The Nothing Ever Happens Market (EP. 418)

Summary

Animal Spirits Podcast: The Nothing Ever Happens Market (EP. 418) Summary

Release Date: June 25, 2025
Hosts: Michael Batnik and Ben Carlson

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1. Market Amnesia and Investor Behavior

Michael Batnik opens the discussion by introducing the concept of "market amnesia," suggesting that this decade is characterized by investors forgetting significant market events quickly. He references an article by Mike Bird from The Economist and a study dating back to 1988 involving researchers from MIT and Larry Summers. The study analyzed over five decades of world-changing events such as Pearl Harbor, the Cuban Missile Crisis, and the Chernobyl meltdown, concluding that these events had a surprisingly muted impact on stock market volatility. Notably, "several of the biggest one-day falls identified by the authors occurred on days without an obvious news-related spark" (05:00).

Ben Carlson agrees but adds that the current market environment, driven by strong long-term earnings growth, plays a significant role. He remarks, "if we were in a different market environment with slow or no growth... it would be different" (05:35). Michael concurs, emphasizing that "earnings are up like 250%" over a 10–15 year period (06:00), underscoring that fundamental growth metrics outweigh short-term geopolitical disruptions.

2. Workforce Reduction in White-Collar Jobs

The conversation shifts to workforce trends, citing a Wall Street Journal report indicating a 3.5% reduction in white-collar employees among U.S. public companies over the past three years. Additionally, one in five companies in the S&P 500 has decreased its employee count over the last decade (09:00).

Michael offers a nuanced perspective, suggesting that "these stories are huge overreactions because your base was overstaffed from May 2022 to May 2025" (10:00). He points out that while some unemployment metrics for recent college graduates appear concerning, historical data shows that current rates are "at or below average going back to the 1950s" (10:30).

Ben counters by asserting, "I don't think it is going to reverse and I think a lot of people are in for real pain now" (12:01), highlighting concerns that ongoing reductions may lead to broader economic repercussions despite contrary data.

3. Side Hustles and Employment Trends

Ben references a Wall Street Journal headline about the rise of side hustles, suggesting it indicates a necessity-driven trend rather than a passion pursuit (12:31). Michael counters by analyzing data showing that multiple job holders remain a small percentage of total employment and that side hustles have been a consistent part of the labor market, albeit not as dramatically as recent headlines suggest (13:00).

4. AI's Impact on the Job Market

The hosts delve into the transformative effects of AI on employment. Michael shares a New York Times story about radiologists, initially predicted to be outpaced by AI within five years. Contrary to predictions, AI has instead "helped them" by serving as a "second set of eyes," thereby increasing demand for radiologists (26:00). Ben categorizes AI's impact into three areas:

1. Displacement: Certain industries and roles may become obsolete.
2. Augmentation: AI tools enhance existing roles, increasing productivity.
3. Creation: New jobs and industries emerge that are currently unforeseeable.

Michael emphasizes the complexity of this transition, noting that "most people will pay attention to the first one and get really mad about it" (28:00). They discuss the necessity of ethical oversight in AI development to ensure it benefits humanity.

5. Foreign Ownership of U.S. Stocks

Michael highlights a trend towards increased foreign ownership of the U.S. stock market, reporting that ownership has grown from approximately 6% in the mid-90s to nearly 20% in 2025 (16:00). He speculates that if the U.S. comprises about two-thirds of the global stock market, foreign ownership could potentially be even higher. Ben supports this by citing market concentration trends globally, revealing that countries like the UK and Japan have significant portions of their stock markets concentrated in a few large companies (17:30).

6. Alternative Investments and Private Markets

The discussion transitions to alternative investments, focusing on private markets. Ben references a Fidelity report on custom models with alternative assets, noting the early stages of a significant trend towards these investments. However, they caution about the high dispersion in private equity returns, where "the bottom quartile for venture and real estate are negative returns" (46:14). Michael suggests that private credit stands out due to its lower dispersion and higher predictability, making it more attractive for advisors and investors (47:00).

7. Stablecoins and Crypto Adoption

The hosts explore the implications of the "genius act," which regulates stablecoins by mandating a 1:1 reserve backing with USD (33:15). Ben posits that this regulation could be bullish for the U.S. dollar and Treasury bills, as stablecoin issuers may invest their reserves in these securities. Michael adds that legitimacy granted to stablecoins could spur greater adoption among individuals and corporations, potentially challenging traditional payment systems like Visa and MasterCard (34:00).

Ben mentions a noteworthy tweet from Weisenthal highlighting Circle's impressive daily returns since its IPO, indicating strong market performance despite volatility (35:55).

8. Personal Anecdotes: Car Maintenance Challenges

Shifting gears, Ben shares a personal story about the high costs and complexities of modern car maintenance. He recounts his experience with a malfunctioning Jeep EV, detailing how electronic components can drastically increase repair costs (e.g., a $2,800 sink replacement versus a negotiated $2,400 with a friend) (38:00). Michael echoes frustrations about the increasing reliance on electronics and sensors in vehicles, which not only raise maintenance expenses but also contribute to the prolonged lifespan and higher value of used cars (22:05).

9. Movie and Show Recommendations

In the lighter segments, Michael and Ben exchange opinions on recent films and television shows. They discuss:

• "28 Years Later": A rewatch by Ben, praising Jon Bernthal's performance as the standout element.
• "Stick": An Apple series featuring Owen Wilson, described as "light and breezy" with "a little bit of heart" (59:00).
• "Plane": Discussed critically by Michael, labeling it as a "high-quality piece of garbage" despite Hollywood star Gerard Butler's involvement (60:00).

They also touch upon upcoming movies and the nostalgia of rewatching older films, demonstrating the personal side of their conversations beyond financial topics.

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Notable Quotes

• Michael Batnik: "I think this sort of market amnesia is a good thing. If you're a successful long-term investor, you almost need this." (04:50)
• Ben Carlson: "I think investors have become better behaved because it's like listening we've been fooled a million times on these headlines." (06:00)
• Ben Carlson: "Most people will pay attention to the first one [AI displacement] and get really mad about it." (28:00)
• Michael Batnik: "Everything's a V. V-shaped rallies are still here in everything." (15:12)
• Ben Carlson: "The average new vehicle loses $4,680 in value every year." (20:57)
• Michael Batnik: "I want someone behind the wheel who's gonna be like, look out for like humanity and all this." (25:11)

Conclusion

In this episode of Animal Spirits, Michael Batnik and Ben Carlson explore the phenomenon of market amnesia, the implications of reducing white-collar jobs, the evolving landscape of side hustles, and the transformative impact of AI on the job market. They delve into the increasing foreign ownership of U.S. stocks and the dynamics of alternative investments, particularly private credit. The hosts also discuss the regulatory developments surrounding stablecoins and their potential to reshape financial transactions. Interspersed with personal anecdotes and lighter conversations about movies and shows, the episode provides a comprehensive analysis of current market trends and future projections, offering valuable insights for both seasoned investors and newcomers alike.

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For more insights and detailed discussions, tune into the full episode of Animal Spirits.

Transcript

[Michael Batnik]

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[Ben Carlson]

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[Michael Batnik]

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[Ben Carlson]

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[Michael Batnik]

