The Biggest Winners and Losers of 2024

Summary

Podcast Summary: The Biggest Winners and Losers of 2024

Episode: The Biggest Winners and Losers of 2024
Release Date: December 31, 2024
Hosts: Downtown Josh Brown and Michael Batnick
Guests: Various friends and experts
Podcast: The Compound and Friends

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1. Introduction

In a special supersized edition of "The Compound and Friends," hosts Josh Brown and Michael Batnick delve deep into the financial landscape of 2024. They explore the year's top-performing and underperforming sectors, stocks, investment strategies, and broader economic trends, providing listeners with expert insights and actionable takeaways.

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2. 2024 Market Overview

Major Index Performance

• NASDAQ: Achieved a remarkable 32% return, continuing the decade-long trend of large tech leading the market.
• S&P 500: Posted a 27% gain.
• Russell 2000: Returned 12%, reflecting solid performance in small-cap stocks.

Quote:
Josh Brown noted at [04:40] “A continuation of the past couple of years, dare I say decade plus of large tech leading the way.”

Mean Reversion Analysis The hosts discussed the lack of mean reversion in the market, emphasizing that the trends of previous years largely persisted through 2024.

Quote:
Michael Batnick at [04:47] stated, “It's cute to be a contrarian and think that just because it's January 1st, everything that happened over the last 12 months will stop and the trend will somehow magically reverse.”

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3. Factor Investing in 2024

Top Performing Factors

• Momentum: Dominated with a 48.4% return, marking a 20% annualized total return over the past five years.
  Josh Brown at [06:03]: “Momentum is the clear standout factor for 2024.”

• Growth: Returned between 2.38% to 6%.

• Quality: Yielded 27%, performing well in a strong market.
  Michael Batnick at [07:16]: “Only in a rip workable market could you say 27 is not bad.”

• Low Volatility: Gained 14.9%, appealing to conservative investors.

• Value: Returned 13.4%, continuing to lag behind growth stocks.

Dogs of the Dow Strategy The "Dogs of the Dow" strategy, which involves investing in the ten highest-yielding Dow stocks, underperformed by 14 percentage points, marking the fifth weakest performance in six years.

Josh Brown at [08:44]: “The dogs have trailed the actual Dow by 14 percentage points this year, which is the fifth weakest performance in the last six years.”

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4. Sector Performance

Best-Performing Sectors

• Communications: 36.6% increase, driven by giants like Meta and Alphabet.
• Financials: Rose 32%, with major banks behaving like fintech stocks.
• Consumer Discretionary: Up 29.5%, boosted by Amazon and Tesla.
• Technology: Gained 24.2%, led by software, semiconductors, Apple, Microsoft, and Nvidia.

Michael Batnick at [10:18]: “Three of the four worst sectors are three of the smallest sectors in the market: Materials, Energy, and Real Estate.”

Underperforming Sectors

• Materials, Energy, and Real Estate: Experienced significant declines.
• Healthcare: Notably the worst-performing sector, with many large-cap healthcare stocks lagging behind the bull market.
  Josh Brown at [10:40]: “Pfizer was my worst performer.”

Quote:
Michael Batnick at [11:22] highlighted, “Disgusting. So I think that if you're looking for some sort of regime change or maybe you want to get cute in 2025, this is pretty much blown all the way up.”

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5. ETF Growth and Trends

Record ETF Inflows

• Total US ETF Assets: Surged to $10 trillion, marking a significant increase from previous years.
• Active Equity ETFs: Grew to $897 billion, enjoying a profitable year despite being a fraction of the passive market.
• Active Fixed Income ETFs: Reached $1.7 trillion, following the trend of increasing ETF popularity over mutual funds.

Josh Brown at [13:41]: “We had a trillion dollars in inflows across the board.”

Private vs. Public Investing The hosts discussed the growing trend of private market investments entering public vehicles like ETFs, although they cautioned about higher fees and liquidity concerns.

Michael Batnick at [38:09]: “We are in the early innings of a secular shift from public to private.”

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6. IPO Landscape

2024 IPO Performance

• Total IPOs: 146 deals raising $29.6 billion, a 50% increase from the previous year.
• Despite structural challenges, including easier access to private markets, there was a notable uptick in IPO activity compared to 2023.

Josh Brown at [17:23]: “We did get a lift. So this year we did 146 IPOs worth $29.6 billion. Last year it was 108 deals worth $19.4 billion—a 50% increase.”

Future Outlook Expectations are that significant IPOs by companies like Stripe, SpaceX, Databricks, and OpenAI could further influence the market landscape.

