Animal Spirits Podcast Summary: "It Was a Very Good Year" (EP.373)
Release Date: January 1, 2025 | Hosts: Michael Batnick (A) and Ben Carlson (B)
In episode 373 of the Animal Spirits Podcast, hosts Michael Batnick and Ben Carlson delve into a myriad of topics spanning market performance, investment strategies, financial planning, and personal anecdotes from their lives. Released on the first day of 2025, this episode offers listeners a blend of insightful market analysis and relatable personal stories, all sprinkled with humor and candid discussions.
1. Market Performance and 2025 Expectations
Timestamp: 02:48 – 08:05
Michael opens the discussion by reflecting on the stock market's remarkable performance in 2024, noting a 26% increase in the S&P 500. However, he tempers optimism by expressing concerns over potentially disappointing returns in 2025, attributing this to overly high market expectations.
A (Michael): "I think it could be a disappointing year for stocks this year based on expectations." [07:34]
Ben concurs, emphasizing the discrepancy between market forecasts and actual performance. They reference a Bloomberg article highlighting that 53% of strategists' forecasts clustered between 0% and 10%, a range that the market often exceeds.
2. Options Trading Trends and Market Speculation
Timestamp: 08:05 – 19:24
The conversation shifts to the surge in options trading, with Michael referencing a Wall Street Journal report that 48 million option contracts have changed hands daily in 2024—a record since 1973.
A (Michael): "Whenever you see neo in a word or post, like we're living in a post..." [After discussion on options]
Ben highlights the structural change in trading behavior, noting that increased accessibility through platforms like Robinhood has embedded speculative trading deeply into the market fabric.
3. Financial Planning and Client Spending Behavior
Timestamp: 19:24 – 22:20
Michael and Ben discuss the pivotal role of financial advisors in encouraging clients to spend wisely. Drawing from insights by Chris—a member of their wealth management team—they emphasize that facilitating purposeful spending enhances client satisfaction.
B (Ben): "The money is meant to be spent with purpose and things that provide you with joy and memories." [22:03]
They explore strategies like mental accounting and bucket planning, where funds are allocated to specific purposes to ease the psychological barriers to spending.
4. Real Estate Market Insights
Timestamp: 22:20 – 33:18
The hosts examine the resilience of the automotive sales sector despite rising interest rates, attributing sustained demand to robust income growth and excess post-pandemic savings.
Michael also touches upon the natural gas market, showcasing its unprecedented stability over the past 25 years, with prices remaining notably low—$1,999 comparable to Black Friday deals.
A (Michael): "Imagine walking into a supermarket this week to buy a last minute item for Christmas and discovering that everything has been marked down to 1999 prices." [28:19]
Additionally, they spotlight Grand Rapids, Michigan as a promising housing market for 2025, citing affordability and attractive demographics as key factors.
5. Personal Anecdotes: Vacations and Family Life
Timestamp: 33:18 – 54:31
Michael and Ben share heartfelt stories from their holiday vacations. Michael recounts a memorable trip to Bahamian Paradise, highlighting moments like visiting the Hancock Building with his son and contemplating future excursions to the Empire State Building.
Ben narrates an intense experience of being in the ER on Christmas night after his son’s minor accident. He expresses pride in his son's resilience during the ordeal.
A (Michael): "We were in the ER till midnight, I think, on Christmas night." [47:40]
B (Ben): "That was a very proud moment for me that he was so tough." [49:05]
Their discussions weave in observations about family dynamics, vaccations with children, and the challenges of being part of the sandwich generation, balancing care for both children and aging parents.
6. Media and Entertainment: Movie Discussions
Timestamp: 54:31 – 58:38
The duo engages in a spirited debate over classic and contemporary holiday movies. They ponder the classification of films like "Die Hard" as Christmas movies and explore the emotional impact of movies like "Family Man" and "Home Alone".
Michael offers a unique take on "Die Hard", interpreting it as a metaphor for reaching for yield and the dangers therein.
A (Michael): "I think Die Hard is actually a movie about reaching for yield and the dangers of reaching for yield." [56:15]
They also touch upon the portrayal of aging in films, referencing conversations inspired by Rodger Ebert's insights on actors looking older due to stress.
7. Behavioral Economics: The Psychology of Money
Timestamp: 19:24 – 26:28
Michael and Ben delve into the psychological aspects of financial planning, emphasizing the difficulty clients face in shifting from saving to purposeful spending. They discuss Michael Finke's study, which reveals that many retirees live below their means, withdrawing conservatively from their savings.
Ben shares personal reflections on the importance of spending for joy and memorable experiences, countering the tendency to hoard wealth.
B (Ben): "The psychology of hoarding money, I don't understand it. I think probably a lot of that is just deep rooted..." [26:28]
8. Closing Comments: Future Market Outlook and Personal Remarks
Timestamp: 58:38 – End
As the episode winds down, Michael and Ben reiterate their cautious outlook for the stock market in 2025, advocating for realistic expectations based on historical data and current market sentiments.
B (Ben): "In conclusion, 2024 was a good year for the stock market. I hope everybody made a lot of money. Let's not plan on making as much money in 2025." [59:08]
They express gratitude towards their listeners and team members, signifying the end of a rich and engaging episode filled with both professional insights and personal narratives.
Notable Quotes:
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Michael Batnick: "I think it could be a disappointing year for stocks this year based on expectations." [07:34]
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Ben Carlson: "Thank you for convincing me that we can afford this purchase, whether it's a house or a luxury." [21:21]
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Ben Carlson: "The psychology of hoarding money, I don't understand it. I think probably a lot of that is just deep rooted..." [26:28]
This episode of Animal Spirits Podcast encapsulates a balanced discourse between market analysis and personal experiences, providing listeners with both financial insights and relatable life stories. Whether you're an avid investor or someone navigating the complexities of financial planning and family life, Michael and Ben offer valuable perspectives to kick off the new year.