Your Budget Sucks (EP.397)

Summary

Animal Spirits Podcast Summary: “Your Budget Sucks” (EP.397)

Release Date: January 29, 2025
Hosts: Michael Batnick and Ben Carlson

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Introduction

In episode 397 titled “Your Budget Sucks,” Michael Batnick and Ben Carlson delve into a variety of topics intertwining market insights, technological advancements, personal finance, and everyday life anecdotes. The hosts navigate through complex financial discussions while maintaining an engaging and relatable dialogue, making the episode a comprehensive listen for both seasoned investors and casual enthusiasts.

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Market and AI Developments

Chinese AI Market Surge
The episode opens with a discussion about the burgeoning AI landscape in China. Michael highlights the significant scale of Chinese retail web sales, stating, “Chinese retail web sales total $2.1 trillion in 2023, compared to $1.1 trillion in the United States” (00:13). This robust spending is attributed to China's larger population and substantial internet penetration, which stood at over 77% of its population in 2023 (00:42).

Ben Carlson adds, “Their technology, evidenced by the deep seq R1 V3, 9 or 6, are impressive” (00:23), emphasizing the advancements in Chinese AI startups. The hosts express enthusiasm about the rapid technological revolution, noting the real-time unfolding of AI developments compared to past technological shifts.

Impact on Mag7 Companies
A significant portion of the discussion centers on how new AI players, like Deep Seq, are affecting established Mag7 companies such as Nvidia. Michael remarks, “Nvidia at one point was down almost 20% yesterday” (06:10). The conversation highlights the market's overreaction to AI advancements, drawing parallels to historical events like the “dot-com bubble” and “Japan's unwind.”

Ben summarizes the situation: “This would be the most loved bear market of all time” (09:16), suggesting that strategic rotations could benefit various market sectors despite the volatility caused by AI disruptions.

Hedge Funds and Investment Strategies

Grand Rapids Hedge Strategy
The hosts delve into hedge fund strategies, particularly the "Grand Rapids Hedge," a concept Michael advocates for in uncertain AI-driven markets. “The whole way this AI story has played out... is why I do the Grand Rapids Hedge” (08:03)—a method that involves hedging against unpredictable market movements.

Performance of Klarman’s Hedge Fund
A discussion about value hedge fund manager Seth Klarman reveals his fund's underperformance. Despite his legendary status, Klarman’s BalPost Group reportedly pulled $7 billion, gaining only 4% per year since 2014 (22:20). Michael connects this to Klarman’s conservative investment approach, citing a quote from 2010: “I am more worried about the world more broadly than I've ever been in my career” (23:13), suggesting that past caution could explain current performance woes.

Ben responds skeptically, questioning if Klarman’s strategy has evolved: “But he didn’t. Obviously he...” (23:23), highlighting the challenges hedge funds face in adapting to new market conditions.

Economic Indicators and Inflation

Rental Market Insights
Colin Roche from Discipline Funds shares optimistic news about the rental market: “The new tenants Rent index... came in at the lowest rate of change at this cycle, down 2.5%” (34:05). This decline in rent prices is cited as a positive indicator against inflation concerns, though Michael remains cautious about future trends: “I don't know how long it's going to last because they're not going to be building any more Apartments...” (34:05).

Volatility in GDP Growth
A Goldman Sachs chart on the rolling 20-year volatility of US real GDP growth reveals decreased economic volatility compared to past decades (34:43). Michael attributes this stability to Federal Reserve policies and controlled government spending, while Ben counters with real-world examples such as the rising price of eggs: “A dozen eggs up $4 year over year” (35:23).

Credit Card Debt Trends
The hosts examine revolving credit card balances, noting an increase in the proportion of minimum payments: “The share of credit card holders making only minimum payments is up to 11%...” (37:12). Michael downplays the impact, suggesting it remains within historical norms, while Ben acknowledges it as a concerning trend but not catastrophic.

Cryptocurrency Trends

Proliferation of Crypto Tokens
Ben discusses the overwhelming number of new crypto tokens, mentioning a staggering “1 million new coins being created every single week” as highlighted by Coinbase CEO Brian Armstrong (42:23). This surge raises questions about regulation feasibility and market saturation.

Michael compares the crypto landscape to podcasts: “There are a million podcasts, but the top 5% of them drive all the traffic and revenue” (43:16), implying that only a select few crypto tokens will achieve significant traction amidst the vast supply.

Regulatory Challenges
The conversation touches on the difficulty regulators face in keeping up with the rapid creation of crypto assets. Ben expresses skepticism about the sustainability of such high numbers, noting that most tokens may not find substantial market adoption.

Personal Finance and Budgeting

Analyzing Budgets on Social Media
A notable segment revolves around a Substack called "The Purse," where detailed personal budgets are publicly dissected. Michael critiques this practice: “If you and all your group of friends all wrote down your back of the envelope budget... everyone would have a problem with someone else's budget” (38:36). This leads to a broader discussion on the subjective nature of budgeting and the unrealistic expectations often placed on personal finances.

Ben adds, “People get really triggered when they see the economics of how people spend money in high cost living areas” (40:10), emphasizing the diversity in financial circumstances and the futility of judging others’ budgets without context.

Saving vs. Spending
The hosts debate the balance between saving and spending, with Michael advocating for reasonable responsibility: “The only people who I have a problem with are like, you don't say any money” (41:10). Ben concurs, highlighting personal accountability in financial management: “I do feel like the money is to be spent however people want to spend it, as long as they're being reasonably responsible” (41:14).

Work Environment Preferences

Hybrid Work Model Popularity
A poll on work environment preferences reveals a strong inclination towards hybrid models: “Hybrid, which is what I do, it's 53%” (45:39). Both hosts express appreciation for the flexibility it offers, though they acknowledge that not all professions afford this luxury.

Michael reflects on the pandemic's lasting impact: “The ability to work from home on certain days... is beyond words” (46:32), while Ben recognizes the privilege associated with such arrangements and the diverse experiences across different job sectors.

Cryptocurrency and ETF Developments

Leveraged ETFs Performance
Ben and Michael discuss the volatile performance of leveraged ETFs tied to Nvidia, noting significant losses: “The Nvidia three times levered ETF was down 50 some percent” (29:09). They caution against the long-term holding of such instruments, reiterating that these are meant for short-term trading strategies only.

ETF Market Share Dynamics
Ben references Ben Johnson of Morningstar, who observes shifting market shares among major ETFs: “SPY had again 100% back in the day and it's about to be eclipsed by what passes it” (32:02). This indicates increasing competition and diversification in the ETF space, influenced by major players like BlackRock and Vanguard.

Movie Discussions

Recent Movie Experiences
The hosts share their recent movie-watching experiences, critiquing sequels and discussing classics:

• Gladiator 2: Michael expresses disappointment, noting, “It was totally unnecessary” (53:39), and criticizes Denzel Washington’s performance as lackluster.

• Goonies and Adventures in Babysitting: Both recall fond memories watching these 80s classics with their children, highlighting their enduring appeal despite not being critically acclaimed.

• A Real Pain: Ben praises the film, though notes the importance of viewing environments: “If I was just glued to the screen... I really enjoyed it” (57:35).

These discussions underscore the hosts' personal tastes and the challenges of balancing entertainment with family life.

Personal Anecdotes

Parking Incident
Towards the end, Michael recounts a frustrating experience with a driver struggling to back into a parking spot: “He was holding up the line, trying to back into a spot” (51:11). This story adds a relatable and humorous touch to the episode, showcasing the hosts' ability to blend everyday experiences with financial discourse.

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Conclusion

In “Your Budget Sucks,” Michael Batnick and Ben Carlson offer a multifaceted exploration of current market trends, technological innovations, personal finance dynamics, and slices of everyday life. Their insightful analysis, combined with personal stories and light-hearted banter, provides listeners with a rich tapestry of information and entertainment. The episode underscores the complexity of modern finance and the importance of adaptability in an ever-changing economic landscape.

For more episodes and detailed insights, visit the Animal Spirits Podcast website.

Transcript

[Michael Batnik]

Today's Animal Spirits is brought to you by our friends at Crane Shares. Like a lot going on in the technological world these days. New AI company out of a place called China. If you haven't heard of it, we're talking about on the show today.

[Ben Carlson]

What is that? A startup economy?

[Michael Batnik]

Something like that. Chinese retail web sales total $2.1 trillion in 2023, compared to 1.1 trillion in the United States. They have a lot more people than we do, but they spend a lot more money.

[Ben Carlson]

I was looking at their GDP per capita, like their. Their economy rivals ours. But you know the denominator thing? Not. Not as impressive. Be that as it may, their technology. Their technology, evidenced by the deep seq R1 V3, 9 or 6, are impressive. They've got some things going on.

[Michael Batnik]

So Crane Share says that China's Internet population is over a billion people in 2023. So that's 77% of the population there, which is kind of interesting. The US Internet population is 311 million, which is 93%.

[Ben Carlson]

Huh.

[Michael Batnik]

So they have room to run there. Anyway, total China retail sales, $6.5 trillion in 2023. CraneShares is a way to bet on this with Kweb. Check out kraneshares.com Kweb to learn more. 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 wr. 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.

