The Compound and Friends

Episode: Million Dollar Payout, Oracle Earnings Preview, Risk On, the Case for Salesforce

Date: December 10, 2025
Hosts: Downtown Josh Brown (A), Michael Batnick (B)

Overview

In this episode, Downtown Josh Brown and Michael Batnick dive into the biggest Wall Street storylines of the week: an earnings preview for Oracle with a focus on its potential AI-fueled transformation, a debate over whether the current market is truly "risk on," the perennial question of lump sum vs. annuity windfall payouts, the headwinds and opportunity for Salesforce, and a healthy dose of skepticism about alternative investments. With real talk, charts, and banter, they break down what investors need to know right now.

Oracle Earnings Preview: AI’s “Systemically Important” Report

[05:14] - [18:32]

• Oracle’s Make-or-Break AI Report

  • Oracle reports earnings tomorrow, with high stakes for the broader “AI trade.”
  • Key Quote: "Probably the most systematically important print for the AI trade this week." – Josh quoting BofA’s trading desk [05:14]
  • The hosts clarify: "I think the analyst meant systemically important, not systematically… but this is a big one. Do you agree?" – Josh [06:08]

• Recap of Last Quarter’s Wild Ride

  • Oracle’s last earnings: shares soared over 30% on sky-high AI and cloud infrastructure guidance, despite missing estimates.
  • Michael recaps: "Cloud infrastructure revenue is on track to grow 77% this year to $18 billion... [CEO] expects it to reach $32B, then $73B, $114B, and finally $144B in the next four years." [08:04]
  • Michael shares: "This fundamentally changed the story of Oracle. Now expectations have been reset, investors have sobered up, but yeah, it's a very, very important report and I'm staying long to the print." [08:57]

• Key Storylines for This Quarter

  • Street expects $1.64 EPS on $16.2B revenue (+15% YoY).
  • Focus on: backlog/remain performance obligations (RPO), free cash flow, impact of capex, customer concentration risk, competition (e.g., Meta using Google's TPUs), and the strength/collectability of massive AI infrastructure deals (like OpenAI).
  • Josh’s skepticism: "It might be a situation where almost no matter what they say, it won't be good enough." [15:13]

• Potential Market Impact

  • Michael predicts a volatile reaction: "The stock is not going to meander tomorrow. I think it's going to be either up 10% or down 15%." [14:08]
  • Discussion on knock-on effects for other high-beta sectors, e.g., chips and power providers as Oracle is a massive AI data center buyer.

• Investor Perspectives

  • Michael discloses his position: "I'm up 3%. My average price is $215." [15:00]
  • Josh admits: "I'm not currently long... I'm sort of worried." [15:14]

Value Stocks: Fact, Fiction, and Global Winners

[18:36] - [25:15]

• Mega-Cap Dominance and Value's Supposed Comeback

  • Top ten stocks now represent 41% of S&P market cap, 32% of S&P earnings. [18:59]
  • Michael: "Everything hinges on the top ten. That's it. That's the story." [18:59]
  • Surprising chart: international value stocks (+35%) quietly outperformed S&P over past year, but few own or notice.
    • Josh’s quip: "Nobody owns those stocks... who is the reader? Other than me, you, Meb Faber, and like nine other losers. Nobody else cares." [21:10]

• Is S&P Value "Value"?

  • The S&P Value ETF’s largest holdings are Apple, Microsoft, Amazon—hardly value stories.
    • Michael’s snark: "In what universe is Apple a value stock?" [24:27]
  • Pure value indexes (which exclude the mega-caps) have far less AUM, few buyers.
  • They debate if real value outperformance requires Tech/AI stocks to suffer.

Lump Sum vs. Annuity: The Psychology of Windfalls

[25:59] - [32:55]

• The Scenario: A 20-year-old lottery winner must choose $1M lump sum or $1,000/week for life.
• The Math: Break-even is about 19 years; at 80, lifetime payout could total $3M.
• Behavioral Factors:
  • Michael: "There is a time value of money... but who's to say a 20-year-old would be able to properly handle a $1 million windfall? What if you blow it?" [27:18]
  • Josh: "There's a component to this where it's like, who are you? Not just how old are you, but what's your current financial situation?" [28:25]
  • Lump sum increases risk, but also potential compounding — yet psychologically, the steady drip can offer peace of mind.
• Memorable Moment: "The right answer is person dependent... the mathematical answer and the right answer are not always aligned." – Josh [31:59]
• Chat humor: "Take the million dollars and buy a million more lottery tickets." [30:37]

Market Mood: Is it Really “Risk On”?