All right, so this stuff helps you save time, build it right into your workflow. This is how AI is going to work, I guess, helping you create proposals faster, service insights quicker so you spend less time researching, more time advertising. Click the link in the show notes as always to start using the AI chat today and when you sign up for your first professional license with Y Charts. Get 20% off your subscription when you mention Animal Spirits. New customers only. Click that link in the show Notes. Welcome to Animal Spirits, a show about markets, life and investing. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing and watching. All opinions expressed by Michael and Ben are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. Michael, I have a take to get off my chest for you today. Someone asked me last week, what are you thinking about? What's going on? What are you, what's percolating in your brain about the markets? And my thought is this decade is about market amnesia. Okay, I said before that the market can really only focus on one thing at a time. I think if you just add up all the stuff that we've been through from the pandemic and all the stuff that went on with that, the meme stock craze, the 9% inflation, the rates going from 0% to 5%, the remember the little Silicon Valley bank dust up that last year for like a weekend? Pretty sure I wrote a 1907 post about that. It lasted at least five days. You had the carry trade blow up was a thing. Liberation day, obviously. Now the U.S. bombing Iran. It just kind of feels like investors get jittery when this stuff happens. Maybe the market nose dives for a little bit and then we kind of forget about it and move on. And I started talking about this last week about how the whole lol, nothing matters kind of thing. But Mike Bird from the Economist wrote a piece on this and he said this is the headline that a bunch of people sent us this because we had discussed this last week. Investors ignore World changing news. Rightly, the nothing ever happens market. And I almost think that this sort of market amnesia is a good thing. If you're a successful long term investor, you almost need this. And I know a lot of people think, well, well eventually this ends badly. But this, this is interesting from the Economist piece. So there, there's a paper going back to 1988. These researchers from MIT, apparently Larry Summers too was part of this. They wanted to figure out what actually moves stock prices. And then they look at five decades worth of world changing events. So they looked at Pearl harbor and the Cuban Missile crisis and the Chernobyl nuclear meltdown and they figured that the volatility of returns on the day of these news events, these geopolitical big things that happen, was less than three times as large as on an ordinary day. Several of the biggest one day falls identified by the authors occurred on days without an obvious news related spark. And I think a lot of this stuff is probably counterintuitive and I think maybe investors have finally learned their lesson on this stuff. And this is another feather in the cap of my idea that investors are becoming better behaved because it's like listening we've been fooled a million times on these headlines this bad thing's going to happen, that bad thing's going to happen. I'm just going to ignore it all. And I think that actually this is another step in the right direction for investors. Thoughts?

[Ben Carlson]

It's a good take and I agree. But I think we have to also discuss the why, why are investors ignoring all of this? It's because it doesn't impact Nvidia. Right. Like earnings from earnings for, for the stock market are not going to be impacted by a lot of these geopolitical flare ups. If we were in a different market environment with slow or no growth, if energy was 15% of the index, if, if, if, if it would be different. But right now what's driving the train are the expectations of long term earnings growth. Now I don't think that investors like Day to Day are thinking about that, but ultimately that's where this is going.

[Michael Batnik]

Yeah. And, and Bird in his piece talked about how I can remember the time frame was 10 years or 15 years, the earnings are up like 250%. And like that's, you're right, that is the thing that matters. Right. Higher gas prices are going to impact Apple and Nvidia.

[Ben Carlson]

So how about this? If we were in a stagflationary environment, each one of these cuts would take us down because it would just be like, oh my God, just another thing, like how much could we possibly take? But we're in the, we're in an opposite environment in which none of this seems to matter.

[Michael Batnik]

It is interesting though that just because I know stuff happened in the 1990s and 1980s but it doesn't feel like it was quite as earth shattering as what we've lived through this decade. Maybe that's recency bias on my part, but it is just weird to see all these things happening and then the market's still not care.

[Ben Carlson]

Well, here's the other thing. Right now the supply chain is built on AWS or whoever's cloud provider. It is. Companies are so much less reliant on like quote, real world stuff. We have the ability to dial up and down productivity so much quicker than we did in the past. So yeah, it's a different world.

[Michael Batnik]

Yeah. And I've written before on the whole stock market versus war thing. I'll put a link in the show notes but just I looked at all these events, World War I and World War II and the Cuban missile crisis and Vietnam and the Korean War and.

[Ben Carlson]

Are those comparisons relevant for today in any way, shape or form?

[Michael Batnik]

They're relevant in the fact that it's the, the relationship between the market and those events is typically counterintuitive, like war in the past. In the past, war has been bullish.

[Ben Carlson]

Right.

[Michael Batnik]

Which is the I think I always say the stock market is heartless. But if you look back at almost all those periods, the stock market did great. You know the stat that World War I, the greatest year for the Dow ever was 1920.

[Ben Carlson]

Oh, 1915. Well, because the market was closed.

[Michael Batnik]

That was after the market closed. But that was during World War I that had happened. It was up like 80 some percent.

[Ben Carlson]

Israel's stock market hit an all time high last week.

[Michael Batnik]

Yes. So again if you think these headlines are like somehow bad for the market then and Josh has got this thing on like the straight of Hormuzer. I don't know how to say it because I've only read it before but when you start people seeing people talk about that, that's a buy signal. I just think investors have have become accustomed to these things. And sure there's going to be a rug pull at some point or one of these, one of these situations is really going to matter. I just don't know what it's going to be and I don't think anyone else does ahead of time either. So I think just ignoring this stuff and continuing to invest. I think the thing that's hard to recognize for a lot of investors is that the reason you make a change in your portfolio should usually be dictated by something that's happening in your life, not the markets. And that's very hard to realize and recognize. Right. It's like a change to your financial plan or you're making more money or you get an inheritance or you're making less money, something like that. That should have a greater impact on your portfolio changes than what's going on in the headlines.

[Ben Carlson]

Ben it seemed like this was the week where a lot of the media started to publish on the biggest companies across America are cutting their Workforces. It isn't just Amazon. There's a growing belief that having too many employees will slow a company down and that anyone still on the payroll could be working harder. That was the, that was the headline from the Wall Street Journal. So they show that US public companies have reduced their white collar workforce by 3.5% over the past three years. Over the past decade, one in five companies in the S&P 500 have shrunk their employee count. And they show this great chart, number of white collar employees at U.S. public companies. The change since the end of 2021. And they break it down by staff executives and managers. And everything is negative, but particularly executives and managers, which makes sense. These middle managers that are not revenue generating, whose job it is to oversee a lot of these people just World of pain.

[Michael Batnik]

Can I, can I make a claim on this? A take that is there's a short term take and a long term take over the long term. I think you do have to be concerned about the labor market and what AI could do over the short term. I think a lot of these stories are huge overreactions because your base. This is from May 2022 to May 2025. 2022 was perhaps the hottest job market we will ever see in our lifetime. And so places were overstaffed. Remember how many job openings there were compared with. So the Wall Street Journal also had this piece and you can go against me on this take if you want, but they had this piece about recent college grads. And there's saying young grads are facing an employment crisis. Crisis in the headline. Okay. And they say the overall national employment rate is down 4%. But for college grads looking for work, it is much higher. 6.6% over the past 12 months ending in May. That does sound bad. They put a chart in here that shows ages 20 to 24. The unemployment rate for bachelor's degree is rising. But if you also look, they have one that shows high school degree, no college. And it's obviously much higher. So it's not like you're still getting a better deal there. But look at this unemployment rate, age 20 to 24. I pulled this from Y charts. Look at this going back historically, it's moving up slightly. Look at, it's probably at or below average going back to the 1950s. This has been way, way higher. It was higher in the 80s, it was higher in the 90s than it is today. So I think we're throwing around this crisis term way too loosely just because we're comparing something to three Years ago. I think people are overreacting.

[Ben Carlson]

Yeah. I will take the other side of that. I don't agree. I think that.

[Michael Batnik]

Look at the stat. Look at this chart I just put in here. If you look back historically, I think we just talk about this stuff more than we did in the past.

[Ben Carlson]

Is this chart going to go back down in the next year? Two or three years? No. Do you think it is? I don't.

[Michael Batnik]

Probably not. But look at how many times in the history that it's gone up. Still got a lot of room to run to get anywhere near what things were like in the 80s or 90s. Revenue recency bias.

[Ben Carlson]

Revenue per employee is back in favor as a metric. Investors and executives track carefully. Yeah, no, I will take the other side of this. I think that this is not going to reverse and I think that a lot of people are in for Walter pain now. I don't, I don't know that it's going to necessarily like tip the economy into a recession or anything like that. I don't know. But I think that the white collar manager that was very comfortable should be very uncomfortable.

[Michael Batnik]

My sense is, I think these things take time to play out. Maybe you're. But so another one from Wall Street Journal was Americans are side hustling like we're in a recession. So they said the two dot trend these days is the necessity, not pursu a passion.

[Ben Carlson]

I'll take the other side of this headline. I think that the idea of a side hustle, and let's be honest, like I know I said let's be honest. What percentage of side hustles are done over the Internet?

[Michael Batnik]

Right. I think it's just easier to do a side hustle.

[Ben Carlson]

How could you have done a side hustle in the 90s? Like what were you going to do? Like mow lawns on the side.

[Michael Batnik]

And I put multiple job holders as a percentage of employed in here. And again, this is something that was much higher in the 90s and it's still like 5 or 6% of total employees. So it's not. So here's one that kind of is to your point. This is from Andy Jassy, the CEO of Amazon. He wrote a piece about thoughts on generative AI.

