Animal Spirits Podcast – EP. 445

Title: The Best Performing Stocks of 2025
Date: December 31, 2025
Hosts: Michael Batnick & Ben Carlson

Episode Overview

In this end-of-year episode, Michael and Ben record on a Saturday, reflecting on the 2025 stock market, best and worst performers, lessons from the year, the state of AI and private markets, shifting wealth trends, and spending patterns in retirement. Their usual candid banter brings personal anecdotes from bowling and family trips into discussions on investment psychology, generational wealth, and much more.

Key Discussion Points & Insights

1. Family Life & Holiday Catch-ups (01:30–06:57)

• Michael is in Disney/Universal with his family; Ben shares his family’s bowling tradition over the holidays.
• Quick take on the business and expense of theme parks, especially regarding the cost of express passes at Universal.
  • Notable quote:
    “For four people, guess how much it is?... just for the one day, it was 1500 bucks.” — Michael (06:09)
• Reflection on how packed and expensive family vacations have become.

2. Investing Lessons Are Timeless (07:10–08:02)

• Ben observes that annual “investing lessons” all kind of repeat.
  • “It’s always the same novel… every novel I write is the same… and I fill in the details. And I feel like that’s the same thing for investing lessons.” — Ben (07:25)
• Michael: Don’t overtrade, don’t sell out of your plan.

3. 2025’s Best & Worst Performing Stocks (08:09–10:44)

• Best performers: Mainly tech—SanDisk, Western Digital, Micron, Seagate; picks and shovels for the AI boom.
• Surprise: Newmont (the sole gold miner in the S&P 500) had a stellar year.
• Worst performers: Highly recognizable consumer brands—The Trade Desk, Fiserv, Deckers, Lululemon, Nike, Chipotle barely missing the cut.

4. Riding the AI Revolution: Energy & Infrastructure Winners (10:50–13:42)

• Discussion of Fidelity’s research on the “AI Revolution.”
• Data center electricity consumption is soaring (terawatt hours, up and to the right).
• G.E. Vernova (spinoff) up 102% YTD, a beneficiary of growing power demands for AI.
  • “I mean… I can’t argue with the performance.” — Ben (13:12)

5. Hype Cycles: AI Isn’t Going Away, But Not All Will Win (13:43–15:33)

• “Is this the end for AI?” Both agree this sort of speculation is usually silly—AI is not all-or-nothing.
  • “It has to be all or nothing… and what if it’s not?” — Ben (14:27)
• Reference: cloud adoption never underwent the same scrutiny, yet quietly transformed everything.

6. Market Contrasts: Small Caps vs. International Small Cap Value (15:34–18:55)

• Small caps underperformed developed international peers by a historic margin (27% spread).
• Ben: DFA International Small Cap Value up 48%, US counterpart up only 10%.
  • “International Small cap value is absolutely crushing it this year.” — Ben (16:51)
• S&P 100 (large cap) profit margins soar, small cap (S&P 600) margins lag—AI investments didn’t compress big tech margins as expected.

7. FOMO for a Good Cause: Corporate Bonuses (18:55–19:14)

• Charles Schwab giving $1,000 to newborns of employees—a standout example of the new wave of employee perks.
  • “That’s a pretty good bonus, right?” — Ben (19:14)

8. The Explosive Growth of Family Offices (19:23–22:31)

• Definition: Ultra-high-net-worth (UHNW) households hiring entire teams to manage their money in-house.
• Family office AUM up 67% in five years; projected $9T by 2030, surpassing hedge funds.
  • “Do you or don’t you have a family office? There’s some status assigned to that.” — Ben (21:22)
• Privacy and personalized risk-taking are primary draws; performance vs. outside managers left open.

9. Consumer Pessimism & Survey Quality (22:33–24:58)

• Consumer sentiment as low as 1980 (the double-dip recession/Volcker era).
• Both hosts doubt survey reliability, pointing to changing societal psychology post-pandemic.

10. Crypto Markets: Post-ETF Malaise (24:58–27:30)

• Michael managed to withdraw his bitcoin from Robinhood after earlier difficulties.
• Market feels apathetic post-ETF launches and deregulation—the price, not tech, is driving narrative.
  • “It just seems like nobody cares about it right now.” — Michael (25:51)
• Ben: Bitcoin shines when price is up; when stagnant, investors lose interest.

11. Private Credit Booms in Risky Debt (28:06–30:45)

• FT reports private credit firms bought $136B in consumer debt (up nearly 14x YoY), especially in buy-now-pay-later, credit cards.
• Ben: Recent returns have validated the space; Michael warns about risks lurking in economic downturns.

12. Middle Age, Regret, and Over-Optimization (31:13–34:30)

• Q&A segment: A 30-year-old expresses regret for “playing it safe” in life; the hosts worry about youthful over-optimization and lack of memorable experiences.
  • “If that optimization causes you to not go out and have a drink with your friend or your brother...that’s not living life.” — Ben (33:50)
• Support for the value of strong relationships and lived experiences.

13. Nature vs. Nurture and Social Wiring (34:30–36:30)

• Personal stories about habits from childhood, cards as a social tradition, kids' unchangeable personalities.

