The Top 10 Risks to the Stock Market (EP. 419)

Summary

Animal Spirits Podcast Summary: "The Top 10 Risks to the Stock Market" (EP. 419)
Release Date: July 2, 2025
Host/Authors: Michael Batnik and Ben Carlson

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Introduction

In Episode 419 of the Animal Spirits Podcast, hosts Michael Batnik and Ben Carlson delve into the top risks currently facing the stock market. The conversation weaves through various economic indicators, market sentiments, and emerging trends, providing listeners with a comprehensive overview of potential threats that could influence investment landscapes.

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1. AI Bubble Burst

Ben Carlson initiates the discussion by identifying the bursting of an AI bubble as the leading contender for ending the current bull market. He posits that speculation around artificial intelligence could inflate asset prices unsustainably, leading to a significant market correction.

Ben Carlson [02:23]: "If we were to come up with a top 10 list of potential bull market enders, I think the consensus number one would be an AI bubble that bursts and takes us down."

Michael Batnik concurs, emphasizing the anticipation surrounding this potential bubble and its implications for market stability.

Michael Batnik [02:38]: "I think we're in a waiting period... people are waiting for an AI bubble to hit."

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2. Debt Crisis and Dollar Decline

Following the AI bubble, Ben Carlson highlights a debt crisis or the abandonment of the dollar as significant risks. The weakening of the dollar, the worst since 1973, coupled with mounting debt levels, could destabilize global markets.

Ben Carlson [05:57]: "Number two would probably be a debt crisis or a dollar abandonment."

Michael Batnik adds that the decline in the dollar’s strength is partly due to ongoing trade dynamics and positions unwinding after a prolonged dollar bull market.

Michael Batnik [13:55]: "A lot of this is the trade war stuff, but a lot of it too was just this is a positioning thing."

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3. Market Sentiment and the Death of Perma Bears

The hosts discuss the shift in market sentiment, noting that perma bears—investors who consistently predict market downturns—are losing their influence.

Michael Batnik [04:24]: "I think we've finally, finally killed the perma bears. I think they're dead and gone."

This change in sentiment could lead to increased bullishness, but also heightened vulnerability to sudden market shifts.

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4. Trends in Retirement Savings and 401(k) Participation

Michael Batnik and Ben Carlson examine positive trends in retirement savings, with more automatic enrollment in 401(k) plans and increased participation rates.

Michael Batnik [17:30]: "The biggest change in behavior has just been small changes in defaults, essentially."

This enhancement in retirement savings mechanisms could lead to greater market stability as more individuals are invested in the stock market.

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5. Surge in Alternative Investments

The podcast highlights the explosive growth of alternative investments, such as venture capital, private debt, and real estate infrastructure. Ben Carlson cites data showing a significant increase in retail clients holding alternative assets.

Ben Carlson [43:12]: "Institutional FI tweeted a table of 60 companies that are adopting the bitcoin treasury."

However, the proliferation of alternative funds also brings risks of overvaluation and potential market corrections if returns falter.

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6. New Graduate Hiring Crisis

A notable concern raised is the hiring crisis for new graduates, exacerbated by AI advancements displacing entry-level jobs. Derek Thompson's analysis indicates a growing gap in job opportunities for recent graduates.

Ben Carlson [25:33]: "AI is making it worse. And he shows this new grad gap."

Michael Batnik acknowledges the complexity of this issue, balancing it against data suggesting low unemployment rates for young adults.

Michael Batnik [25:34]: "It's a minor change, I would say on the margins."

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7. Inflation in Consumer Goods

The hosts express surprise at the rising inflation in fast food prices, noting that even established chains like McDonald's are seeing significant price hikes.

Ben Carlson [27:35]: "But let's say that even if they are inflated by 40%, see what I did there? But let's say... the increase in fast food prices is absolutely bonkers."

Michael Batnik attributes this phenomenon to companies seizing the opportunity to raise prices after years of suppressed inflation.

Michael Batnik [28:16]: "They finally got their chance to raise prices."

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8. Corporate Adoption of Cryptocurrency

The podcast discusses the increasing trend of corporations adopting cryptocurrencies like Bitcoin as part of their treasury management. However, this strategy is met with skepticism regarding its long-term viability and impact on stock performance.

Ben Carlson [38:36]: "What is the strategy to buy bitcoin? Is it to get more cash in your balance sheet? Like, is it going to sell the bitcoin?"

Michael Batnik questions the sustainability of companies like MicroStrategy maintaining a premium for their Bitcoin holdings.

Michael Batnik [39:07]: "Why are we paying a 3x premium?"

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9. Potential Real Estate Market Correction

Michael Batnik anticipates a housing market correction, driven by prolonged high mortgage rates. He cites the Case-Shiller Home Price Index, indicating a near 0.68% decline from highs.

Michael Batnik [40:50]: "If housing Prices nationwide fell 3 to 5%, it's very rare but it could happen."

The correction could trigger broader economic concerns, but might be mitigated if mortgage rates subsequently decrease.

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10. AI's Impact on Financial Advisors

A forward-looking discussion centers on whether AI will replace financial advisors. Michael Batnik expresses doubt, suggesting that AI may augment rather than eliminate the need for human advisors, especially in areas requiring empathy and personalization.

Michael Batnik [32:37]: "AI will probably help a lot of DIY investors... But I don't think AI is going to replace financial advisors."

Ben Carlson acknowledges the potential for AI to disrupt the advisory sector but emphasizes the continued importance of human interaction in financial planning.

Ben Carlson [34:06]: "The thing that advisors bring to the table that computers don't is empathy and personalization and people skills."

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Additional Discussions

Beyond the primary risks, the podcast also touches on:

• Stock Market Performance: Highlighting the global surge in stock market new highs, surpassing new lows for over half of the world markets, signaling robust investor confidence.

  Michael Batnik [12:00]: "More than half of the world made new highs last week. The best reading in over a decade."

• Investor Behavior During All-Time Highs: Discussing how all-time high markets attract speculative behavior, which can lead to volatility.

  Ben Carlson [15:03]: "In the U.S. it's like a multi-decade anomaly."

• Consumer Anecdotes and Off-Topic Banter: The hosts share personal stories and opinions on unrelated topics like movies, driving etiquette, and technology glitches, providing a relaxed and relatable atmosphere.

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Conclusion

Michael Batnik and Ben Carlson provide a nuanced exploration of the myriad risks that could impact the stock market. From the speculative fervor around AI and the fragility of the dollar to the evolving landscape of retirement savings and alternative investments, the episode underscores the complexity of modern financial markets. While optimistic trends such as increased retirement participation offer some stability, emerging threats like inflation surges and potential AI-driven market disruptions warrant vigilant monitoring by investors.

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Notable Quotes:

• Ben Carlson [02:23]: "If we were to come up with a top 10 list of potential bull market enders, I think the consensus number one would be an AI bubble that bursts and takes us down."

• Michael Batnik [04:24]: "I think we've finally, finally killed the perma bears. I think they're dead and gone."

• Ben Carlson [27:35]: "The increase in fast food prices is absolutely bonkers."

• Michael Batnik [32:37]: "AI will probably help a lot of DIY investors... But I don't think AI is going to replace financial advisors."

• Ben Carlson [34:06]: "The thing that advisors bring to the table that computers don't is empathy and personalization and people skills."

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This summary captures the essence of Episode 419, providing insights into the key market risks discussed while incorporating relevant quotes and timestamps for reference.

Transcript

[Michael Batnik]

Today's Animal Spirits is brought to you by Vanguard.

[Ben Carlson]

Vanguard is working hard to balance opportunity and risk for investors. In this time of volatile yields, we.

[Michael Batnik]

Know financial advisors are working hard to do the same. Visit vanguard.com fixedincome today. Important information all investing is subject to.

[Ben Carlson]

Risk, including the possible loss of the money you invest. Bond funds are subject to the risk that an issuer will fail to make payments on time and that bond prices.

[Michael Batnik]

Will decline because of rising interest rates.

[Ben Carlson]

Or negative perceptions of an issuer's ability to make payments. Vanguard Marketing Corporation Distributor.

[Michael Batnik]

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.

[Ben Carlson]

Positions in the securities discussed in this podcast.

[Michael Batnik]

Welcome to Animal Spirits with Michael and Ben. Michael, last week you and I were in Chicago for a quick trip to do the Morningstar conference, which was fun. Cool seeing people. The night before we went out to dinner in the Fulton Street Market area of Chicago in the West Loop. Lovely, lovely area. Really cool. And it's a Tuesday night and we are walking around and the place is bustling right there's the restaurants are full, they have these outdoor tables, they're all full, people are walking around, the vibes were immaculate. And you look to me and you said what if we just tongue firmly implanted and cheeky, what if we just never have another recession again? And you were halfway kidding obviously. But maybe there was a tinge of like seriousness and you do get the thinking like gosh, what is going to change people's behavior? In my My only answer is like the Minsky moment here that so much stability eventually is going to create instability. Like that's that's my like non answer of what finally ends this is the excesses get taken too far or people just become too accustomed and just unaware of risks that may be staring them in the face.

[Ben Carlson]

If we were to come up with a top 10 list of potential bull market enders, I think the consensus number one would be an AI bubble that bursts and takes us down. Do you think so?