[Ben Carlson]

By the way, there was a lot of throat clearing in there. It was basically like a page and a half of enhancements of generative AI and how they're using them all over. And then it's like, yeah, we're going to need less people.

[Michael Batnik]

Yeah. He said, yeah, he talked a lot about what it's going to do. But he said as they roll out more generative AI and agents, it's going to change the way their work is done. We expect this will reduce our total corporate workforce as we get efficiency gains from using AI extensively across the company. And I just, I asked you, I think on Slack, how do we separate the actual AI productivity gains from the fact that tech companies probably over hired and need to cut workforce? It's a balancing act to think through what the actual reason is. Right.

[Ben Carlson]

Well, it's also the. I think it's also getting ahead of. We're spending a lot of money.

[Michael Batnik]

Mm.

[Ben Carlson]

Let's try and cut some employees. It's kind of like Doge though. It's like a drop in the bucket. How many people are you really gonna let go to offset the spending?

[Michael Batnik]

So I also think that just the labor market dynamics in the years ahead, if you combine AI with 10,000 baby boomers retiring every single day, I think we're gonna get some weirdness in the labor market data. I think it's gonna be very bizarre for the next 10, 15, 20 years.

[Ben Carlson]

Yeah. All right. This is surprising to me. Bob Elliott tweeted. It seems the hard and soft data have converged toward each other. And it happened with soft data. A lot of the survey stuff catching up. I would have considered this to be, let's say like +280 if I was a betting man four months ago.

[Michael Batnik]

So sentiment turned around. It looks like the hard data did fall. I don't know what this is. I don't know what this is measuring here. But you're right, the sentiment, I mean, the sentiment there to me looks like the stock market.

[Ben Carlson]

I would have said like the odds of them converging because hard data is falling fast. And now to your point, hard data did fall, but I would've said minus 1 15. So yeah, surprising.

[Michael Batnik]

So V shaped rallies are still here in everything. Everything's a V. All right.

[Ben Carlson]

This is, this is something. The Financial Times put out a report that said X as in Twitter chief executive.

[Michael Batnik]

Ah, you're a narc if you call it X. Gotta call it Twitter.

[Ben Carlson]

Sorry, I'm just reading.

[Michael Batnik]

I know the worst is when people say Twitter. I mean X Like it's still Twitter. Sorry.

[Ben Carlson]

Linda Yaccarino has said that users will soon be able to make investments or trades on the social media platform as she outlined a push into financial services and owner Elon Musk's quest to build an everything app.

[Michael Batnik]

No one's doing this. You already can do it on Robinhood or Where, like, no one. This isn't going to work.

[Ben Carlson]

Yeah, I would agree with that. This is gonna be a flop.

[Michael Batnik]

Yeah, no one's gonna do that. There's. I. No way. Sorry. Who has ever been able to make the Everything app? It's not a thing. Ryan on the Office. Woof woof, or whatever it was called, right?

[Ben Carlson]

What do you mean, guys, I don't know what you're talking about.

[Michael Batnik]

Okay. He had this. Ryan on the Office had this idea where you put one social media post out and it goes immediately to Facebook, Twitter, LinkedIn, and then it would send a fax and it would like. It would do everything for you. All right. You still got to catch up on the Office, I guess. Okay. Torsten, Slot chart of the week. I don't know when this is through, but this. He's saying a record high foreign ownership of the US Stock market. So I don't know if this is through April yet or not, but it is kind of crazy that we've gone from essentially 5 or 6% foreign ownership in the stock market in the mid-90s to nearly 20% now. And how important globalization is to our financial markets. This is like the rest of the world catching up with us, too, and realizing. I've seen all this stuff. I think Vanguard had a good study a number of years ago showing that home country bias was even worse in foreign countries. Probably not anymore, which doesn't make much sense because those countries, stock markets are so concentrated and they're such a small piece of the global pie. Foreigners should have a much higher ownership share of U.S. equity. Kind of like how we talked last week, how people have a higher allocation of stocks than cash and fixed income. They did in the past. This is the kind of thing that is a trend that shouldn't really reverse and probably should continue to go higher.

[Ben Carlson]

How high can it go, though?

[Michael Batnik]

If we're 65, 70% of the global stock market, it should be higher.

[Ben Carlson]

Why? What is. Why foreign owners own almost 20% of the market. How high should it go? That's a lot. No.

[Michael Batnik]

Well, yeah. I don't know. I'm just saying if we're two thirds of the market, there should be a really high ownership of US Stocks by foreigners, pension funds and sovereign wealth funds, and individuals and family offices. Think about it, all right?

[Ben Carlson]

We spend a lot of time talking about concentration in the s and P500. Schroeder's has a chart that shows market concentration as a global phenomenon. So in the.

[Michael Batnik]

This is what I was just talking about.

[Ben Carlson]

Top 10 stocks in UK are 50%. Wow. So the top five here are 26%. The top five there are 35%, 25% in Japan, 23% in EM, and 17% in the ACWI. So it's not just us.

[Michael Batnik]

I've looked at this before. The rest of the world is way worse because their stock markets are smaller. So I think if you look at like Korea, Samsung makes up like 25% of their index or something like that.

[Ben Carlson]

I think we spoke like years and years ago about Greece. I think it's like hilariously skewed.

[Michael Batnik]

Yes, that's the thing. In other countries it's even worse. That's why. So yeah, Samsung is 20%. So there's two names that make up 30% of the South Korean stock market ETF. And so yeah, the concentration over there is way, way worse.

[Ben Carlson]

All right, here's another good one from bank of America Global Research. Once a diverse index, The S&P 500 is now 50% growth. So they broke it down by Pure value, Pure growth and blend. And Pure value has gone from 25% in 2005 down to 15% in 2015 down to 9% in 2025, while pure growth went from 35% up to 50%.

[Michael Batnik]

Remember when Apple was a value stock for like a year?

[Ben Carlson]

Yeah, it really was traded for like 12.

[Michael Batnik]

Is that when Buffett was buying?

[Ben Carlson]

Basically, that's, that's when. That's when people were talking about back out the cash. And I think a lot of nitwits, probably myself included, were like, lol. Back out the cash. Well, back out the cash. Great investment.

[Michael Batnik]

Yeah, it sort of worked. I mean, this is, I guess another one that makes a lot of sense because that's also 2005 period. Value had had a really good run for about five years following the dot com bubble.

[Ben Carlson]

Ben, let's talk about cars. Light, also from the Journal. Light vehicle sales have fallen by about 1.7 million a year since 2016.

[Michael Batnik]

This was a really good piece, by the way.

[Ben Carlson]

It was. It really was. I agree. Reflecting the number of younger consumers declining the pleasures of ownership, millions more remain trapped in toxic relationships with abusive elders. They're talking about cars. The average age of passenger cars on the road is currently 14 and a half years. A friend of mine, it's kind of crazy, has a Cherokee EV and the thing just died.

[Michael Batnik]

Like it doesn't sound like your Jeep evs are doing very well. Cuz you say yours isn't great either?

[Ben Carlson]

No, it just, it just died. It won't turn on. It's like a year old. The total cost to own and operate an automobile averaged a frightening $12,296 in 2024, roughly 30% higher than a decade ago.

[Michael Batnik]

So that's insurance, gas, maintenance, all the stuff that goes with owning a car, right?

[Ben Carlson]

New cars are 50 grand almost. In 2024, the AAA calculated the average new vehicle losses. I'm sorry, the average new vehicle loses an eye watering. $4,680 in value every year.

[Michael Batnik]

Big time depreciation.

[Ben Carlson]

Dude, it's wild. Like, cars suck.

[Michael Batnik]

That's nuts. Every year for the first five years. So they're saying because some people are now priced out of new cars, which is almost 50 grand, demand for used cars is up. That means the average used car is now over 25 grand, which is kind of insane. Obviously, these cars are lasting longer.

[Ben Carlson]

I wonder if some people are gonna be like, you know what? I'm just gonna start taking Ubers everywhere I go. There's no way I'm spending $13,000 on Ubers a year.

[Michael Batnik]

If. If you calculated it out.

[Ben Carlson]

So especially for two car households, you.

[Michael Batnik]

Know, I see a lot more of the electric bikes on the road. If you live in a nice climate, that would be appealing to me.

[Ben Carlson]

Cars have become a huge pain in the ass. They're so expensive, they're so reliant on computers. They spoke about how much plastic is in cars and how they're basically built to die, sort of like the iPhone.