[Ben Carlson]

Welcome to Animal Spirits with Michael and Ben. One more plug for our trip down to Naples. Our trip. That's Ritholtz Wealth Management. We're going to be there. President's Week. So that's Wednesday, February 19th through the end of the week. If you are interested in speaking to us, I'll be there with Josh and Chris and a bunch of the team. Reach out to inforedholtswealth.com got one more plug for today.

[Michael Batnik]

Wait, was Naples founded by Italians?

[Ben Carlson]

Gotta be.

[Michael Batnik]

Is that the explanation?

[Ben Carlson]

Okay, there's a. You know what? I'm not gonna say what I was about to say. I don't wanna get shamed. I'll say it. There's a Naples, Italy. No.

[Michael Batnik]

Yes.

[Ben Carlson]

Of course.

[Michael Batnik]

That's why I said it.

[Ben Carlson]

Of course. Of course there is.

[Michael Batnik]

Yeah. He knew that.

[Ben Carlson]

All right. Future Proof, Ben, by the way, this T shirt that I'm wearing, is that you and I or is that just a generic? That can't be you and I. We didn't have surfboards. All right, never mind. No, never mind. It did look, look like our silhouette, though.

[Michael Batnik]

We're getting very close to future proof in Miami.

[Ben Carlson]

Yeah. So we're doing something new and exciting. We're doing. So we. Every year we do a wealth tech demo, which we're doing again this year. So please link in show notes. If you are a wealth tech company and you want to reach advisors, there's no better place.

[Michael Batnik]

So I talked to a fintech founder yesterday and I said you'd be perfect for something like this. And I explained what it is about the demo and getting in front of the advisors. He's like, oh my gosh, that sounds amazing. Yeah, perfect.

[Ben Carlson]

All right, we're taking this, this a step further. Emerging managers. That's right, emerging managers. So what is an emerging manager? No offense, but if you are day trading leveraged ETFs or single stock ETFs, that's not an emerging manager. Okay. You might have knocked it out of the park in 2024, but we're not talking to you.

[Michael Batnik]

You can call yourself a boutique.

[Ben Carlson]

So we're looking at the. This is the criteria below a billion dollars in assets under management, managing your first, second, or third institutional fund. Less than five years managing money for institutional investors. And we're looking for. Well, sizes vary. But anyway, if you think this is a fit for you, you've got something interesting, unique. Hit the application. We'd love to see you there. Miami March Citywide is not only going.

[Michael Batnik]

To be advisors, but also a lot of money managers.

[Ben Carlson]

A lot of money managers.

[Michael Batnik]

They. We have the, the boardwalk. So you can click. We'll share the link in the show notes and show the picture on YouTube, just the boardwalk of what it's going to look, look like next to the beach where all the stages are and everything. And I'm getting excited and oh, and.

[Ben Carlson]

Finally, how could we forget this? The best part, Ben, who's going to be performing?

[Michael Batnik]

We have musical acts. All American Rejects are headlining and the Fray is opening for them. And I mean, that's, that's 2000s. What do we call the aughts? I still haven't. Don't have a good term.

[Ben Carlson]

I'm not. I don't say the odds. It's the 2000s. That's it. That's what it is.

[Michael Batnik]

But if you say the 2000s, it feels like Anyway, I. So I pulled up the All American Rejects, like, top songs on Apple Music. I'm. I'm a boomer. I listen to Apple music instead of Spotify. I'm so. I'm not gonna apologize for that. It's just what I do. And I don't know the first six songs like. Oh, I know that one. Oh, I forgot about that one.

[Ben Carlson]

Oh, yeah. And the Fry how to Save a Life was a.

[Michael Batnik]

One of the best songs of that decade.

[Ben Carlson]

Where did I go wrong?

[Michael Batnik]

One of the great songs of one of the best Scrubs episodes of all time, which is a show that's been lost to history.

[Ben Carlson]

I never watched Scrubs.

[Michael Batnik]

I love that show. It's the same guy who did Ted Lasso. The Lawrence.

[Ben Carlson]

Ben. Speaking of history, this. This is. I think we're probably a few years away from this, although you're closer to it than I am. How come I was on the train the other day with Chris and our friend Dave. How come people of a certain age, let's say in the, I don't know, 44 to 48 age range, which I made up. How come they say, what year did you graduate high school? Instead of just saying, how old are you?

[Michael Batnik]

Ah, that's true. That is a way of getting around it. That's a good question.

[Ben Carlson]

But just, come on, don't beat around the bush. We could all add 18 or whatever.

[Michael Batnik]

Class 99 here, right?

[Ben Carlson]

Yeah. Dude, you're 56.

[Michael Batnik]

Yeah, that is. That is a kind of question you hear the dads ask at youth sporting events, Right.

[Ben Carlson]

I'm saying why?

[Michael Batnik]

I don't. I don't know.

[Ben Carlson]

You're not fooling anyone. We could all add. All right, so yesterday was one of those days in the stock market where, luckily for me, my schedule was on the light side, which means I only had 11 meetings. Not to brag. LOL. Just kidding. And it was one of those days where just nothing. But I. I was glued to the screen. I'm not going to lie. Right. It was a. One of those. One of those days that you get in the market, I don't know, a couple times a year, depending on the environment.

[Michael Batnik]

This is a really fun day. Yeah, it kind of reminded me a little of the. The Japan unwinding thing, the carry trade unwind or whatever, where Japan was down 12% a day.

[Ben Carlson]

But, but, but, but that was. We knew that was like, you know, more or less nonsense. It was going to blow over. This is, you know, people were calling.

[Michael Batnik]

It a layman one of the time, but.

[Ben Carlson]

Nah, come on.

[Michael Batnik]

No, this. This is fun. My favorite thing about this whole AI episode is watching this technological. Technological revolution. Easier said than done. Play out in real time is just. You didn't have this in the past. In the past, it was all like hearsay and gossip and rumors and you'd. You'd wait to hear stuff in the newspaper or the magazines. We're seeing this stuff play out in real time and it's happening in hyperspeed. It's awesome how quickly it's.

[Ben Carlson]

What an adrenaline. What an adrenaline rush, huh?

[Michael Batnik]

It really is. So, Ed Yard, Daniel was the first one I saw say, like, this is going to be bad news for the Mag 7. He put out a note this weekend basically saying, like, listen, this new Deep Seq, which I'm not a big fan of the name, no offense. It doesn't roll off the tongue. Right?

[Ben Carlson]

Yeah, I agree. I agree.

[Michael Batnik]

So just saying, like, might not be good for Nvidia. Might not be good for Mag7. That whole idea seemed to snowball. Nvidia at one point was down almost 20% yesterday. Because the idea is, well, this company was able to produce an AI system without nearly as much bandwidth and investments as all these other mag7 companies are. Maybe we don't need any. As much GPUs. Whatever. That, that's. That was the whole story. Nvidia got crushed. The semiconductor ETF, shaking my head, SMH was down 10%, basically. I also looked at the returns for this thing over the past six years or so. Like, it's just unbelievable how. How much this is up. So you could say again, my. My whole thing of looking for an excuse. But. But you always rip on me for making the Grand Rapids Hedge on these sorts of things. But this is why the whole. The way this AI story has played out. This is why I do the Grand Rapids Hedge. The whole. The whole story of AI from the start has been out of left field. Out of left field. No one saw this coming. No one saw this coming. That's the entire story of this, I think.

[Ben Carlson]

Are you moving the goalpost on what a Grand Rapids Hedges?

[Michael Batnik]

No, the Grand Rapids hedges need playing both sides, right? Yeah.

[Ben Carlson]

The Grand Rapids Hedges. Having no opinion. It's boring.

[Michael Batnik]

But that. That's why with AI, I'm going full Grand Arp attach. Because no one knows anything about how this is going to play out. And the people that are the most certain are just wrong all the time. And here's. Here's the most annoying AI person to me. You know who it is? It's the ear to the ground AI guy who tells you, you know what? Actually, Chad, GPT level 3.7 is when you have to go on. No, no, now it's Claude 3.1. No, it's, it's perplexity. And the people who try to say like this is the one, this is the thing, and then a new one comes on and then.

[Ben Carlson]

Fluid situation. Ben.

[Michael Batnik]

Yes. So anyway, very exciting day in the markets though, I thought because you had these semiconductor stocks getting slaughtered and everything else did okay.

[Ben Carlson]

Even a lot. Even software companies did okay. I mean, yeah, the, The S&P493 did quite well. So you made a good point yesterday to Josh and I. This would be the most loved bear market of all time. If we get a rotation out of tech and the rest of the market, you know, whether or not there's a bear market. But if just. I think there's so many people that are just dying, salivating for Nvidia to get cut in half.

[Michael Batnik]

Oh yes, and worse, the professional money managers especially would be dancing in the streets is what I said.

[Ben Carlson]

Because they want. And listen, I fully understand how human behavior works. I would be the exact same way. But they want all the retail traders, all the know nothings, all the people that didn't study this in school and take it seriously as a profession. They want their comeuppance. And I get it. Again, I would. You know, I'm a human too. I'd react the exact same way.