[Michael Batnik]

Yeah, that does seem it seems like we are in a waiting period. I was going to get to this next someone DM'd me the other day and said hey, you guys don't talk enough about markets anymore or something. You talk about all this other stuff, and I don't think that's really true. But I don't think there's that much interesting to say about the markets right now. And I think that's why people are forcing. Like whenever the interest rates rise, people always say, oh, look, it's the, it's the, you know, bond vigilantes. It's, it's government spending. I feel like people are kind of making up narratives because there's not that much interesting to say about markets right now because I feel like people are waiting for an AI bubble to hit.

[Ben Carlson]

By the way, remember interest rates probably. Was it four or five weeks ago at the upper end of their range?

[Michael Batnik]

Yeah.

[Ben Carlson]

Who bought the zeros? And tlt not to brag, this guy didn't buy it.

[Michael Batnik]

Oh, are you still holding them?

[Ben Carlson]

Still holding.

[Michael Batnik]

Okay. Those fears are always overblown. And I'm, I'm fine saying that every time rates rise a little, people freak out and then it's really nothing.

[Ben Carlson]

It is a good thing that Liberation day happened. Let me explain. So we had that at the beginning of March, was. No, is it April 2nd? What was the date?

[Michael Batnik]

Yeah, beginning of April.

[Ben Carlson]

Okay. We had that at the beginning of April. And consensus coming to 2025 was we are off to the races. MNA animal spirits, stock market boom. IPL window opening. And then we slammed on the brakes and we got a 20 very quick bear market. And it is a good thing that we had that because had we not had that, would the S and p be up 20% in the first half of the year?

[Michael Batnik]

It might be. So it was a healthy almost end to amer to Pax Americana. Right.

[Ben Carlson]

I don't know what that word means, but it is.

[Michael Batnik]

It, it, it. I'm gonna be honest. I don't either. It sounds really smart, though.

[Ben Carlson]

It slowed down what was a potential runaway train in the markets. And you might say, well, what's wrong with the runaway train? A lot is the, the steeper the climb, the easier it is for markets to get unstable and bust.

[Michael Batnik]

It is pretty amazing that we were down 15% on the year at one point because we did hit new all time highs in February and now I think the market's up 6%. So there's like your 20% difference. Right. I know that doesn't necessarily look like that, but here's, here's another thing that I think about the markets these days. I don't run by you. I think we've finally, finally killed the perma bears. I Think they're dead and gone. Like in the 2010s, especially coming out of the 2008 crisis, they had the megaphone. Everyone was willing to listen to the perma bears because, you know, listen, this is going to happen again. We're going to double dip recession and Europe is going to. European Union is going to fall apart. And they were still given headlines, and they were still given. People really listen to what they said. And again, it sounded like an interesting thing. And then the pandemic hit. It's like, okay, fine, these perma bearers are gonna be right again. And I feel like finally, finally, so many predictions of the end of the system. The system's gonna collapse and the dollar's gonna be destroyed and all these things. I think there's such a record now. And every time these people come back out of their cave, people throw all their past predictions in their face and dunk on them so much that perma bears are now just dead.

[Ben Carlson]

You mentioned the dollar. We. We just experienced the worst first half of the year for the dollar since 1973. And I would say that if there were predictions again of what would end the bear market, the bull market, excuse me, number two would probably be. Or maybe even number one would be a debt crisis or a dollar abandonment.

[Michael Batnik]

Okay, I got some dollar stuff coming.

[Ben Carlson]

When I was. When I was on my way home from Chicago, the airport. I know Chicago is a big airport, but it was jammed. There was a lot of talk earlier in the year, not, not fake talk about travel coming down. And there was. It was legitimate, especially from foreigners. You saw it in the TSA numbers. The airline stocks got killed. I don't know what they're doing right now. I know they've rebounded a bit, but we have a chart later in the show of TSA travel, and it's right back on track.

[Michael Batnik]

We can't get that out of our system. I guess.

[Ben Carlson]

You also saw. Did you see. There was a. I saw a tweet yesterday. I don't know if Jassy was on cnbc. I can't remember exactly where it was or what was said, but it was something like. Amazon has not yet seen any increase in play in prices from tariffs. And you got to figure that they would probably be the first to see them. You said, is that over? No more. No more inflation. By the way, speaking of inflation, you saw Trump's handwritten note to Powell?

[Michael Batnik]

Yeah. Good penmanship. My. You know, when I write now, it looks like I'm doing cave drawings. I can't write anything. Now, so I'm surprised he still has such good penmanship.

[Ben Carlson]

Well, the next meeting is in July, right. I don't know where the probabilities are, but come on, just do it already.

[Michael Batnik]

I don't know. I definitely can see. I would not. I've been saying we they should lower rates and I think I lean that way. But for me it's like 60, 40. I almost for some the people that say like, well, stocks are at all time high and speculation is this. But I don't think that's the Fed's job to care about.

[Ben Carlson]

No, there's nothing to do with the stock market.

[Michael Batnik]

Right. It's inflation in the labor market and inflation is lower and the labor market is softening. So on those two metrics, I agree the Fed probably should cut. It's not like they need to like cut down to 1% like Trump is saying if they go from 4 and change to 3 and a half or something like that seems reasonable. But it is true that right around 4% is, I don't know, probably the historical average. So it's not like things are wildly crazy right now in terms of rates.

[Ben Carlson]

While we're on the topic of of the Fed and a little bit of rambling here, the New York City mayoral race, obviously a big deal that a socialist won. It's like mind bending stuff.

[Michael Batnik]

It was a huge deal for me in Michigan. Huge deal.

[Ben Carlson]

Is it not a big deal? I mean, do you live in this country?

[Michael Batnik]

Does New York City? Is New York City like the mayor of New York? Is it going to impact me personally at all?

[Ben Carlson]

Well, so we're doing a podcast here. I mean, is it going to impact me personally at all?

[Michael Batnik]

No. Probably a little.

[Ben Carlson]

Probably not.

[Michael Batnik]

Well, probably not. Yeah. That's the funny thing is that like what can he actually do? He can't change tax rates.

[Ben Carlson]

I know nothing about local politics.

[Michael Batnik]

Taxes are changed at the state level. The mayor of New York cannot change tax rates.

[Ben Carlson]

None of this is my point. Here's my point. We spent since 2022 when Kyler talked about the Vibe session. We spoke about the soft data and the hard data and forget about the soft data, just look at the hard data. And I think that that was very misguided because the soft data, which is really a reflection of how people feel about inflation, like above everything else. Would you agree?

[Michael Batnik]

Right.

[Ben Carlson]

That is now driving local, not just local national politics. It's a huge deal.

[Michael Batnik]

Well, I think this gets back by Minsky moment thing. I think as long as we have this stability, the instability, people will Be more apt. As long as we don't have recessions and things get really bad, people will be more apt to take a chance and a risk on something like this. And I think we're going to get more weird outcomes in, in politics where you go, wait, that doesn't make any sense. Yeah.

[Ben Carlson]

People still are not accustomed to spending what they're spending on everything. Food in particular, which is an everyday occurrence. Food prices aren't coming down and they're voting for change. And it is, it is a fascinating.

[Michael Batnik]

It's all, it's also, it's all. It's always been sales, but. So I listened to him on the odds podcast. He's a really good speaker. I'm not even talking at all about his policies or anything. The way that he presents his ideas, he was really compelling.

[Ben Carlson]

So you also think billionaires should not exist?

[Michael Batnik]

Yeah, definitely. I want the government to create grocery stores for us. I think what could possibly go wrong?

[Ben Carlson]

All right, let's get to the doc. What are we talking about here today? Oh, before we get to the doc, I want to point out new merch. What do we think?

[Michael Batnik]

That looks good. Show the back.

[Ben Carlson]

What is that? Oh, Animal Sports, auto shop.com. we got new year.

[Michael Batnik]

All right. Exhibit A, chart of the week. Don't fear new all time highs. Matt and team at exhibit A looked at the average year forward returns from one, three and five years going forward. I got a question already this week. Hey, I just sold a house. I want to put it into the stock market. My proceeds stocks at all time highs. People, people still find this nerve wracking. So Matt looked at investing at all time highs versus investing all other days and then you look at the forward 1236, 60 month returns and this one always seems kind of mind boggling to me. But your returns are better investing at all time highs than they are in all other days.

[Ben Carlson]

Yeah, it's hard to wrap the brain around.

[Michael Batnik]

You would have. You would have. No, that's when bad things can happen from there and bad things can. Do you remember? I don't, I don't remember which one of us asked. You asked or I asked back in April, like what are the odds of all time highs again this year?

[Ben Carlson]

Oh, man. What do we say?

[Michael Batnik]

I think what we said, if the tariff stuff comes off probably. I think that was kind of our answer. And it did. And it. And here we are.

[Ben Carlson]

Well, we are. Was that our answer?

[Michael Batnik]

Yes. You remember talking about this?

[Ben Carlson]

We, we talk a lot.

[Michael Batnik]

Yeah, we do. All right, this is from the daily chart book. Via how do you say his last name? Willie Delwich. Right.

[Ben Carlson]

Local.