[Michael Batnik]

The other thing that this touched on was the cost of insurance and the cost of maintenance has risen a lot because of all the sensors and such that we have in there. That it's. Anytime you get it fixed, it's not cheap either. And that's one of the reasons that the prices keep going up. Cause the cameras and the sensors and all the stuff they're putting in there is more expensive as well. Unfortunately, I think a lot of people assume that having like a two car household now is the thing, right? But you're right, it's hard to get off of that. And maybe some people will these days. But yeah, some of the stats in here were pretty, pretty crazy. Okay, so Mark Zuckerberg is desperate. I think this is kind of his whole thing. And I mean, I guess it really kind of goes back to the Social Network movie about him. He just seems like a guy who's constantly searching for something. I don't know if it's approval or. He kind of changes up his style and his. He just seems like a nerd who, like, is constantly trying to Be in the in crowd. Right. And I think that that's actually been a good thing for him in his career.

[Ben Carlson]

I think Mark Zuckerberg, his image today versus, I mean, five years ago, forget about it. Or ten years ago even too, during the election was not great. I think he's. His approval rating is maybe at an.

[Michael Batnik]

All time high just because he grew his hair out curly. Yeah, right. Got a tan and started doing like Muay Thai or something. So Sam Altman talked on a podcast recently and he said Meta started making giant offers to a lot of people on our team. You know, like $100 million signing bonuses, more than that in compensation per year. And I think Altman was bragging like, hey, a lot of our people are turning them down. So you mentioned scale AI a few weeks ago, I think with Mary Meeker's presentation. And I think. Right. Two days later, Facebook made a $14.3 billion investment in them and they wanted the founder to help now. And they also made a big investment. Daniel Gross and Nat Friedman, who are on this trajectory podcast for Row and Smile, talking AI. I don't know if you've heard any of those interviews. They brought them in to run their AI efforts. And so it's interesting to me because this all, to me sounds like they are behind, but I also wouldn't because of, again, his like desperation. And I'm not saying this almost in a bad way. I'm saying like, I think it's worked for him, but he seems so desperate. And you almost think like, God, they must be really far behind. But I wouldn't put it past him to make all these investments and then come out ahead still and be okay.

[Ben Carlson]

You said you don't mean desperate in a bad way. I think he's paranoid in a good way.

[Michael Batnik]

Yeah. Well, and that was like the Grove book, right? The intel guy.

[Ben Carlson]

Yeah.

[Michael Batnik]

Only the paranoid survive, it seems. But obviously he's. Whatever they've done, he's looking at it and going, oh my gosh, we're behind someone or something. I just do wonder, with all the money being thrown around, what's the breakdown between people who are just true AI believers and this is going to be our next God or something? Or this is gonna, you know, the sum total of human knowledge and it's smarter than humans versus people who are just like, all right, this is signing bonuses. I'm gonna get my five year max to play for the Grizzlies or whoever. Like, I, I would love to know the breakdown of it.

[Ben Carlson]

Who cares?

[Michael Batnik]

I don't know. I'd like to have some morality, I guess, in AI because it's gonna be this life changing technology. I just want someone behind the wheel who's gonna be like, look out for like humanity and all this.

[Ben Carlson]

I don't know, what was the name of the AI in Mission Impossible?

[Michael Batnik]

See, I didn't watch the new one yet.

[Ben Carlson]

What?

[Michael Batnik]

I'll just wait till comes out on video. I don't care.

[Ben Carlson]

All right. I mean, you're Mr. TC, are you not?

[Michael Batnik]

Yeah, I don't know. I'll get to it.

[Ben Carlson]

Okay.

[Michael Batnik]

But yeah, that's a big thing though, AI as the. That's gonna be because we couldn't make the Chinese the villains in movies anymore because you have to sell movies over there. And so I think the Russia thing has kind of been played out. You can't really do Nazis anymore because too far away from World War II. So AI is just going to be the villain in like every movie going forward.

[Ben Carlson]

Yeah, I've probably seen a dozen over the last 12 months.

[Michael Batnik]

Right. It's not that great of a story though anymore. Right. Can we just have an off switch for AI if it gets too powerful, just turn it off.

[Ben Carlson]

What's this piece about radiologists?

[Michael Batnik]

Okay, this is interesting. This is why I think the labor market stuff is going to be hard to predict. So this is a story in the New York Times and they say nine years ago, one of the world's leading AI scientists singled out an endangered occupational species. He said at the time, Jeffrey Hinton, people should stop training radiologists now. It's just completely obvious that within 5 years AI would outperform humans in that field. And they say today radiologists are still in high demand. And it's true. They said at Mayo, they're using AI to help identify any like medical abnormalities and predict disease. And it can also serve as a second set of eyes. Hey, I'm looking at this. What am I missing or what? You know, check me. But they say that there are more radiologists than ever. And actually AI is helping them and they, they're because of the demand for healthcare, they're needing more radiologists. So it's not putting them out of business. It's just becoming helpful to them in their job. And there's actually it somehow it's increasing the demand for radiologists.

[Ben Carlson]

So there's three things that are going to happen, I think and probably a lot more than not thinking of industries are going to get displaced entirely. The thing that customer service, the thing that you just mentioned. No, no, no. Actually radiologists are going to be in higher demand and is going to help it be more productive. And then the third and hopefully biggest category of the three are new jobs that we cannot possibly predict today because we don't know what technology or what technology is going to exist.

[Michael Batnik]

Yes.

[Ben Carlson]

And that would be the hope that there's going to be new, new demand for new jobs that we just don't know about yet.

[Michael Batnik]

And unfortunately, most people will pay attention to the first one and get really mad about it.

[Ben Carlson]

Right. So, for example, a little teaser on talking wealth over at the Unlock. I'm speaking on Wednesday at 11 to Dave Nottingham and you and I could talk about this Ben, next week to rehash. I want to get your thoughts.

[Michael Batnik]

Yes, I have thoughts.

[Ben Carlson]

My kids will not use a financial advisor. A human being. A human being will not financially advise my children. More to come.

[Michael Batnik]

You know, you're selling your kids short there. You're saying they're not going to have any money. Is that the problem? Yeah. Okay. You laid this out to me and I definitely have, but I agree with you those three things. And the hard part is going to be the transition phase. I just, it's really going to be interesting how the next 10 years plays out because there's going to be a lot of people who are really, really mad. I mean, so wait, so we had the tariff thing and we argued about, like, we need to make our iPhones in here again. Right? There's going to be situations where AI is all customer service and people are going to go, we need to have real people again for customer service. And there's.

[Ben Carlson]

I'm going to be the guy saying, I remember when there was not real people, there was real shitty computers that always broke.

[Michael Batnik]

Or you think that, you think AI is also going to go, hang on a sec, my computer's running a little slow today. That's every customer service person in history. So they can look up your whatever, but there are, there are going to be people. The other day I posted, I did a blog post and I, I like to include a picture or something there for social media, right? And I just did. I think I did a Keeping up with the Joneses when I pulled something from Daniel Crosby's book since we talked to him. And I used some studies and I did a People standing in front of their toys and houses that are unhappy. Right. The Joneses aren't as happy as you think they are. And some dude hit me on social media with, oh, cute. You're using AI to create pictures, like making fun of it. Like, there's going to be people who are like anti AI and like totally like, I'm not going to use this technology. There are going to be people who are too cool for AI.

[Ben Carlson]

I mean that was going to be a thing. That was you with Facebook and coffee.

[Michael Batnik]

But I'd never used it.

[Ben Carlson]

Right.

[Michael Batnik]

Either of them. Okay, still never had a Facebook account.

[Ben Carlson]

This is meta. I just asked Chat GBT how many people in the United States work in call centers doing customer service roles? How many people do you think then.

[Michael Batnik]

A million? 2.8 thousand.

[Ben Carlson]

2.8 to 3.4 million according to Chat GPT.

[Michael Batnik]

Do you remember the presentation? This is a long time ago, by the way.

[Ben Carlson]

That's a lot of people.

[Michael Batnik]

There's a lot of people. We had a presentation or a conference in New York a number of years ago, back before we knew how to do actually good conferences. But we had Scott Galloway there and he did one of those presentations where he went through a million slides. And remember the Amazon store where it was gonna be like you walk into Amazon store, you put the stuff in your cart and you walk out and it charges you. I don't know if that still exists or if it just seems like it never.