Michael Batnick at [17:27]: “I think Stripe, SpaceX, Databricks, OpenAI—there are companies that people think are $500 billion or more companies at some point that they won't come public necessarily at that valuation.”

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7. Personal Investment Stories

Reddit Stock Example Josh Brown shared his successful investment in Reddit, purchasing shares at a significant dip and benefiting from the company's strategic moves, including partnerships and data monetization.

Josh Brown at [18:15]: “I bought Reddit at $112, and it's now up to $170. I'm up 50% very fast.”

Quote:
Michael Batnick at [18:37]: “Great trade, Great trade.”

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8. Mergers & Acquisitions (M&A) Activity

2024 M&A Trends

• Total M&A Value: $1.9 trillion across 17,574 transactions, slightly elevated from the previous year.
• Expectations for 2025: Anticipate a 50% increase with more spin-offs, acquisitions, mergers of equals, and private equity activity.

Josh Brown at [22:19]: “I think they're going to see all kinds of spin-offs, acquisitions, mergers of equals, more private equity activity as well.”

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9. Household Wealth and 401k Trends

Record Household Wealth

• US Household Net Worth: Reached a new high of $159 trillion, though concerns about wealth inequality persist.

Michael Batnick at [23:29]: “The world's 500 richest people have a significant portion of the country’s wealth, but there are many average ordinary people who have done very well for themselves as investors.”

401k Balances by Age

• Ages 55-70+: Average 401k balance around $250,000.
• Ages 30-50: Balancing towards the upper end, with expectations to reach $300k-$350k in the next decade.
• Young Adults (20-24): Average balance of $7,200, highlighting the need for increased saving and investment.

Josh Brown at [25:41]: “People above the age of 55 through 70 have average 401k balances of around $250,000.”

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10. Best and Worst S&P 500 Stocks of 2024

Top Performers

1. Palantir: Up 360% (added $139 billion in market cap).
2. Vistra: Gained 266.1%, the best-performing utility stock.
3. Nvidia: Increased by 176%.
4. GE Vernova (Spin-off of General Electric): Up ? (exact percentage not specified).
5. United Airlines: Benefited from increased consumer spending and travel rebound.

Michael Batnick at [26:23]: “Palantir is the stock of the year.”

Worst Performers

1. Adobe: Down 25%, possibly due to AI-related workflow concerns.
2. AMD: Decreased significantly despite Nvidia's strong performance.
3. PepsiCo: Fell due to price increase saturation and declining volumes.
4. Merck & Co. (M&A related uncertainties): Down 6%.
5. Johnson & Johnson: Declined 5%, lacking breakthrough products.

Josh Brown at [28:32]: “Adobe is down 25%, it's a software company involved in AI.”

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11. Consumer Trends

E-Commerce Surge

• US E-Commerce Share of Retail Sales: Returned to new highs, more than doubled over the past five years, reaching $1.16 trillion by September.
• TikTok Shop: Exceeded platforms like Sephora and QVC, driving significant sales through influencer promotions.

Josh Brown at [32:16]: “The percentage of things that we buy off the Internet is going much higher.”

Holiday Shopping

• Holiday E-Commerce Spending: Set new records with Cyber Week, Black Friday, and Cyber Monday showing 7-10% increases over the previous year.
  Josh Brown at [36:32]: “We spent $131.5 billion between November 1st and December 2nd.”

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12. Private Equity and Wealth Management Trends

Shift from Public to Private

• Increasing integration of private assets into public portfolios and 401ks, despite challenges like higher fees and liquidity issues.
• Survey Insights: Majority of wealth managers hold allocations between 1-10% in alternative assets, with a significant opportunity for growth.

Michael Batnick at [38:09]: “We are in the early innings of a secular shift from public to private.”

Skepticism and Caution

• Concerns about conflicts of interest, due diligence, and administrative burdens.
• Advisors are cautioned to evaluate private investments meticulously, avoiding high-yield promises and non-correlation claims.

Josh Brown at [42:44]: “If you're getting sold something, it's not great. What's the worst reason to invest in private? 14% yields. Not realistic.”

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13. Options Trading Trends

Record Activity

• Daily Options Contracts: Averaged 48 million in 2024, marking the fifth consecutive year of all-time highs.
• Amateur Participation: Increased from 23% to 29% of US options activities, indicating a shift from hedging to speculative trading.

Josh Brown at [48:50]: “Options are now prop bets.”

Michael Batnick at [49:00]: “We're all in. We're a nation of gamblers.”