[Michael Batnik]

Midwest. Another Midwest guy. More than half of the world made new highs last week. The best reading in over a decade. So this is the percent of the Acqui, which is all Country World Index at new highs and new lows. And this is the first time, looks like in a long time that we've had more more than 50% new highs versus new lows.

[Ben Carlson]

The best reading in over a decade.

[Michael Batnik]

It's a global phenomenon.

[Ben Carlson]

Hard to believe. I saw Bespoke tweeted Israel had the best stock market performance in the second quarter, at least the ETF.

[Michael Batnik]

Oh wow.

[Ben Carlson]

Go figure.

[Michael Batnik]

Stock market is heartless. So IFA is up 20% on the year. I said the S And P is up 6 on the year right now. So that 14 and change 15% or so outperformance. I looked at this, we had a conversation with Slack about this yesterday. If this holds, this is the best calendar year outperformance since 2006 when it was 11% and it would also be the biggest outperformance since 1993 which was 23% if that 15% gap stayed. Obviously there's a lot more to go but. So Josh asked us the other day how much of this is the dollar? And obviously a lot of it is, but it's probably from the perspective of the US investor it's probably half and half. So Jake tweeted, you mentioned the dollar is off to its worst start since Bretton woods ended in 1973. Obviously a lot of this is the trade war stuff, but a lot of it too was just this is a positioning thing. The dollar was so strong for so long and people held dollars. Isn't a lot of this just an unwind of that trade as well that the dollar had a 12 year bull market essentially. But yeah, this is, this is but the case for international diversification is this, this is the reason you also get the currency diversification. That's something people don't really think about very much.

[Ben Carlson]

Mike Sicardi tweeted. This is from Goldman. Growth sectors are outperforming in the US while value sectors are leading the rest of the world. So we've got, that's interesting, the US value divided by growth and it's at an all time low. The ratio meaning growth stocks to value set differently at an all time high. But it looks there's a, there was a hard break in the beginning of January, in the beginning of 2023. It looks like this is interesting value in the rest of the world is really destroying growth.

[Michael Batnik]

Very interesting because for years there's been talks of is value dead? And I don't know how often we see the meme of the guy throwing the intelligent investor into the trash, you know, into the garbage can. But value investing has worked overseas. If you look over the a lot of different time frames, 1, 3, 5, like value investing over there has worked. So it's just the US is the outlier because of the giant tech behemoths. I actually think for the factor investing people in the quants, this is actually a thing where you can kind of hang your hat on a little bit and say, listen, our ideas aren't completely dead. It's just you have this potentially once in a lifetime phenomenon with tech stocks.

[Ben Carlson]

In the U.S. it's like a multi decade anomaly.

[Michael Batnik]

Right? Yeah, it really is.

[Ben Carlson]

We were speaking about all time highs earlier and one of the things that I've learned in the last 12 years since we made all time highs in 2013, is that by definition at all time highs there will be pockets of stupid behavior. And it's so easy to get thrown off the target. It's so easy to look at these micro sectors of stupidity and say, could you imagine investing today? And it's been a complete distraction and continues to be so, so I'm talking with Josh Steiner. What are your thoughts about this topic? But like the pudgy Penguin ETF drop, there's just, there's so much dumb bitcoin and. But there always is. That's a, that's, that's a permanent feature of bull markets. You don't get stupid behavior like this in bear markets. There's no speculative appetite.

[Michael Batnik]

How about this stupid behavior might be a permanent trait of all markets going forward because of the information age. What if there's always going to be stupid stuff happening because you now have pockets and swarms of people who can attach to stuff in ways they never could before.

[Ben Carlson]

I don't, I don't really buy that because in 2022 a lot of that nonsense we just weren't talking about.

[Michael Batnik]

And then it immediately came back though.

[Ben Carlson]

Yeah, but it's not permanent because it.

[Michael Batnik]

Disappeared for two years. There was the idea that, listen, once we take the speculation out of the market and GameStop fell 95% or something, AMC fell 99% and guess what? That didn't stop people from wanting to speculate.

[Ben Carlson]

Yeah, no, but I just think it's. Nothing is permanent. Everything ebbs and flows.

[Michael Batnik]

Fair. All right. How America say is one of my favorite annual updates From Vanguard. This is the other side of that equation. This tells a lot of the story of the stock market. For the past 15, 20 years or so, two thirds of automatic enrollment plans have implemented automatic annual deferral increases. What that means is that if you are in a plan that you are automatically put into, and that's a lot of them, you also will automatically be defaulted into saving more money over time. So if you do nothing, you join a company that has this feature, you're automatically put into the 401k plan. You're probably automatically put into a target date fund, which is a lot of equities, and you're automatically saving more money each year. They said 45% of participants, and this is $5 trillion worth of assets, increase their savings rate, which is an all time high. Way more. And 61% of plans are now automatically enrolled and that's up from 10% in 2006. So again, instead of opting in, you have to opt out. Right. And then they said for those plans, 94% participation rate. So almost everyone is in the plan if you're automatically enrolled. And it's actually way higher for bigger firms. For places that have more than 5,000 participants, it's 75%.

[Ben Carlson]

Remember the retirement crisis that we used to speak about a lot?

[Michael Batnik]

I think we've kind of fixed it in many ways.

[Ben Carlson]

These are separate generations. We were talking about more of the older people with the median retirement account being not a large dollar amount of. But I think future generations, regardless of the stock market, are in good shape.

[Michael Batnik]

Yeah. And they show this. They break it out by income and age. And this is really good for people who make a lower income and are younger too. Those are the people that need the most help. They also say this. The average accountant has 80% in stocks. The median account has 89% in stocks.

[Ben Carlson]

Wow.

[Michael Batnik]

And 79% of participants are offered some form of advice.

[Ben Carlson]

Wow.

[Michael Batnik]

The biggest change in behavior has just been small changes in defaults, essentially. And this has a massive implications for the market. And I'm going to have thoughts on this for our AI talk in a little bit because I have thoughts on your AI video. Sam Rowe tweeted this. This is another Goldman one. IRAs and 401 s account for 58% of the 44 trillion in US retirement assets. But here's the one that's interesting to me on this. These are all retirement assets. There's 44 trillion. And it's annuities and defined benefit plans, which is pensions. There's 20% of all retirement assets are in government defined benefit plans, meaning 20% of all retirement assets are in a pension. Still, I don't think people realize how many people still get a pension if they work for the government in some way. It's a huge number.

[Ben Carlson]

How many teachers are there?

[Michael Batnik]

Right, yeah, that's the thing.

[Ben Carlson]

Teacher policemen.

[Michael Batnik]

So the government pension plans are just as big as 401 plans.

[Ben Carlson]

Wow. Yeah, that is surprising.

[Michael Batnik]

Right? All right, interesting one from the retirement manifesto. And I think, I wonder how many investors realize that we're living through one of the great bull markets of all time. I wonder if people appreciate it. So this is from the retirement manifesto. Fritz Gilbert writes this good blog and he just looked at. He said his biggest surprise in retirement is that because he invests a lot in the stock market that he's having a hard time spending it all, essentially. So he looks at this hypothetical situation. You have a million bucks in the S&P 500 index fund in 2019. And usually we look at these things in percentages. Right. Because that's what market people do. He says, as of the end of 2024, that million dollars in 2019 would have turned into almost $2.6 million. And again, we look at these things usually in percentage terms and not dollar terms. And I think the dollar terms matter more for individuals. But this really is just an unbelievable market we're living through. And I think we're going to get to the point where people think that this is just. This should be the baseline expectation that things should just always be this good.

[Ben Carlson]

Yeah, I couldn't agree more. I would say that the average investor, even the average market participant, I mean, maybe if you really sat them down and were like, come on, come on. But if you polled the average investor, does this feel like a historical bull market? No. I mean, we've read all the textbooks on that. Maggie. Not Maggie Haberman, who wrote the book Bull.

[Michael Batnik]

Maggie Maher.

[Ben Carlson]

Yeah, Maggie Mayhar.

[Michael Batnik]

It's a great book.

[Ben Carlson]

And I wonder people at the time, it probably just doesn't feel like that. You only really know with the passage of time when you look backwards.

[Michael Batnik]

My father in law mentioned this to me once. He was mentioned saving college for his kids, my wife and her brother. And he said in the 90s, he's like, saving for college was so easy because you just put all your money into the stock market and it always went up. He's like, you didn't have to really think. No one Even really did 529 plans very much because you just put the money in the stock market it went up and you spent it. And the thing is this could become even more so if we get this AI bubble. It could be, it could get the expectations could get very out of whack in the coming years.

[Ben Carlson]

What do you think the odds are if you had to guess of Nvidia being a $10 trillion stock in the next call? 10 years? Right now it's approaching 4.

[Michael Batnik]

4 trillion?

[Ben Carlson]

Yeah.

[Michael Batnik]

Next. How many years?

[Ben Carlson]

10.

[Michael Batnik]

Well, I feel like if it's going to happen, it's probably going to happen sooner than later. I feel like the AI bubble would, wouldn't, would inflate well before 10 years. So I don't know, it wouldn't rule it out. If we do get this a crazy AI bubble.

