (13:54)

That's a good chart. Hey, can I ask you a question? Getting back to Erik Larson, wasn't the Devil in the White City supposed to be a movie?

B (14:04)

Yeah, with DiCaprio. Never happened. Great book.

A (14:08)

That would be a good movie.

B (14:09)

It should be a Today. If they made it, it wouldn't be a movie. It would be a TV series.

A (14:14)

It's True.

B (14:15)

Man, your dog loves to bark lately.

A (14:18)

Well, you know what it is? She's barking at the. At the shovelers up there.

B (14:23)

Oh. Snowplows and such. That makes sense.

A (14:26)

Cut it out. See if that works.

B (14:30)

My wife always says, hey, you have to say the same word to the dog. So we get our dog got like a week of training, and she thinks that that week of training really stuck in the dog's head. I'm like, come on. The dog forgot all the training immediately because we didn't stick with it. So the word is, the dog starts barking and I say no or shut up. You know something? And my wife said, no, you have to stay quiet. That's what she responds to.

A (14:52)

Does it work?

B (14:53)

No, I. When I yell no, then she stops.

A (14:56)

But also, little dogs, like, cannot be stopped.

B (15:00)

No, that's true. You're right.

A (15:01)

I mean, big dogs can't be stopped either. But, like, little dogs are more prone to barking.

B (15:05)

Oh, yeah, definitely. Okay, what's your small cap earnings here?

A (15:11)

All right, we. Chart of the week from exhibit A, small cap earnings. So we've been talking a lot about small caps outperforming. By the way, the streak ended. Rest in peace. It was a good one. I think they outperformed 14 days in.

B (15:22)

A row or something.

A (15:23)

Something like that. Look at this chart. So we have a drawdown, which you've seen drawdown price charts before, but now we have in earnings, and small caps are coming up the rear in a big way. Look at that recovery, man.

B (15:34)

I didn't realize that the drawdown in small cap earnings was that deep in Covid. So it was 35% drawdown almost.

A (15:42)

Hmm.

B (15:43)

That was meaningful.

A (15:44)

It's wild. Look, look. Up until like pre Covid, they tracked the S and P. Yeah, perfectly. The earnings drawdowns and divergence ever since.

B (15:55)

And this is all interest rates. Could you. Is that fair?

A (16:00)

Yeah, I think so.

B (16:01)

Okay. I've never seen this before. I was kind of like seeing a piece of data that, like, oh, never thought of that before. So Goldman Sachs had this update, and they looked at how equities perform during economic expansion. I wish they would have done it the other way. I told chart kid, hey, let's look at what happens during recessions too, when it's an economic expansion. What do we mean?

A (16:21)

So we're looking at what exactly?

B (16:23)

The percentage of time stocks are positive when there's an economic expansion. And it's almost 90% of the time. So this is returns during these periods. Right. And this is. I think this is annual returns. Right. Returns greater than 10% happen 65% of the time and greater than 20% is like one third of the time. Now those are pretty close to the averages. Maybe. Obviously the positive return is way better, but the decline of at least 10% is only 4%. So it's just saying when the economy keeps growing, the probability of stocks doing well is pretty high. And I guess that's another reason why everything has been so good. Because we just don't have economic contractions anymore. Doesn't seem like it. We have these pockets of recessions in these industries, but not the whole economy. Therefore, the stock market continues to go up. See if I can figure out how to do this for recession. I thought that was interesting. Makes sense. All right. You and Josh had Jeremy Grantham on again, second time. Well, he really won you over this time. I feel like he. You love this guy.

A (17:23)

I really do.

B (17:25)

He's like a sweet old grandpa. Right. Because you said he's 87 years old and still sounds very sharp. Right?

A (17:30)

Incredibly sharp. I love Jeremy Grantham because now I think most of the world knows Jeremy Grantham for being bearish. I mean he wrote a book called the Making.

B (17:39)

I can't believe he actually called his book that.

A (17:42)

It was definitely like a middle.

B (17:44)

Totally tongue in cheek. Yes. But I can't believe that the editors let him. That's kind of. It's hilarious.

A (17:49)

I think now, I think most. To the extent that people know gmo, it's for their bearish forecast. They do a seven year forecast and it's been widely bearish and wildly wrong since I think as far as, as far back as I can remember. 2013, I think is probably the first time.

B (18:05)

I remember 12 to 15 years probably.

A (18:07)

And it called for a flat decade or flat seven year period for us large cap stocks. I believe something like that. The reason why. And, and in fairness. Well, not a fair. It's just in reality Jeremy is. Has he retired in 2011? Maybe. Although I'm pretty sure that he would. Would have agreed with those numbers. Whatever. He was wrong and we spoke about it on the show and the reason why he was wrong is because all of his work, a lot of his work, I shouldn't say all of it. A lot of the work in his early years were about how margins mean revert and nobody could have foreseen or few people could have foreseen in 2013 that the Mag 7 was only going to expand and get bigger and bigger. But I think a lot of people don't know the history of his earlier years. I Didn't until I read the book. Up 16 of the first 17 years. 8% outperformance was like the first investor or the first or second institutional investor to manage index funds. Was his idea.

B (18:58)

Big first into small caps early on 1970.

A (19:01)

1970, before Vanguard was a thing. He was early to small cap value small caps stocks. And, and he was, he was early to using value momentum. Just. He had a monster career. Got the dot com bubble, right, the GFC bubble, right, the Japanese bubble, right. And he got this decade very wrong. But the reason why I feel good about him, as opposed to a lot of the people in that ilk that are labeled perma bears, there is just a nastiness. Not with all of the perma bear. Some of them are intellectually honest, but there just seems to be like a. I want the system to burn. We have to have our comeuppance. And would he be happy if there was a bare market to feel better about? Yeah, I'm sure, I'm sure he would. I mean he made that pretty clear.

B (19:40)

He did sound like he was a little, little. He, he wishes 2022 would have been worse.

A (19:45)

Yeah, he does, he does. But he seems to be a gentleman, a genuinely nice man and he cares about humanity. He doesn't want the world to end.

B (19:55)

Him, he's not a psychotic bear. Perma bear.

A (19:57)

In fact, his foundation has, has invested $700 million into making the world a better place with green energy and whatever. Like he cares about humanity. And so I could look past them being on the wrong side of recent market history.

B (20:12)

So I, I, I, I think I'd written this before, not about just him, but other people. And I thought about this after listening to the podcast, which I thought was.

A (20:18)

Really good, but also like just sorry to cut you off, but his, he's very aware of who he is. Like that, that quote that I read about his confession about the way that he managed money was the wrong way to do it.