[33:18] - [41:22]

• Mike’s Bull Case for 'Risk On'

  • Technology stocks up 11 days straight (extremely rare).
  • Small caps (Russell 2000), micro-caps, and equal-weight indexes breaking out.
  • “Risk sniffer” indicators: tight credit spreads, high-yield and beta, commodity proxies all bullish.
    • Michael: "This rebound is getting all the confirmation it needs... this is emphatically a risk-on market." [34:24]

• Josh Pushes Back

  • Big headline risk remains: example of JPMorgan stock tanking 6% in minutes after exec calls the consumer "fragile." [37:29]
  • Josh’s point: "In true risk on mode, we laugh at negative headlines... this market is more fragile." [39:08]

• Memorable Exchange:

  • Michael: "If Oracle reports a bomb tomorrow..." [36:16]
  • Josh: "In real risk on, we laugh at danger. Danger is our middle name." [39:08]

• Fed Cuts & Historical Market Performance

  • Data shows when the Fed cuts near an S&P high, returns are mixed short-term, but strong (+15% on average) after a year. [42:48]
  • Josh: "So slow your roll, everybody." [43:19]

When Alts Go Wrong: Yieldstreet/Willow Wealth

[43:25] - [53:24]

• Alt Investments: Illiquid and High-Fee Risks
  • Josh: "There have always been... prominent examples of really bad situations with alts... The public has no idea what the hell they’re buying." [45:25]
• Yieldstreet Becomes Willow Wealth
  • Yieldstreet, aimed at democratizing alternative investments, rebrands to Willow Wealth after $200M+ in customer losses on real estate and "marine loans."
  • Skepticism: "Anytime you hear 'democratize' and 'Main Street,' grab your wallet." – Josh [46:10]
• Cringe Commercials & Opaqueness
  • Michael highlights their bizarre "Hampton Dumpty" ads: "Literally, Hampton Dumpty. Can you even..." [48:41]
  • Josh and Michael roast their misleading, fee-free performance charts.
• Disclosures and Fees
  • Michael: "Financial indices assume the reinvestment of dividends and do not reflect the impact of fees. Well, excuse me..." [50:30]
• Takeaway:
  • Public market losses are common, but illiquid, high-fee, opaque products add additional, unique risks.

The Case for Salesforce (CRM)

[53:32] - [62:16]

• Recent Moves and Activist Involvement

  • ValueAct and Starboard Value have significantly increased their stakes; ValueAct has a board seat.
  • Last time activists got involved, the stock jumped nearly 100%.
  • Josh: "When ValueAct and Starboard... got aggressive in buying into the stock, they were able to help the thing almost double." [56:46]

• Investment Thesis and Risk

  • Salesforce trades well off its highs, amid fears of AI disruption.
  • Josh highlights: “This is a tax loss selling candidate where people are just unloading it into year-end. And oftentimes those are great bounce candidates in January.” [61:55]
  • Michael is cautious: "Their business model is certainly under pressure... It's not going to go away, but they're under assault by AI solutions that do Salesforce solutions better than they do." [58:30]

• Comparisons to Adobe

  • Both see activist pressure and concerns about AI disruption; both are considered de-risked after major sell-offs.
  • "Salesforce is not Polaroid, but... Adobe may be more likely to use AI to their advantage." – Michael [58:04]

Mystery Chart: Pfizer and Lessons from Value Traps

[62:26] - [65:41]

• Sector Rotation & Health Care's Slump
  • Michael quizzes Josh on a chart: It’s Pfizer — a former holding with flat performance post–M&A spree.
• Josh's Reflection:
  • "There are huge winners in this sector... and this [Pfizer] is just not one of them."
  • On value investing: "Sometimes when I become a dilettante in that area... it might pay off, but not systematically." [64:45]

Notable Quotes

• On Market Fragility:
  “In true risk-on mode, we laugh at negative headlines... This market is more fragile.” – Josh [39:08]

• On the Psychology of Windfalls:
  “The mathematical answer and the right answer are not always aligned, depending on who you are and what it is about yourself that's important.” – Josh [31:59]

• On Oracle’s High-Stakes Report:
  “AI will change everything, but right now AI is fundamentally transforming Oracle and the rest of the computer industry... Several world class AI companies have chosen Oracle... Training AI models is a gigantic multi-trillion dollar market.” – Larry Ellison, paraphrased by Michael [08:04]

• On Alts:
  "Anytime you hear 'democratize' and 'Main Street,' grab your wallet." – Josh [46:10]
  "Financial indices... do not reflect the impact of fees. Well, excuse me..." – Michael [50:30]

• On Value Indexes:
  "In what universe is Apple a value stock?" – Michael [24:27]

Timestamps for Key Segments

• Oracle Earnings Preview: 05:14–18:32
• Value Stocks & Global Outperformance: 18:36–25:15
• Lump Sum vs. Annuity: 25:59–32:55
• Risk-On Debate / JP Morgan Headline Risk: 33:18–41:22
• Alts Gone Wrong (YieldStreet/Willow): 43:25–53:24
• Salesforce Case Study: 53:32–62:16
• Pfizer Mystery Chart & Value Lessons: 62:26–65:41

Tone and Takeaways

The episode offers honest, no-spin perspectives on the week’s biggest market stories, mixing technical/financial rigor with personal stories and irreverence. Michael and Josh are quick to admit uncertainty and emphasize that in finance, the “right” answer often depends as much on behavior and psychology as on math.

For investors: pay attention to expectations, beware the dangers lurking in alts, and remember that sometimes the best investing questions don’t have clear-cut answers.