[Ben Carlson]

So you wouldn't rule it out. Bold.

[Michael Batnik]

There's a greater chance of seeing an AI bubble than not seeing one is my line of thinking. If that happens, sure, 10 trillion for Nvidia is probably not going to sound too weird and it would seem crazy when it happened because I remember $1 trillion was assigned to the top for Apple and didn't really matter, right?

[Ben Carlson]

Ben? Our yield. So there was an article in the Wal Journal by a friend, Jason Z. These funds are yield magicians. How do they do it? I have a new term for, for describing these products. It's Irene. Income rules everything around me. Your thoughts?

[Michael Batnik]

Yeah, not bad.

[Ben Carlson]

These are the new levered funds in the sense that we're going to be spending a decent amount of time just talking about the education component.

[Michael Batnik]

And this, this isn't like a call option strategy on an index. This is options on individual securities that are very very volatile and in many.

[Ben Carlson]

Cases they are transforming the total return into an income stream. And guess what? If the total return of these instrument the underlying drop, so is, so is your return.

[Michael Batnik]

It doesn't, it doesn't matter what your yield is.

[Ben Carlson]

If so, here's the lead. The dividend yield on The S&P 500 is 1.3%. As if by magic, nearly a dozen exchange traded fund were offering payouts of at least 100% this week. These funds generate high weekly or monthly income by trading option contracts on a single stock. Such option income funds have been wildly popular this year attracting more than $6.4 billion in new money according to FactSet. So people love, love, love love income. They can't get enough of it. And guess what? The demand is there and they will most definitely be supplied with products. So on our two most recent talk yearbooks we spoke with Neos and Calamos about some of the products that they're offering now. These, these are not, these are not this where they're offering 100 returns. But nevertheless, the category is exploding. And it really is important for investors, obviously advisors, but investors too, to understand that there is no magic or alchemy. Everything is a trade off. And there's nothing wrong with income. But don't be seduced by the sticker income that you're going to see in your portfolio because often, always, actually there is some sort of string attached.

[Michael Batnik]

You know, in my book A Wealth of Common Sense, I wrote about the biggest myths in investing. And I wrote saying that yield is not the same thing as total return. And I think I used like annually capital. Those, those REITs back in the day, they had like 15% yields. And I looked at here's the yield every year, but then here's the total return and the yield was 15% on these things. And the total return ended up being negative over time because the price of the stock fell and that you have. Yes. Just because this says 80% yield on it does not mean you're going to get 80% in this stock or in these positions.

[Ben Carlson]

Yeah.

[Michael Batnik]

All right. Last week we talked about the new grad crisis. I think you were on board saying, yeah, I'm willing to call this a crisis. So is Derek Thompson and his new substack. Derek went full substack on us. He says young people are facing a hiring crisis. AI is making it worse. And he shows this new grad gap.

[Ben Carlson]

This is alarming and getting worse.

[Michael Batnik]

Total unemployment minus recent grad unemployment. And it's just showing that in the previous 25, 30 years, you actually had a better chance of getting a job as a new grad. And now it's going the other way. It's a minor change, I would say on the margins. But yes, you're right, it's going in the wrong direction. Here's the counter argument from our friend Jake at Economic. He says the average college grad is now 24 years old, up from 22 in the 1980s. 40% of graduates now go on to grad school, which is really high to me. I didn't realize that that's a crazy high number. So he says, thus the applicable bucket is 25 to 29, where unemployment is near a record low. Thoughts? I think that's a pretty good counter argument. Um, like, what if people are just waiting longer?

[Ben Carlson]

Okay, so. Okay, okay. You know what seems like a fair rebuttal. I don't want to like ne, but it's also not.

[Michael Batnik]

But it is true that it's not easy for new grads. And I, I've heard this from numerous people saying, like, we're, We've. We've paused. So this is a real thing.

[Ben Carlson]

I also kind of think that. Fine, Jake's counter is. Is seems valid, but this is the type of thing that I trust, like my senses and instincts here, that there is something happening. And it's not like we can't. It's not like, why is this. We can't expl. No, we know exactly what's happening. We know exactly what's happening. There's a megatrend of productivity of AI that is doing things that these people otherwise would have been hired to do. You don't have to do mental gymnastics to come up with an explanation.

[Michael Batnik]

It's. Right, so there was just. There was way too much over hiring in the past three to four years. Right. It was the strongest labor market we've ever seen in our lifetime. And that was part of it too.

[Ben Carlson]

So, yeah, no, it's. It's. I think it's gonna get worse, but this is not my beat. Okay, Somebody showed us this chart. It's fast food price inflation since 2014. And I'm going to just take that, Take this at face value and just say that this data is accurate.

[Michael Batnik]

I'm calling fake news on this, and I'll tell you why.

[Ben Carlson]

Okay, please do. Because I, I mean, the sort of. That was like.

[Michael Batnik]

Well, at least for McDonald's. Okay, so they show McDonald's having the highest national inflation rate at 100% of 2014. I have the inflation hedge here. You have to have the app, because if you have the app and you spend more than $10, you get 20% off of your entire order.

[Ben Carlson]

Okay, how about this? Let's just agree that perhaps these numbers are a bit inflated. See what I did there? But let's. But let's say that even if they are inflated by 40%, even by 60%, the increase in fast food prices and all food prices is absolutely bonkers. I don't know what Chipotle is these days, because I haven't had it in a long time. Is it $14 for a bowl?

[Michael Batnik]

You know, I got a veggie bowl the other day for 999, but that's a veggie bowl.

[Ben Carlson]

Okay, well, anyway, this just goes back to the underlying mood of the country, which is social media and politics and why the bull market is not appreciated.

[Michael Batnik]

So I, I do think that it's a real thing. That in the 2000s, companies were really scared of raising rate, raising prices because economic growth is slow and employment coming out of the great financial crisis, employment and hiring was slow. And I think that the 2022, 2021 inflation finally gave these companies an excuse to raise prices. And I think, yes, there was inflation in some of the inputs, but the fact that margins kept going up I think means that a lot of these companies finally said, oh, yes, we have our chance, let's do it. And I think that is really part of what happened. So I think they were suppressed in the 2010s and then they finally got their chance in the 2020s.

[Ben Carlson]

Did you see the picture? Well, it doesn't matter. I was about to say a social media thing. Who cares? The Peter Thiel with that girl. I don't know what was going on.

[Michael Batnik]

No, I don't know. But I linked to the Peter Thiel interview here in the New York Times and it is kind of weird because he did say he didn't, he didn't know for sure if humanity should survive, which is an odd take. I guess.

[Ben Carlson]

That's, that's what you want. One of the most powerful people in the world saying that's, that's cool.

[Michael Batnik]

He, he wants our consciousness uploaded into AI or something. I don't know. That's going to be a movie theme for a while. I can't remember. It was already in a movie somewhere or TV show. But that'll be a big movie theme in the years ahead. Like our consciousness living forever.

[Ben Carlson]

It's the new. The new. Like rich people are the enemy. It's in everything these days.

[Michael Batnik]

Yeah, it is. All right, so he, he was asked, what is the impact on AI going to be? He said, my placeholder is that it's roughly on the scale of the Internet in the late 1990s. I'm sure. I'm not sure it's enough to really end stagnation. It might be enough to create some great companies. And the Internet added maybe a few percentage points to GDP, maybe 1% to GDP growth every 10, 15 years. It added some productivity. So that's roughly my placeholder for AI. So what if because the Internet did. The Internet changed our lives forever. The way that we interact with each other, the way that we communicate, the way that we work, everything about the Internet completely changed our life. Right. We can agree upon that. It didn't completely change the economy, it changed the companies. There are.

[Ben Carlson]

I don't know about that.

[Michael Batnik]

No, in terms of, in terms of growth, it didn't the Internet didn't add this insane growth to gdp, Right. So what if AI is the same thing where it's going to completely change our lives, it's going to change the way work, it's going to change the way we communicate, it's going to change the way we plan for things, it's going to change our efficiency. What if the impact on the economy is just kind of like, it added some productivity. It didn't really, like, completely change because people are probably throwing out weird numbers. AI is going to add 3% to GDP growth. What if it just. In the numbers, it doesn't change much. And it's more a stock market thing than it is an economy thing.

[Ben Carlson]

But the stock market drives the economy in a lot of ways, even if you. Even if it doesn't show up in, like, raw GDP numbers.

[Michael Batnik]

Okay, but I'm saying what if the impact of AI is more. It helps profit margins for the stock market more than it does totally, completely reforms the economy? I think that's a. That's a pretty decent baseline.

[Ben Carlson]

Yeah, I think a lot of my. I don't really have a ton of high conviction takes here because literally, who knows?

[Michael Batnik]

Yeah. But I think that's a pretty good baseline as opposed to, like, it's going to reshape things that it's going to be all right. You, two or three weeks ago called me one morning and you were very concerned.

[Ben Carlson]

No, no, no, I'm not. I was concerned. This is the wrong adjective.

[Michael Batnik]

You were. You were deep in thought. How's that?

[Ben Carlson]

Deep in thought.