B (20:32)

I thought it was funny that he said he reads the comments because you'd think like he would, he's not a guy like some people just, that's like a lot of, a lot of these people that you talk to actually do like the stuff that they hear and like they, they pay attention. Anyway, I, I listened to it and I wrote about this before with him and I think other people just like experts on an earlier version of the world. And the thing is the fact that he called the Japan bubble and he called the dot com bubble, right? And he got out ahead of the great Financial crisis and like latent up on risk. Of course he was going to call this one again, like, and be. Feel like kind of certain about it, you know, like, how could you have that track record and not. So that's why it makes sense. But so my, my thinking was, what is the thing about the current cycle that will get people in the future? Because this obviously, this got him. This whole like the fact that the world changed, this time it was different. And that that got him. He was expecting mean reversion. Mean reversion didn't happen. And it was like, wait, in the past this has always worked for me and now it's not working anymore. What the heck? So what are people learning in this current cycle that is gonna get them? Because I think the easy one is just the fact that there are so many high quality companies. And I pulled this one from the new Mobison piece, which I know you put some stuff in here later that just shows the share of economic profit for the top 10 companies by market cap. And it just goes up, up, up, up every year from 2015 to 2024. And I think it was just, it wasn't easy to hold these companies because they all had huge drawdowns. But buying the companies you knew that were the biggest and the highest quality companies in the world, that that led to outsized returns in huge outperformance. I think that's the thing that's going to get people eventually.

A (21:57)

Jeremy in his book, he was like, once upon a time nobody wanted to own growth stocks, right?

B (22:02)

But don't you think that's the thing that people. And obviously you say, well also the buy the dip every time the stocks fall, eventually they're not going to come right back. But we had a bear market in 2022. But don't you think that's the thing that gets people is like just buying these companies that you know, that are the highest quality. They just can't outperform forever. That's not going to last.

A (22:19)

No, it's not. I guess. Okay, I thought you were gonna ask like a specific, like what's going to end this bull market. We could, we could save that debate for another day because obviously we do that every week. I guess. I think the thing that might get people in the future is just this idea, once upon a time that you just took risk and you got rewarded like all the time immediately, right. There are going to be years of negative performance. There's going to be a string of them. There might even be a period of five years where the Market goes sideways, you're losing money or loses money. There might even be a period of tenure and I'm being facetious, like it will happen. There will be a five year period and maybe even longer where stocks go sideways and stocks don't go sideways. If they go sideways, it's because they went down a lot and then they recovered.

B (23:06)

Right.

A (23:06)

But of course it's going to happen now. Maybe this, this extended period of the wind at our back continues for another five years. Like, I don't know. But yeah, probably. I would just think that this, this whole delusion that we were drunk on risk. Yeah.

B (23:21)

Could be because this wasn't just Grantham. There was almost everyone who got caught up in that, that lost decade and the two huge crashes. And like everyone who, who sort of had a hand in calling that or, or predicted that things were going to go wrong, they all overstayed their welcome on that prediction.

A (23:36)

Yeah.

B (23:37)

So there's going to be people who overstay their welcome on the bullish side of things too. That's what, that's what I'm getting at. That's going to happen as well.

A (23:43)

For sure. The last time. So the first time we had Jeremy on, I read a quote to him that he gave to Barons that I, I remember you and I speaking about a time where we were like, good for him, where he was self aware enough to say that, like, listen, I called three bubbles. Like it is in my nature to see, to see risk or something like that.

B (24:01)

Of course. Right.

A (24:02)

So he, so he knows who he is.

B (24:03)

Yeah. Anyway, it's also, I think, I think it's a good lesson that like, I think everyone is going to have a hard time like letting go too. Like you said, he retired and he could have just walked off in the sunset. But I feel like this is a defining thing of the baby boomer generation. They're going to have a really hard time letting go, just like walking off into the sunset, you know.

A (24:23)

Well, look at our politicians.

B (24:25)

That's what I'm. Yeah, that's what I'm saying. They're going to have a really hard time not being in the spotlight anymore.

A (24:30)

And the.

B (24:32)

So if you work for a baby boomer, just expect that they're not going to retire when you think they are.

A (24:37)

Yeah. In. In too big to fail. Sorkin's book, he was, he was mentioning names like, I think he was talking about like Pelosi or Schumer or whatever. It's like, what. How are they still in power? Like they were, they were, they were at retirement age 15 plus years ago.

B (24:58)

But let's be honest, you and I are never gonna be able to walk away either. We'll be doing this when we're like 7 years old still, right?

A (25:04)

I hope. Yeah. No, I mean I'm, I'm, I'm not, I'm not one of those people. Well, I think there should be like age limits for Congress or whatever. But like I'm totally understand the fact that. Yeah, if you what, you just, you just get old and you shut your brain off and die.

B (25:18)

Right. Yeah. I won't be able to do that.

A (25:21)

No, I'm not. Not me. All right, somebody sent us a chart then with margin debt overlaid with the S&P 500 and we've spoken a lot about this over the years. They're concurrent indicators. The S P is at all time highs. You better believe that margin does could be at all time high.

B (25:36)

This was the one back in like I'd say 2012, 2013, where people really hung their hat on like, oh no. Margin debts at new all time highs. Watch out.

A (25:42)

This was a big one. This definitely was. You know, we were.

B (25:47)

So wait, so you did it as a percentage of market cap and it's obviously much lower.

A (25:51)

All right, so if you, if you divide it by the Russell 3000 market cap, it kind of shockingly hit a multi decade low last year, which is really weird.

B (26:02)

That is surprising.

A (26:03)

I wonder if it's because. You know what, I have a hypothesis. Who needs margin debt when you could just use levered ETFs.

B (26:10)

Oh, that's true. Yeah. People are using different types of leverage these days. Counterpoint futures, all that.

A (26:16)

Yeah, counterpoint to what I said 10 seconds ago. This is a massive increase over the last five months or over the last 12 months, I suppose. So for people that are listening, it went, it's been going down for the past, since 2018 until 2025.

B (26:32)

But isn't this just people not wanting to sell and they're finally borrowing against their shares?

A (26:37)

I don't know. I don't know.

B (26:39)

That'd be my guess.

A (26:41)

Not sure. All right, funny enough, I wanted, I wanted to grab this chart for Grantham because part of his reason for index funds back in the day was not, not a market efficiency argument. It was just investing is a zero sum game and remove frictions and you'll, you'll do better than people. Because his, his analogy was like if you're at a poker game and you've got some suckers like and they just run out and they just stop playing and you're only competing with the pros. Like it's harder to beat the pros eventually, if that's all that's left. And look at this. So anyway, actively managed mutual funds. This, this, this is the chart I was looking for up. It's updated by Michael Mobison. He just put out a new piece. Actively managed mutual funds down into the right. This is. Is there a bottom here? Like when does this even dry up? Because it looks like it's almost accelerating, although it's cumulative. Nevermind.

B (27:38)

Don't you think it's going to accelerate even more because the baby boomers in years ahead will be also selling out of their 401ks finally. I mean they're already doing this. But no, I don't. There is no bottom for this.

A (27:48)

Yeah. Again, this is a cumulative chart. So I don't know if it's accelerating.

B (27:51)

Or not, but there's still plenty of money in actively managed mutual funds because the market continues to go up. They're not bringing in new money, but the money that they already had is growing because the market is doing so well.

A (28:02)

All right, so on the one hand you have less pros, right. Like less dollars being being managed by professional money managers. But you have a lot more retail to pick off now. So this chart, he's got US Equity trading volume, institutional versus retail.

B (28:19)

Now the problem is retail has been outperforming.

A (28:22)

That's true.

B (28:23)

Right. That's gotta be the even harder part for active man actively managed funds.

A (28:28)

Well, we don't, we don't know that for sure. We know that.