[Michael Batnik]

Yes, everyone wants second level thinking to finally matter. Not first level thing. So yesterday S and P growth was down almost 4%. S&P value was up 1%. International stocks were basically flat. Dividend stocks were flat. Small cap value was up a little bit.

[Ben Carlson]

A lot of things worked. Yeah, Nas Staples had a hell of a day.

[Michael Batnik]

So yeah, it would be the most beloved bull bear market of all time.

[Ben Carlson]

Hey, we didn't, I don't know, just shoot. Sorry for shoehorning this in here, but man, that Bill's game. Man, that Bill's game. So I'm an idiot because every year I bet on the bills. I feel so bad for those fans. Like I felt crushed, not even as a better, but like genuinely I felt disappointment as a sports fan and as somebody who likes to see somebody else get a chance to win. And I'm not even like a Chiefs hater, you know, Mahomes is obviously, you know, on, on his way to goat status, but just brutal. Oof.

[Michael Batnik]

Like, how do you root for the best too? Because I feel like they're, we're connected as as tortured sports fans with the Lions. So I was rooting for them too. That was tough. Is it possible getting back to the AI stuff? Sorry to cut you off on your parlay. Parlay of the week is. Is the market overreacting more than Ali Larder in Landman?

[Ben Carlson]

Because she does dial it up a bit. Did you finally finish it? I feel like I ask you this every week.

[Michael Batnik]

No, I'm almost there.

[Ben Carlson]

I think the show we don't want you stop watching. I'm sick of asking you.

[Michael Batnik]

No, I think Billy Bob is so much better than everyone in that show. That is the only part that's like, he's so good.

[Ben Carlson]

Okay, well, if you would get to the end, you would see that there's somebody coming in season two who can match his acting ability.

[Michael Batnik]

But is this just going to be another one of those blip things where everyone overreacted for a weekend in a day and then in two months we go. I remember that because just like when the AI stuff first started, it was Google is done. Remember? And Google had that rough like three week stretch.

[Ben Carlson]

Yes.

[Michael Batnik]

People were pouring dirt on Google's grave. Yeah, that was wrong. It just seems like the. The narrative machine goes so quick because the expectations get so out of whack. I would just. The only part of this I like. I know a lot of people were talking about this like, well, it's a Chinese company and that's. That's bad for America. But I just like the fact that maybe these mag7 companies have some competition. That's the only part of it that I thought was actually a positive. I think that. I think that's actually a good thing.

[Ben Carlson]

Yeah. I think you nor I, nor most people are qualified to opine on what this means for the tech and then therefore what it means for the stocks.

[Michael Batnik]

No, and I will not.

[Ben Carlson]

Yeah, literally, who knows? But you know who I think might know is this guy Ben Thompson. So Ben Thompson has a substack called Stratetury and let me just quote him for a minute. He says in the long run, model commoditization and cheaper inference, which Deep Seek also has demonstrated is great for big tech. A world where Microsoft gets to provide inference to its customers for a fraction of the cost means that Microsoft has to spend less on Data Centers and GPUs or just as likely sees dramatically higher usage given that inference is so much cheaper. Another big winner is Amazon AWS has by and large failed to make their own quality model. But that doesn't matter if there are very high quality open source Models that they can serve at far lower cost than expected. Apple is also a big winner. Dramatically decreased memory requirements. I'm going to bob about this, forgive me, because it gets very technical and I don't get it. Meta, meanwhile, is the biggest winner of all. A big barrier to realizing that vision is a cost of inference, which means that dramatically cheaper inference and okay, again, I'm going to blah, blah, blah because it's just technical. Google, meanwhile, is probably in worse shape. A world of decreased hardware requirements lessen the relative advantage they have from tpusc. All right, so to conclude, he says, so this is all pretty depressing then. Question mark Actually, no. I think that Deep Seek has provided a massive gift to nearly everyone. The biggest winners are consumers and businesses who can anticipate a future of effectively free AI products and services. Javon's Paradox will rule the day in the long run. And everyone who uses AI will be the biggest set of will be the biggest winners. Another set of winners are the big consumer tech companies. A world of free AI is a world where product and distribution matters most. And those companies already won that game. So maybe not all bad. Maybe not all bad at all, actually.

[Michael Batnik]

So I guess the point is maybe these companies don't have to invest as much as they thought they did. Yeah, in all of this.

[Ben Carlson]

Now the other part of that is like wait a minute, Starlink, Is that the name of it? They're, they're, they're raising $500 billion? Probably not. How much CapEx are all these companies spending? Did that just go to waste or you know, like parsley through all that is.

[Michael Batnik]

Is OpenAI? Is OpenAI the biggest loser then? Because everyone yesterday wanted to say it's Nvidia, but is it really OpenAI?

[Ben Carlson]

You would think. I mean. Sam Altman tweeted this morning, some thoughts on the state of the matter. Again, nobody knows. The market is obviously in flux. Trying to figure out will this blow over? Maybe. Is this the pin that burst the bubble? Maybe. I wouldn't take anything off the table.

[Michael Batnik]

That seems a little too easy and it seems like if everyone waiting for the dot com bubble to blow up from this, it's just these companies are so much more high quality. So even if you got a correction or bear market in all of these stocks, like waiting for the dot com bubble to blow up to me seems like an overreaction.

[Ben Carlson]

I think the idea that there's going to be an 80% decline in the NASDAQ is far fetched. And if you want that, my God, be careful what you Wish for. Geez Louise.

[Michael Batnik]

I still don't even use the AI tech very often. I've dabbled in all the models, but it's not like you just found Apple.

[Ben Carlson]

Pay a couple months ago.

[Michael Batnik]

Yeah, I'm never going to be someone who is again ear to the ground guy on this stuff and using it all the time and finding the best model. Or I've tried a little bit of each of them and I still haven't found a way to make it part of my daily life. I'm sure at some point it will be it. Just now it isn't, but my only take on it is it's not. I don't think we're going to get a Google moment where it's like, Google obviously won. Search Like I remember using Ask Jeeves in the past.

[Ben Carlson]

I was an Ask Jeeves guy.

[Michael Batnik]

Some of these other really horrible ones that just didn't do anything when I was in college and Google obviously won. It seems to me like there's not going to be one winner from all this. There's going to be multiple winners. Doesn't that seem more likely than there being just one? Okay, this is it. This is the AI model everyone's going to use. I don't see it working that way. Maybe I'm wrong.

[Ben Carlson]

Speaking of Apple, we have a lot of value shoppers in the inbox, in the audience, a lot of people inquiring about Ben's knockoff AirPods. And I'm here to tell you listeners that I was on the phone with Ben the other day and I said, what the dude, are those your fake AirPods? It sounded like that's like, hello? Yeah, hey, what's up? I'm like, dude, come on. He goes, oh, hold on, let me take my AirPods out, sir. You get what you pay for.

[Michael Batnik]

I don't like to use them. I use my actual AirPods for phone calls. I use those for just listening to stuff. This one is from chart kid Matt. He did s&p500x tech and then the whole s&p500 andx tech yesterday finished at an all time high. Pretty crazy. So that I think the Jason getfort sentiment trader stat of the day was even with the S and p losing nearly 1.5%, more than three hundreds of its stocks rose today. Since the index became 500 stocks in 1957, this had never happened before. The only other days with 250 advancers were in 99, 99 and 2000.

[Ben Carlson]

Wait a minute. Those were the tops. Those are the tops. I. Dude, a Rotation like so if you look at like the ratios RSP divided by SPY or the staples divided by the Q is like it was a monster move and it would be so incredible for everyone except for people that are concentrating the max 7. It would be just so great if we get a rotation small caps, mid caps quality.

[Michael Batnik]

Whatever it is, doesn't it feel like we get so many more of these this has never happened before stats. I feel like the 2000s is the decade of this has never happened before.

[Ben Carlson]

Yes, right.

[Michael Batnik]

I feel like these things, this crazy thing has never happened before just happened. And I think it's because of the speed at which this stuff is is transmitted.

[Ben Carlson]

So Walter Bloomberg tweeted, so retail investors bought the dip yesterday. He said, or. Or it is this a robot? Again, we just don't know. Retail investors bought a record $562 million of Nvidia stock yesterday, according to Vander Research. Our friend Gungeon at the Wall Street Journal cited something similar. Many individual investors bought the dip in Nvidia buy versus sell orders and the buy sell ratio in Nvidia Broadcom, Vanguard's S and P. Just an overwhelming amount of buy orders.

[Michael Batnik]

So one of the things that a lot of people don't realize and that one of my favorite underrated books on the markets is Bull A History of the Boom and Bust by Maggie mahar about the 80s and 90s bull and bear market. And she extended it to 2004 to see what happened in the aftermath. People kept buying stocks throughout the dot com bust. It wasn't like people fled. Like the mutual people didn't completely flee mutual funds in Texas. They kept pouring money in. And even if and when this thing ends or whatever, it is like the whole big tech boom, it's not like these people are all of a sudden gonna go, okay, all right, I'm out right away. Because they've been conditioned for 12 years to keep buying.