[Michael Batnik]

Very deep in thought. You said. I. I had a crazy thought this week, and I have to run it by you. I think it's possible AI is going to replace financial advisors. And I said, whoa, whoa, whoa. Tap your brakes. And you said, I'm going to talk. I got to talk about this. I'm going to bring Dave Notic on the unlock. I'm going to talk to him about it. I listen to that, and I think you kind of had some time to sit and consider and think about it. And I think I'm more on Dave's side of this thing. I think that AI will probably help a lot of DIY investors and maybe create some more DIY investors. But I don't think AI is going to replace financial advisors.

[Ben Carlson]

All right, so I spoke with Dave at the Unlock Talking wealth is a show. I'm talking to Jason Wang tomorrow about the custodian advisor relationship and what that's going to look like in the future. So if you're an advisor and you want to hop on board, we're going to, we're doing a weekly show there. Where I land on this, I think, is I'm talking like far into the future. I think that the lines between what's real and fake will be completely blurred. And I think that the next generation will not necessarily think about AI as AI. They will just think about it as something that exists.

[Michael Batnik]

So I, at that point, it's a commodity and it's in what, what differentiate yours and what, what rich person is going to say, I'll just do the commodity just like everyone else.

[Ben Carlson]

Okay, well, when you say rich, yeah, sure. People with $5 million will probably. I don't, I don't hate to say these to, to say always, because I'm talking far into the future. Okay. I think the biggest.

[Michael Batnik]

I'm going to be dead far into the future.

[Ben Carlson]

The biggest hurdle here is regulation because advisors need to be certified and all that sort of stuff. And there's going to be lobbyists and all that sort of stuff. But I just think that a lot of what we do.

[Michael Batnik]

Have they given the CFA to AI yet to see if they could pass?

[Ben Carlson]

I mean, I'm sure they can in two seconds. It's not that hard. The thing that advisors bring to the table that computers don't is empathy and personalization and people skills and all that sort of stuff. All of the technical chops that we have. If they can't be answered entirely accurately today with AI, they will be able to very shortly. And I suspect you've seen the.

[Michael Batnik]

You can do the same thing on Google, though. Google didn't replace financial advisors, if you think about it.

[Ben Carlson]

Wait, here's my. Stop, stop. My point is this. It's not going to be for the technical aspect of it, of which you can get a lot of that on ChatGPT. Dave made a good counterpoint that a lot of it is wrong, but fine. But let's just say that eventually it's 100% accurate. You've seen, and we are in the first inning of AI products and what they look like. You've seen the videos that you can generate and the people look just like you and me. They have hair, they can be bald, they look just like us. And far into the future, they will be able to empathize and learn with you, and it will be the same air quote person on the other side of the screen every single time. And you'll be able to get access to this quote person at 8 basis points, and they will be able to know you and empathize. And again, I don't know if that's 30 years in the future or never, but that's where my thought was happening.

[Michael Batnik]

Here's where I think AI will help. The Internet definitely helped a lot of DIY investors because now there's asset allocation models and risk reward things and efficient frontiers and historical data and all these different, you know, the Bogleheads and Reddit and all these different places you can talk to people. And there's a lot of DIY people have, who have that information has helped them a lot and they've done it on their own. And a lot of those people still eventually go to an advisor. So I think there's going to be a lot of that where the people just starting out will be helped. And the other thing is, it's kind of funny because in the last five or 10 years the big worry has been, listen, the majority of financial advisors are gray haired people. The average age is like 60 years old. Like what happens when all the advisors retire? Who's going to help them or who's going to help all these people? And there's also just a bigger group of people who need financial advice. Think about it. In 1983ish, there was 19% of the US households were invested in the stock market in any form. Today it's 60%. So there's just more people who need advice now because more people are invested. So I think AI is going to help all those people who haven't been getting a lot of help.

[Ben Carlson]

I'm not talking about these people, I'm talking deep into the future.

[Michael Batnik]

Yeah, but that's not a prediction, that's oh what, you know.

[Ben Carlson]

No, I'm saying I don't. Fine, I'll say let's say 27 years, 26.9 years.

[Michael Batnik]

Yeah, I still think people are going to want to talk to people, but I think the DIY people are going to find really helpful stuff out of AI.

[Ben Carlson]

Hang on. I guess what I'm saying is this option will exist. I'm not saying that 100% of people are going to use this option, but.

[Michael Batnik]

I think the option, some people, some people will, you're right. But I don't think it's going to replace financial advisors.

[Ben Carlson]

Well, you could also say and let's move off, it's enough already. But Robo Advisors didn't replace financial advisors. Guess what, they took a lot of assets. They definitely made us compete harder. How much money does Vanguard manage in their quote, Robo, how much Money is in Schwab. It's not insignificant. It's not insignificant.

[Michael Batnik]

And they also forced those types of capabilities onto advisors to use. Right. Automatic rebalancing and tax loss, harvesting all these things. And I think that's what AI will do too, is just be integrated.

[Ben Carlson]

All right, let's talk about crypto for a second. There was the genius act. Genius act. Genius act. Or is this in the genius? I don't know. Whatever, it doesn't matter. The head of the fha, I believe, said that banks are now able to look at crypto assets as assets, where in the past they weren't able to loan against that. It's like, listen, I have $10 million of Bitcoin. The bank would say, so what? You have no other assets. That's not real assets. So Dip Wheeler tweeted loan underwriters at Freddie Mac determining if an unemployed teenager. If an unemployed teenager has enough fart coin to secure a mortgage. And it's a picture of Ben Affleck and the accountant. Pretty good. Pretty good tweet.

[Michael Batnik]

Did you watch number two yet?

[Ben Carlson]

I didn't. I'm not excited about number two. I. I'll get to it.

[Michael Batnik]

All right.

[Ben Carlson]

All right. Institutional FI tweeted a table of 60 companies that are adopting the bitcoin treasury. And of course, it's micro strategy or now just strategy that has 600,000, almost Bitcoin, and second place is a long way away. It's Mara at almost 50,000. But what are all these companies doing? I guess what is the. Aside from juicing their stock price, which isn't a goal in and of itself, what is the actual. And I'm not talking about strategy, because their strategy is bitcoin. So I understand that. But if you are, let's say, who is this company? I don't know any of these companies. Company xyz, for example. What is the strategy to buy bitcoin? Is it for, like, to get more cash in your balance sheet? Like, is. Are you going to sell the bitcoin?

[Michael Batnik]

Isn't it to get more shareholders? But isn't this the bear case for MicroStrategy, though, that all these other companies do it too?

[Ben Carlson]

Nah, I don't buy that strategy. I don't buy that line of thinking. In fact, I think I hate it.

[Michael Batnik]

Why?

[Ben Carlson]

Because they're the. They're. Well, why can't. Why can't there just be another bitcoin?

[Michael Batnik]

But this is different. This is. MicroStrategy is given a premium.

[Ben Carlson]

Yes. And the idea that it's going to Be taken away by who? By Pro Cap, BTC, By GameStop, By Kango Inc.

[Michael Batnik]

If MicroStrategy shareholders decide like, hey, this one is trading at a discount, I'm going to invest in that instead of MicroStrategy.

[Ben Carlson]

I mean, are you assuming they're going to do that or.

[Michael Batnik]

I'm, I'm laying out a case that, like, why wouldn't that be the case? Why are we paying a 3x premium?

[Ben Carlson]

Because they're, I don't know that they're the only one, but let's just say they're the gold standard of premium. I'm not saying it's permanent. Like, I'm not saying that, but I think that why wouldn't they buy any of these others? It's just like, it's sort of a lazy rebuttal. Okay, no offense.

[Michael Batnik]

Getting spicy on animal spirits today. All right, let's talk about real estate. Is there a housing correction coming? Potentially. This, to me, this, this is the first time that I can actually see a decent little housing correction coming because rates continue to stay so high. So Case Shiller Home Price national index is 68 basis points off the highs. 68, not nice. And this is, I think they use like a three month moving average for the prices on this one. So it's a little dated. But the fact that rates keep staying at six and a half, seven percent for so long and buyers are just kind of like, no way, man, I'm out. I think you could make the case the housing market needs a slowing economy because a lot of people are saying, listen, who cares if the Fed cuts rates? Last time they cut rates, mortgage rates went up. But I think that the reason for the Fed cutting rates matters. If it's because a slowing labor market and the economy is slowing, then that would be a good thing for mortgage rates. And I think you could honestly make the case the housing market needs a slowing economy because guess what? So let's say housing Prices nationwide fell 3 to 5%, which doesn't happen very often. It's very rare. I think it could happen.

[Ben Carlson]

Are you seeing any price cuts in your neighborhood?

[Michael Batnik]

Not really. But I mean, you see all the stories in Florida and Texas and these places. I think there's still not much supply here. But I mean, I've seen a few houses where they took the house off the market. It was for sale for six months. They took the house off the market. But I, but if there was a 5% correction in housing prices, a lot of people would be freaking out, like, oh my gosh, I Can't believe it. The solution would just be lower mortgage rates and then demand comes back. I think that's the, if you, if you put together a 5% correction in housing prices and mortgage rates go to 5%, boom, housing mini crisis solved. So I do think if housing prices fall, the same people who have been screaming about housing affordability are going to be screaming there's a crisis happening.

[Ben Carlson]

Yeah, well, the people that scream always screaming.

