Animal Spirits Podcast—Episode 439
“Is the AI Trade Over?”
Date: November 19, 2025
Hosts: Michael Batnick and Ben Carlson (The Compound)
Episode Overview
In this episode, Michael and Ben dive deep into current market dynamics with a focus on artificial intelligence (AI), speculation about the end (or not) of the AI trade, market skepticism, and what healthy corrections look like. They debate tech stock volatility, investor sentiment, comparisons to previous market manias, the psychology of bubbles and corrections, and key issues in private credit and household finances. Along the way, they punctuate insights with personal stories, notable charts, and their trademark humor.
Key Discussion Points & Insights
1. Is the AI Bubble Over (or Was There Ever One)? (02:25–06:46)
- Ben: Opens with a take that “there’s no euphoria in this market. ...this is a joyless bull market” [02:25].
- Michael: Replies, “There was absolutely euphoria...when OpenAI was making announcements...Oracle stock jumped 25% in a day. That was absolutely euphoric behavior” [03:00].
- Ben: Maintains skepticism, saying, “I think the euphoria is in the tech CEOs, not the end investor” [03:38], and calls recent bubble action “weak” if it was the top [04:12].
- Both ultimately agree: Any hype is gone for now, and corrections feel healthy and necessary.
- Michael: “Corrections only look healthy in other people's stocks” [05:49].
2. Market Corrections and Skepticism (06:46–09:13)
- Comparison of meme and speculative stock drawdowns: roundhill meme ETF down 40%, with many names seeing 30–50% declines, but S&P only down about 3% [05:10].
- Discussion of media’s skeptical tone vs. the euphoric coverage during the dot-com era.
- Michael: Notes that much of today’s euphoria is among “hyperscaler CEOs” (e.g., Altman, Satya, Zuckerberg), while the public and politicians are growing wary of AI [07:15].
- Quote: “AI is becoming deeply unpopular in America. ...Republican Senators say they’re afraid to mention the words AI because their popularity ratings go down.” [07:45; attributed to Brad Gerstner via Michael]
- Ben: “All the skepticism we’ve had...do you think that’s stopping Mark Zuckerberg from investing more?” [08:47].
3. AI Skepticism, Macroeconomic Impact, and Company Fundamentals (12:16–14:55)
- Oracle’s wild swings: After an OpenAI announcement, Oracle stock pops 37% in a day—clear euphoria, later loses $60B in market cap [13:05, 13:33].
- AI’s effect on society: Public (esp. Main Street) worries about job losses and societal disruption. “Nobody’s rooting for it except Altman and Satya, who’s doing four podcasts.” [08:42, Michael]
- Discussion: Will Microsoft allow OpenAI to fail? “No way. Too much money on the line.” [14:17–14:23]
4. US Startups vs. Rest of World; Tech as the New ‘Villain’ Industry (14:23–16:09)
- Michael: “US startups are pulling ahead of their peers elsewhere, and not just because of AI...it’s about faster adoption of new technologies like AI, stablecoins, etc.” [14:55]
- Ben: “The tech industry is going to be the next financial industry… after this is all said and done, they’re going to be the villains.” [15:28]
5. Market Resets, Bear Markets, and Investor Psychology (16:09–20:48)
- Discussion of whether we need a long bear market or recession to reset complacency in markets.
- Ben: “I really do think the speed of these recoveries, this is just going to be the new normal. ...the speed of information, of technology means these recoveries and downturns will both happen faster than they did in the past.” [17:26]
- Recognition that 50%+ crashes (like 2000 or 2008) are rare, probably not needed, and nobody is truly better off from them.
6. Legendary Trades vs. Legendary Investors (21:25–24:39)
- Michael Burry closes his hedge fund. Ben: “There’s a difference between making a legendary trade and being a legendary investor. ...Buffett is the latter, Burry and Paulson made legendary trades.” [21:46]
- Caution not to follow “legendary” market calls, as even the best can be wrong repeatedly.
7. The 'Great Wealth & Stuff Transfer' (24:38–26:35)
- Conversation about the challenges of inheriting not just money but ‘too much stuff’ from boomers.
- Joke: “You have to invest in dumpster rentals… think about all the renovations and stuff people are going to be throwing away.” [25:18, Ben]
8. Young Consumers, Blame Games, and Conference Call Insights (26:35–32:26)
- Ben and Michael challenge companies (e.g., Chipotle, SoFi) blaming young people or consumer “weakness” for poor performance.
- Michael: Reveals the value of listening to earnings calls: “Are they being level with you?” and points out which executives seem honest vs. defensive or evasive [31:42].
9. Household Financial Health and Consumer Collections Data (32:26–33:44)
- Only about 5% of US population is in collection (historically low), though amounts owed are rising [32:59].
10. Inflation Feels Hotter Than the CPI—Why Perceived Inflation Is Different (34:39–36:44)
- Michael references the “Chartnay” blog’s attempt to measure everyday inflation, which shows prices for daily goods running 1–2% above official CPI [36:03, 36:28].
- Ben: “No one ever believes the inflation numbers” [36:44].
11. Is the AI Trade Just Getting Started? Bezos, OpenAI, and Market Fragility (38:41–41:24)
- Bezos launches Project Prometheus with $6.2B; market implications debated.