B (28:32)

I'm generalizing, but you know, I would guess retail is outperforming. Outperform more this decade than they have before because of the name.

A (28:38)

Without a doubt. Without a doubt. Without a doubt. And so, but so now there are more individuals that own stocks than institutional investors.

B (28:50)

This is, yeah, this is kind of an interesting chart. How it totally flipped and now it flips back again. I would love to break out the individuals. How many of These are just CEOs and people in the C suites that own these shares? Yeah, I don't know what percentage that is. It's got to be a high percentage. But you're right, the fact that it flips back, that means more individuals are buying and selling stocks now.

A (29:13)

Well, the chart that I opened the show with, where we're talking about like debt as a percentage of household net worth, how much of the household net worth is, is owned by the top 5%.

B (29:24)

Yeah, well, that's true. A decent amount. Two thirds of the net worth is owned by the top 10%. 67, 70%, something like that. Yeah.

A (29:33)

All right. Speaking of top X percent, I wanted to play this for you. This is just wild. Let me share my screen. We are going to give guidance at some point to see what is a Mom and pop. That someone, maybe your parents for their retirement. About 5, 10, 12 homes. So we don't want to push the mom. It pops out. So they're talking about the. The new proposed law about blocking institutional investors from.

B (30:01)

So you never watched Arrested Development, right?

A (30:03)

I never went. No.

B (30:04)

Okay. I think it's one of the greatest sitcoms ever. This is Lucille Booth. It's a banana, Michael. What could it cost? $10? That's. That's that quote, obviously.

A (30:14)

Yeah. I mean, could you. Could you imagine being so out of touch?

B (30:21)

I don't know. When you've been rich for decades and decades, like, you have to be out of touch. You have to. There's no other way. You know, flying on private jets. And, of course. Why do you think so many celebrities go nuts? No one ever tells them no. They can get anything they want, anytime they want. They fly on private jets, of course.

A (30:40)

Could you. I actually just had a thought. Bear with me. Duncan, hold my beer. I'll be right back. Give me, like, two minutes. I gotta find something.

B (30:51)

Okay.

A (30:53)

So I. Yesterday, during our snow day, I was cleaning out. I've got, like, a chest on wheels that we need to, like, get rid of. So I opened the chest, and I saw all of these, like, stacks of photos, like, family photos. And I don't even know how I ended up with them. I have never seen most of these. So we've. We've spoken in the past about the houses that we grew up in, and not just us specifically, but our generation, what everything looked like. We're speaking today about how much money people have. Kitchens today look very different than they used to. So look at. Look at the kitchen that I grew up in. Here's a picture of my mother, who I miss very much in Merrick. Like, this is. This is what kitchens used to look like.

B (31:38)

Man, that's actually not bad for some 80s kitchens, though.

A (31:41)

Like, just. I mean, the microwave was. You know what? You know what? I don't think this microwave ever worked. In fact, I'm. I'm almost positive I never turned this microwave on. God only knows what the dishwasher was, but it was just, like.

B (31:54)

You know how much wallpaper there used to be in in houses?

A (31:58)

Just walls everywhere. Right. Like, everything was walled off. I don't know what that countertop is. What do you call that? Like Formica?

B (32:04)

Formica, yeah. It would start peeling and the edges would fall off a little.

A (32:08)

Yeah. And it was, and it was just, it was just peeled forever. You never fixed anything. We never got a new couch. You, you cleaned the carpet. Like some people came to like steam the carpet once every other year or whatever. And I know my neighborhood is not like any wealthier than it was when I grew up. It's the same people that live here.

B (32:32)

All right, put a pin in this one. I got something for you for this for later too.

A (32:35)

Okay.

B (32:36)

Last week you asked why isn't the dollar falling? Because everything going on in the world.

A (32:40)

Right now and then the dollar fell.

B (32:41)

The dollar rolled over. And it's rolling over, it's kind of back to the lows now, even below the Liberation day stuff. So the dollar is. So this is another reason why international stocks are doing well, obviously. The funny thing is if you do a zoom out here, you know, I'm a big zoom out guy. This is the dollar going back to the early 1970s. And you can see there are huge moves in like the 80s. The dollar was going nuts in the 80s. Way higher, way lower. It's all over the place. It's essentially unchanged since like 1975. The dollar has gone nowhere. So you get these cycles and you know, it's been up ever since the GFC basically with some snapbacks. But over the very long haul, these currencies don't move all that much against each other.

A (33:25)

A few questions, comments, thoughts about precious metals. And I'm not saying this because I'm bitter about selling silver 90% ago. So it's up another 6% this morning or this afternoon, I suppose it was up even higher.

B (33:38)

Look at this chart. This thing looks like a meme stock.

A (33:40)

It's unbelievable. So my two first question first is this. I don't know anything about like precious metals and inputs and stuff, but like are there things that are going to break as a result of this? Just like manufacturing jewelry for example.

B (33:54)

Obviously I don't know anything. I guess my question would be anything big enough to matter, like macro wise, probably not. I mean it's up 55% this month, this, this year. Silver's up 50%.

A (34:07)

But silver is an input. Like it is an industrial metal. It's not just for watches or necklaces.

B (34:15)

We don't fight with swords anymore. So I think we're okay there. And maybe this is a chart crime, you know, the chart crimes I that really get Me on the people on, on social media love to do the thing where they compress the chart really close together. So anytime a line goes up, it looks just going nuts. Even if it could be going from like 80 to 82, it looks like the line's going straight up.

A (34:36)

That's criminal.

B (34:37)

Yeah. Um, but this looks like that over the long horizon. And so I have to imagine we're. We're in like meme stock territory here where people like the Reddit people have to be in on this. Like the. They have to be in on this.

A (34:53)

So who's buying it today?

B (34:56)

It has to be all these other people that are just. I don't get. I mean, my whole thing has always been because we've had a few people try to dunk on us, like, hey, you guys totally missed the precious metal move. And my thing has always been, I wrote about this, like 10 years ago. You don't buy and hold commodities.

A (35:09)

You.

B (35:10)

It's trend following. That's it. So when a trend starts, you follow it. Right. And I'm sure that a lot of trend followers have hopped on this, but this is also reached now. It's not just trend following. This is fad investment territory. Right. Someone this morning I posted this chart on Twitter and they said, I think you're nuts if you're long or short this right now.

A (35:28)

Oh, that's good.

B (35:29)

And that's. That's actually a pretty good way to think about.

A (35:31)

Well, actually, Todd Son has a chart showing the volume in one of the inverse silver ETFs, which was dead for a while. Like, nobody put any money in there. The volume is going nuts.

B (35:44)

Oh, people, okay.

A (35:46)

There's plenty of people that are shorting it now, so I don't even wonder.

B (35:51)

I don't know, are there a lot of vehicles that you can leverage up to go long this too? Is that happening as well has to, right?

A (35:56)

I don't know. I don't know. But it is, it is wild. It is. It is wild to see not being a silver person. It's a five. It's a five trillion dollar asset class now, and it's going literally vertical.

B (36:06)

So I pulled up the drawdown chart for price of silver going back to like the 60s. There's been some massive drawdowns. Obviously, the 1980s thing, gold and silver, just because they went so crazy in the 70s, it was down like 90% from, I don't know, 1980 to 2000 or something.