[Michael Batnik]

You're right. Well, true. Okay, this is interesting. So the rate thing, rates have been high for so long now. This is from Odetta Cushy on Twitter. She says 20% of mortgages still have a rate of less than 3% which is so insane to me, 1/5, but it's now 19% have a rate of over 6% and 10% have a rate over 5%. So we're getting, it's getting a little more balanced. It's still, you know, 80% have one less than 6% but that's, that's a way higher. It's much like we're slowly but surely churning those low mortgages where the 6% and up are having a bigger proportion of it.

[Ben Carlson]

This is a good email. His in laws live in a wealthy area of San Diego. He said, however, they are by no means wealthy other than the, other than the house that they own. I think that this is, this anecdote is representative of a decently large number of people. They bought their house 45 years ago for something, something insane like 36 grand, owned an outright and is now worth well over $4 million. They're in their 80s and don't want to sell it because they don't want to pay tax on the massive gains they have and take away the Step up basis that their kids would get once they pass the house is way too big and way too much upkeep. But they have the mentality that if they sell, they are screwing over the next generation by taking 600 grand out of it. So they feel trapped. That's pretty common here. There's a large aging population who essentially waiting to die rather than selling, which has a large trickle down effects to the overall real estate market. I imagine this is a big issue, especially in wealthy coastal areas.

[Michael Batnik]

That makes sense. I mean this is like getting down to like housing nobility where this doesn't seem fair. Right. Because plus you're getting the Step Up. If I was the kids, I would tell them sell it, who cares, right? It's still a massive, massive gain. Or take out a huge home equity of credit or something. Spend the money, enjoy it, don't worry about us. It's interesting though, all right, from Bloomberg, a tidal wave of alts coming that we've been talking about. So there's a survey shows 80% of alt managers plan to launch retail friendly products and structures. Nearly double from three years ago. Morgan Stanley just filed for a multi asset vehicle designed to provide exposure to everything from venture capital to private debt, real estate infrastructure, all in one fund. So this stuff is still, it's coming. They, they are, they see they're chomping at the bit here. My only big takeaway here is that. So this is from bank of America. Number of retail clients holding alt assets has more than doubled since 2020. And the firm adds new 50 new funds to its platform each year. Returns just have to fall. If that's the case. That's the only, like I'm not predicting a crisis from this, but this is just, if this stuff becomes commoditized, it just returns half to fall.

[Ben Carlson]

Yep.

[Michael Batnik]

Or there's going, there's going to be a fund that's going to re, that's going to receive some serious markdowns as managers get over their skis and then investors can't get out. And that's when people start freaking out a little bit like, holy crap, this thing fell 30% and I can't get out.

[Ben Carlson]

Do you think the industry will have like a washout? Because I think it's, I'm not saying there's not going to be hiccups, but I think I see it being mostly up and to the right probably. Okay, we spoke.

[Michael Batnik]

I wouldn't bet against the trend of trying to get. Listen, all of our fees have been wrung out of the stock market because everyone's investing in index funds and ETFs and free trades. We need to get our fees somehow. That's the active manager solution.

[Ben Carlson]

We spoke about investor positioning this chart from J.P. morgan's guide to alternatives. And I forgot to mention the chart on the right. So just within the context of the conversation of Yale dumping $6 billion in a secondary, which is something that they've done, you know, not infrequently in the past. And also there's regulatory reasons why they might be doing this. So they, they did a survey, long term alternative asset allocation plans. And they, they asked the share of institutional investors that plan to increase, maintain or decrease their allocation by different verticals in alternative asset management and in private equity. 46% plan to maintain their allocation, 48% plan to increase their allocation, and only 6% plan to decrease their allocation. So this idea that institutional investors are dumping their alts, their private equity onto the unsuspecting bag holders of retail, at least according to this, it's 6% plan to decrease their allocation. It's just. I just don't buy that argument.

[Michael Batnik]

And a lot of them are held hostage because if you get into a good fund that you want to stay with, listen, I invested in Fund 4. If you want to invest in. If you want to stay with us, invest in fund five and six. Pony up some money now. So a lot of these institutions feel trapped.

[Ben Carlson]

I'm not saying that we're not going to hear horror stories of bags being dumped on retail, but just this idea that it is a mega trend of nefarious behavior, that's not happening.

[Michael Batnik]

I also think the bag thing is more. They're stuck in these companies that are not having exits. So we just need more money to invest. And that's where the bag holder thing comes from, is that we need you to pony up more so we can invest in more companies. Because we're not having the exits we did in the past. We're not giving the distributions.

[Ben Carlson]

S and P Global has a post out called Look Forward Future of Capital Markets. And there's a lot of good stuff in there. But one thing that caught my eye was how wealthy the United States is. So we have over $21 trillion in investable assets among the mass affluent middle markets, representing more than 40 million households.

[Michael Batnik]

So this is like the wealth management cohort.

[Ben Carlson]

Right? So let's start here.

[Michael Batnik]

That will be using fake AI video in the future to manage the money.

[Ben Carlson]

So let's start here. 284,000 households have more than $20 million. Does that melt your face a little bit? 284,000. How's that possible? Okay, another 487,000 are worth between 10 and $20 million in investable assets. And then between this.

[Michael Batnik]

This isn't houses or business interests or.

[Ben Carlson]

This is like, oh, yeah, I believe it's investable assets. Okay. And then 5 to 10 is 1.578 million. And affluent, which is 2 to 5 is 3.9 million.

[Michael Batnik]

We have a very rich country. But this is why the pitchforks are coming out though, right?

[Ben Carlson]

Part of it, yeah. It's the, the distribution is. Is certainly uneven. That's. That's capitalism.

[Michael Batnik]

All right, this one surprised me. Did you, did you look at this Uber thing yet? How many people actually tip. What percentage of people tip their Uber drivers? Because I would have thought it's like restaurants where just everyone does it. What percentage of people currently tip their Uber drivers? What's your guess?

[Ben Carlson]

I just saw the number.

[Michael Batnik]

Okay. I would have thought it been way higher. I would have said 80%. It's 20%. I thought that it was assumed that almost everyone tipped. Isn't that you want to keep your star rating high so you tip? I assumed everyone tipped an Uber driver. This is shocking to me.

[Ben Carlson]

If I take a driver, I don't.

[Michael Batnik]

Take them very often. So that's.

[Ben Carlson]

I almost always tip. The only time I don't is if I forget. But I almost always tip.

[Michael Batnik]

Okay. I tip every time. I assume that's what I guess. Maybe if you're in a city and you use it all the time, you think, like, wait a minute. That really adds up. Because I use it when I travel. That's about it. Occasionally we'll use one in town if we go out or something and we're drinking and. But I. I almost. I. This number surprises me.

[Ben Carlson]

We got a few emails from people that ditched the second car. We spoke about this last week and just went full Uber and they all said that it was cheaper. I have a few car stories, so I have many flaws, but this isn't one of them. I'm a very courteous driver. I respect those around me. I follow the rules of the road. I do the right thing, and it really grinds my gears. When people don't, I turn it to the Hulk. So two things.

[Michael Batnik]

I think 80% of drivers are terrible. That's my take.

[Ben Carlson]

So I'm driving down Merrick Avenue. There's a dairy barn on the right that has the exit. So it's one lane that goes straight, right, goes over the main road, and then the lane right next to it is the turning only lane, the left turn only. So I'm coming in the straight lane. Who? I'm getting worked up just talking about this, Ben. I'm coming in the straight lane and I slow down because I see this woman is exiting the dairy barn and she wants to get in. So no problem. I slow down, give her the wave. She doesn't wave back. But then she doesn't go straight. She goes into the left lane, but the left lane because it's turning lane. It's backed up a little bit, so she's now diagonal.

[Michael Batnik]

Oh, she's. She has her butt sticking out.

[Ben Carlson]

Yeah. So now I can't get by her. I'm just like you.

[Michael Batnik]

That's a bad one.

[Ben Carlson]

Are you. You don't behave, people.

[Michael Batnik]

Yeah.

[Ben Carlson]

One more. We're coming to the beach club. And we are. There's a bunch of cars parked. This is sort of hard to describe, but, like, we're coming around the turn, okay? So we're coming around the turn, and there's all of these people waiting to get in. There's a valet parker, and this lady just stops 100ft in front of where she should have. And I'm watching this, and I couldn't believe what I was seeing. She gets out of her car and just starts emptying it. And there's two, I don't know, males in their 20s that just start getting out of the car and just taking their stuff. And I'm looking at Robin like, is this really happening? She goes, don't, don't. So I blast the horn because it's just.

[Michael Batnik]

That's what the horn's for.

[Ben Carlson]

It is the rudest. One of the rudest acts I've seen in a long time. Because now there's. Now traffic is piling up and people can't see because there's a turn, like I said. So there's just cars just piling up because the chutzpah of this lady. To think you, you're behind me. Nothing matters. I'm doing my own thing. People are so inconsiderate. It's unbelievable. So I. I blast the horn, and she looks at me. She goes, like, what?

[Michael Batnik]

Don't even realize it. Right? That was. That was a valid honk.