- Key Quote: “It hasn’t even started. We don’t even have the robots yet.” [39:08, Michael]
- Discussion: What would happen if OpenAI failed? Is the market resting entirely on AI’s promise?
12. Tech Valuations, Uncertainty, and Market Knowledge (42:01–42:58)
- Ben: “The market already knows everything...but sometimes the market is wildly off the mark, right?”
- Michael: “We’re all just guessing. We don’t know. That’s the point – nobody knows.” [42:25–42:54]
13. Tech Stock Volatility and Compounders That Stop Compounding (44:47–45:38)
- Many “compounder” stocks (Nike, Estee Lauder, Charter, etc.) rolling over. Insight: Competition erodes even long-term winners.
- James Dyson's Quote: “Everything changes all the time, so experience is of little use.” [46:51, Michael]
14. AQR (Cliff Asness) in Sports Betting—Will ‘Quants’ Ruin FanDuel/DraftKings? (47:37–48:52)
- Ben wonders if institutional quant trading will arbitrage away retail betting margins, possibly harming sportsbook profits.
15. Crypto: Bitcoin Volatility and Narrative Shifts (49:00–51:14)
- Bitcoin’s wild swings and the (lack of) catalysts post-ETF launches.
- Michael: “What is the next catalyst? ...all of the promise, all of the catalysts… have happened.” [49:56]
16. 50-Year Mortgages—A Solution or a Trap? (51:17–53:46)
- They run the numbers: A 50-year mortgage reduces monthly payments compared to a 30-year by only a few hundred dollars but means paying far more in interest, potentially harming lower-income buyers.
- Ben: “A 30-year fixed-rate mortgage is one of the greatest financial inventions…in this country.” [53:15]
17. Homebuying Ages—NAR Data May Be Misleading (53:46–54:27)
- Recent data puts the median first-time homebuyer age at 39, but survey flaws may have overstated this—“the data is faulty” [54:17].
18. Private Credit, BDCs, and Alternative Investments (55:38–57:20)
- Schwab acquires Forge Global; big predictions for capital flows into alternatives.
- Ben: “Private markets to financial advisors is like AI to people—some just don’t want it.” [56:07]
19. Market Structure Stories: Blue Owl, Private Credit, and Risks (58:44–60:55)
- Blue Owl and BDCs suffering in public markets, skepticism rampant about private credit structures and merger issues. Forced fund mergers are causing up to 20% realized investor losses. [60:28, Michael]
20. Societal & Cultural Trends (60:58–62:06)
- Marriage & Divorce: Fewer young people are marrying early, and divorce is in decline. Hosts see delayed maturity as positive. [60:58–62:18]
21. Retirement Contributions Update (62:22)
- 401k and IRA contribution limits are going up in 2026: new 401k max at $24,500.
Notable Quotes & Memorable Moments
- Michael: “Corrections only look healthy in other people’s stocks.” [05:49]
- Brad Gerstner (via Michael): “AI is becoming deeply unpopular in America. ...Republican Senators say they're afraid to mention the words AI because their popularity ratings go down.” [07:45]
- Ben: “If that was it, that was the worst bubble ever.” [04:12]
- Michael: “A trillion dollars is so hard to wrap your head around. Tim Cook since he became CEO…$700 million a day in market cap added.” [10:28]
- Ben: “There's a difference between making a legendary trade and being a legendary investor.” [21:46]
- Michael: “All of the growth in the economy is happening because of the hyperscaler spending.” [40:24]
- James Dyson via Michael: “Everything changes all the time, so experience is of little use.” [46:51]
- Ben: “A 30-year fixed-rate mortgage is one of the greatest financial inventions…” [53:15]
Timestamps for Important Segments
- 02:25 – Is the AI bubble over?
- 05:49 – Healthy corrections and personal anecdotes
- 07:45 – AI’s unpopularity and Main Street skepticism
- 13:05 – Oracle’s AI-driven volatility & market caps
- 17:26 – Speed of market cycles as the “new normal”
- 21:46 – Legendary trade vs. legendary investors
- 25:18 – The ‘great stuff transfer’ and practical advice
- 31:42 – Listening to conference calls: who to trust?
- 36:28 – Why inflation feels hotter than numbers show
- 40:24 – The economy’s reliance on hyperscaler tech
- 44:47 – When ‘compounders’ stop compounding
- 49:56 – What’s next for Bitcoin/crypto price action?
- 53:15 – 30- vs. 50-year mortgages: social impact
- 56:07 – Private credit adoption and market resistance
- 60:28 – Forced mergers and investor losses at Blue Owl
- 62:22 – Retirement savings limit increases
Tone and Style
Michael and Ben’s style is conversational, analytical, and laced with wit and sarcasm. Their banter keeps the pace lively as they shift from serious macro debate to personal stories to industry inside baseball, all in a tone that balances skepticism and curiosity.
Conclusion
This episode is a must-listen for anyone interested in the intersection of AI, market cycles, and societal issues, served with candor and humor. Michael and Ben offer timely context behind the numbers, question prevailing narratives, and remind listeners that market wisdom is ever-evolving—and often, nobody truly knows what’s next.
Contact & Survey:
The hosts urge financial professionals to fill out their survey (see show notes) to help shape future content.
Next Up:
Look for an upcoming episode on the real age of first-time homebuyers, new market structure stories, and a dive into the media landscape.
Note: Ads and non-content sections were omitted for clarity and brevity.