A (36:20)

Well, coming off the gold standard might have.

B (36:22)

Yeah, that, that totally. But it also had a 66% correction in the 2000s. So not that long ago. Like this thing is extremely volatile.

A (36:32)

Well, how about that? Somebody asking who's buying it now? That was me. I bought the top of 2011 at 50 bucks.

B (36:37)

Yeah, I guess if you're a trader though, you just have this is trend following rules. If you're.

A (36:42)

No, but listen, I'm not, I'm not, I'm not, I'm not mad that people are making money. Like I, I'm, I, I, I'm a positive, I'm a positive, some thinker. So I'm not bitter. I'm happy for people that are making money.

B (36:52)

I think the story is fascinating that the real stuff is winning. I, I would have been if you'd asked me a few years ago, hey, the dollar is going to be falling and people are worried about like the, the system or whatever. What's the play? I would have said crypto, definitely. And look at this.

A (37:06)

Mike Zakaria, that is the interesting dichotomy is that like bitcoin is, is, is digital gold. Nobody wants digital gold.

B (37:12)

It's, it's, I would have been totally wrong about this. So, so Mike Zakari posted the gold and bitcoin market caps. Gold market cap is now over $30 trillion. And Bitcoin is essentially, I mean this is kind of hard on this chart to see, but hasn't moved very much in the last two to three years. Right. If you look, this is since the start of 2025. Okay. Gold is up.

A (37:38)

Look at the next chart I put in.

B (37:40)

Okay. Oh, I did this. Look at mine. I went back further than you. We did this.

A (37:44)

Wow.

B (37:45)

So since the start of last year, bitcoin is essentially unchanged. It's down 4%, silver's up 250% and gold is up 90 again. I never would have imagined this, that.

A (37:56)

Bitcoin is like Zima and investors like just give me the booze, get out here with that nonsense.

B (38:01)

But I guess this is, is this more, is this still like a central bank story? Because I thought Michael Sembla said that's not just that. Right. That it's not just central banks buying this. There's obviously. So where is the buying pressure coming from?

A (38:11)

Well, I think they're the biggest buyer.

B (38:13)

Okay. But that was the hope for bitcoin that like, listen, corporations are going to buy this stuff and then maybe someday governments will buy it. And obviously that's, but you're right, like.

A (38:21)

Who'S buying it today to send it up 7% after this run up, it can't just be Reddit people.

B (38:29)

That's my only guess. I don't know. That's my. That's my best guess. It's nuts. It's a crazy move.

A (38:36)

Wild credit to the gold bugs. It's. I. You know, the 2000 twins were. Were not a kind environment.

B (38:42)

Is it silver bugs, too? Is it a different name for silver bugs?

A (38:44)

I don't. I don't know. But. But credit to them.

B (38:49)

But, I mean, historically, this asset class, precious metals, has been huge booms and huge busts. That's. That's the history of it. These massive gains and then these massive losses. That's. That's, like, what it does.

A (39:00)

All right, let's do some economic stuff. Taurus and Slack at Apollo is like a. What does he call this thing? Let's see the daily and weekly economic indicators. All right, so daily data. Restaurant bookings are solid. TSA air travel, solid. Daily debit card data, solid. On the weekly data. All solid. Is there anything that's, like, not. That's a few things. All right, mostly good. Mostly good stuff here. I picked out a few daily data for US air travel. I can't believe this. 2025, despite a big decrease in foreign travel, like, still record numbers. Close to record numbers. And during. During COVID We thought business travel was dead. At least I definitely did.

B (39:42)

Forever. I did, too.

A (39:44)

And dead wrong.

B (39:46)

Are you ever on a flight that's not almost all. All full these days? Every flight I've taken is almost always full.

A (39:51)

Nope.

B (39:52)

Right. You're almost surprised when it's not full now.

A (39:56)

I can't tell you the last time that the seat has been open next to me.

B (39:59)

Right. That's a great feeling, though, isn't it? Especially on the morning flight when that. When no one sits next to you.

A (40:05)

So good. All right. Weekly job openings. This is a bit concerning. Just down to the right. If you're out of work. This is not an easy time.

B (40:15)

Counterpoint. We're back at 2019 levels.

A (40:18)

No, rejected.

B (40:19)

Not a counterpoint. That doesn't count. I thought we said a lot of these job openings were fake. I thought that was the story we went with.

A (40:25)

Yeah. So 4,000 down, whatever. Normalizing seemed appropriate, but this is past. This is way past normalizing. Also, no layoffs. So if you have a. If you have a job, you're okay. And if you don't, tough nuggies.

B (40:39)

I mean, that's the weird part about it, though, right? Openings are closing, but people aren't getting fired.

A (40:45)

Not good. All right. According to Moody's, the Share of total outlays going to those in the top 20% of the income distribution, making over $175,000 per year nationwide, increased to nearly 60%. There's another new high in the data we have constructed back to 1989. So the title of this chart says it all. The economy is increasingly K shaped. Bottom 80% taking less of the pie. Top 20% taking more.

B (41:10)

This is spending personal outlays.

A (41:12)

Yeah.

B (41:13)

Holy smokes.

A (41:14)

Yeah. But good news to counter that increasing inequality. Jeff Weiger tweeted. Everyone thinks credit card trouble is compounding, but the data shows the opposite. My guess, if you send this chart to a friend, they will have no idea that delinquencies have been falling since 2024.

B (41:33)

So remember when credit card debt hit a trillion dollars and it was like a big thing just because it's. Hey, round numbers. Everyone likes round numbers. I think it's at 1.2 trillion now. 1.3 or something. Yeah. It still hasn't led to the end of the world. Credit card data is not going to be the tell. I don't think. I think that's like a concurrent indicator. When things go bad, credit card data will go bad. It's not going to like front run things. How's that? It's not going to be a macroeconomic indicator.

A (42:00)

You don't need to be a leading indicator.

B (42:02)

No fair.

A (42:08)

There's a whole rich data set of this. I feel like we don't need to speculate either. Credit card. Credit card either is or is not a leading indicator. You need to learn how to vibe code.

B (42:20)

All right. I hate that term. I'm sorry.

A (42:23)

I don't love it. That's okay. I don't love it either.

B (42:27)

That's just not gonna be me. I'm gonna survive life without probably ever vibe coding. It's gonna be okay. I'm gonna make it. I looked at like I googled the Claude code thing. I clicked it. Eh, not for me.

A (42:40)

No.

B (42:42)

If I get left behind by the robots, so be it. All right, here is a study from the Keel Institute. American importers and consumers bear nearly the entire cost of tariffs. Foreign exporters absorb only 4% of the tariff burden. The remaining 96% is passed through to US buyers. So that's the companies and the consumers. So I guess the way you think about. So it says they did all these studies. So US customer revenue surged by 200 billion in 2025, a tax paid almost entirely by Americans. Now that sounds like a big number, right? $200 billion. I guess this is probably the reason though that it hasn't had an economy wide impact yet, because in a $33 trillion economy, $200 billion is just not a lot of money. Right. So this has been a like minor tax on probably small businesses and consumers, but not enough to warrant like a macroeconomic calamity. Right?

A (43:36)

Yeah.

