Podcast Summary: "Everybody's Wrong" – The Compound and Friends

Release Date: July 18, 2025
Guests: J.C. Parets (Founder and Chief Technician of Trend Labs)

1. Introduction and Milestone Celebration (05:31 - 07:30)

In this landmark 200th episode of "The Compound and Friends," hosts Josh Brown and Michael Batnick welcome their special guest, J.C. Parets, founder and chief technician of Trend Labs. Celebrating from Bryant Park in New York City, the hosts acknowledge the dedicated crew behind the scenes and set the stage for an insightful discussion.

J.C. Parets [07:30]: "You're such a dick. It's so perfect."

2. Understanding Trend Labs and the "Everybody's Wrong" Newsletter (07:33 - 10:22)

J.C. Parets delves into the origins and mission of Trend Labs, emphasizing the "Everybody's Wrong" newsletter. The newsletter aims to identify where market consensus falters, allowing investors to capitalize on overlooked opportunities.

J.C. Parets [09:30]: "Trend Labs is specifically what I'm doing, what I'm doing with my portfolio, what matters to me."

Michael Batnick highlights the unique contrarian approach of the newsletter, contrasting it with typical trend-following strategies.

Michael Batnik [10:42]: "A lot of technicians are trend followers and you are too, to some extent. But you also have this contrarian streak to you."

3. Bond Yields and Market Implications (12:00 - 17:00)

The conversation shifts to the significance of 30-year Treasury yields, currently at 5%, and their potential impact on the stock market. Michael Batnik raises concerns about a possible spike in yields leading to increased market volatility.

Michael Batnik [13:16]: "I feel like we're off to a horrible start."

J.C. Parets explains that it's not merely the direction of interest rates but the rate of acceleration that could destabilize markets.

J.C. Parets [14:07]: "It's more about the rate of acceleration and less about the exact direction."

They explore how rapid changes in the bond market can ripple into equities, citing historical patterns where swift movements led to significant market shifts.

4. Short Interest Analysis and Identifying Squeeze Opportunities (24:00 - 35:00)

J.C. Parets introduces a chart from Trend Labs showcasing hedge funds and asset managers' short positions, highlighting areas where the market consensus might be incorrect. The discussion emphasizes how high short interest combined with new stock highs can indicate potential short squeezes.

J.C. Parets [26:13]: "Everybody's wrong is, is not only identifying those who are wrong, but extracting dollars for our own selfish endeavors from those folks."

Notable examples like GameStop and Iron Iran illustrate recent short squeeze events, demonstrating the real-world application of Trend Labs' strategies.

5. Global Market Performance: A Wave of All-Time Highs (35:00 - 58:00)

The hosts and J.C. Parets review a series of charts showing global stock markets reaching new all-time highs, from Europe’s DAX and FTSE 100 to emerging markets like India and Brazil. This synchronized global bullish trend underscores the episode's theme that “Everybody's Wrong” regarding market pessimism.

J.C. Parets [56:36]: "This is Japan priced in yen, making all time highs. But if you price Japan in the dollar, you're going to see all time highs as well."

The conversation touches on the rarity of such global upward momentum, likening it to previous years like 2017, which were marked by low volatility and strong international growth.

6. Sector Spotlight: Biotech’s Struggle and Potential (59:00 - 66:00)

A critical analysis of the biotech sector reveals contrasting performance within ETFs like XBI. Despite high short interest and overall bearish sentiment, select biotech stocks show resilience and potential for breakout.

Michael Batnik [65:17]: "If rates come down, people think biotech is not going to rally? It always does that people buy small cap biotech stocks when interest rates are coming down."

J.C. Parets emphasizes the importance of individual stock analysis within the biotech space, noting that while many are undervalued, only a few may deliver significant returns.

7. Cryptocurrency Insights: Bitcoin Dominance and Market Sentiment (66:00 - 75:00)

The discussion shifts to cryptocurrencies, highlighting that the total crypto market cap has never been higher, yet remains insignificant compared to traditional markets.

J.C. Parets [47:58]: "It's completely irrelevant. A rounding error at best."

J.C. Parets points out the growing institutional interest, particularly noting that commercial hedgers are now net long on Bitcoin, contrasting with prevalent speculative shorts.

J.C. Parets [51:52]: "The smartest money in the world, commercial hedgers are the most net long bitcoin ever."

The conversation also touches on Bitcoin dominance dropping, which J.C. interprets as bullish for both crypto diversity and broader market risk appetite.

J.C. Parets [49:25]: "I think it's bullish for stocks. I think it's bullish for crypto."

8. Sector Importance and Contrarian Perspectives (75:00 - 80:00)

Back in the equities realm, the hosts debate the most important sectors, with J.C. Parets advocating for financials as the backbone of bull markets, while Michael and Josh emphasize technology due to its dominant market capitalization and growth.

J.C. Parets [39:03]: "I think it's on a case by case basis. In that group, it's hard to buy a basket, particularly the XBI because there's so many different things going on."

The discussion underscores the necessity of financials for financing market growth and the vital role of technology in driving earnings and valuations.

9. Contrarian Trades and Future Outlook (80:00 - 78:32)

Wrapping up, Michael pitches a contrarian trade on the biotech ETF (XBI), suggesting that prevailing negative sentiment and high short interest present an opportunity for significant upside as market conditions evolve.

J.C. Parets [63:18]: "If you are shorting the stock and buying Bitcoin to take advantage of the arbitrage, my point is, dude, you're betting that that orange line is not going to follow the black line."

The hosts reflect on past market behaviors, reinforcing the newsletter's philosophy that consensus opinions are often incorrect, and true opportunities lie in recognizing and acting against widespread market pessimism.

10. Personal Highlights and Closing Remarks (75:00 - 78:32)

As the episode concludes, the hosts share personal updates, celebrating J.C. Parets’s new lake house in the Poconos and Michael Batnick’s plans to attend a Broadway show with his child. They express gratitude to their listeners and crew, reaffirming their commitment to the podcast’s ongoing journey.

Michael Batnik [77:56]: "We'll see you on the 400th episode. We appreciate you."

Notable Quotes with Timestamps

• Michael Batnik [10:42]: "A lot of technicians are trend followers and you are too, to some extent. But you also have this contrarian streak to you."
• J.C. Parets [14:07]: "It's more about the rate of acceleration and less about the exact direction."
• J.C. Parets [26:13]: "Everybody's wrong is, is not only identifying those who are wrong, but extracting dollars for our own selfish endeavors from those folks."
• J.C. Parets [49:25]: "I think it's bullish for stocks. I think it's bullish for crypto."
• J.C. Parets [63:18]: "If you are shorting the stock and buying Bitcoin to take advantage of the arbitrage, my point is, dude, you're betting that that orange line is not going to follow the black line."

Conclusion

In "Everybody's Wrong," The Compound and Friends deliver a compelling exploration of current market dynamics through the expert lens of J.C. Parets. Emphasizing contrarian analysis and the identification of mispriced assets, the episode provides valuable insights for investors seeking to navigate uncertain financial landscapes. From bond yields and short interest to global market synchrony and the evolving role of cryptocurrencies, the hosts dissect multifaceted topics with both expertise and engaging camaraderie.

Listeners gain a deeper understanding of how consensus views can often lead to missed opportunities and how strategic contrarian moves, as advocated by Trend Labs, can potentially unlock significant market gains.