[Ben Carlson]

Yeah, it's gonna take a lot to unwind that. That muscle memory.

[Michael Batnik]

Did you listen to Howard Marks and Odd Lots this past week?

[Ben Carlson]

I did not.

[Michael Batnik]

So he wrote a. We talked about him last week about his bubble memo. It was actually really good. And I thought his take was interesting. They asked him, so you've been looking for signs of a bubble. That was his piece. Something about signs of a bubble. And he said what I say in the memo is that in my opinion the current environment lacks behavioral aspects of a bubble. So he's saying numerically, some of the numbers seem like a bubble. Like some of the valuations and the craziness of what's going on. But he said that's just in a bubble is really, it's not a rise. That's a bull market. It's not high prices. A bubble is a temporary mania in which people are going. Are so agog at things that they throw over all this. But all caution. He says, I'm not really seeing that level of behavior yet.

[Ben Carlson]

I think people are conflating like pockets of mania in the meme coin stuff which we'll get to. And some of the, you know, the, the rigetti, the quantum computing stocks, I call it rigatoni. Like there is definitely like areas of, of mania. The leveraged ETFs is a clear sign of, I mean that is a clear sign of, of mania.

[Michael Batnik]

No, but it's not the whole everything. Right. We're not that far away from literally everyone predicting a recession. That's not. You don't get that in a mania.

[Ben Carlson]

Well, I guess the other thing is like I don't hear from, I don't really hear from friends ever about like hot stocks. Do you?

[Michael Batnik]

No. It's been a long time. 2021, I heard a lot of people.

[Ben Carlson]

21 was nuts.

[Michael Batnik]

Yes. That was my plumber.

[Ben Carlson]

Remember my plumber walking in. That was 21. This. It's not that. And does. Does not mean stocks can't fall 30%. I'm just saying behavior wise. I would, I would agree that it seems obviously there's, you know, there's examples galore of excessive optimism perhaps, but mania? I don't think so.

[Michael Batnik]

Yes. It is just, it feels so. We last week we talked about the Trump coin stuff. That feels like a year ago at this point, now that the AI stuff has already taken over. It is just crazy how these stories just in the market suck all the oxygen out of the room now.

[Ben Carlson]

Yeah. All right, how's. How's this for. Huh. Renma Europe's stock 600 is now overbought.

[Michael Batnik]

You heard that, right? That looks, if I'm a technical analyst, I'm saying that's a breakout.

[Ben Carlson]

The real message is that it has punched through resistance making new High German DAX all time highs. Europe can't compete. Okay, maybe. I mean, you know, look at, look at, look at the chart.

[Michael Batnik]

Not to like kick the Europeans while they're down and behind, but in no world would you have imagined that the new AI bottle came out of Europe right. Anywhere?

[Ben Carlson]

No, right.

[Michael Batnik]

Like it came out of China. Like would it have, would that been the most shocking news of the century? That like. No, actually it came out of Europe. Someone in Europe developed this. It's kind of crazy how that, like you wouldn't even expect that anymore. Anyway, I love Europe. Sorry, just had to say that. All right. Sean created this for me. I want to look at the sector performance by administration because I feel like a lot of people are now already saying, like, whatever Donald Trump is going to do, it's going to lead to this and it's going to lead to that and it's going to lead to this. And obviously it's funny how something out of completely out of left field could change that narrative immediately. But. So this is sector performance and total performance by Trump and Biden and both were pretty similar. They both had middle double digit returns, annualized basis.

[Ben Carlson]

Wait, hold on. This is so interesting because even like sector by sector, I mean, there's, there's one or two. Wait, what? That doesn't make sense. Like energy, for example, but outside of energy. And maybe materials like gas, but everything is like pretty tight.

[Michael Batnik]

Yeah, it's not. The biggest one is obviously energy, that under President Trump, energy was down 12% per year and under Biden was up 27% per year, which is the opposite.

[Ben Carlson]

Of what you would expect.

[Michael Batnik]

Yes, and I guess that's the point. And the other point is energy is a pretty small part of it. But yes, it, it. That. That was my surprising thing too, is like how well it did under both presidents.

[Ben Carlson]

Yeah.

[Michael Batnik]

All right. Did you read the Seth Klarman piece in Bloomberg?

[Ben Carlson]

No. We spoke about it last week with Bob Elliott, but I did not. I did not read the piece.

[Michael Batnik]

Okay. So they said that they pulled $7 billion from Klarman's BalPost Group, and he's one of the legendary value hedge fund managers, and he gained 4% per year since 2014. And heading into the crisis, I guess in 2008, he was annualizing for 26 years at 20%. So obviously one of the legendary investors. But this does not surprise me at all that he's had such a poor time, because I did this presentation a number of years ago and I use a quote from Jason Zweig that Klarman said in May of 2010, this is like the bull market has barely even started yet. He talks about how holding interest rates at zero are screwing everything up. And he says, I am more worried about the world more broadly than I've ever been in my career. He said this in 2010. And I use it as an example of like people getting stuck in the fighting the last war mentality. And so Klarman Having really crappy returns doesn't surprise me at all.

[Ben Carlson]

Oh, wait a minute. Two things you're. This is. This quote is 15 years old. I'm sure he changed his mind.

[Michael Batnik]

But he didn't. Obviously he. Well, I don't know that he's held no the story.

[Ben Carlson]

But wait, he's not as. Again, I don't know for sure. But he's a bottom up stock picker, right? He's not a. This is not a macro fund. It's.

[Michael Batnik]

No, it's like a multi strategy. He's more of like a credit guy actually.

[Ben Carlson]

Oh really? But hold on, I'm just saying. Was he shorting things?

[Michael Batnik]

He was basically, essentially keeping 20 to 30% of his fund in cash. So he's been very conservative. And here's what I think might have happened. You never know these things. I remember when we came out of the crisis, we had a hedge fund manager, a long, short hedge fund manager at my old endowment and he had like a $3 billion fund and he was kind of one of these guys who did really well during the crisis and coming out of the crisis, remember all the worries about Europe and the European Union and all that stuff. And he was so freaked out about that. And he's a bottom up stock picker, right? But he got into macro and he said, you know what? I have the majority of my net worth invested in this fund. I am getting ultra defensive and I'm going to stay defensive because all of my money is invested in it. Is it possible that Klarman just made like a billion dollars and said, you know what, I'm not taking any more risk. Like it's mostly my money anyway.

[Ben Carlson]

Who would know? I don't know. You know, I was also pretty conservative in 2012. You should have seen my portfolio shorting Amazon. I think I shorted Green Mountain coffee.

[Michael Batnik]

So you've heard of Klarman's margin of safety book, the value investing. It sells for like $2,500 on Amazon. I looked it up for. And it's got, it's always had this mystique about it because it's impossible to find.

[Ben Carlson]

I mean that is, that is comedy, right?

[Michael Batnik]

Have you ever. So someone, a number of years ago I mentioned this that I'd never read it. Someone sent me a PDF.

[Ben Carlson]

Yeah, it's PDF. Yeah.

[Michael Batnik]

So someone sent me a PDF and I read it. I don't know if you've read it before. The price got the expectations way too high. I mean it's a, it's a pretty good value investing book, but like, nothing you've never heard in a, in a Buffett, any of the Buffett books before. So not to kick the guy wise down again, although I did see a tweet that said basically, like, yes, Klarman made 4% for a decade on his fund, which is cash, like returns, I guess, basically. But he probably earned over $300 million in management fees on his $20 billion in vested capital. So he probably did okay. Still, here's one that my brother sent me. He said, did you see this hedge fund story? I did not. Hedge funds have. This is from Reuters. Hedge funds have charged their investors $1.8 trillion in fees from 1969 to the end of December 2024. So I guess 1969 is when the. What was that guy's name? And more money than God. The first hedge fund guy.

[Ben Carlson]

Oh, Alfred Winslow, I think.

[Michael Batnik]

There you go. Over the past 55 years, hedge funds have kept roughly half of the money they made from trading profits. So from fees, all the profits that have ever been earned in hedge funds, the hedge fund managers have kept half of that, which is an insanely high number. And look at this. They show the total. They show the top 20 managers and plus all other managers in the total. And basically, if you weren't in the top 20 managers, they, they themselves earned, I don't know, a third of the total gains just in the top 20 managers alone.

[Ben Carlson]

So we, I mean, we know this, right? Like, if you can get into one of the top performers, you're going to have fantastic returns and the fees will have been well worth it. And if you can't, you're. It's not.

[Michael Batnik]

And they, they said those ones charge even higher fees. They could be like 3 and 30 or 2 and 30 or whatever it is. It's the whole Ray Dalio thing. He said there's 8, 000 pilots in the air or 8, 000 planes in the air and 100 good pilots.

[Ben Carlson]

Yeah, I don't believe that he. That's made up.

[Michael Batnik]

What is that?

[Ben Carlson]

How does he know there's 100 good pilots? I mean, listen, it's a good, like, it's a good analogy. It's a good baseline for an analogy, but it's completely made up.