B (43:37)

All right, so you talked about housing before. Someone sent me this. I thought this was a really cool inflation calculator. What should I spend? Click on the link there. So it looks at, you can pick a year every five years or something. Go back to 1970 and basically it shows you what the price was in 1970. Right. So this is a gallon of gas, a gallon of milk in 1970. If it just followed the price of inflation till today, what would it cost? Well, a gallon of milk would cost $11 if it just followed inflation. But it's actually only like $4. So it's cheaper than you would expect based on inflation. And I did this for things like eggs and a gallon of gas. And movie tickets, Surprising movie tickets actually have not kept up with inflation. What do you pay? Because you go all the time. 10 bucks is probably about what I pay for a matinee with my kids. What do you pay for a movie ticket in New York? 15, 20.

A (44:22)

It depends which, it depends if I'm going to like a Regal or an imax. Those are obviously more expensive. But the local one is probably, I don't know, 14 bucks.

B (44:31)

Okay, so the one that is the biggest difference obviously of all these and like college tuition is one of them. But a median home. So median home in 1970 was $17,000. If it followed inflation, that would be up to like $140,000. The actual median price today is like 400. So it's saying housing is way more expensive, has been way higher than inflation over time. It does. So I wrote back that and I said, here's the hard part to calculate. I wrote the guy who created this little tool that emailed me. I said, housing today is so much nicer. So how do you account for that in inflation? Right. There's more bathrooms, there's more bedrooms, the kitchens are nicer, the appliances are nicer. Does that account for all the inflation? Of course not. Housing has just gotten more expensive. And it really was the 1970s that made housing take off as an asset. Everything else did so much worse in the 1970s. Sneak preview from my new book. I'm right about this a little bit. Everything else did so much worse. The only asset class that dwell in the 1970s besides, like gold and precious metals was housing. That was the thing that got people interested in housing to begin with as an investment.

A (45:35)

What's your new book called?

B (45:37)

Risk and Reward.

A (45:38)

How long have you been writing it for?

B (45:40)

I turned to my last edits last week. Comes out in May I think. Hopefully. So yes, I've really been right. This is a 10 year project for me. I've kind of been writing this since I started my blog. How's that?

A (45:53)

Love it. Speaking of prices, I went to, I did one, I needed to get bananas, so I got a bushel. Unbelievable value.

B (46:03)

It was like I've been saying this, remember? It's crazy.

A (46:06)

Yeah. You've been on this corner.

B (46:07)

My wife is like, why do you always buy so many bananas? And I'm like, because you're bound to get one or two bad ones and they ca it for 10 of them or something. It cost $3.50. Why not buy more than you need?

A (46:18)

Great point. On the other side of value, Starbucks. Listen, I, I'm addicted. They, they won't lose my business, unfortunately. But I went this morning and I got a little like cardon of one of their like chocolate protein drinks. I forget what it's called. Doesn't matter. And two egg bites, like little round eggs that they put in the oven. And this isn't egregious, I suppose, but it feels insane. It was. And it was $11.50.

B (46:54)

Yeah. But they know they have everyone hooked. It doesn't matter. Like my wife loves to go to Starbucks and my kids have like the breakfast sandwiches or the cake pops or the banana.

A (47:01)

Isn't that nuts? It was like 12 bucks for a little carton of milk and two things of eggs.

B (47:10)

As a non Starbucks user my entire life, I don't, I have no frame of reference here.

A (47:14)

Yeah, yeah. All right, Ben, I was, I chatgpt something the other day and it just not such a profound realization. But you should never say I don't know. Now you could, you could say it out loud. But like there should never be an excuse for not knowing something because back in the day or even like with Google you would like Google something. Like they would like send you to an article. Like that's a lot of work. Now you literally just say hey, what is this? And I can't remember what I asked it, but it was something that like, you know, it's something that I probably should know. And I didn't know because I don't.

B (47:46)

Know most things my kids ask all the time because my son loves to ask questions just Inane questions and he'll go look it up on chat. Hey, what year was this college formed or whatever. Went to college basketball game this weekend. What year did the college start? And then it has the whole history of it too. So he's like always constantly reading me and asking these things.

A (48:03)

Yeah, but like, yeah, it's great. Like it all. Hey, but you know what's annoying about ChatGPT? They have like your search history. But like they don't have every search. It's like seem. I don't know, it seems like random. They have like every fourth search.

B (48:15)

I think they drop off eventually.

A (48:16)

I have my list, right? Oh, is that what it is?

B (48:19)

Or sometimes your searches just go on to other ones and you can't see it.

A (48:22)

But I ask it everything. Like I, I'd be very embarrassed if you saw what I asked it, so please don't look. But there are some very basic things that I, that I just, you know, just got by me.

B (48:33)

All right, all right. Another one from Torsten Slack. He shows that the all the profit margin expansion in The S&P 500 has come from tech stocks. Right. The green bars are everything else. Orange bar is tech. You can see the orange getting much bigger and that's leading the charge higher. Couldn't you say that the way you measure success in AI is if it makes the green bar go higher and not just the tech stock margin expand?

A (48:56)

Absolutely.

B (48:56)

When you say that's like if AI really is a success, it's going to make all these other companies more efficient. I mean, some people might say that's not a success because who knows what that means for jobs. But that would be a test for me to see does it really help all these other companies or not?

A (49:10)

I agree.

B (49:12)

All right. A bunch of people sent us this New York Times story about prediction markets. Betting on prediction markets is their job. They make millions. Welcome to the era of the poly market. Sharp. They talk about this guy who quit his job as a cpa. He made his first hundred thousand dollars betting these markets and he's talking about how he's betting on Trump speeches. Whether he's going to say hottest or big or radical or rigged or all these different words that you can bet on. Now he says he's got like 500 bets going on at once. This one kind of was tough. I'm so terminally online, I don't think I even recognize my own neighborhood. I spend maybe 16 hours a day on the computer. I should get out more. This is the guy that he does this and they Profile all these people who. This is their job now. They figured out a loophole or whatever. They're good at it. They make a bunch of money. This is the interesting part about these markets. And they interviewed this one guy who said he preferred to be anonymous because he didn't want any attention from the IRS, but he said, if I made $2.5 million last year, someone else lost that. And I think that's the hard part. These. These companies are going to have a hard time getting really big scale like they want is in the stock market. It's not a zero sum game. Right. Just because you make a bad bet on a company it underperforms doesn't mean, like, if you. You could have just been in actively managed mutual funds for the past 15 years and underperformed the S and P, you still did pretty well. Even if you underperformed by a couple hundred basis points. In these markets, you need. You constantly need new people in them because there's gonna be a lot of people who are just going to lose and give up. I'm not putting more money on this. I just lost five bets.

A (50:47)

I guess now is a good time for me to raise my hand.

B (50:50)

You're into it.

A (50:53)

No, I'm one of these idiots. I'm on the other side.

B (50:56)

No, that's what I mean. You're the one. I'm saying you're playing these now. Prediction markets.

A (51:01)

Do you listen to the podcast?

B (51:02)

Well, just.

A (51:04)

Are you the only person. Are you the only person not dunking on me? Thank you, Ben. You're taking it easy on me. There was a lot of people in my inbox last night after the game.

B (51:10)

Oh, well, of course. That Seahawks are never going to win this Uber Bowl. Let's be honest. Come on.