[Ben Carlson]

Unbelievable. Sorry, I just had to get that off my chest. All right, all right. So Bill Arts sent me this. This is a thing that. That I'm unaware of, but apparently it's a thing that exists. So AMC does these. I don't even know how to describe them.

[Michael Batnik]

They're.

[Ben Carlson]

You buy a ticket, it's like a lottery. It's like a random. You don't know what movie you're going to see. And it's movie that's not in the theaters yet.

[Michael Batnik]

Oh, okay.

[Ben Carlson]

So it's like a grab bag. So anyway, the movie that he saw was. It was Jurassic World, and he walked out. Now, that is. That is much more of a remark on Bill Arts movie preferences. He's a real sicko. He's not a Jurassic guy. He likes the gnarliest horror movies. Like I do.

[Michael Batnik]

Boy, I can see. I can see doing that when you're younger. Like, I'm going to. I'm going to roll the dice and see what we. Comes up. I would never do that at our age.

[Ben Carlson]

I don't know that I would. That's a. That's a serious dice roll. I don't know that I would do it either.

[Michael Batnik]

No way.

[Ben Carlson]

All right. Sticking with the theme of they're just remaking everything. The strangers, chapter two, which is the. The original strangers. What year was that? Like the turn of the century? Was that like 2000?

[Michael Batnik]

They're asking me like I've ever heard of this before.

[Ben Carlson]

You never saw the strangers?

[Michael Batnik]

Come on, man. Look at this poster. No, of course I didn't see it.

[Ben Carlson]

So the strangers is with Liv Tyler, who's the main guy? And it was a Very, very 2008. Okay. It was a very scary movie. Liv Tyler. And who's the main guy? Don't know him.

[Michael Batnik]

Do you never. Do you just not become desensitized to it after watching a million of these?

[Ben Carlson]

I get scared. That's why I go. I go for the adrenaline.

[Michael Batnik]

Social network two is just gonna. There's no way that's gonna be good.

[Ben Carlson]

So Social network two? Why?

[Michael Batnik]

That's. Yeah. Can I tell you this for your guy, Denis?

[Ben Carlson]

Yeah.

[Michael Batnik]

He's doing the new James Bond. I'm shorting that. He's not a James Bond director. It's not. I also think they've run out of ideas.

[Ben Carlson]

Okay. You're. You're Bill ackman. I'm Carl Icahn. I will take all of. I will take all of the.

[Michael Batnik]

I'm shorting this. And also, they're gonna. It's. They've done it. There's nothing else they can do for James Bond. I don't think it's.

[Ben Carlson]

I think it's kind of over besides the point. So I want Theo James in the actor seat. I was listening to the big picture, and the heavy favorite is Aaron Taylor Johnson. But I want to see Theo James.

[Michael Batnik]

I think one of the Daniel Craig James Bond movies was good. The other ones were all way too long and not good.

[Ben Carlson]

Okay, well, I'll be seeing it, and you'll be wrong. Are you excited? Did you watch a trailer for project hail Mary?

[Michael Batnik]

I sent it to you guys yesterday. Can't wait. I loved that book.

[Ben Carlson]

So are you short that one as well?

[Michael Batnik]

I'm very long. That's the kind of one where you see that. That trailer in the theater and you get goosebumps and you're so excited. I don't know what. How they're going to do the alien in that movie.

[Ben Carlson]

Yeah, because the description of the alien. They smartly teased it.

[Michael Batnik]

That's my only worry. But I loved that book.

[Ben Carlson]

All right, I have two more quick things. Do you have an Apple laptop?

[Michael Batnik]

Nope, I have an Apple map desktop.

[Ben Carlson]

Okay, well, same thing. You use the messaging you text on your computer sometimes. Okay, here's this. This bugs me. I don't know if it seems like an easy fix. So right now I'm looking at my laptop and I've got my text message open and it's on. It's on a text message. Okay.

[Michael Batnik]

Okay.

[Ben Carlson]

Like the. If I were to type, it would be on a certain text message. But then when new text messages come, your text box stays in the old text message. So it's very easy to see a text start typing, and then you resp. You. You reply to the person behind them. Why can't they fix that? Your text box, your mouse text box should automatically go to your newest message.

[Michael Batnik]

I guess that's why I don't do a lot of texting on my computer.

[Ben Carlson]

Tim, Apple, if you're listening, please fix that. One more thing, Ben. I sent this with you as somebody who is not just courteous on the road, but courteous in email. This was in my inbox, my LinkedIn inbox. It was a link to an article from a company that we know. I know the founder and this person, it's a salesperson. Listen, shoot or shoot. So he sent us a link and then said, now mind you, this is a stranger. I've never met this person. Why don't you guys do something with us?

[Michael Batnik]

What's wrong with you?

[Ben Carlson]

I mean, that's how I took it. Very aggressive. I don't like that. I don't talk to people that way. I don't like being. Talking to that way. I've spoken to that way. So I'm on the train, I show it to Chris. I'm like, could you believe this? The gall of this person. Again, the chutzpah, as we say. So I was going to reply, excuse me, but I didn't do that. I just said. I said, does this message usually get a positive response? And then he said, first person I sent it to, so maybe not. Question mark.

[Michael Batnik]

That's good.

[Ben Carlson]

This guy made lemonade out of lemons. I'm still not taking. I'm still not working with him. Well, I said, all right. That got a legit chuckle out of me. And that was it. He left me alone.

[Michael Batnik]

That's why it's hard to understand text in a text message. Like, maybe he was thinking like, why don't you guys do something with us? And you think it as like, why don't you do something with us? It depends on the tone could be.

[Ben Carlson]

So, all right, what do you do in this scenario? I am on the plane to Chicago, and I got two missed calls from a number that I don't recognize, but it's like a local number. And then I get a third missed call, and then I see a calling a third time. So I pick up. It's three calls. You got to assume it's like, something relatively important.

[Michael Batnik]

Kids or something. Maybe.

[Ben Carlson]

Yeah. So I pick up, and I'm on the plane. I said, hello. He goes, hi, Michael. This is blank from blank. We. I'm like, whoa, hold on, hold on. How do you. How do you get my number? Well, we're just reaching out to see. I'm like, we're already a customer of yours. Do you not know that we're already working with you? Oh, I'm. I'm sorry. I just, you know, I'm kind of new. I'm like, what's your. And he hung up on me. And I was about to say, what's your name? And he hung up on me. Now, I thought, what would you do in the. I know what you would do. You would do nothing.

[Michael Batnik]

Yeah, I would let it go. It's a young person. They don't know what they're doing.

[Ben Carlson]

Yeah, but three missed calls. That's a lot. So I was thinking, like, all right. So, by the way, I called him back because I'm like, you. You hung up on me. I called him back right away. He didn't pick up.

[Michael Batnik]

So we had a guy come to our door the other day, and I'm in the basement. I think I was lifting weights. Not the brag.

[Ben Carlson]

And you are very swollen these days. Is it swole or swollen? I guess either.

[Michael Batnik]

Work. I don't know. I'm a. I'm an old. I don't know. So I'm in the basement. Got our little workout room down there. And I hear the doorbell ring twice. And my wife's like, can you get it? I don't want to. I'm. I'm in PJs or something. I don't want to get it. And I'm like, just ignore it. Ring again. And she's like, can you just get it? And so I walk upstairs, and then the guy knocks, and I open the door. I'm like, what? And it's a young kid, and he stepped all the way back. He's like. He just. He's trying to sell something. He goes. And he goes, we're selling house. Washing. Gonna wash houses. And I wanted to be like, dude, you gotta Work on your delivery a little better. But I said, appreciate the offer. We actually just had it done a couple weeks ago. All right, thank you, sir. And he runs off.

[Ben Carlson]

Do you wash your own house? Do you power wash your own house?

[Michael Batnik]

No. No. Okay. It's hard to get certain spots and our house is white. Our house is white, so we need to have it.

[Ben Carlson]

So you're right. It is hard to get certain spots. And guess what? Those certain spots, they just sit green at my house. Can't get to them. So anyway, no, no, the way they.

[Michael Batnik]

Do it ours though, we do it once every three years. They spray this. This is really boring middle aged stuff. They spray this cleaner on it. They don't even power wash. They spray this cleaner. They leave it on there for a minute, then they just hose it off and the. The stuff just melts off and it's good for three years.

[Ben Carlson]

There is something very satisfying about seeing the melt off.

[Michael Batnik]

Yeah.

[Ben Carlson]

Anyway, so I'm thinking, do I. Do I call this. I mean, I know, I know the founder. Do I just call him back, hey, but you know what? I let it go. I mean, that would be very, very little of me to get this kid.

[Michael Batnik]

Fired, but definitely let it go.

[Ben Carlson]

Come on, you don't cold call somebody three times in a 35 minute window. Who does that?

[Michael Batnik]

Hey. Always be closing. All right, I got a lot of recommendations. We got to get to these.

[Ben Carlson]

All right, take the mic.