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14. Notable Winners and Losers of 2024

Winners

• Elon Musk: Capitalized on significant political and business moves, including strategic ownerships and AI ventures.
• Peter Thiel: Benefited from Palantir’s stellar performance and his involvement in conservative politics.
• Michael Saylor (MicroStrategy): Achieved a 422.5% increase, heavily investing in Bitcoin.
• Jamie Dimon (JPMorgan Chase): His leadership drove a 45% total return, outperforming the S&P 500.
• Blackstone and Apollo: Both saw substantial gains, with Apollo up 85.5% and Blackstone up 34%.

Josh Brown at [52:09]: “Michael Saylor, I think he's one of the biggest winners of the year.”

Losers

• Gary Gensler (SEC Chairman): Faced challenges with ETF regulations and court losses.
• Elizabeth Warren: Did not achieve her regulatory goals despite strong banking performance.
• AMD: Lost significant market cap, contrasting Nvidia’s success.
• Carl Icahn: His stock plunged, reducing his net worth by $15 billion.
• Perma Bears: Consistently underperformed, reinforcing the risks of bearish investing during bull markets.

Josh Brown at [62:12]: “Carl Icahn is one of the people that has not won in 2024.”

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15. Conclusion

Josh Brown and Michael Batnick wrap up the episode by reflecting on the remarkable successes and notable failures of 2024. They emphasize the importance of understanding market trends, diversifying investment strategies, and staying informed about sector performances. The hosts encourage listeners to remain vigilant and proactive in their investment decisions as they prepare for the opportunities and challenges of 2025.

Josh Brown at [67:43]: “If you just buy both stocks, one of them is going to have a turnaround that maybe both that negates whatever the downside is in the other one.”

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Notable Quotes:

• Josh Brown at [04:40]: “A continuation of the past couple of years, dare I say decade plus of large tech leading the way.”
• Michael Batnick at [07:16]: “Only in a rip workable market could you say 27 is not bad.”
• Josh Brown at [08:44]: “The dogs have trailed the actual Dow by 14 percentage points this year, which is the fifth weakest performance in the last six years.”
• Michael Batnick at [11:22]: “Disgusting. So I think that if you're looking for some sort of regime change or maybe you want to get cute in 2025, this is pretty much blown all the way up.”
• Josh Brown at [18:15]: “I bought Reddit at $112, and it's now up to $170. I'm up 50% very fast.”
• Michael Batnick at [38:09]: “We are in the early innings of a secular shift from public to private.”

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This comprehensive summary encapsulates the key discussions and insights from "The Biggest Winners and Losers of 2024" episode, providing listeners with a clear understanding of the financial landscape and investment opportunities of the year.

Transcript

[Josh Brown]

Ladies and gentlemen, welcome to the Compound and Friends. Tonight's show is a super sized edition of what are your thoughts? With Michael Batnick and I, we roll through the biggest winners and losers of 2024. The people, the stocks, the investment opportunities, and a whole lot more. Do not miss it. Stay tuned. I'll send you there right now. Welcome to the Compound and Friends.

[Michael Batnick]

All opinions expressed by Josh, Michael Batnick and their castmates are solely their own opinions and do not reflect the opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast. Oh.

[Josh Brown]

All right. Ladies and gentlemen, welcome to the final edition of what are your thoughts of 2024? Thank you so much for joining us. Thank you for coming to the live. Love to see here. I want to tell you about our sponsor and then get right down the business because, man, are we covering a lot of ground today. Public. If you're serious about investing, you need to know about public.com. that's where you can invest in everything. Stocks, options, bonds, crypto. You can even earn some of the highest yields in the industry, like the 6% or higher yield you can lock in with a bond account.

[Michael Batnick]

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[Josh Brown]

Full disclosures in podcast description. Okay, guys, let's. Let's start off with a special announcement. We are coming to Naples, Florida. We're going to do a live edition of the Compound and Friends. It's Michael.

[Michael Batnick]

What is. What is the meaning of this?

[Josh Brown]

It's Macro Inferno. It's Michael. It's me. Michael is. I think that's Robin Gibb. I'm not. I'm not sure who's who in this. I know. I'm Barry, of course.

[Michael Batnick]

Bulge.

[Josh Brown]

You like the bulge, right?

[Michael Batnick]

What is this? Literally, I don't play this before my time. Yes, clearly.

[Josh Brown]

Macro Inferno stars myself, Michael Batnik, and our extremely, very special guest, Mr. Brian Belsky. You can come, you can hang with us. We're going to do a cocktail hour. We're going to do a live tape and I won't have any cocktails before the show. And then drinks and mingling after. So if you are a fan of the show and you're in western Florida or you're in East. East coast Florida and you want to make the drive across Alligator Alley, come see us at the Alamo Drafthouse for a special live edition. Put that back up. What's the date? February 20th.