[Michael Batnik]

Remember the Justin Timberlake movie with Mina Mila Kunis? Like the Friends with Benefits one? And his whole shtick is that there are no good pilots. The plane flies itself and the pilots aren't as good as they say they are.

[Ben Carlson]

I don't remember that line. But I will say Justin Timberlake. I enjoyed him on screen. One of my favorite movies. One of my favorite garbage movies of all time. Like Truly Alpha Dog. You ever see that one?

[Michael Batnik]

Bruce Willis, bad movie.

[Ben Carlson]

I forget the name of the kid who plays it, who's the main character.

[Michael Batnik]

But, but I agree there's gotta be good pile teller because you've had a rough landing in your time before, right? And a, and a. On a. Like I feel like the landing itself, that alone, even if the plane is flying itself the whole rest of the time.

[Ben Carlson]

Have landings gotten better over time? I feel like it's been a while since I had a rough one. Did you see the tweet that was going around over the weekend about this guy saying like, oh, everything's so hard to navigate these days and oh yes, nothing works. And now this guy is a anti monopoly attorney, I believe so he's got a vested interest in, in. In seeing.

[Michael Batnik]

Life is so much easier now than it has ever been.

[Ben Carlson]

Like, just even last night, this is a minor example. I put air in the tire and remember back in the day you had to use stuff like fine quarters and you would go from machine to machine and they were.

[Michael Batnik]

You had that measurement thing that like the thing would come out at the end.

[Ben Carlson]

Well, true, but then, but then in came the air machines at the gas station and they, they never worked or they lasted for 30 seconds. Now you tap your Apple pay, the machine goes on, it lights up, you.

[Michael Batnik]

You set the tire pressure, you set the psi.

[Ben Carlson]

It shows you what it. It's so easy. And there's just a million examples. I was listening this morning to the rewatchables Before Sunrise, which I've only seen once, and it was one of the most enjoyable moving movie viewings I've ever had in my life. It was just, I don't know, I probably saw it five years ago.

[Michael Batnik]

The first two movies are like two of my favorite movies of all time.

[Ben Carlson]

Unbelievable. So anyway, in the, in the, in on the podcast, they were talking about like life pre Internet and how if you met somebody like, and you had a great connection and you lost their phone number, like they were just gone forever, there was just no way that you would find them again.

[Michael Batnik]

I remember if you try to meet a friend somewhere and if you weren't at the same right place at the right time, like you just sat there and waited. There was no like, hey, I'm over here text.

[Ben Carlson]

Yeah, I was sat there. So I didn't experience that because like in 1999 I was 15, so you were a little bit older. Than I was. But yeah, life is easy now. Come on.

[Michael Batnik]

It is much easier.

[Ben Carlson]

All right, we got, you know, it's been a while actually since we got a question about levered ETFs.

[Michael Batnik]

Did you see the Nvidia ones yesterday? The Nvidia three times levered ETF was down 50 some percent. The two times was down 30. Whatever. Which you would expect.

[Ben Carlson]

But I'm not going to lie, I was tempted to buy NVDL at the close. I didn't cuz I just don't.

[Michael Batnik]

The two times. One the three times.

[Ben Carlson]

I don't want to get into that behavior, but I thought about it.

[Michael Batnik]

Just buy it for a quick balance.

[Ben Carlson]

Yeah. So all right, you know, like I'm a young person, I'm contributing. Why wouldn't I just buy. And I think the ticket that they gave was upro. You pro is a triple levered ETF, I believe. Is that right? Upro ETF from pro shares. Yep. Three times daily performance. Okay, so I went back three years and over the last three years the S&P is up 45%. Pro shares is up. I'm sorry, upro is up 70%. So barely. Barely twice as good in fact. Barely. Really not even close to twice as good. With a drawdown that. With a 45% drawdown. 50% draw. Yeah, who needs that? Come on. Who needs that? These products are not meant to be bought and held. I don't know how many times we could say that.

[Michael Batnik]

Even the purveyors of these products say that. These are not.

[Ben Carlson]

These are trading vehicles we've had on people from direction many times. And they basically invented this category and they're like, this is a trading vehicle. Do not buy and hold this. That's not what it's for.

[Michael Batnik]

The thing is if you look at like the two time NASDAQ 100, the performance is otherworldly. But it's also, you put it in context of a time when a raging bull market with not a lot of volatility and how about this?

[Ben Carlson]

In 2020 this thing lost 65%.

[Michael Batnik]

Oh no.

[Ben Carlson]

I'm sorry, I'm sorry, I'm sorry, I'm sorry. In 2020 it lost 71, 77% in three weeks. Could you freaking imagine?

[Michael Batnik]

That's Great Depression in three weeks.

[Ben Carlson]

Yeah, you can't stick with this. What are you nuts?

[Michael Batnik]

So we're recording. This market just opened on Tuesday and Nvidia is up 1% or so at.

[Ben Carlson]

The open half a percent.

[Michael Batnik]

Okay, I. You must be. Is one of us behind or is one of Us ahead.

[Ben Carlson]

What do you think?

[Michael Batnik]

I don't know.

[Ben Carlson]

You definitely use 15 minute delays. No offense.

[Michael Batnik]

No way. Mine, mine says real time 9:33. I would have expected like a 5% bounce today in Nvidia after falling almost 20% yesterday. I don't know what that means, but yeah, maybe your levered one. You would have got out for like a little minor gain and that's it.

[Ben Carlson]

Yeah. So. All right. Interesting, interesting. From Ben Johnson. Man. Remember when Spy was the king of the world, the ETF world? It's still the ETF to me.

[Michael Batnik]

When I plug in an ETF into any of the. Into Y charts, whatever, SPY is the one I use the most still.

[Ben Carlson]

Yep. Sorry, voo, ivv, nothing but respect for you, but it's still Spy to me. However, Ben Johnson shows that. And Ben Johnson is at Morningstar. Remember a couple, a couple of months ago, I was like, I'm just throwing around these names, assuming that everybody knows who we're talking about. And I said that in the future I was gonna say who these people are. I don't think I've done a good job on that. Okay, well, Ben Johnson, our friend at Morningstar, great analyst there, tweeted the ETF, SN, S and Preakness. Not bad start as a one horse race in 1993 with Spy. Today, there are four in the field and then the chaser. The market share is setting up for a photo finish among the top three. And he looks at the market share of IVV, SPY, Voo and SPLG, which not even worth mentioning. And wow, SPY had again 100% back in the day and it's about to be eclipsed by what passes it. First, I'm going to say voo.

[Michael Batnik]

So I suppose what this chart is really showing is the massive importance of the platforms for BlackRock and Vanguard and fees.

[Ben Carlson]

Because Spy, I know it's not a big deal, but they're stuck at nine because of their relationship with S and P. Like they, they just can't go lower. So IVV and V are at three basis points.

[Michael Batnik]

Yeah.

[Ben Carlson]

Okay, this is. I don't know if concerning is the right word, although it's not great. Kevin Gordon from Schwab tweeted, so far this month, There were just 98 companies where at least one insider purchased company shares, versus 447 at which at least one insider sold. That buy sell ratio is on track to be the lowest record, lowest on record going back to 1988. So if insiders aren't buying their stocks as much as they're selling them.

[Michael Batnik]

Do you think they were just waiting for the because of the 2022 bear market though that they've been putting off sales until things came back that.

[Ben Carlson]

I don't know. I don't know. But it also makes sense, right? Like if you're an insider probably already so much of your compensation is tied to your, to the stock and it's been nothing but up and to the right. So like why would they be buying their own stock?

[Michael Batnik]

Right. Yes. Sitting on massive gains.

[Ben Carlson]

Right. Because they're already probably getting issued a ton anyway. So.

[Michael Batnik]

All right, let's talk about the economy. This is from our friend Colin Roche at Discipline Funds. Is that a good bio for you? He says one of the most important pieces of the news was the new tenants Rent index. NTRI leads the actual CPI rental data and came in at the lowest rate of change at this cycle, down 2.5%. This has been and continues to be the main reason why I'm not worried about inflation flaring up again. So there have been people who said like I'm worried inflation's coming back. Cullen is not there. Rental. The rental index continues to fall and again is negative on a year over year basis. That's good news, correct?

[Ben Carlson]

It's great news.

[Michael Batnik]

Rent prices are falling. I don't know how long it's going to last because they're not going to be building any more Apartments with 7% mortgages. But for now it's great. Just talk to me again in two years when it's going back up.

[Ben Carlson]

Bookmarked, noted. We've discussed this in the past. This chart comes from. Who is this from? Looks like it's Goldman Sachs. Goldman, okay, rolling 20 year volatility of US real GDP growth. And yeah, things are much calmer in the economy, hard as that may be to believe, than it was in the past, like dramatically so there's a lot.

[Michael Batnik]

Of people who really hate the Fed and who really hate government spending. But you could say that those two things have basically helped make the economy way less volatile.