A (51:16)

That was an awesome game and did that fourth and four.

B (51:21)

So you're forced to root for the Patriots now?

A (51:23)

I'm forced to root for the Patriots. So, yeah, not a great feeling. Not a great place to be. I mean, objectively, the Seahawks clearly look like the best team in the league.

B (51:30)

But wait, are you making a bunch of other bets on these prediction markets now, or is that the only one?

A (51:35)

No, but this is what I've been saying. The stock market is positive some. You stick around long enough, generally speaking, you don't act like a complete maniac and you will make money. So somebody emailed me this morning something about, like, how does it feel? Or whatever. I can't. It wasn't that nasty. But, like, you risked 100% to make 14%. Yeah, I did that was the calculus. I said, like, yeah, I could lose. If they win, I'm going to lose all my money. That's how it works. And if they don't win the super bowl, I'll make 14%. But this is like, it's not fun to lose 100% of your. Of your money. Another thing with the stock market is, generally speaking, bets don't go to zero overnight. I mean, if you're trading options, they do, but you could be wrong and lose 20% and still walk away with 80 cents. So what I think is happening is I do think that the prediction market is here to stay. I think it's going to be bigger. I think it's going to be much bigger and more liquid than it is today. I also think that a lot of the early success is sending a wrong signal to some of these companies that are going all in. Robin, as an example, they've never seen this sort of adoption. Yeah. But I think that they're extrapolating too far. I think that the hardcore people that we're going to predict are already doing it. I don't think they're gonna, like, expand the pie that. I don't think you could annualize the growth. I think, like, what it is is there. But I do think it's. I don't think it's all nonsense. I think just in terms of, like, wisdom of the crowds and information and seeing what's implied in this decision or that decision, I think it's cool. I think there's a lot of good things about it. Like the, the. We're gonna obviously rely on prediction markets for elections going forward as a better source of truth than whatever it's done previously. But, yes, this, this. This idea of betting on everything. I don't, you know, I'm not super into that.

B (53:33)

The one way that this. We'd be kind of wrong here, I guess, would be if these companies just supplant all the online gamblers. If FanDuel and DraftKings are hurt because these. These just take over sports gambling, they'd be bigger than we think that that'd be the one thing that would make.

A (53:48)

Yeah, I guess. I guess my point is, like, is it going to. Are other areas of the betting markets going to grow? Like, I. Yes, but no. And also, listen, if the, if the Patriots win, I know we're two weeks away. I'm sorry. If the Seahawks win, I promise I'll be okay. And if you want to check in and give me a little. A little ribbing, which I've Received several of those. That's fair game. Where. You know it's fair game. I would be. I would be ducking.

B (54:11)

Hey, you. You put it out there. You could have. You could have kept it yourself if you wanted.

A (54:15)

Yeah, this is, you know, this is part of the fun. It's okay, right? All right. Oh, here's. This is not a great chart. Weekly data for home sales meeting data for yourself.

B (54:27)

This is great for some people.

A (54:29)

Good for buyers.

B (54:30)

Yeah.

A (54:32)

But no, it's not even.

B (54:35)

Why, if houses are staying on the market longer, this is great for buyers.

A (54:39)

Wrong.

B (54:40)

Why?

A (54:41)

Because. There's no. Because buyers are not finding value. It means the prices are still too high.

B (54:46)

Yeah. And they have to come down. They're going to come down, otherwise you're not going to sell.

A (54:49)

You just move the goalposts. It's not good for buyers. They're not buying because they're not finding value. These homes are still way too expensive.

B (54:57)

And that's why the days are going up. This is becoming a buyer's market. That's why this is a good thing for buyers.

A (55:04)

Fine, maybe trend in that direction. But it's at the highest level since.

B (55:07)

Like Covid, if your house starts sitting on the market for one month, three months, six months, like you start. You're going to take eventually. Okay, I'll take a lower offer. I'm going to cut the price.

A (55:17)

I would hope so.

B (55:18)

Yeah. Otherwise it's not going to.

A (55:21)

Anyway, housing market is still frozen.

B (55:24)

All right. You've talked about this before, how the financial media hates private credit or want. Maybe, maybe they don't hate it, but they want to see. They want. They want to see its downfall. And so there's two. Two big headlines this week. BlackRock cuts the value of private debt fund by 19%. Waves fees and then another one. Private credit investors are cashing out in droves. And I think anytime something like this happens, the media is going to pounce on it because they. I think they want to be first to any potential sign of like a crisis in this space. Is that fair?

A (55:58)

Yes.

B (55:58)

Even if, and I think you pointed out both of these stories were kind of. I know nothing burgers. They didn't. There wasn't much substance there.

A (56:05)

Well, also, the media loves just this idea that, like, it's bullshit. The marks are fake investors being lied. It's juicy. It's a juicy story.

B (56:14)

Right. So Matt Levine had a really good take on the marks. He said, broadly speaking, the point of private credit is that you don't have to worry about the marks very much.

A (56:22)

That's the, that's the whole point.

B (56:23)

So he says you make the.

A (56:24)

These are loans. I'm not trading them. I'm lending money in the month and the company's paying me back. What is with the marks?

B (56:30)

So he says the loan, you make the loan 100 cents on the dollar. It eventually either gets paid back or it isn't. If it's paid back, then it was worth a hundred cents on the dollar. If not, it's not. Eventually you find out the answer. He says your funds estimates along the way are some of the second order interest. But if you're a buy and hold investor, they just don't matter that much. Now here's where it does matter. Because the fact that more retail and more advisor clients are into this space, they're not buy and hold investors. They're going to want to get out. And that's when there's a problem, is when you try to add more liquidity to the space. That's where the problems happen and that's where the headlines are going to happen.

A (57:03)

Yes.

B (57:03)

So it's a time horizon mismatch.

A (57:05)

You're right.

B (57:06)

Yeah. If there's a company that defaults, then of course that's. You're not going to get paid back or not 100 cents on the dollar. So that's the thing.

A (57:13)

Right. So my take on Tricolor and first brands, when it happened, when was that even? Was that September?

B (57:21)

Yeah. I guess it was a story and then it kind of went away. Right.

A (57:25)

All right. So my take at the time was like everything else, unless this was the big one and Jamie was right that there were more cockroaches. I guess there were two cockroaches or three. So my, my, you know, when you were, when you were in the sewer. Sonali I said I think this is going to fade away. Maybe I'm wrong, but I don't know. So far I feel like I'm right.

B (57:46)

But how about this? There's only more cockroaches when there's a recession. Like all this stuff people worry about, just wait till the recession. Yeah. All right. The Wall Street Journal had this article. The Americans who are going a whole month without buying anything, just like dry January. People are doing dry. No, by January. Okay. So they profile all these people who decide if the whole month of January, like besides necessities, we're not buying anything. This one dad of said he's got three kids, he's locking up his credit card unless you need it. Like we're going to talk about this before you spend something. Not to be a personal finance scold. These kind of things don't work, right. Like the crash diet that my favorite book on. This is one of my favorite behavioral books, is called Mindless Eating. And the stat they give that stuck with me Forever is 95% of diets, people end up gaining all the weight back. And I think if you go into it like this instead of developing good habits like that, it's just not going to help.