[Michael Batnick]

I want to say it's not limited to Florida residents, because last time we did this or one of the times in North Carolina, we had people from all over the country come see us.

[Josh Brown]

That's right, Michael. And in Florida in February, there are people from all over the country in the. On the west coast. It's a lot of Midwest, I feel like. So it's. It's February 20, 5pm and man, are we gonna have a great time. Belsky is gonna come fully loaded with his outlook. Yeah. Tan, of course. Tanned. And I'll be tan, too. And we'll listen. We'll. We always have such a great time hanging with the fans. So if you are gonna be in Florida this February and you want a ticket, let me tell you how you get one. Send an email right now. Ask the compound [e-mail]. we have a very limited quantity of tickets available, but if you're a fan of the show, we want you to grab one. So ask the compound [e-mail]. all right, let's start off. We're going to do 2024 by the numbers, sort of a year in review. Just to bring everyone up to speed on what actually transpired this year. This was an incredible year for so many reasons. I want to start with the major index returns. Throw this chart up. Michael, what jumps out at you here?

[Michael Batnick]

A continuation of the past couple of years, dare I say decade plus of large tech leading the way.

[Josh Brown]

That's exactly what I was going to say. Like, if you were looking for some sort of a mean reversion, you didn't get it this year.

[Michael Batnick]

You know, I feel like as the calendar turns, it's, like, cute to be a contrarian and think that just because it's January 1st, everything that happened over the last 12 months will stop and the trend will somehow magically reverse. And maybe 25 is the year, but maybe it won't be.

[Josh Brown]

I think continuation is the right way to put it. The NASDAQ did 32% this year. The S&P did 27. The Russell did 12. Not bad, by the way. So. So maybe that was the mean reversion.

[Michael Batnick]

Can I say one more thing? One more thing that stands out? So, of course, large tech is you know, the clear standout. But I also want to point your attention to the fact that for all the hemming and hauling and the bemoaning of emerging markets and international stocks underperforming. Who's mad about 9%? Now I know it's not 32, but 9's not that bad.

[Josh Brown]

What's 9%? I mean 9% after nothing for two years.

[Michael Batnick]

Okay, but, but small caps like. Oh, small cap on the performance. Yeah, I performed 12%. I'll take it.

[Josh Brown]

Bloomberg Global Aggregate Bond Index negative 1.8%. Is that surprising? Is that about what people should have expected?

[Michael Batnick]

Well, I think it's because of the run up in rates over the past couple of weeks. Prior to that it happened, it had been positive.

[Josh Brown]

Yeah. So. So look, I, I still run into people that ask like our bonds worth owning here, are they like, are they a helpful part of the portfolio?

[Michael Batnick]

Absolutely.

[Josh Brown]

I mean that was a positive number. But the purpose of the bonds is that it wasn't a guarantee that you were going to get 32% NASDAQ this year.

[Michael Batnick]

If we knew then, no. Why would you have won bonds?

[Josh Brown]

Right. If I know, if I know what the stock market's going to do next year, I could tell you whether or not you need to own bonds. But because I can't, I think that's an important caveat. Let's do factor leaders and laggards. So chart kid, Matt and Sean did a lot of work on the show to get us ready for this. And I just want to, I'll, I'll go through these numbers out loud for those who aren't looking at the chart. Momentum is the clear standout factor for 2024. It now has a 20 annualized total return over the last five years. This is as good of a run for any factor as any of us alive have ever seen. Momentum did another 48.4% this year. Growth was 2.38.6%. Quality 27, not bad.

[Michael Batnick]

Only, only in a rip workable market could you say 27 is not bad.

[Josh Brown]

I know low Vol did 14.9%. So you made money if you were a conservative this year. Just didn't make as much. That's the trade off. Yeah. Value 13.4 which we're going to talk about later. Yield. So if you were a Dividend specific investor. 7.8%. Anything. Anything here worth talking about?

[Michael Batnick]

It's a mirror of the previous slide.

[Josh Brown]

Okay.

[Michael Batnick]

I got no, nothing else to add.

[Josh Brown]

Let's look at the dogs. So remind people what this is.

[Michael Batnick]

So the dogs of The Dow are the highest, the 10 highest yielding stocks in the Dow.

[Josh Brown]

So the strategy is you buy, you buy the 10 highest yielding Dow stocks because generally the highest yielding means that their share prices have not kept up with the market over the prior year.

[Michael Batnick]

That's exactly right, Josh. And if you were looking for some mean reversion sucks or a trend change, it's been painful for five of the last six years. And dogs of the Dow had, had been a winning strategy. It's very much a value strategy. And as we all know, it's been out of favor for the last five years. It won't be forever, but for now it is.