[Ben Carlson]

They're in the airport.

[Michael Batnik]

But Galloway was saying, listen, there's 2 to 3 million people who work at cash registers and those people are going to be out of business. How come stuff like that never happened?

[Ben Carlson]

I think it did happen to a certain extent with the self checkout lanes. There's fewer cash. There's way fewer cashiers at like the grocery stores than there used to be.

[Michael Batnik]

There are still people who do not know how to use self checkout lanes. And I don't, I don't get it how at this point, like there are certain people, I feel like you should have to pass a test. Like there should be a timer, a shot clock for self checkout lanes and the drive through. If you take too long at the self checkout lane of the drive thru, sorry, you either go inside or you go to a person to pay.

[Ben Carlson]

I agree. The cashier should say, nope.

[Michael Batnik]

Yeah, you can't hold up society. Sorry. There's gonna someone come to sweep all your stuff and move you over here. You lost your privilege for this as a human being.

[Ben Carlson]

All right. I don't have a ton to say on this topic other than I just don't like this. Brian Armstrong at Coinbase said the world needs crypto now more than ever. Now as a fellow bald, I appreciate his baldness. And I guess it's like, you know, if you. A barber's gonna tell you need a haircut. So what I expect him to say, but Right. Goes on to say, debt is growing exponentially, inflation is crippling entire nations. Economic freedom is declining. It's time to increase economic freedom globally with crypto. So actually, you know what? Maybe. Okay, maybe I will give a pass here or. Or try and interpret what he's saying because he didn't say bitcoin. If he said bitcoin, I would have just said hard. Hard. No, but stable coins. I think stable coins actually do increase economic freedom. I think. Or can not an expert, but if I am. If I am somebody who lives in a country with not this more stable currency, the idea of digital dollars sounds pretty good.

[Michael Batnik]

I feel like people don't even make that anymore. I'm going to get into stablecoins in a minute. How many CEO pictures do you think are them? Not looking at the camera, but look.

[Ben Carlson]

At the way that. Yeah, yeah, look over here, look over here.

[Michael Batnik]

So someone also sent us the coinbase and I feel like they should almost be spiking the ball instead of trying to make weird arguments. But they. There was a commercial in the NBA finals. Someone sent this to me and it was saying how like 5 years ago it cost X number of bitcoins to buy a house. It was like, you know, 10 bitcoins to buy a house.

[Ben Carlson]

Who uses bitcoin to buy a house?

[Michael Batnik]

Now it costs 2 bitcoins to buy a house. And it was kind of saying. It was just a weird way of.

[Ben Carlson]

Set number go up.

[Michael Batnik]

Yeah. Okay, so back to stablecoins. So the genius act. I love what they're doing now. This is maybe this is another AI thing.

[Ben Carlson]

By the way, I saw somebody tweet. Was it. Who was it about? It's called genius because Trump refers to himself as a stable genius.

[Michael Batnik]

Ah, okay. Good lie. All right.

[Ben Carlson]

Pretty good.

[Michael Batnik]

So all the articles these days now have the key points, and I think that's just taken from AI but so this genius act, it regulates stablecoins and it also mandates you have to have $1 of reserves for every $1 of stablecoins. Right. So this is like, if you're going to be using, this stuff has to be backed. And ironically enough, this stuff is just going to increase the demand for dollars, obviously. Right. This is bullish for US Dollars. Correct?

[Ben Carlson]

I would think so.

[Michael Batnik]

And T bills, probably, because isn't most or treasuries. Isn't most of this money just going to be invested in T bills and treasuries?

[Ben Carlson]

I don't think anybody wants a stablecoin that's backed by the lira.

[Michael Batnik]

Right? But so this is going to just. People always say like, who's going to buy our debt? I guess it's stablecoin issuers. But so Sam Lee, who's a great follow and probably one of the most successful crypto people that no one ever talks about because he just kind of. He used to work at Morningstar, he runs his own financial advisor firm, he tweets about crypto once in a while. But he is probably one of the best crypto people I know who's not completely indec. He. He's like the more the human side of it.

[Ben Carlson]

All right, what'd he say?

[Michael Batnik]

So he just, he just talked about how this is like a huge, huge deal potentially. So he's saying, listen, it's profitable. So someone like tether earns 6 billion a year in risk free because their stuff is backed and they just put it into, into T bills. Right. Also, he said big corporations now have permission to go after the market and grow. They can more easily compete with Visa and MasterCard and American Express retailers in particular have a strong incentive to cut credit card processing fees. Most importantly, the ACT grants stablecoins legitimacy, which will spur adoption by individuals. So one of the stories I saw said like, why wouldn't Amazon and Walmart just create their own stablecoin and totally do away with the 2 to 3% processing fees? He's saying, let's see, in the long run, with more legitimate non speculative economic activity occurring on stablecoins or cryptocurrency networks that power them will become increasingly attractive places for commerce. We could see huge growth in decentralized financial protocols. So this is obviously like recreating the rails of the financial system. So he's kind of saying, like, listen, a lot of this stuff is not imminent. It's going to take time to build out. But the fact that this stuff is a possibility now is one of the reasons that a company like Circle is going bonkers, right? And trying to bet on who the winner is going to be. Like, it's kind of like if you can build, you know, rebuild the rails of the financial system and potentially, you know, challenge credit card companies. Like, the possibility for this being a huge, huge companies is really there.

[Ben Carlson]

Weisenthal tweeted, here's Circle on every day since its IPO. Incredible run. So this is literally daily returns up 168. That's IPO day. Up 29, up 7, down 8, up 10, down 9, up 25, up 13, down 1. Up 34, up 21. LOL.

[Michael Batnik]

Those look like annual returns for the.

[Ben Carlson]

S and P. Let me tell you a quick story. It's long. I'll try and make it quick. Um, so my house that I rented out is closing, hopefully soon. I have paid either three or four months of my mortgage without a tenant, which was not. Not that much fun. She left, not abruptly, but I was like, all right, she's been there five years. And she's like, no, actually, I'm leaving in 30 days. I was like, oh, well, could he use a heads up? Anyhow, so just in terms of, like, eating away at whatever return I made, which, you know, I got very lucky, but still, four months of mortgage payments and a decent amount of repairs, unfortunately, to pass, you know, inspections and all that sort of stuff. So I had a plumber come in, and there's a couple of issues, like, not important, but the bill was $2,800. And I said, huh, can I. I see the breakdown. There was four different things, and one of them was $1,000 for a sink, you know, 200 for a faucet and whatever the rust labor. I said, that sounds really high. I'm going to phone a friend. And the rest of the things. I spoke to my broker, and he said, yeah, everything else is reasonable, but that's. That's crazy talk. So I said, all right, instead of 2,800, what if I'll. I'll give you guys cash. Can I give you 2,400? He said, okay, fine. We'll do that. I went to the bank, and I. On the way to the bank, I called my friend and I said, hey, can you install a sink, a faucet? He said, yeah, great. All right. So I went to the bank, and I got $2,000. Now, I owed them 2400. I'm sorry, 20. I owe them $2,500. I owe them $2, 500. I asked 24. This 25. Okay, fine. The bank was closed. It was Juneteenth. And the maximum amount of cash that you could withdraw is $2,000 from trace. Did you know that?

[Michael Batnik]

Did not know that.

[Ben Carlson]

From the. From the. From your debit card. Now, the bank was closed. There's no tellers. I couldn't go to the window. So I called them up, and I said, hey, can you please increase my limit? She said, no, you're maxed out. I said, really? The most cash that I can access on a day is $2,000. And she said, yes. But I said, But I need more cash. She said, well, I'm sorry, you can go back tomorrow. Like, there's nothing I can't override. You're at the max. So obviously I'm thinking about stablecoins and all this, like, this is crazy town. So I. And then they. They pissed me off. I called them back and I said, listen, I'm not going to do the faucet, you know, so whatever that is. A thousand bucks just knocked it off the price, and I'll just. I'll give you cash. He called me back and said, actually, you don't. You no longer get the cash discount. Now it's whatever, $2,000. And I'm like, come on, really? Like, so now. So now why even pay my friend 500 bucks? I might as well just have you just do the whole thing. So he's like, anyway, we're going back and forth. And he said, all right, fine. They'll. You could put $2,000 cash, 500 bucks on the credit card, no additional fees. I said, all right, fine. Just do it.

[Michael Batnik]

Well, you wanted to pay him in bitcoin.