A (58:42)

Well, yeah, but I hear you, but like, if you, if you don't spend the money in January, that's good. It doesn't mean that maybe, maybe you could.

B (58:50)

Maybe you learn stuff. Like, maybe I don't need this to buy this much stuff anymore. I can pick and choose. You're right. But I just think these crash courses just don't. They don't work very well.

A (58:58)

Yeah, I guess the only thing that I would say is if you, if you spend 600amonth on things you don't need, and then one of those months, you don't spend that 600 bucks. All right? The 600 bucks in your pocket.

B (59:11)

By the way, everyone has a friend who does dry January. And you're like, oh, he's doing it cause he's an alcoholic. Right? Like, you have that friend, like at the kids games is like, oh, I'm just counting down the days till dry January is over. It's like, you're not really helping yourself that much here. Right. Anyway, I thought this was interesting. This is from JPMorgan. Did this guide to retirement thing, right? Just look at their guide to the markets, and they show percentage of people with 401k loans or credit card debt. And it peaks at midlife, which makes sense because that's when spending peaks, right. I took this data from the BLS. Your spending peaks at like age 45 to 54. It goes up until then, then it goes down. Right. And you spend less as you age, which is probably surprising for some people and why people end up with more money in retirement than they. They think. But look at the percentage of households who still hold credit card, like a revolving credit card debt in retirement.

A (60:00)

That is interesting.

B (60:01)

It's almost 40% at age 65. That's a really high number, right?

A (60:06)

Yeah. Wow. Higher than I would have thought.

B (60:10)

Okay, what do we got in movie theaters?

A (60:12)

All right, somebody sent this to us. Here's the headline. Our movie theaters cool again. Gen Z's hottest club might just be the multiplex. Here we go. Last year, there was a 25% increase in the theater Attendance for members of Gen Z, according to the annual strength of theatrical exhibition report from Cinema United, the world's largest exhibition trade association. Likewise, the number of Gen Z moviegoers who visit theaters at least six times a year rose from 31 in 2024 to 41% last year. Gen Alpha is even reporting higher levels of interest in going to the multiplex or that's a survey, whatever. While 45% of millennials and 48% of Zoomers said they enjoy watching films on the big screen versus at home, a solid majority of Gen Alpha, 59% said they favor the theatrical experience.

B (60:56)

Did a movie theater rate this survey? There's no way these numbers are correct. 25% more Gen Z went to movies last year. No way. You believe this?

A (61:13)

I have not seen the methodology.

B (61:18)

Come on, man, think about it.

A (61:21)

I'm, I'm telling you. I have noticed a material uptick in attendance at theaters lately.

B (61:27)

That's possible. Okay, so the big worry about Netflix, which, it sounds like the Netflix Warner Brothers thing is just done. Like they're. Lucas Shaw wrote about it. He's like, listen this. Unless Paramount substantially increases their, like, this is it. This is the deal.

A (61:39)

Paramount stock is getting. Paramount's in a. Paramount stock got cut in half in like four months. Like, what are they going to do?

B (61:47)

It was funny because someone made the point of like, Paramount is a, It's. I don't know, it's a 12 or $13 billion company. They were trying to buy a company that's like six times the size of them. That should have been your tell. Like, maybe this isn't going to happen. So Ben Thompson had the. Greg Peters, who's the co CEO at Netflix on his checkery and his podcast. And I listened to it and it's interesting. All the stuff people are talking about in the industry are the movie theaters, right? And when they asked him like, he goes, why did you do this deal? What's. You know, because you've said in the past you don't want to do. He talked a little bit about movie theaters and keeping that and he kind of, it was a brush off answer. But he really, he talked about HBO a lot. And I think that Netflix knows that they have a quality hole, a quality void in their programming. It's just, it's not the same. And I think, I think the HBO part of it is probably a bigger deal than the movie theaters here. Like, they want higher and they're like, listen, we're going to keep all the HBO people, all right? We're gonna Let them do what they do and create quality content. And he didn't really say whether he's gonna bring them together. I'm sure HBO is gonna have its own tile on Netflix or something.

A (62:47)

It would be amazing if we can have more HBO quality content. So, like, for example, I watched his and hers. So six episodes. I'll watch anything that's six episodes. And it was good. It was fun. It was like legitimately good. It was like typical Netflix B. B minus type of thing. Right. Like, the ending made no sense, but like, someone died.

B (63:09)

Who is it?

A (63:09)

Yeah, yeah, whatever. If we could have like more high quality programming. Who says no?

B (63:18)

Yeah, so I, I like that part of it that, that, like, okay, good. They're not gonna, like, they're not gonna try to mess with hbo. At least as of now, I hope.

A (63:26)

Sinners led the, Led the field. Sixteen Oscar nominations.

B (63:32)

That's a lot.

A (63:33)

Horror is very back. Weapons got a nod.

B (63:36)

You think it's a movie.

A (63:38)

Frankenstein got nine. Sinners is not like a traditional horror movie.

B (63:42)

No, but it has elements of horror movie.

A (63:44)

It's in the category. I, I rewatched the first, like 10 minutes of from Dusk till Dawn because I think, like a lot of people when they saw Sinners, I enjoyed it at a good time. Overhyped, in my opinion. I rewatched it. I agree. It was fun. I don't. 16 OCR nominations sounds like a stretch.

B (63:58)

I, I think it was a very good movie. Not a great movie. That's my, that's where I fall on it. I really liked it. I didn't think it. I didn't love it.

A (64:04)

Yeah, I really liked it too. I mean, I liked it. I don't know if I really liked it. So I thought from Dust Till Dawn. I rewatched the first 10 minutes of from Dust till Dawn. Amazing. Now I'm pretty sure. I mean, the first.

B (64:16)

I remember, I only watched it once. I remember not liking it.

A (64:18)

Oh, I saw From Dust Dawn a dozen times. I mean, obviously, but, but, but I'm pretty sure that the last I, I, it's been a minute, but I'm pretty sure the last 20 minutes from Dussel dawn is an absolute joke. Like, I think, I think there was. I think I remember like a vampire playing the guitar of somebody's body. Like the body guitar. Like eating somebody. Yeah, it was. It got really bad. I'm pretty sure it fell apart at the end. All right, random. Just a random chart as we wrap up Las Vegas tourism. You would have thought from what we read that it's like in the shitter. It's not. It's sideways. Is that surprising?

B (64:54)

It is funny how people like to pick on Vegas for some reason. As a, it's, as a like big economic indicator.

A (65:01)

Vegas is dead. No, it's not. All right, Ben, I got a, I got a. I got a parking ticket for backing in.

B (65:10)

Wait, what do you mean?

A (65:11)

There's head in parking only in the train station.

B (65:16)

Really?

A (65:16)

So, yeah, so I backed my car and. All right, so wait, I take.

B (65:20)

I love that rule. That's amazing.

A (65:22)

I know. You do. I take the 803 train and the parking lot is full at 803 and it's. I, I have a big parking lot. Like, there's got to be, there's got to. I mean, there's literally got to be a thousand spots. It's expansive. And at 803 it's, it's, it's standing room only on the 803 train now. Like, I don't know, you know, people are back in the city. But anyway, the parking lot is full. So I was driving past, I'm like, oh, I literally think I'm going to have to like miss a train. So I saw a spot I jammed in my brake instead of like backing all the way. Cuz there was cars behind me. Instead of backing all the way up to, to park in, head in. I just backed it in and I got.