[Josh Brown]

The dogs of the Dow is a really tough strategy during times of massive technological transformation. And that's what we're living through. And as you can see, you had one positive year out of the last six.

[Michael Batnick]

Which year was that? Was that, was that it wasn't even 22.

[Josh Brown]

Yeah, okay, 22. So, so, so the dogs have trailed the actual Dow by 14 percentage points this year, which is the fifth weakest performance in the last six years.

[Michael Batnick]

Yeah, and after 2022 we forget that like people were all about this, right? Think about how well value stocks did relative to growth and everything else. And you piled in 23 and you got your face ripped off.

[Josh Brown]

Let's do sectors. 7 out of 11s and P500 sectors had double digit returns in 24. If you lost money because of your sector weighting, you had to really go out of your way and try hard because the biggest sectors, so communications, that's, that's Meta and Alphabet and I think Netflix is in there, did 36.6%. Financials though did 32%. And consumer discretionary, which is Amazon and Tesla did 29 and a half percent. And then tech was the fourth. Tech did 24.2%. Tech would be like software semis. Apple's in there, Microsoft's in there, Nvidia is in there. But your top four sectors all did what the market did or slightly better. And those are also where the biggest market cap stocks are. So you had to be really pursuing a bizarre like cap weight, inverse cap weighted strategy to have screwed this year up. And some people I suppose managed to, but I feel like most investors had a great year. What do you think about that?

[Michael Batnick]

Yeah, well, you took the words right out of my mouth. I was going to point to the opposite side of the chart, which is three of the four worst sectors are three of the smallest sectors in the market. Materials, energy and real estate. So yeah, they were horrible. Performers, but the index didn't really seem to mind.

[Josh Brown]

Health care was horrific this year. I have one health care standalone stock, Pfizer, and I think it's my worst performer.

[Michael Batnick]

I bought. I did. After I made the case for Moderna, I did it. I pulled the trigger.

[Josh Brown]

Did it go up A little bit? Okay. My, my machine won't let me type that ticker symbol in. All right, let's, let's put this health care chart up.

[Michael Batnick]

What do you.

[Josh Brown]

What are we seeing? This is Ned Davis research.

[Michael Batnick]

So this is a.

[Josh Brown]

So bad.

[Michael Batnick]

This is a really clever chart. I've never seen anything like this before. This line chart shows all the previous bull markets for the stock market and it shows the relative performance of health care in those previous runs. And this by far has been the weakest performance for health care relative to the market in a bull market.

[Josh Brown]

The red line just, just off the charts.

[Michael Batnick]

Disgusting. So I think that if you're looking for some sort of regime change or maybe you want to get cute in 2025, this is pretty much blown all the way up.

[Josh Brown]

I had dinner with a very good friends of ours and the husband works as an investment banker in specifically health care and biotech. And he travels all over the country talking to companies, not talking to investors, but like management teams of companies that are either doing an IPO or considering M and A. And his comment was basically like, GLP1 sucked all the air out of the room. And anybody working on any kind of drugs that's not related to the weight loss, diabetes stuff, it just, it's not that they're not doing well. It's. They just can't get anyone's attention. They can't get portfolio managers attention. Yeah, nobody really wants to hear about. It's not. So there's a lot of like, obviously great work, by the way. Il Molino Roslyn. I'm going to go on the record right now. I'm just going to tell you it's the best. It's the best Italian restaurant in Long island and there are many, many very good ones.

[Michael Batnick]

No, that's a good take. I like it a lot. I especially like the bricks of Parmesan cheese they put on the table in the beginning.

[Josh Brown]

So they start the meal that gets going. The thin sliced eggplant marinated in olive oil and garlic. The bruschetta, like the tomato and onion and. And then they, they drop, they drop that Parmesan wheel on the side of your table. It's like a Flintstone. Like it's going to tip the Table over and they take a little spade and they chunk it out for you.

[Michael Batnick]

So good.

[Josh Brown]

Why doesn't every restaurant, like, rev my engine like that?

[Michael Batnick]

When I sit down, I'm a huge fan of. You go to the table and boom, there's like something for you. Yeah, the whistle, so to speak.

[Josh Brown]

Anyway, so health care bait, it's not that they're. Look, if you owned Lilly this year or you owned like Novo Nordisk, like.

[Michael Batnick]

You made money, but what if you own CVS? Remember that, that whale? Hedge fund manager.

[Josh Brown]

Yeah. UnitedHealth had a horrendous year for obvious reasons. It's just a lot of the large caps in the healthcare sector just were mia. And they're not part of the bull market that we're currently experiencing, at least not yet. ETF AUM broke a record, Right? I think there's a trillion dollars in inflows across the board. Do I have that right?