14. Millennials & The Top 5% (36:35–40:14)

• WSJ data: Top 5% threshold now $300,000 (inflation-adjusted), up from $212K for Boomers.
• Fewer lawyers make the cut than before; finance/computer math steady.
• Societal/Income inequality has widened—more frequent vacations and more people with expensive phones are symptoms.
  • “Everybody has a $1500 phone. Is that … nuts?” — Michael (39:17)

15. Elite Education & Top Earnings (39:38–40:14)

• Elite private colleges boost 1%er odds by 60% over public flagship universities—choices/parental opportunities matter.

16. Retirement Spending Patterns & Financial Advice Trends (40:17–44:29)

• JP Morgan data shows retiree spending is front-loaded, decelerating sharply with age and health.
• Advisors now focus on convincing clients to spend in early retirement, not underspend.
• 401k plans “worked”—more Americans than ever save for retirement, 401k/IRA adoption far outpaces old-school pensions.
  • “There is now more people than ever saving for retirement even when you account for population growth versus the late 70s, early 80s.” — Ben (44:13)

17. Entertainment: Biopics, Video Games, & Recommendations (45:28–54:14)

• Biopics fatigue: Sam Altman (played by Andrew Garfield), Neil Diamond, Springsteen, and Bob Dylan films discussed with skepticism.
• Best Video Game Debate:
  • For Ben: “Mario Kart, and there is no other answer.” (47:17)
  • Michael: Remembers N64 Zelda boom, preference for classic titles.
• TV & Movie Recommendations:
  • Four Christmases has improved with age.
  • Stranger Things is a hit with Ben’s daughter, but later seasons feel repetitive.
  • The Offer (Godfather miniseries) highly recommended for fans.
  • Musings on “what if’s” in movie casting (Chris Farley as Shrek, etc.).

Notable Quotes & Memorable Moments

• Best Performing Stocks:
  • “Those top four names, those are pick and shovel. And those are not new, new companies either. Those are companies that have been around for a long time.” — Ben (10:29)
• AI Cycle Debate:
  • “What if it is—these two companies figure out how to work it, and these other companies figure out how to use it better… It’s not the whole thing crashes and burns.” — Ben (14:27)
• Small Cap Value Outperformance:
  • “This has to be the biggest spread ever, right? …can’t imagine there’s been a bigger spread than that ever.” — Ben (16:51)
• Family Office Growth:
  • “It’s kind of become the word for ultra high net worth families. Do you or don’t you have a family office? There’s some status assigned to that.” — Ben (21:22)
• Crypto Apathy:
  • “It just seems like nobody cares about it right now. Seems like apathy…” — Michael (25:51)
• Over-Optimization and Happiness:
  • “If that optimization causes you to not go out and have a drink with your friend…that's not living life.” — Ben (33:50)

Important Timestamps & Segments

• [03:00] Universal/Disney Family Trip Rant
• [07:10] Timeless Investing Lessons
• [08:09] Best & Worst Performing S&P 500 Stocks
• [12:00] AI Power Consumption & Utility Plays
• [15:34] Historic Performance Gap: Small vs. International Small Cap Value
• [19:23] The Rise of Family Offices
• [22:33] Consumer Sentiment Data Skepticism
• [24:58] Crypto Market Sentiment
• [28:06] Private Credit Moves into Consumer Debt
• [31:13] Middle-Age Regret, Over-Optimization
• [36:35] Millennials, Top Earners, and the Education Effect
• [40:17] Retirement Spending & Financial Advice
• [47:17] Mario Kart = GOAT?
• [49:36] Movie/TV Recommendations & The Offer

Closing Thoughts

Michael and Ben wrap up their last show of 2025 with gratitude, highlighting the loyal audience and the community built around Animal Spirits. Their market wisdom is wrapped in warmth and wit, blending practical portfolio takeaways with the realities of life, family, and fun.

“You guys show up for us, we show up for you. We are so grateful… for everybody that listens.” — Michael (54:23)

Recommendations

• Four Christmases (Ben)
• The Offer (Michael)
• Stranger Things (with caveats for later seasons, Ben)
• Book: The Men Who Would Be King (Michael)
• Book: Cameron Crowe biography (Ben)
• Best video game: Mario Kart (Ben)

Summary Table of Topics

| Segment | Key Topic | Timestamp | |--------------------------|------------------------------|-----------------| | Family/Holiday Catch-up | Bowling/Disney | 01:30–06:57 | | Investing Lessons | Timeless advice | 07:10–08:02 | | Stock Performers Recap | S&P 500 leaders/laggards | 08:09–10:44 | | AI & Utilities | G.E. Vernova, power demand | 12:00–13:42 | | Small Cap vs Intl Value | Historic performance gap | 15:34–18:55 | | Family Offices | UHNW trends, structures | 19:23–22:31 | | Consumer Sentiment | Data skepticism | 22:33–24:58 | | Crypto State | Post-ETF landscape | 24:58–27:30 | | Private Credit Booms | Buy-now-pay-later risk | 28:06–30:45 | | Middle Age/Optimization | Regret, happiness | 31:13–34:30 | | Millennials & Income | Top 5% threshold, education | 36:35–40:14 | | Retirement Patterns | Spending, 401k success | 40:17–44:29 | | Entertainment Rec’s | Biopics, games, movies | 45:28–54:14 |

Animal Spirits is back next week—maybe with 2026 predictions, maybe not.