B (65:57)

Why do you think they have that rule? I'm curious.

A (65:59)

I guess they're like, no, don't show off. You want to brag, you want to brag, you get a ticket.

B (66:04)

I hate when people back in. I hate it. It really annoys me because you're going and then they have to stop. Then you have to kind of back up and wait. And it. People think it's safer for some reason, but you're just making everyone else wait for you.

A (66:15)

And I know this is your point. Giant trucks need to back in.

B (66:19)

They think they need to back in. But that's the. I'm. Look at how cool I am.

A (66:22)

No, no, no, they do you, you can't. You know, physics, geometry, angles. All right, Ben, what did you, what did you get into this week?

B (66:30)

All right, so the guy from Free Solo. Did you ever watch that, Doc?

A (66:33)

Yeah. Yeah.

B (66:34)

Very good. So he climbed Taipei 101. As you know, my son is a big skyscraper guy. So he, when he saw this, he's like, oh my gosh, this is amazing.

A (66:41)

So when I was, when I was in Grand Rapids, George made me watch on YouTube like the 10 Tallest Skyscrapers and something tells me. Something tells me he's seen that one before.

B (66:51)

He's got them all memorized. He knows how many floors they are. He knows how tall they are. So we watched it, and that guy is insane. Like, it was. It's kind of funny. We probably watched the first 20 minutes and we didn't watch it live. And then they're like, kind of. Kids kind of get more like, can we just fast forward to the end? And we got through. My. My daughter's like, he didn't die. Can't believe it. But I don't know how that guy, like, he should. Like, his level of calm. Like, he climbed literally the top of, like, the spire. And there's like a little thing, little circle on top, you know, like the stands on it. He stands up on it and he. He looks like he's just cool as a cucumber. It's super windy. He's taking a selfie. I'm like, I'm worried this guy's gonna fall from that thing. So it was very interesting. I just think so. Netflix is obviously getting into way more live content like that.

A (67:38)

Don't you think he's wasting his talents? He should be a day trader.

B (67:42)

Holy. He could. It does seem like he's taking the limitless drug or something. I listened to. I'm probably halfway through your CAA book that you told me to listen to the James Andrew Miller one.

A (67:51)

How great is that?

B (67:52)

Very good story. I would never want to be an agent. It's kind of funny. Like, they talk about the one agent shacked up with Ali McGraw for a while, and she's like, why would someone want to do this? Like, you get calls from crazy people in the middle of the night and. But the way that they went upsetting about their business is interesting. I thought the interesting part, the most interesting part of the book is that mailrooms don't exist anymore. You hear all these stories back in the day, like, all three of the guys, three of the founders, like, started in a mailroom at an agency and worked their way up. You hear all those stories, like, of people at Bear Stearns or Lehman Brothers or Goldman Sachs, who I started in the mailroom, and then I worked my way up, and now I'm a partner. That never happens today.

A (68:24)

I'm pretty sure. I'm pretty sure. I asked Chabot Chat what exactly happened in the mailroom. And it's exactly what you think it is. Like, it's literally. It's mail. It's mail sorting and dropping it off and. But the Concept seems so, like, data. It's like there was an actual mailer. Yeah.

B (68:36)

But the idea that you would have to start there, and obviously they kept it for CA to, like. It was kind of like a. You have to put in your lumps, and then you work, you know, figure it out from there. But that whole starting at the very bottom, working your way up to running the company, that just. That can't happen anymore, right? It doesn't happen.

A (68:53)

Nope. Nope.

B (68:54)

All right. I told you. I finished Landman, finished the new season. I thought it kind of went off the rails a little bit. And I still love Billy Bob. I think. I think the third. Like, someone. There was a death. There was a weird college story. I think I'm probably good at the show. I think.

A (69:12)

Who died? Did I miss that part?

B (69:15)

The son who seems like he's in a different. Different TV show. Someone tried to assault his fiance, and then he killed him.

A (69:22)

Oh.

B (69:23)

Anyway, spoiler alert. It was. It was entertaining. I think the show is about ready to, like, completely go off the rails. So that's where I'm. I'm good.

A (69:31)

All right. I hear you. And it's totally possible. I actually think that this season was terrible, and yet I enjoyed every bit of it. And when I say terrible, nothing happened. It wasn't terrible. That's. That's kind of. But, like, it was. It was not. It didn't. It didn't move the story forward. So I actually think that season three might bring it back and something might actually happen.

B (69:52)

Okay. I did think that they didn't use Andy Garcia enough. Like, he was there. I thought he was gonna be a really good character. He kind of didn't do much. So anyway, it's an entertaining show, but it's. The amount of cringe moments that they have are. It's. It's a lot of cringe stuff.

A (70:03)

Like, I love it. I'm all in.

B (70:05)

All right.

A (70:06)

But. But. Yeah, of course. I hear you. All right. This. This is my type of film. Ben Mercy. It looks like. It looks like Minority Report.

B (70:17)

This is the new Chris Pratt one. Okay.

A (70:18)

Yeah. The critics gave it a 21. The audience gave it an 82. Say no more. I can't.

B (70:23)

Okay. Over the top action. Kind of cheesy, but it's still entertaining. That's. That's really landing there.

A (70:29)

Yeah. I'm. I'm. I'm. I have not been to the theater. I'm, like, falling behind. I haven't seen Marty Supreme. I haven't seen Primate, which I'm very excited to see.

B (70:39)

I Don't know what that is.

A (70:40)

I want to see. I want to see Mercy. There's one other that I want to say.

B (70:44)

It's kind of insane how quickly these movies are on demand now where, like, hey, it's still in the theater. You can rent it here for $24.99 or whatever.

A (70:53)

Correct. Oh, Send Help is coming out this week. I gotta see that. I don't know if I'm gonna make it. I gotta. Gotta get back to the theater, Ben. That's what I'm trying to say.

B (71:01)

So wait, wait. See this Mercy movie or not?

A (71:03)

No, no, no.

B (71:04)

You're just saying it's in your wheelhouse. Okay.

A (71:05)

Right in my wheelhouse. Oh, and bone topple, I haven't seen yet. Yeah, I got to get out there. All right, Ben. I am taking the kids sledding because it's been a while since we've had some snow here.

B (71:19)

We went sledding this weekend, too. Still fun. I still go occasionally with the kids. I'll sled down the hill a few times. I love it.

A (71:27)

It's great fun.

B (71:28)

Yeah. We went, and my kids. It was like, 8 degrees out. We were literally the only three people on the sliding hill, Me and my twins. There's no one else around. It was all, like, powdery and a big hill we have, and it was way too cold for everyone else. And we went down once. My daughter's like, I'm not gonna do this. And we went, like, a dozen more times, because once you start doing it, it's so much fun.

A (71:46)

Yeah, it's good. It's good, clean fun. All right. Thank you for all the emails, even the ones dunking on me. I appreciate those, too. Animal spirits@the compoundnews.com. hope everybody is staying warm and dry and just generally enjoying the themselves. We'll see you next time.