[Ben Carlson]

I went back to the house, took $2,000 out, and I said, hey, is it cool if I just leave the money in the. In the drawer? I'm going to. I don't want to sit there and watch you do this. He said, yeah, no problem. Nice kid. He called me later that night and said there was only $1,800 in the drawer. And I said, no, there wasn't. I took out $2,000, put an envelope. Took the money out of the envelope and put it in the drawer. I said, I will go to the house over the weekend, and hopefully it's there. And he said, okay, I. You know, what would you have done in that situation if the money wasn't there?

[Michael Batnik]

Nowhere to verify, you know?

[Ben Carlson]

Yeah, it's my word against his.

[Michael Batnik]

Yeah.

[Ben Carlson]

Anyhow, the $200 was in the drawer, which made me very happy. I was like, I don't want to call the credit card company and tell him to reject it and then get this. Get in trouble.

[Michael Batnik]

So he just didn't see it.

[Ben Carlson]

Yes. I'm like, dude, oh, okay. So he just. Because it was, you know, it was a small stack of bills, so I guess he just picked it up. And. And there was just two that were. That he didn't pick up, which is odd. But anyhow, so. So the whole point of the story is buying an investment property, not that much fun. Right. Paying several months of a mortgage, not that much fun. Paying to Repair a window, the paint, the this, the that. Going to the town to make sure that. Not that much fun. The return on hassle, as Nick, like Nick likes to say, not great. Not doing this again. Even though it was a very good financial outcome. Still pain in the ass. And also $2,000 at the bank. Come on.

[Michael Batnik]

Yeah, you don't deal with this with index funds, right?

[Ben Carlson]

No. Come on, Chase. Did you see.

[Michael Batnik]

Wait, wait. So. But what is this. So is your crypto thing. Do you think crypto, like makes this sort of transaction either? Because I think I heard this story once and I'm out in one of my uncles here. But one of my favorite stories from my uncles was. I think this is in the 70s. He's riding a 10 speed bike home from a party and he. He hits a crack or something. And this is like downtown, I can't remember Detroit or Grand Rapids or something. And he falls over in front of a cop and a joint rolls out of his pocket. And they brought him into the. And this is on a Saturday. They brought him into jail to like book him for a night of jail. He had weed on him. And my mom and her sister were gonna go pick him up at the jail. And they didn't have any money. No banks were open. They couldn't afford his bail. They had to wait till Monday to go to the bank to get some cash out to go pay 50 bucks, whatever it was at the time to get him out of jail. So he had to spend the weekend in jail. There were no. This is pre atm. There was no atms back then. So my, My point is it could have been worse. You could add nothing.

[Ben Carlson]

Now, I guess a listener or you or even me could say, well, why didn't you just Venmo them? Like, what's wrong with Venmo, right? I don't know. But the point is, banks as they currently exist are just a bit. It's a. A time of a different era.

[Michael Batnik]

Yeah. Maybe on purpose. All right. You know the I'm not leaving meme? I guess it's Leo from Wolf of Wall Street.

[Ben Carlson]

Sure.

[Michael Batnik]

Overrated movie.

[Ben Carlson]

I think so too. A good movie. A good movie. A good movie.

[Michael Batnik]

Decent movie. I watched it once. Overrated. That's boomers with their housing. Redfin says one in three baby boomers say they will never sell their house. And another 30% say that they'll sell at some point, but not within the next decade. Boomers aren't leaving. And I kind of tend to believe them because they've lived in their house For a very long time. I think the number Is they said 2/3 of boomers have lived in their home for 16 plus years. And it also shows that younger people say that they are more likely to move if they can. I still do think that there's a cohort of millennials who are gonna be in their house for a long time. I am personally with a 3% mortgage. I mean, my oldest daughter's 11, youngest are 8. Like at least until the kids are done with high school or college, probably. We're in this house.

[Ben Carlson]

I really want to be on the water giving that. I'm a nautical man. But I'm not leaving.

[Michael Batnik]

Right. It'll be hard. I mean, they're, you know, things do happen, but I, I, I can't see. And plus, listen, we're finally taking some of that home equity line of credit. I'll talk about this more in the weeks ahead, I guess. And we're doing.

[Ben Carlson]

Are you doubling renovation, Doubling size of your mud room?

[Michael Batnik]

I wish. Mudroom's not being touched. But we're doing like new flooring and. Oh, well, if we're doing new flooring, we gotta do a new paint job. Hey, we're doing a new paint job. We have to change the banisters. And so I'm like, one decision leads to three or four in housing. And this is another point of the housing, the return on housing. But sometimes you make these decisions about how you want your house done. It's like almost an experiential thing. Are we gonna get a 1 to 1 return on what we're doing? Absolutely not. And it's very expensive, Way more expensive than I thought. We're putting like hardwood floor. So at our whole house, it's not going to be cheap, but we're going to live there for a long time. So I don't mind making this investment.

[Ben Carlson]

Yeah, if you amortize that cost, you know, it's nothing. All right.

[Michael Batnik]

Oh, wait, wait. One more thing about the negotiating though. Like you said, paying in cash. Like, I think that's a really, that's a thing you should do for any type of renovation. Okay. If I pay cash, will you make it cheaper? And I was going to do that tactic, but they offered me 0% financing for a year. Done. Don't ask me again. Of course I'm going to do that. I'm going to let them carry the cost for a year for a very high cost thing. Sure.

[Ben Carlson]

Was that through?

[Michael Batnik]

Click. Put it on my tab. No, not buy now, pay later.

[Ben Carlson]

All right.

[Michael Batnik]

I'd be Fine with that though if.

[Ben Carlson]

It was, let's run through some stuff in private markets. We're getting long so we could do this quick. There was an article over the weekend or last week. Fidelity rolls out custom models with Alts via investment partnership. We are in the early innings of this mega trend. It feels like it's, I think financial advisors feel like it's a bubble because there is just so much activity from these alternative asset managers, like just hounding us relentlessly. So from that respect, you could say there is way too much supply, which I'm calling the relentless ask. There's way too much supply of these investments and maybe not enough demand to soak it up. Now that might be true, but they're coming. And if you want to learn more, another plug for talking wealth on the unlock for advisors. I spoke with Phil Huber and it was great because there's, there's just, there's a lot of negative press. Some of it very fair, some of it kind of nonsensical that we got into. But there was.

[Michael Batnik]

And Phil comes from both sides of the aisle so he can speak, he was an ra. But the thing is this thing getting like the model portfolios and the target date funds, like that is the entrance, that's the foot in the door when you have it, when it's in the model. And a lot of people use those and a lot of advisors rely on those. Like that's, that's when it's a really big push.

[Ben Carlson]

So there is a. J.P. morgan has this guide to alternatives like they do, they've got to the markets Guide to retirement, Guide to alternatives. Want to run through some quick charts. So they show public and private manager dispersion and when you look at global large cap equities, the dispersion over a 10 year period, it's nothing. On the high end it's 8.9%. On the low end it's 7.2.

[Michael Batnik]

And this is like top and bottom.

[Ben Carlson]

Quartile or I don't know what it says exactly but like, okay, the point is if you throw a dart at large cap managers, even if you hit the worst of the worst, whatever, okay, so the market did nine, you did seven, two. You know what I mean? Like if you selected the worst, if you're throwing darts at private equity, you could be in for a wall to pain. And let's be honest, most people are throwing darts.

[Michael Batnik]

This is a great chart. David Twenson talked about this a lot. Like if you're not in the top quartile, top decile for these private assets. It's not worth it.

[Ben Carlson]

So, all right, so here's what it is. It's 75th percentile. And then on the bottom is 25th percentile.

[Michael Batnik]

Yeah. Right. So it's top and bottom quartiles.

[Ben Carlson]

So 21% of the high end for private equity, 1.5% of the low end and no liquidity. How do you like that?

[Michael Batnik]

That's in the bottom. Bottom quartile for venture and real estate. Are negative returns.

[Ben Carlson]

Horrible. So, yeah, you better be careful and you better. You better be right.

[Michael Batnik]

But this is why private credit is the thing. Private credit, of all the privates, has the lowest dispersion. So this is why I think most advisors will be most comfortable using private credit. And it's also the easiest thing to sell.

[Ben Carlson]

I agree with you.

[Michael Batnik]

Yield. We're going to be 10% yield. What else you need to know? Yep, Sign on the dotted line.

