Podcast Summary: Ask The Compound – “What if the Stock Market Falls 30%?”

Date: December 24, 2025
Hosts: Ben Carlson, Duncan Hill
Guest: Eric Balchunas (ETF Analyst, Bloomberg)

Overview

In this final episode of 2025, Ben and Duncan tackle big listener questions on investing in a high-flying market—and what might happen if it falls 20-30% in 2026. They also address topics ranging from Bitcoin ETFs vs. buying crypto directly, how crypto and stock markets interact, if low gas prices mean recession, and turning an investment hodgepodge into an actionable retirement plan. Tonally, the episode is upbeat, frank, and laced with humor, as the hosts mix personal anecdotes and expert insights.

Key Discussion Points

1. Can the U.S. Stock Market Really Fall 30%?

• Framing the Big Drop:
  Ben opens by contextualizing massive recent gains in the U.S. market (24% in 2024, ~20% in 2025, and 26% in 2023), noting that a 30% downturn would only bring valuations back to early 2024 levels.
• Mindset Shift:
  Listener Boris proposes thinking of a 30% drop as “time travel” to earlier (cheaper) stock prices rather than disaster.
• Dollar Cost Averaging:
  Ben notes that for long-term investors using dollar-cost averaging, a drop can be an opportunity, not just a loss.
  • “A 30% decline would take us back to January 2024. Things were not so bad then, were they, Duncan? …It’s a chance to go back to those levels that most people now wish they’d bought more stocks at.” — Ben (22:05)

2. Bitcoin ETF vs. Buying Bitcoin on an Exchange

(with Eric Balchunas, Bloomberg ETF Analyst)

• Fees & Costs:
  • Buying Bitcoin on exchanges like Coinbase includes high transaction fees (often 1.5% or more) and wide bid/ask spreads.
  • ETFs have far smaller costs: no commission, ~2–3 basis points spread, and an annual fund fee of 20–25 bps.
• Who Should Buy What?
  • If buying once and holding 4-5+ years, direct purchase may be cheaper. But most don’t operate that way.
  • ETFs provide institutional-level custody, lower ongoing fees, and avoid personal security risk.
• Security & Storage:
  • ETFs partner with custodians like Coinbase for cold (offline) storage—much safer than personal wallets.
  • “If Coinbase were to get hacked, we’d have like a national emergency.” – Eric (10:24)
• Risks Unique to Holding Coins:
  • Risks of hacks, scams, or even personal kidnapping for passcodes—these don’t apply to ETFs.
• Crypto Purists vs. Mainstream Investors:
  • Many investors want convenience: “People want to outsource stuff. …Nobody wants the coin, really. They want to outsource this. Same with stocks, same with bonds.” — Eric (12:32)

3. Does Crypto Volatility “Cause” Stock Market Drops?

• Correlation Not Causation:
  • Recent data shows some correlation between Bitcoin and tech stocks, but causality flows from risk sentiment, not crypto to stocks.
  • “Crypto is not the tail wagging the dog. …Crypto is just a risk-on, risk-off asset." — Ben (15:57)
• Market Size Perspective:
  • U.S. stock market: ~$70 trillion. Crypto (all coins): ~$3 trillion.
  • “Crypto is not nearly big enough to cause a stock market correction. It’s just that the tech stocks were falling, so crypto is falling too.” — Ben (16:57)
• Notable Quote:
  • “The Venn diagram of people who own bitcoin and own a lot of tech stocks is probably a circle, right?" — Duncan (16:14)

4. Do Low Gas Prices Signal a Recession?

• Mythbusting:
  • Lower gas prices sometimes align with recessions (from less demand), but not always.
  • U.S. gas prices have remained low despite economic expansion in the ’80s, ’90s, and even now—thanks to increased oil supply.
• Notable Anecdote:
  • “Gas was like 92 cents a gallon [in 1997] … and the economy was booming in the ’90s.” — Ben (18:43)
• Conclusion:
  • At current, low gas prices are tied to abundant supply, not recession worries.
  • “Low gas prices right now… This is a good thing, this is not a bad thing.” — Ben (20:28)

5. How to Consolidate and Plan with a Large but Disorganized Portfolio?

• Case Study:
  • Ryan, age 46, earns $400K+/yr, with $3M+ spread across life insurance, 401k, and taxable accounts, targets $300K/year retirement income.
• How Much Is ‘Enough’?
  • Using the 4% rule, he’d need ~$7.5M saved for a $300K withdrawal (24:27).
• Advice for Wealthy Investors:
  • While online advice has broadened, most of the wealth management industry “is explicitly geared toward people like you” with significant assets.
  • “You need a financial advisor. …Take that hodgepodge and turn it into a well-oiled machine.” — Ben (25:13)
  • Tax, estate, and insurance planning is essential at this level.
• Industry Shift:
  • More advisors now serve “every level,” but high-wealth advice is still the norm.
  • “The wealth management industry wants you.” — Ben (26:47)

Notable Quotes & Moments

• “It’s not just because you waited too long and you’re starting late doesn’t mean all is lost. …That’s awesome to hear.” — Ben (02:43), on a travel nurse who 10x’d her retirement.
• “If you die skydiving, God forbid, no one can feel sorry for you, right?” — Ben, joking about risk tolerance (14:22)
• “Has there ever been a bad time-traveling movie? I say no.” — Ben (21:31)
• “We started the year under Mifflin holiday best!” — (Holiday sweater banter, 01:41)

Timestamps for Key Segments

• Bitcoin ETF vs. Exchange, with Eric Balchunas: 04:02 – 13:20
• Crypto and the Stock Market: 13:29 – 16:57
• Low Gas Prices and Recession Risk: 17:03 – 20:28
• Stock Market Drop = ‘Time Travel’ Opportunity: 20:46 – 23:27
• How to Consolidate a Wealthy but Messy Portfolio: 23:27 – 27:39

Takeaways

• A severe market correction may only feel like “losing recent gains”—and can be reframed as an opportunity for long-term investors.
• For most, a Bitcoin ETF is a simpler and possibly safer way to access crypto than owning coins directly.
• Crypto volatility is not sufficient to disrupt the U.S. stock market at present.
• Low gas prices are currently a boon, not a warning sign.
• Even high-net-worth individuals can benefit from comprehensive, goal-oriented financial planning.

This summary covers all meaningful content and practical advice delivered in the episode, omitting advertisements, intros, and outros for clarity and utility.