[Michael Batnik]

All right. I saw the Ballad of Wallace island pop up on Peacock the other day. Oh, new movie. A guy I've seen in a Ricky Gervais show or two, Carey Mulligan, who I really like. And then the same day, someone emailed us and said, you have to watch this. This is a total Ben movie. Okay. So we watched it last weekend. This is my favorite movie I've seen in a long time. You absolutely shouldn't watch it. This is a total Ben movie. I give this a 7.5. So two guys wrote it and star in it. They wrote the movie. One of the guys also wrote the music for the movie and sings all the music in the movie with Carey Mulligan. So this is like, it's a comedy but also has some heart to it. It's got like, subtle British humor. I'm a big fan of British humor. Like, they don't hold your hand with British humor. But the guy in it who also wrote the movie. So here's the. Here's the premise. A guy lives on this remote island in Wales. He's got a big mansion because he won the lottery. He lives by himself. His wife died. He pays his two favorite folk singers, who used to be together in a group to come give a show to just him on the island. Pays him a lot of money. And then hijinks ensues. And it's. This guy is like a poor man's British version of Galifianakis. He was hilarious, but also got so. I really like this movie. Total Ben movie. Again, you shouldn't see it, but if you're on the Ben corner, this is a total Ben movie. I love this movie.

[Ben Carlson]

Can I tell you something? I hovered over the description because I saw the recommendation coming and I just went, I read it. I said, what? Nah.

[Michael Batnik]

And I even listened to the album. But so this.

[Ben Carlson]

Wow. You even listen to the album?

[Michael Batnik]

Yeah, it's actually pretty good. So this got me thinking, this guy is a poor man's Galifianakis. Whatever happened to him? Because after the Hangover, he's still.

[Ben Carlson]

Oh, you know what you said Galifianakis. I was thinking of. I was thinking of Gaffigan. Oh, yeah. Where is Galifianakis?

[Michael Batnik]

He should have been. I think he maybe didn't want to be so famous, but he should have been Will Ferrell for 10 years. Here's the thing, here's my take. I mean, they did two Hangover sequels. He did that one movie with Robert Downey Jr. Called due date, which is okay, but the Hangover came out in 2009. That was a generational top in movie comedies. And we've been underwater in a drawdown ever since then. We're in a 50% drawdown and never came back. We're in a Japan of comedy movies. So that's what happened to him. There wasn't any good comedies coming out anymore.

[Ben Carlson]

Can I. You know what's bizarre? I kind of thought that you were right that Galifianak disappeared, he got too famous, and that was really not his life that he wanted to live. But I'm at his IMDb and he's been working this entire time.

[Michael Batnik]

Okay. I'm really surprised at how. Because after he did Alan and the Hangover, it's like, okay, this guy is the next Will Ferrell. He's gonna be doing unbelievable comedies for. He's on a few things, but.

[Ben Carlson]

Well, Between Two Friends was pretty big for.

[Michael Batnik]

Yeah, but that's like a YouTube show. It's not a real thing. Alright, so finally the Bear came back for season four. You know, I've been a huge fan of the bear.

[Ben Carlson]

But you hated last season or two seasons ago.

[Michael Batnik]

Last season was anime. This season, I hate it. I can't believe it. They should have pulled a fleabag and it should have been two seasons. They should have walked away after season two.

[Ben Carlson]

Are you going to keep going or are you?

[Michael Batnik]

We have to. So here's the thing. We watched episodes one through six of the season and honestly, literally nothing happened. They neutered all the characters. There wasn't the same energy and chaos. That wasn't the same writers, it's the same guy. I think they just ran out of ideas. It's like there was some painful scenes where my wife and I go, oh my gosh, it's still going painfully bad. And then they had a really good episode seven, which was a wedding, and they had all these guest stars come on and it was really good. And now we're two episodes from the end, but they totally botched it. And it's a terrible limping to the finish line. Like totally limping. Like they shot the leg off and anyway, they should have pulled a fleabag and gone on. After two seasons, two more things. Snow White, the Recreation. They did it. It's got a 2 on IMDb. 2 out of 10. I don't think I've ever seen a movie that big have such low of a score. My kids watched it and they watched it with two of their friends. So this is 8 to 11 years of age, five kids. They loved it. I came in and out and there was a few things they changed from the original, but they've never really watched the original much. I couldn't believe my kids actually really liked it because it got terrible reviews. Yeah, maybe my kids aren't the best. Finally, Brad Pitt was on Dax Shepard's podcast, Armchair Expert. He doesn't do a lot of podcasts. I think he's done one or two in his life. Totally worth a listen. Okay, great.

[Ben Carlson]

Okay.

[Michael Batnik]

I've always been a big Brad Pitt fan. Just he comes off as just like the coolest guy ever. But it got me thinking, cause he's on the COVID of gq and you can tell Brad is. He's aging. Like he's still a very good looking man.

[Ben Carlson]

Obviously he still has a six pack.

[Michael Batnik]

Yeah, he's like the best looking person a lot ever. Maybe. But he's eight. He's allowing himself to age. He's not doing the Botox or the. I've seen a lot of them with the fillers and stuff. And I think this is one of the reasons that movies aren't as good anymore. Actors and actresses aren't Allowing themselves to age naturally. Like, the. A lot of the actresses look the same at age 50 as they did at 30. Almost. It doesn't feel real almost.

[Ben Carlson]

So I saw F1 and.

[Michael Batnik]

Oh, yeah, what did you think?

[Ben Carlson]

Brad Pitt. I did notice, like, the arm is getting a little bit. There's getting a little bit of loose, loose skin in the elbow area, which is. That's what happens when you get older.

[Michael Batnik]

Yeah.

[Ben Carlson]

And I was like, yeah, good for him. He's aging. But then. Yeah, yeah. But then he takes off his shredded and he's still shredded somehow.

[Michael Batnik]

But what did you think of one?

[Ben Carlson]

I'll get to that in a second. Real quick. So I am. I'm out of TV shows right now, which is fine. I kind of need a break. I'm very happy to just be falling asleep and scrolling. I watched probably 20 minutes of Superbad, and I think for you and I, that was. I mean, that was my peak comedy. That's my favorite comedy of all time.

[Michael Batnik]

Yeah, me too.

[Ben Carlson]

But there's probably a lot of young people who have never seen it or never heard of it. And I implore you, young people, watch Superbad. It is. Just laugh out loud, even though you know every line of the movie. And then also I caught 20 minutes the other night of a movie that I plugged pretty aggressively when it came out. And I'm gonna do it again. Incoming on Netflix with students. Remember that movie, the. The High School Teacher?

[Michael Batnik]

Oh, yeah.

[Ben Carlson]

Great high school movie.

[Michael Batnik]

Oh, yeah. Good party movie.

[Ben Carlson]

Very good. It's one of those.

[Michael Batnik]

They don't make any good. They don't make any. Any good party movies anymore.

[Ben Carlson]

It's one of those comedies that they don't make anymore. Okay, so F1. This is from IMAX. The film launched in stellar fashion with IMAX riding home with the $28 million in box office. And it's opening weekend empowering over 90% of the global box office. The highest global indexing of the year for imax. So I saw it on IMAX and it was Sunday night and it was packed. It was packed. And the movie rules. It was just a ton of fun. It's exactly what you want from a blockbuster. I'm not an F1 guy. Didn't watch the show. I know nothing about it, but I was listening to the Big Picture talk about it. And they filmed on location, so it took them three years. There's maybe 12 different set pieces that they go to.

[Michael Batnik]

So Brad Pitt talked about this in the interview. They literally filmed the day that they were doing these F1 races. They would have, like, 10 minutes, and they would line the cars up and go on the courses with all the people in the crowd.

[Ben Carlson]

So he was driving 180 miles an hour in these things.

[Michael Batnik]

He talks about how he's kind of a speed demon. It sounds like.

[Ben Carlson]

So it was two and a half hours. There's a couple of Brad Pitt monologues that felt very long, but that's a nitpick. It was just so much fun. Like, I cannot recommend it highly enough. It felt like Maverick. Same director. It just. Everything that you want from a summer blockbuster. Tons of fun.

[Michael Batnik]

Good. That's good.

[Ben Carlson]

Yeah. Great movie. All right. That is. That's it.

[Michael Batnik]

I'm just picturing you constantly sneaking away at night to go to movies by yourself.

[Ben Carlson]

I might see Megan, too, but I don't know. Well, Kobe's at camp. Robin's. Logan is the easiest to put to bed. And she. I guess she's very happy to get away from me.

[Michael Batnik]

That's true. You go to the movies by yourself. Gives her some time to just.

[Ben Carlson]

Well, you know what? Because we. We don't spend a ton of time together at night. Like, we very much. She's talking to her friends or whatever. She's watching the Housewives. I'm doing whatever I'm doing. So she's like, I don't care. Go.

[Michael Batnik]

You know, part of the wives entertainment is texting each other. They find entertainment value in texting each other.

[Ben Carlson]

And Robin's a big. She's a yente, not a gossiper per se, but, I mean, she talks. She's on the phone with her friends all the time.

[Michael Batnik]

Okay.

[Ben Carlson]

Yeah, all the time.

[Michael Batnik]

That's entertainment to them.

[Ben Carlson]

Yeah. So I'm gonna go to movies. Okay, leave.

[Michael Batnik]

Get out of here. I've had enough of you. All right. Thanks to the production team, as always. Animalspiritscompoundnews.com have a lovely fourth. See you next time.

[Ben Carlson]

Don't get.