[Ben Carlson]

Investor asset allocation. So institutional investors, 22% to alternatives, 78% to traditional assets. Very high net worth. And family offices of 30 million plus have 19% in alts. High net worth investors 1. 5 million to 30 million, 2%. So they are pushing and I don't know how much winning they're going to do, but they're going to win in my estimation.

[Michael Batnik]

Right. You want to bet against those places, that chart you had that showed BlackRock versus Blackstone and the assets versus the market cap.

[Ben Carlson]

It's unbelievable. So BlackRock has 10 times the amount of assets as Blackstone, yet Blackstone's market cap is 10 to 15% larger.

[Michael Batnik]

Right. It would be like Vanguard versus any active manager. Like Vanguard's market cap, if they're a publicly traded company, would be much smaller than a lot of the active.

[Ben Carlson]

Exactly.

[Michael Batnik]

Trillions of dollars.

[Ben Carlson]

That's exactly right. I spoke with Phil about the story about Yale. Well, listen, if the Pioneer are dumping their, their private investments and like, they're just. They're not dumping their private investments. There are. There are other parts of the story, but the chart that I want to point to is secondary market volume has gone from 25 billion dollars in 2012 up to 162 billion in 2024. There is.

[Michael Batnik]

What is. So a lot of this is rebalancing too.

[Ben Carlson]

There's just so much more liquidity.

[Michael Batnik]

Yeah, it's easier to. It's easier to trade now. But again, I think a lot of that is rebalancing, perhaps.

[Ben Carlson]

Yeah. There was a story again about. Zweig wrote about this about marking up. Marking up to nav when you buy Something in the secondary market. And Phil and I spoke about this. If you're buying something for 40 cents, you're marking up to a dollar and you're taking carry. That's horseshit. But a lot of these buyouts in the secondary market are at a 5 to 6% discount to NAV. So, okay, that's the price, that's the cost of liquidity. If somebody wants to dump a billion dollar stake in private markets and the buyer pays 95 cents, I have no problem with them marking that up to nav.

[Michael Batnik]

Right, Yeah, I agree.

[Ben Carlson]

Lastly, private company buy at multiples versus the S& P. This is wild, Ben. So for large cap and middle market, large cap is considered a billion dollars plus. Middle market is 100 million to a billion. They're looking at median enterprise value to EBITDA of the trail in 12 month multiples. There's no liquid, there's no discount. There's no discount. And part of the whole appeal of locking up your money was that if you are going to give up liquidity, the higher returns better come from a lower entry point in terms of valuation. That disappeared.

[Michael Batnik]

I can't remember what the podcast was, but there was an interview with Mitt Romney a number of years ago and he was talking about how Bain Capital, when they bought companies and he started out in like the 80s and 90s and they were buying these companies like two to four times.

[Ben Carlson]

Yeah, they're shooting fish in a barrel.

[Michael Batnik]

And yeah, he's like, of course our returns were great. The valuations were ridiculously low on these companies. That's not the case anymore.

[Ben Carlson]

So the small cap. So under $100 million. Yes. There still is a substantial discount there. It's 8.8 times as there should be. Right. So anyway, JP Morgan guide to Alternatives, very good resource. The Unlock Talking wealth with Phil Huber. All right, Ben, let's move on to the sapphire reserve. So.

[Michael Batnik]

So you threw it out there at the end of the show last week.

[Ben Carlson]

Yeah, I didn't have the time to go through it. Are you bailing?

[Michael Batnik]

So I, well, I may have changed my mind. I maybe overreacted last week. Credit to me for raising my hand and saying. So you said, well, they're raising the fee to what, 7.95 a year? Which just sounds insanely high. So here's. This is from the points guy. They broke it down. What you get. So you get the. You get a $500 annual statement for their curated luxury hotel brands. You have to do it through them, which I hate. Using the portals on the Credit cards to book travel. I don't like it.

[Ben Carlson]

It sucks. Split into two, 250 biannual credits. That's impressive.

[Michael Batnik]

Yeah, so you gotta. So that means you have to book twice. So that one you're probably not gonna use. So you get the $300 annual statement credit. Here's for you for StubHub. Okay. Again, split it between two six month periods. $300 in DoorDash promotions. So that's not bad. Oh, wow. $300 in dining credit.

[Ben Carlson]

But wait, but wait, but wait, Ben. Yes, there's all of these things, but you really have to be on top of it. So for example.

[Michael Batnik]

Yes, exactly.

[Ben Carlson]

For DoorDash. Oh, 300 bucks. So you do the math. You're like, oh, this is. They're paying you. No, they're not. For DoorDash, it's a $5 restaurant promo and two $10 promos on everyday essentials each month.

[Michael Batnik]

Right. And you have to activate it. You get a statement credit for Apple TV or music. So I would use that. That's fine. 120 bucks for Peloton membership. 10 bucks a month. So I'll use that. The doordash Dash Pass membership, which takes away some of the fees.

[Ben Carlson]

Dude, this is a job in and of itself.

[Michael Batnik]

But yeah, it's a lot. So you're right, you have to be on it. And that's why they know. Plus they have the $300 travel credit applied to all purchases made in travel category. So you get that.

[Ben Carlson]

So listen, this is, this is decent value.

[Michael Batnik]

It ends up working out for me. But they know people aren't going to use all these values. That's why.

[Ben Carlson]

But so wait, but you're not, you're not canceling, you're not leaving?

[Michael Batnik]

I'm not leaving. I'm still here.

[Ben Carlson]

All right. I also grabbed this chart from the J.P. morgan's Guide to Alternatives. I just wanted to flag this one thing they show real retail, real estate per capita. Look at us, we are so far, number one, we've got 23 and a half square feet per person. Canada's number two at 16.8. Then Australia at 11.1. UK is 4.6. Japan is 4.4. China's 2.8.

[Michael Batnik]

So think about it. When you drive through America and you pass a town on the highway, every town in America. You see, look at, there's a Best Buy, there's a TJ Maxx, there's, there's all these, you know, there's all these retail, target, whatever. You don't get that when you drive in other countries. Right. You don't see all this big box retail, so you're right. That's what, that's what we have. And obviously we love to spend money.

[Ben Carlson]

Ben. I put. I put the travel. The car stuff in the travel section. So I just wanted to pull out two. Two quotes. We spoke about this earlier. How cars suck. Quote. This is David Francis Kelly. Credit to David Francis. Kylie. I'm sorry. Great quote here. The gizmo that failed in my Ford Escape that pivots to direct either hot or cold air in the H vac is plastic. The cost to replace was over 2000 bucks because the geniuses at Ford buried it with no access unless the whole dash was pulled out. By the way, we forgot to mention this. I think maybe I did, but I think. I don't think we did. A couple of months ago, somebody emailed us and was like, hey, you guys are always talking about people like David Francis Kiley. Like, where do journalists get these people? There's a website that matches journalists to everyday people. Did you know that?

[Michael Batnik]

No.

[Ben Carlson]

Yeah. I forget what the site is, but there's a. There's a. There's a repository. People waiting to talk to journalists.

[Michael Batnik]

Probably people who leave Yelp reviews.

[Ben Carlson]

Here's another one. My 2013 BMW X5 rear ended. A small car. And the damage to my car look minor, said Tom Walken, a psychologist in Raleigh, North Carolina. But the electronics in the front bumper area pushed the repair cost to more than 75 of the car's value. So North Carolina law required that it be totaled. Yeah, this sucks cars.

[Michael Batnik]

And his. His insurance probably went up a lot too.

[Ben Carlson]

All right, Ben. Continuing the. Another mega trend of remaking movies from our era. A new Harold and Kumar movie is officially in the works. I like how lucky. When I was younger. I'm not going to see this.

[Michael Batnik]

These movies didn't do it for me. I probably watched the first because you weren't.

[Ben Carlson]

You weren't a stoner.

[Michael Batnik]

Yeah. Yeah, but I liked. I loved Half Baked, though.

[Ben Carlson]

Okay, well, who didn't?

[Michael Batnik]

So this. This one. And it just didn't do it for me.

[Ben Carlson]

You know what I saw last night? So during the finals when Halliburton's Achilles exploded, which was disgusting, and that sucked. Feel bad for him and Pacers fans. During halftime, I said, you know what? I'm going to the movies. I will watch the rest of the game on my phone if I need to, but I'm not anticipating a nail biter.

[Michael Batnik]

That's a pretty good choice.