[Ben Carlson]

Okay, counterpoint. Have you seen the price of eggs? I'm just kidding. But seriously, have you seen the price of eggs? So look at this chart from Mike Zakari throwing it in the doc now. The he shows the price of eggs. The three are average where prices are in 2024 and where prices were in 2025.

[Michael Batnik]

So I see this.

[Ben Carlson]

A dozen eggs up $4 year over year. It's too much, Ben. I don't like it.

[Michael Batnik]

So let's say you buy a dozen eggs a week Right. Let's call that fair for some. Most families.

[Ben Carlson]

I'm a dozen egg guy.

[Michael Batnik]

And eggs went from $4 a carton, that we call them a carton from $4 for a dozen to $8 for a dozen. That seems like a huge price increase. That's $16 a month. $16, that's. You can't even buy a Applebee's meal for that anymore. Is it really worth losing your mind over for $16 a month? I understand people buy a lot, but I understand people getting mad about gas prices. I don't understand the infatuation with eggs because how much of the needle is it really moving? You would have to buy a lot of eggs for it to really impact your budget. That's all I'm saying.

[Ben Carlson]

I don't think anybody's necessarily up in arms. It's just know it's a chart.

[Michael Batnik]

It's. I think it's also just one of those things that people latch onto and okay, this is from the Wall Street Journal. They are a little worried about because Americans are carrying big credit card balances. So JP Morgan said in its most recent quarterly report, higher revolving credit card balances where the amount of people don't pay off. Right. Those are the amount that doesn't get paid off each month. The proportion of people making the minimum payment is above pre pandemic levels. Same thing from Capital One CEO said the same thing on an earnings call. You can see the revolving credit card balance fell dramatically during the pandemic and came back. It looks to me like it's on the same trend as 2013. It's just kind of back in that trend. But they also show the share of credit card holders making only minimum payments and it's up to 11% and it's about as high as it's been since 2020. And my main takeaway here. Now that sounds bad. My main takeaway here is that this number is always right around 8 to 10%. I don't know how important these people are to economic activity. I'm not trying to marginalize a group. But if 2% of the population is now just making the minimum payment on their credit card balance, I guess you'd call. I don't know if you'd call these people subprime or whatever it is, but are they really moving the needle? If you're forced to make just minimum payments on your credit card, are you actually moving the needle for the economy and should you really worry about this?

[Ben Carlson]

All right, I think that the second chart, the share of credit card Holders making the minimum payment is much more important than the, the revolving credit card balance because the, the denominator is what matters. And to your point, Ben, it's higher than it's been in the past, but it's, it's always like this. So it's always in a range of between 8 and 10%, and we're a little bit higher than that now, so. Yeah, but it's not great. I mean, obviously you don't want to see this.

[Michael Batnik]

No, it's. That's the worst financial move you can make. Paying a minimum payment on your credit card and rolling a balance over.

[Ben Carlson]

Yeah.

[Michael Batnik]

Bar none.

[Ben Carlson]

Yeah.

[Michael Batnik]

Oh, this is a good substack. People were debating this on Twitter. It's called the purse. And they have this home economics thing where they, they look at someone's actual budget. And this is the kind of stuff that always, always, always makes people on social media mad. I feel like some people would probably rather have their Google search history be put online than their budget because it's impossible to have a budget online and not get someone mad. So they went through all the numbers and it's a 38 and 39 year old in Brooklyn and they make like $400,000. And they say that their take home pay after taxes and stuff is like, is 25 grand. They live in Brooklyn and they go through their checking account balance, their emergency.

[Ben Carlson]

Funds, and they have, I'm just reading this. So checking account balance. All right, what's the big takeaway here, Ben?

[Michael Batnik]

So they, they have like, I don't know, 200 grand in retirement accounts between a 401k and a Roth. Their monthly contributions to retirement plans are almost $2,500.

[Ben Carlson]

All right, so 10%, not bad.

[Michael Batnik]

So 10%, so not terrible. A lot of people are saying like you make $450,000 and you're only saving 25. That, that's a way small number. So they're saving 30 grand a year. I think that's actually pretty decent, especially if we're in Brooklyn. And then he says they own a $1.5 million townhouse in Brooklyn and their mortgage is like six, five hundred dollars.

[Ben Carlson]

Dude. People get, people get really triggered when they see the economics of how people spend money in high cost living areas.

[Michael Batnik]

Yes.

[Ben Carlson]

If I made $400,000, it's like, dude, right? Calm down. Every.

[Michael Batnik]

I didn't get as people were debating this one.

[Ben Carlson]

I just think, what were the talking.

[Michael Batnik]

Points just why aren't they saving more? Why aren't they wealthier? A lot of these things like that, But I think if you and all your group of friends all wrote down your back of the envelope budget for every month, here's how much I make, here's how much I save, here's how much I spend, here's what I spend on. I don't think anyone would agree, like, oh, that looks pretty reasonable. Everyone would have a problem with someone else's budget. Yeah, right. There's no budget that someone looks at and goes, perfect. That's nailed it. You're, you're great.

[Ben Carlson]

I feel like you probably have a perfect budget, let's be honest.

[Michael Batnik]

No, no, no, no. You'd look at my, you'd look at my spending on clothes and shoes and you'd say, what's wrong with you? Okay, yeah, everyone has something like that, but I think everyone should have something like that.

[Ben Carlson]

Yes, that's what the money is for.

[Michael Batnik]

Yes, exactly. All right, I got one more thing on.

[Ben Carlson]

I do, I do feel like the money, money is to be spent however people want to spend it, as long as they're being like, reasonably responsible. All right, if you could be saving a little bit more, who cares?

[Michael Batnik]

Yes, I, I, the only people who I have a problem with are like, you don't say any money.

[Ben Carlson]

Pick up pickup truck drivers. Ben, we know.

[Michael Batnik]

I'm just saying if you're spending extravagantly, not saving anything like that, that's, that's the problem.

[Ben Carlson]

That's irresponsible. It's 9:48am Eastern Standard Time. Nvidia has undercut the lows from yesterday. Ben, back to you.

[Michael Batnik]

Okay, that was good. That was a good traffic update. Brian Armstrong from Coinbase CEO talking about regulation and this, this number, I think blew a lot of people away there. Certainly blew me away. He's talking about. Regulators need to understand that applying for approval for each new crypto coin. Do you still call that. That sounded really. Boomery is totally infeasible at this point. They can't do 1 million a week. So he's saying that there's 1 million new coins being created every single week, which, absolutely, to steal your phrase, blew my face off. If you would have told me a hundred or a thousand, I would have been surprised. A million. I mean, I guess the whole thing is, that's the whole point of this infrastructure is it's easy to start and plug in. I never in a million years would have guessed. If you'd have said, guess how many new crypto tokens are being created a week? I never would have guessed a million ever.

[Ben Carlson]

Dude, there's gonna be a hundred new ETFs a week. James Seifert over at Bloomberg tweeted, Tuttle Capital just filed for 10 different leveraged crypto asset ETFs. So including the two time long Melania ETF. Like, are you kidding me? Who needs this?

[Michael Batnik]

This is just playing up to the degenerates.

[Ben Carlson]

Two time long Trump coin. Sure. Awesome.

[Michael Batnik]

So this is one of those things. Where is deregulation in crypto actually going to be a net positive or not? And a lot of people in crypto seem to think so.

[Ben Carlson]

I don't, I don't buy the fact that like, oh, all of this supply going to drown the market because nobody wants any of this supply. You know what I mean? Like the 850th thousand. I can't even say that word. You know what people want? Bitcoin and whatever, some other like. But the amount to supply, yeah, it's.

[Michael Batnik]

It'S wild, I guess it's like podcasts, right? There's a million podcasts, but the top 5% of them drive all the traffic and revenue or something, I think.

[Ben Carlson]

So, Ben, I want to play from you a quote from Larry Fink. Larry is the CEO of one of the largest asset managers in the world, blackrock. And the tone, his tone, like many others, has changed just a little bit over the past couple of years. Tell me if you could, if you could sense a difference, Ben. Okay. Of what he used to say a few years ago compared to what he's saying today.

[Michael Batnik]

Okay. I'm pretty sure I watched this on cnbc, but let's hear.

[Ben Carlson]

Okay.

[Michael Batnik]

Every time I hear his name, I think about. You see what happens, Larry? You see what happens, Larry?

[C]

If you're frightened of your debasement of your currency or you're frightened of your economic or political stability of your country, you can have an internationally based instrument called Bitcoin that will overcome those local fears. And so I'm a, I'm a big believer in the utilization of that as a, as an instrument. And so if that becomes true, and you know, and you see that it, it is, it could be a proper hedge against maybe hope, security or equities. The question is, could you see a 2 or 5% allocation? I was with a sovereign wealth fund during this week, and that was a conversation. Should we have a 2% allocation? Should we have a 5% allocation? If everybody adopted that conversation, but, you know, it would be 5006-000007-00000 for Bitcoin.

[Ben Carlson]

But does it also.

[C]

I'm not, I'm not promoting it, by the way. So that is not my promotion or.

[Ben Carlson]

Ben, how much can I put you down for? It is wild. I mean, all of these people were so negative. And I don't. I'm not throwing shade, like. But anyway, it goes to your point. Like, it's deregulation. Bad crypto. Could it be bad for crypto? No. Is a short answer fair?