[Michael Batnick]

Yeah.

[Josh Brown]

What is this chart showing us? $10 trillion now in US ETFs, which is enormous.

[Michael Batnick]

So we're looking at passive to active. It's like 10 to 1. Passive versus active flows or a.

[Josh Brown]

Okay, got it. So just, just, just to go through this, the active equity AUM ETF universe is $897 billion.

[Michael Batnick]

But let's also point out that that universe had a hell of a year because a lot of it was things that were getting inflows for the first time in a long time. So even though it's just a fraction, these are wildly profitable. This was a great year for active ETFs.

[Josh Brown]

And even fixed income. Is that 1.7 trillion in active fixed income?

[Michael Batnick]

Yeah. Well, Todd. Todd Stone's all over this. He has a chart showing rise in fixed income ETFs versus mutual fund counterparts. And it's. It's doing what you think it would be doing.

[Josh Brown]

We had. We had Rick Reeder on the last compound and friends, that was so good. Second, you know, it's like a blur. We did Rick Reeder and Harvey Schwartz back to back, which is insanity.

[Michael Batnick]

And did we do Cliff before that?

[Josh Brown]

And then we might. We had Nick Colis and Cliff Asness. Like the last four shows.

[Michael Batnick]

We are on a heater.

[Josh Brown]

Sick. It's crazy. All right, this comes from the J.P. morgan Guide to ETFs. What are we looking at?

[Michael Batnick]

The Milestone 10 trill. It's kind of hard to believe.

[Josh Brown]

When were we at five trail?

[Michael Batnick]

2020? No, we crossed 5,000,000,021. It's unbelievable.

[Josh Brown]

So we know where the money is coming from. I mean, it's Coming from everywhere. But a lot of it is leaving the active mutual. Actively managed mutual fund and a lot of conversions. Yeah. So a record year of actively managed outflows. Like, like the FT wrote about this and it's still, it's like one of the biggest trends of the year is people just saying even if they're allocating to active, they just do not want mutual funds. ETFs are the biggest not want them.

[Michael Batnick]

The biggest story in financial markets in my opinion of the last of the.

[Josh Brown]

Century Bitcoins ETF is a record launch.

[Michael Batnick]

Not even close.

[Josh Brown]

No, it's a, it's a record.

[Michael Batnick]

And there's not even the number two. I don't even know number two is so far behind.

[Josh Brown]

Nope. Right. Nobody has ever launched an ETF in any category that has raised assets at the rate that the blackrock.

[Michael Batnick]

And I'm gonna go out, I'm gonna go out on a limb and say nevers a long time but I don't think we'll ever see anything like this ever again.

[Josh Brown]

Wait for Solana. Okay. IPOs. So I thought this was interesting. This is the last piece of the puzzle and maybe we get it this year. And there are structural reasons why we're not getting a boom in IPOs alongside of the stock market, which historically you always would have gotten. And those structural reasons include how easy it is to raise money in the private market, how easy it is to stay public, how much liquidity there is for people that want exits while private, and just a host of other factors too numerous to mention. But we did get a lift. So this year we did 146 IPOs worth $29.6 billion. Last year it was 108 deals worth 19.4 sets of 50% increase. If you're anchored to that 2021 number, you might never see that again. When we got almost 400 deals raising 142 billion, that was spac mania. The thing to keep in mind with this, the dollar amounts, those are going to be heavily affected by like the big, big, big deals. And you think, do you think we.

[Michael Batnick]

See like a giant one next year? Stripe, SpaceX, anything like they say SpaceX.

[Josh Brown]

Ended the year 25. We're, we're going to bring out Aaron Dillon back to ask these questions of. But I think Stripe, SpaceX, Databricks, OpenAI. There's like there's, there are companies that people think are 500 billion dollar or more companies at some point that they won't come public necessarily at that valuation. But when those deals come, you're gonna see that blue line pop up, and maybe that'll be. Maybe that'll be the signal that, okay, this thing's gotten carried away. We're starting to peak in IPO terms, but that didn't happen. We got an improvement, but that's pretty much it I want to show you.

[Michael Batnick]

Hold on, hold on. Before that, Can I, Can I give a credit to you? Did you buy. You bought Reddit after the giant gap? Higher.

[Josh Brown]

I bought it at 1. I bought it at 112. It's 170.

[Michael Batnick]

So that's a pro move. So on Tuesday, October 29th, Reddit closed at $82 a share. And the next day, after a blow at earnings release, it closed at 116. So from 82. From 82 to 116. And that's a hard buy that.

[Josh Brown]

It's not. It's not, though.

[Michael Batnick]

No, it.