[Ben Carlson]

So I went to see because I'm not gonna be able to see it for a while. I've got stuff coming up I want to see. 28 years later. Awesome movie.

[Michael Batnik]

See, I kind of want to watch the first two before I watch that one again because it's been a while.

[Ben Carlson]

So 28 days later I rewatched that.

[Michael Batnik]

Movie was like a phenomenon when it came out.

[Ben Carlson]

It was. I never saw 28 weeks later and I was told to skip it, so I did.

[Michael Batnik]

Oh, I like that one.

[Ben Carlson]

Okay. 28 years later was a certified banger. It was awesome. Okay, awesome.

[Michael Batnik]

But anyhow, see, that's one of the ones where you and I are actually on the same wavelength here for kind of a horror ish movie.

[Ben Carlson]

Yeah, I'm surprised that you like that sort of stuff, but okay.

[Michael Batnik]

Anyway, when the guy's walking through the hospital in the first one and be like, what? And it's the guy. It's Kelly Murphy Oppenheimer. Yeah.

[Ben Carlson]

There was a trailer for. I thought it was a full reboot. It's not a reboot. I know what you did last summer because Jennifer Love Heughan and Freddie Prinzer in it. I'm in for that. Even though that was.

[Michael Batnik]

So one of the. One of the two of them is going to be the killer. Spoiler alert.

[Ben Carlson]

That was like. That was like a C level teen horror movie in my. In my opin. But I'm gonna see that.

[Michael Batnik]

Definitely saw it in the theater. But let's be honest. One of those two is. Is the killer now. Yes. That. I. I have not seen it. I saw the trailer. One of them is the killer.

[Ben Carlson]

Stop.

[Michael Batnik]

Trust me.

[Ben Carlson]

Yeah. No. Okay, what else is going on, Ben?

[Michael Batnik]

All right, before recommendations, I'll. We'll keep it short for Duncan this week. Since we went so long last week. This is just another old person, middle aged thing my wife and I with some friends found. Went to a new restaurant this week. Just kind of in the middle of nowhere in northern Michigan. It was on a golf course and there's a farm in the background. It's called the Farmhouse. And this place was spectacular. It looked awesome. The vibes were great. The food was absolutely amazing. If I would have gone to a place like that and I was young, I'd be like, oh, this place is pretty cool and never think of it again. My wife and I were talking about this restaurant for like the next 24 hours. Like, I can't believe how awesome it felt like a New York kind of restaurant. Like, and that's the kind of thing when you're older, that you get excited about finding a new restaurant.

[Ben Carlson]

Oh, yeah, right.

[Michael Batnik]

When you're young, I don't care. I didn't remember the name of that place was. I don't remember what I had to eat last week. When you're older, you find a new restaurant. It's like you tell everyone about it.

[Ben Carlson]

Yeah, that's a big topic of conversation amongst 40 year olds.

[Michael Batnik]

Right. Did you guys try the new place down the street yet? Amazing.

[Ben Carlson]

I'm dying to.

[Michael Batnik]

Yes. Oh, we're definitely going to go next time. All right. I got some recommendations. Look at you. Got nothing in here this week, but.

[Ben Carlson]

No, I just recommended 28 years later.

[Michael Batnik]

Okay. I got two this week. We watched the Accountant 2 on Amazon prime and I don't know if this went to the theaters or not or if it's straight. Amazon Prime. Okay. Did you watch Accountant one? The first one.

[Ben Carlson]

I love it.

[Michael Batnik]

See, I liked it. I honestly, my wife and I were talking before we watched this. I don't remember what I remember.

[Ben Carlson]

It's very, very forgettable. I saw it recently again. It's very forgettable.

[Michael Batnik]

I kind of liked it. The second one, I feel like had no connection to the first one at all. Like a little bit minorly. But then Jon Bernthal is the brother who. I think he was in the first one a little bit. Again, I don't remember it.

[Ben Carlson]

He was.

[Michael Batnik]

It's a totally unnecessary movie. Didn't need to be made. Completely unnecessary. And I was totally entertained. Great. Like, there was some great scenes with Affleck and Bernthal and Bernthal is probably the best character actor there is right now.

[Ben Carlson]

Bernthal's the best.

[Michael Batnik]

He. He is so. So he has so many good lines in this. And again, a totally forgettable, like, unnecessary movie that was completely entertaining and I totally enjoyed myself.

[Ben Carlson]

Did you see we own. What is it? We. We own this. We own this city. Did you see that on hbo, The Bernthal mini miniseries?

[Michael Batnik]

Oh, yeah, yeah, yeah. That was pretty good. He's the cop.

[Ben Carlson]

He's great.

[Michael Batnik]

Yeah, he's the Baltimore cop. All right. And so the new Owen Wilson show on Apple called Stick. Have you seen this yet?

[Ben Carlson]

I saw two episodes. I don't. I don't love it.

[Michael Batnik]

Okay. My wife and I plotted through five episodes this week. It's a little bit of a coming age, so that's. Maybe that's. But it's one of these shows where, like, you don't have to invest a lot of yourself in it.

[Ben Carlson]

Okay.

[Michael Batnik]

It's just light and breezy and entertaining. And you know what? Always Always works. So in the fifth episode, they did a montage. Put a song. You can see people talking. You can't hear what they're saying.

[Ben Carlson]

A montage. It's like the fast forward button.

[Michael Batnik]

Yeah. We're going to this town. We're going to this town. So it's a road trip show. It's golf. It's got a little bit of heart on it. Cause there's people dealing with grief in the show. But it's not the kind of show you have to be totally invested in. It's just very light. And I was thinking Owen Wilson just always plays himself. He literally is the same character in this show that he is in Wedding Crashers. And he looks exactly the same. He's got literally the same haircut still as he always had.

[Ben Carlson]

He's the best, but.

[Michael Batnik]

He's the best. He plays himself, but he. I mean, it seems like he's playing. I don't know. My wife and I both really liked it. Marc Maron plays the sidekick. I really am into it. We've plowed through that one very quickly.

[Ben Carlson]

Okay. I have another quasi Wreck. It's not a wreck. It's just a movie that I saw that I liked. But it's. It was. It was. It was fun, but underwhelming. And it was just a little. Vibes were weird. You ever see Plane with Gerard Butler?

[Michael Batnik]

Okay. It's funny because I was having this conversation last night with my wife.

[Ben Carlson]

It felt like, hollow, like I should have loved that movie.

[Michael Batnik]

But do you ever. Do you ever go on Netflix or one of your streamers and you see they have the continue watching thing and it shows you the movies or shows you're watching.

[Ben Carlson]

Yeah.

[Michael Batnik]

And you see something that your spouse is watching and you go, what the fuck? You. What are you watching? That. She was. She was watching Plane.

[Ben Carlson]

That's bizarre.

[Michael Batnik]

And I wanted to be like, what are you watching? This piece of garbage. For you watching it? I get.

[Ben Carlson]

Plane was a. Was a high quality piece of garbage.

[Michael Batnik]

Okay.

[Ben Carlson]

Yeah. Total junk.

[Michael Batnik]

I mean, it's a Gerard Butler movie.

[Ben Carlson]

I have. I have a Gerard Butler. I love it.

[Michael Batnik]

Aren't all of his movies high quality pieces of garbage? Let's be honest. Yeah, well, no offense to him. He's carved out a nice lane.

[Ben Carlson]

300 was not garbage. So watch your mouth. Careful.

[Michael Batnik]

Okay.

[Ben Carlson]

Do not talk about Leonidas that way.

[Michael Batnik]

That movie's okay.

[Ben Carlson]

That's a great movie. All right. We went looking in.

[Michael Batnik]

Not bad. As you hear this, we will be recording a live show at the Morningstar Conference on Navy Pier in Chicago, which should be out as, like, a bonus episode. And we're gonna do something a little different for that, so that should be fun. Come say hi if you're there. Anything else?

[Ben Carlson]

Hey, stay cool in the heat, okay?

[Michael Batnik]

I got nothing. I got no time for weather. Sorry.

[Ben Carlson]

Bed hates weather. Talk.

[Michael Batnik]

But what else is there to talk about?

[Ben Carlson]

No, that was it. You just say, yeah, stay cool.

[Michael Batnik]

All right?

[Ben Carlson]

Go yourself, San Diego.

[Michael Batnik]

All right. Thanks to the production team, as always. Email us [e-mail] we'll see you next time.