[Michael Batnik]

Yeah. So it is funny. If the ETF would have just gotten approved earlier, people's opinions about bitcoin would have changed quicker.

[Ben Carlson]

Yeah.

[Michael Batnik]

Right?

[Ben Carlson]

Yeah. All right. The guys threw up a good survey on the YouTube channel. What type of work environment would you most. Most prefer? And the choices were in the office Monday through Friday, a hybrid or a remote. And this is probably about what I would expect. I'm surprised that in office got 15% because I would think, like, who wants to be in the office five days a week? Remote got a third of the votes. And hybrid, which is what I do, it's 53%. I can't tell you how incredible. And I understand I'm privileged to say this. I know a lot of people don't have this luxury, but everybody at our company does. The ability to work from home on certain days and then also be in the office with your colleagues on others is beyond words. It's Monday through Friday is really tough.

[Michael Batnik]

You can't put a price on that. Right?

[Ben Carlson]

Yeah.

[Michael Batnik]

I. I think there are some of the people who say in the office. I think there are some people who love the camaraderie.

[Ben Carlson]

Oh, yeah. Hey, Jerry, how was your weekend?

[Michael Batnik]

Knowing me, that. That is not me right in the. But everyone knows that person who just spends their whole day walking around and socializing.

[Ben Carlson]

And Barry is. Mr. How's your weekend?

[Michael Batnik]

Yeah.

[Ben Carlson]

Oh, yeah. Good. Let me tell you about mine.

[Michael Batnik]

Yes. But that doesn't surprise me. And getting back to your comforts of today, the ability to work from home. I think this is the thing that people still don't appreciate enough coming from the pandemic. And obviously not everyone, as you said, gets that luxury. But the fact that we just kind of had a pandemic and this. This is the outcome is. Is just. It's kind of amazing if you think about it. You. How many hours a week do you save of being on a train versus what your life was like before all of the hours.

[Ben Carlson]

Now, listen, anytime we talk about, like, the pandemic and how lucky we are, obviously, I feel like, awkward about it because there are a lot of people that don't have the luxury that we do. And also let's not forget that like literally a million people died. So, you know, with that obvious understanding, it is, it is just a before and after for sure. All right, this was an interesting email. Hey guys, in the past you've talked about the wealth horseshoe effect, where a certain upper bound of money becomes burdensome. It's a really entertaining discussion, although not one that I'm remotely close to wrestling with. I think, you know, who, who, who among us are. Where do you think hiring a full time private chef fits into the wealth spectrum? Never. Yeah, he went there.

[Michael Batnik]

Okay.

[Ben Carlson]

Can I tell you what I'm, you know, I like cooking. You know what I did last night? Not that you asked, but I'll tell you, I made, sauteed some shrimp in like teriyaki sauce and I, I made my own cauliflower rice. Not that it's that hard. You put it, you just put it in a blender and you just shred it up and. But I like cooking.

[Michael Batnik]

I, that's not even. A private chef is not even like a 0.1% or not a 1% thing. It's like a top 0.1% thing. That's, that's pretty upper echelon stuff. I don't, I don't know how much it would cost.

[Ben Carlson]

How much does the private chef cost? I mean, that's crazy talk.

[Michael Batnik]

Let's put it this way. We have, we have a, we have a range of clients at our firm in terms of wealth and having conversations with them. I've only ever heard of it one time with one of our clients.

[Ben Carlson]

So it's, you know, interesting question. But this might be the, this might be the question that has the least relevance to anybody listening.

[Michael Batnik]

Yeah. Yes.

[Ben Carlson]

I don't think a single one of our listeners has a private chef. And no offense to all of you, including Ben and I, I don't think any of us will ever have a private chef. But it is interesting, I guess.

[Michael Batnik]

Yeah. I think it could actually be kind of awkward just walking in and have someone in your kitchen. Yeah.

[Ben Carlson]

How many meals a day do you eat? What do they do the rest of the time?

[Michael Batnik]

But I mean, it would be pretty amazing to be like, just give me my favorite tonight. Give me the usual. That, that part of it would be pretty cool counterpoint.

[Ben Carlson]

It destroys, it destroys like the joy in eating, Right. If you have like great food for every meal, it's like, that is true. There's something like this. Like you have a peanut butter and jelly and then you have like a steak. And like the steak is like oh, it's like a treat.

[Michael Batnik]

Yeah. Make it a treat. Also, if you have a private chef, do they clean up themselves? Like, who does the dishes? If I have a private chef, I don't want to do the dishes, too. I want them to do the dishes.

[Ben Carlson]

I'm a big dishes guy, as you know. You saw my dishes last night.

[Michael Batnik]

Like a bomb went off. Honestly, if my wife did that, I'd talk. I'd give her divorce papers. If my wife loaded the dishwasher like.

[Ben Carlson]

You do, they come out clean.

[Michael Batnik]

No way. There's no way. It's like dishes on top of dishes. I don't know how it closes. You take your top rack off?

[Ben Carlson]

No.

[Michael Batnik]

Okay. All right.

[Ben Carlson]

I will take a video unveiling of the dishes and show you spotless.

[Michael Batnik]

All right. You must have a really good dishwasher. Story time. Monday nights are pretty busy for us, the Carlson family, as far as practices go. Right. My daughter has soccer and basketball back to back, and my other daughter has soccer. So it was my night to drive last night. So I, I drop, pick up one of the teammates, drop the older daughter and her teammate off at basketball, then take the younger daughter to soccer. Right. And then I'm going back to get basketball and then back to soccer, pick everyone up. So I'm waiting for my daughter at soccer, but it was like a blizzard last night. It was dark and it was windy and snow everywhere. And I'm parked right in the front, ready to go.

[Ben Carlson]

Yeah, the Midwest is going to take over the world fair.

[Michael Batnik]

Hey, make it a treat, right? We appreciate summers more.

[Ben Carlson]

True.

[Michael Batnik]

So there's this guy trying to back into a spot, and he's holding up the line, trying to back into a spot.

[Ben Carlson]

Oh, come on, man.

[Michael Batnik]

Right. Yes. There's a line of people waiting, and he's trying to back in right next to me.

[Ben Carlson]

What type of car are we talking?

[Michael Batnik]

Suv, a Chevy Traverse or whatever. And he's backing up and backing up, and he's so far off that he is literally backing up right into me. And he probably gets within. It looked like he was within 3 inches of hitting me. And I'm sitting in my car and.

[Ben Carlson]

I'm looking at him, and, you know, objects in the rearview mirror are closer than they appear.

[Michael Batnik]

Yes. But you have. You have the. Everyone has the camera now. So then he straightens it out and he does it again, and this time he is within a papers razor's edge of hitting me on the side. And I'm sitting in my car going.

[Ben Carlson]

Oh, is this a hunk?

[Michael Batnik]

And then finally He. He repositions.

[Ben Carlson]

How are you not honking? How are you not honking?

[Michael Batnik]

Okay, this is what I was going to ask. Finally, he gets in, and he's so close to my door, I literally cannot get out of the car. And he, like, sits in his car and goes, like, nailed it. Should I have honked? I did not honk. Midwest.

[Ben Carlson]

Should you have honked?

[Michael Batnik]

I. I should have honked, huh?

[Ben Carlson]

Should you have honked?

[Michael Batnik]

I didn't want to scare him and have him hit the gas and nail me.

[Ben Carlson]

You should have put your head out the window and screamed.

[Michael Batnik]

I was screaming inside of my car. But, yes, I was not. Obviously, he didn't. He didn't know that I was in my car. Right.

[Ben Carlson]

Anyway, wait, so how did this resolve itself? You get out of the.

[Michael Batnik]

I literally had to climb out over of the passenger side of my car.

[Ben Carlson]

Dude, come on.

[Michael Batnik]

Yes.

[Ben Carlson]

Have some self respect. You climbed over the pen?

[Michael Batnik]

Yeah, that was pretty bad. All right, recommendations? Oh, I got a question for you. Okay, so I'm doing a little remodeling of my office so my kids. You can't see it. I'll send a picture for YouTube to Duncan, but my kids said, hey, your walls are too white in your office. You need to hang some stuff. And so they, for like, the last two years, have. Every time they come to my office, they hang a picture of theirs. And so my whole wall now is just kids pictures from school that they've drawn. It actually looks kind of cool, but I said I need to, like, class it up in here a little bit. And maybe this is College dorm room classing it up. But I bought three posters from Amazon of my favorite finance movies. What are those movies? Okay, again, this is maybe College dorm Room, but I don't care. So tell me what. What movie posters did I buy for finance movies for my office?

[Ben Carlson]

Okay, I've got, like, five, but I think. I think within the five, I'll get the three, right? Wall Street, Margin Call, Boiler Room, the big short.

[Michael Batnik]

Okay, stop at the first three. You got me. I'm too easy. That was it.

[Ben Carlson]

So, Wall Street, Boiler Room, Margin Call.

[Michael Batnik]

Yes.