[Josh Brown]

I don't know this.

[Michael Batnick]

No, I know this. I'm saying for most people, you're like, oh, I missed it. And professional investors buy that, so credit to you. So you bought it after whatever 30% move, whatever it was, and now it's up another.

[Josh Brown]

I'm up. I'm up 50% very fast.

[Michael Batnick]

Yeah.

[Josh Brown]

And. And what I. So what I did after that gap, here's what I did. I loaded up the last four podcast appearances that the CEO of Reddit made. He talked to Kara Swisher. He did like, like he. He had. And these are not necessarily recent, just anything from the prior year and a half, two years. And I listened to him talk about the opportunity in Reddit before they crushed earnings. So I listened to, like, three or four interviews. Then I listened to the conference call itself that produced that gap, and I walked in, I bought the stock because I understood that. I understood that. What's happening at Reddit? Is it. Why am I talking about Dan Ives? What's happening at Reddit is like a delayed reaction to the groundwork that they've been laying for 20 years now. They're a serious contender in the advertising business. When before it was just kind of like a hobby.

[Michael Batnick]

Well, Twitter's lost.

[Josh Brown]

Yes. The deal with Google putting Reddit results as the top three search results on Google led to this massive influx of traffic. And now, dude, me.

[Michael Batnick]

That's how I found Reddit. Yeah, I know, I know. I'm 15 years late, but I was never a Reddit user until Google put it up.

[Josh Brown]

Right. And by the way, one of the things that Steve Huffman was talking about. And by the way, Steve Huffman is a Founder Reddit. He's not like an installed CEO they got from McKinsey and this is really important. The reason he's the CEO of Reddit is because Sam Altman basically begged them to come back to the company. They were in the wilderness prior to coming public and Altman was on the board and just was like, you got to come back and do this. They, they are now striking deals with people like Sam Altman. All of the LLMs want to incorporate Reddit data into their training because that's 20 years of user generated content, some of the richest informational content that exists anywhere on the Internet. The sheer volume of it dwarfs whatever the New York Times is selling because it's millions of people commenting about their lived experiences with products, with services, with, with events and expertise. And all of that is becoming, I think, like the weapon arsenal for large LLMs, large language models that want to have useful results. So they struck a deal, I think with Alphabet, but I know they're talking to everyone in Silicon Valley about what their data costs and that's like a huge line of business for Reddit. And every day the sun comes up and 100 million da use come on the site and add more content to that already incredible library of information.

[Michael Batnick]

So you, did you ever add to your position on the way up?

[Josh Brown]

I don't need to because the market soft. The market edits my position.

[Michael Batnick]

Great trade, Great trade.

[Josh Brown]

Still long. All right. But I have a stop loss in because it's gone up a lot. So I just want a full disclosure. All right. M and A. This is just North America, so consider this just United States. We haven't had a bubble here. So if you're one of these people, it's like, oh, they don't ring a bell at the top. Well, they're not ringing a bell here. We did what, what Is that number? 1.9.

[Michael Batnick]

Excuse me, Trill.

[Josh Brown]

1.9 trillion 17,574 transactions M&A wise, which is about the same as last year, slightly elevated, but not really.

[Michael Batnick]

I think you're more likely for this to be 50% higher next year than IPOs.

[Josh Brown]

So I'm going to make that call to. I don't think that Trump 2.0 means the floodgates open with IPOs. I think they'll go higher. I think where you're really going to see the sex is media companies and tech companies that have not been allowed to merge effectively, like for five years, nobody's even attempted anything. That's really going to change here. And I think you're going to see all kinds of spin offs. You're going to see acquisitions, you're going to see mergers of equals, more private equity activity as well. So I would, I would look for this to be where you see evidence of overly bullish sentiment.

[Michael Batnick]

I agree.

[Josh Brown]

All right. Household wealth new record $159 trillion in US household net worth.

[Michael Batnick]

The sense and tears.

[Josh Brown]

Yeah, okay. I guess I don't. How do you, how do you look at this chart and say America is up. Like you, you have to, you have to go to the second derivative and say well, what's the distribution?

[Michael Batnick]

Well, that's what I was gonna say.

[Josh Brown]

Yeah, fine, we agree. Yeah, we agree. Inequality. There's always inequality though.

[Michael Batnick]

So the world's 500 richest people. I saw this other from Bloomberg this morning just at 10 trail.

[Josh Brown]

Yeah, it's normal. Listen, is it ideal? Is the, is the, is the concentration of the wealth of this country ideal? No, but please understand, inside of this $159 trillion in net worth, that's net of debt, there are a lot of average ordinary people who have done very well for themselves as investors over the last few years.