[Ben Carlson]

Can I see these posters?

[Michael Batnik]

Oh, I don't. I. They're wrapped up. I got to. I still got to hang them.

[Ben Carlson]

So you got. You have to frame them. You're going to get them framed?

[Michael Batnik]

Yes. College Dorm Room, maybe. Do I care very much.

[Ben Carlson]

It screams I'm in finance, but I also won't honk at you if you back your me.

[Michael Batnik]

Exactly. All right. Gladiator 2 came out on Paramount plus my wife and I watched it two and a half hour long. I think Gladiator 1, the first one is one of my. I think it's one of. It's. I think it's probably the best movie of this century. If not, it's in the running. Yeah, absolutely. Love it. So this movie was totally unnecessary. I actually thought the first hour or so I was like, oh, this is pretty good. Then we kept watching and they get to the part where they put sharks in water in the Coliseum. I don't know how they ever would have gotten sharks back in the day. Like how they would have caught sharks and then put them in the Coliseum and take them out of the Coliseum. Maybe I'm nitpicking. It wasn't good. It wasn't bad. I thought Denzel.

[Ben Carlson]

It wasn't bad.

[Michael Batnik]

I thought that there was enough breadcrumbs to the first one that I thought it wasn't bad. It wasn't good.

[Ben Carlson]

It was an abomination.

[Michael Batnik]

I know there's a lot of people who hated it. I didn't hate it. I was kind of entertained. Here's the other thing, though. Denzel Washington is one of my favorite actors ever. He mailed it in. Didn't put a self address on the. On the back. Didn't put a stamp. This was one of the most mailed in performances I've ever seen from a good actor.

[Ben Carlson]

So I was entertained. I didn't like, have a bad time watching the movie.

[Michael Batnik]

That's what I mean. It was. I was still kind of entertained.

[Ben Carlson]

The CGI baboons were horrendous, but okay. But I could say that I had a decent time watching it, but it was a piece of garbage. It felt like a movie that went straight to HBO back in like 2006.

[Michael Batnik]

Yeah, it felt like a Gladiator knockoff. I agree.

[Ben Carlson]

The quality was just horrendous. And Ridley Scott, I mean, I know he's. He's an older gentleman, but he's, you know, he's.

[Michael Batnik]

That is the biggest thing I thought, like, the quality of the first one was so.

[Ben Carlson]

Script was terrible. It was so bad. Again, I. I had a good time watching it, but it was a piece of shit.

[Michael Batnik]

That's what I mean. Yeah, it totally unnecessary. All right, so we watched a few 80s movies. My kids. I love sharing my old. Some of my favorite movies with my kids. We watched Goonies with my kids and my kids absolutely loved it. My daughter's like, where's. When's Goonies 2 coming out? I'm like, well, this came out in, like, 1985 or something, so maybe they'll make a new one. Probably not.

[Ben Carlson]

Can I tell you, the last time I saw Goonies, I was eating magic mushrooms, which I think is perhaps socially acceptable now.

[Michael Batnik]

Only if you microdose.

[Ben Carlson]

Okay.

[Michael Batnik]

If you macro dose. No, it's not.

[Ben Carlson]

So I macro dose. This was in 2000. What year did I graduate high school? 2002, I guess. And there's one scene where a skeleton prop, like, comes out of a. Of the wall to scare them, whatever. And my friend said, is that Willem Defo?

[Michael Batnik]

He said it straight face. That's pretty good. The part where they ask Chunk to tell all the bad stuff he's done and he's crying and he's talking about how he did fake puke in the movie theater and then everyone else puked. Perfect acting for the. I mean, I don't know. I love it.

[Ben Carlson]

Okay. I should watch it with my kids because. Yeah, I don't really even remember the movie that well.

[Michael Batnik]

And another one I watched with my daughter, Adventures in Babysitting. For some reason, this was a big one in the Carlson family household growing up.

[Ben Carlson]

Never heard of it.

[Michael Batnik]

It's not the greatest movie ever. It's a Chicago movie. Elizabeth Shue plays a babysitter. And honestly, without her in it, she's so good in it. It wouldn't be that good. But the whole thing is she has to pick her friend up from downtown Chicago from the suburbs, and she has all these kids with her that she's babysitting. And then hijinks ensues. Great 80s premise.

[Ben Carlson]

Yeah.

[Michael Batnik]

But the whole thing is that she needs. She gets a flat tire on the way, and they need $50 for a tire. And the whole movie is like how they can't come up with, like, $50 for a tire. This is in 1987. And again, I said I spent 350 on one a couple weeks ago. It's just funny to hear that number to be like, $50.

[Ben Carlson]

Yeah.

[Michael Batnik]

And that was, like, a big deal. Okay.

[Ben Carlson]

That's all I got. Okay. I watched on your recommendation, A Real Pain. What did you think I would think of the movie?

[Michael Batnik]

I thought you would like it.

[Ben Carlson]

Okay. I very much liked it. However, I know that we're very attuned to this. More so than most, I would say, more so than most movie viewers. I pride ourselves on the ability to distinguish where and how you watch a movie matters a lot. Hence me going to the theater, our airplane movie discussions. If I went to the theater and watched a Real Pain I think I would like it if I was on my couch and strictly watched it on as a standalone. I don't know how much I would have liked it, but I watched it on my iPad with the Knicks game on. On my main tv.

[Michael Batnik]

Oh, that's a horrible idea.

[Ben Carlson]

No, no, no. The next game was on mute.

[Michael Batnik]

Okay.

[Ben Carlson]

The next game was on mute, and I was, you know, back and forth. So in that setting, I very much like the movie. If I was just glued to the screen for 90 minutes or whatever, I probably would have been like, yeah, it was good, but I really enjoyed it.

[Michael Batnik]

It's a slowish.

[Ben Carlson]

Yeah. I mean, not a ton happens, but I. You know, two great actors. Okay. Conclave. Not for me.

[Michael Batnik]

That doesn't surprise me.

[Ben Carlson]

Yeah, just. Just not for me. I watched it. Yeah, not for me. Anyway, it was. It was nominated for. For best picture, which I guess, you know, makes sense. So here's the list. Anora the Brutalist, A Complete Unknown. Conclave Doom, Part 2. Amelia Perez. I'm Still Here. Nickel Boyz's Substance and Wicked. Any movies that you feel particularly strong about winning?

[Michael Batnik]

I mean, the only thing I feel particularly strong about is this is one of the worst lists in a long. Might be one of the worst lists in a long time. Are there any movies on here where you go, man, I mean, I saw.

[Ben Carlson]

Wicked and Dune Part two was incredible.

[Michael Batnik]

I just. There's no, like, stand up, like, in 20 years, I'm gonna look back at this movie and be like, that movie was amazing. I don't think there's any on this list that are gonna be like, that.

[Ben Carlson]

I loved Anora. Is it like Best Picture? I don't know. Yeah, you're right. Pretty weak list. Although my kids have watched.

[Michael Batnik]

My kids have watched Wicked like, five times already, and they listen to the soundtrack all the time. So they. They give the shout for Wicked here.

[Ben Carlson]

Okay, So I watched Meet the Parents for the first time in a long time. Like, in full. I watched it in full. Why did I watch it in full? Robin was sick last week, so I was sleeping in. In a room by myself and fired up.

[Michael Batnik]

You know, you told me that you did that. And then my wife got sick, had a little. Had some sniffles and coughs, and I said, I'm doing. I'm not. I'm sleeping in the basement.

[Ben Carlson]

Yeah, I didn't get sick. She had the flu. I didn't get sick. I know we know this. This is not Breaking Ground, but holy is that movie so funny.

[Michael Batnik]

I rewatched recently, too.

[Ben Carlson]

I have nipples Greg, can you milk me? Is really one of the best lines of all time. And the whole thing, the whole thing, it's just so, so, so good. And I, I haven't seen it for 20 years. You know, we saw it 100 times when it came out. So if you're, if you're a young person, if you graduated high school in 2015, watch this movie, perhaps peak.

[Michael Batnik]

Ben Stiller, like one of his better performances ever.

[Ben Carlson]

What a run.

[Michael Batnik]

All right, so almost 10 o'clock as we're finishing this up. Nvidia is up 1%. The NASDAQ 100 is up 60 basis points. Not, not like a coming back, storming, coming back, but putting up a fight. I think that this kind of thing happening is. I think it's really, it can't be too easy, right? The whole, like, I didn't like the fact that it was seemingly too easy for this AI stuff to be like, just add mag7 here. Have it. Control this space. Yeah, I kind of like the way this is playing out now. I want to see the back and forth.

[Ben Carlson]

Yeah.

[Michael Batnik]

The 2000s has to be one of the most exciting decades ever for financial markets. And the fact that we have social media to follow along for all the bad stuff about social media, and you and I have talked a lot about it, there is a lot of downsides to social media. Being able to watch this stuff play out in real time is absolutely one of the better parts of social media.

[Ben Carlson]

Yeah, no doubt, no doubt. All right, keep the emails coming. Animalspirits at the compoundnews. Com. Personal emails, personal responses. We'll see you next time.