[Michael Batnick]

I was reading, I can't deny it, I was reading a book on vacation that's from 2012. And the number that stood out to me was there was four. There was 400,000Americans almost 15 years ago that had a net worth of $5 million more. And that number is obviously significantly higher today.

[Josh Brown]

It's millions now.

[Michael Batnick]

Millions.

[Josh Brown]

Yeah. Next chart. Average US 401k balance by age. Great job on this chart, kid. Matt. So as you might imagine, people above the age of 55, you know, through 70 and higher are all about $250,000 in again, average 401k balance. But what you, what's more interesting to me is looking at this cohort 30 to 50. These are the working on their way to becoming wealthy people. And if they keep going, they will join that cohort with an average balance of 250. But it'll probably be higher then it'll probably be like in 10 years those numbers at the top end will probably be 300 to $350,000. Average balances. And this is how it's supposed to work. So anything in here that, anything in here that surprise. I guess maybe I'm a little surprised. 7200 for, for 20 years old to 24 years old. I feel like that, that's like not enough.

[Michael Batnick]

Listen, this is the epitome, as Nick Magulia would say, of just keep buying like it works. And it doesn't mean that stock markets go up every time or all the time, but you just keep buying.

[Josh Brown]

It flatlines at 65. Because people are taking money out.

[Michael Batnick]

Yeah.

[Josh Brown]

And. Or, or retiring and not contributing anymore.

[Michael Batnick]

Are we still on topic one? Let's keep moving.

[Josh Brown]

Okay. Five best S&P 500 stocks this year. Palantir. This is the stock of the year. 360. 360%. It is the best performing stock in the S&P 500. But the caveat is it wasn't added to the s and P500 until September.

[Michael Batnick]

Okay.

[Josh Brown]

Look at the chart.

[Michael Batnick]

I am.

[Josh Brown]

That's, that's, that's when you buy it. Well, that's when it breaks out to a record high above the August high added to the S and P. And then it just, it goes from 30 to 80. It just goes vertical.

[Michael Batnick]

I mean, in hindsight, this is so easy. That August retest was perfect.

[Josh Brown]

Yep. All right, this one's interesting. Vistra, we spoke. Yep. This is up 266.1% year to date. This, this is the. This is the best performing S and P name. If you only use the companies that were in here the whole year. And this is a utility. And we're going to talk about that in a minute. Third best stock is Nvidia, up 176.

[Michael Batnick]

Front loaded. Look at that. Amazing. And it all came in the first half of the year, basically.

[Josh Brown]

But. Oh my God.

[Michael Batnick]

Yeah. Oh my God.

[Josh Brown]

Fourth best stock. Gev.

[Michael Batnick]

What is this?

[Josh Brown]

You know this name?

[Michael Batnick]

Is this a spin off? How is this just.

[Josh Brown]

Where's this guy?

[Michael Batnick]

Why does this chart started April?

[Josh Brown]

It's the. Because it's the energy business of General Electric.

[Michael Batnick]

Yeah. Okay.

[Josh Brown]

So it's called GE Vernova. And spin offs are good. Dude, we underrated fifth best United Airlines. Look, this just speaks to.

[Michael Batnick]

Jesus.

[Josh Brown]

The underestimating of what the consumer would spend money on this year or how much they would spend. People just continued to travel. I don't think we can. We can call this pandemic. Like people being held back by the pandemic. It's five years ago.

[Michael Batnick]

Yeah. So one of my worst trades of the year was selling. So Delta looks similar. I sold Delta on that. On the nasty puke in the summer. That was fun.

[Josh Brown]

Delta still looks great. Okay, worst stocks, Adobe. I don't really understand what's going on here. It's down 25%. It's a software company that's involved in AI. Either people think AI is going to take away some of the human driven workflows design workflows that people are using Adobe products for or. I don't know. This seems like they need a CEO change. What do you think about this chart?

[Michael Batnick]

I don't know. Okay. I would say I don't anything about the company, but the chart looks viable. It's like a very, very, very, very. If you zoom out which we don't have, it's a very easy stop below 440. So I like the risk reward here.

[Josh Brown]

You do?

[Michael Batnick]

I do.

[Josh Brown]

You don't. You don't care about what's plaguing the company. You don't want to dive into that, bro. Okay, fine. J.C. all right. Second worst stock AMD. This is a shocker to me. I'm not in it.

[Michael Batnick]

I just.

[Josh Brown]

Paul much. All right. We're gonna talk more about what's going on there. But we did a deep dive into the AI related semiconductor stocks a couple of weeks back. So for people that want more, they can go find that. But I can't believe that Nvidia did +176 and the stock was down. It really goes to show that this idea of like buy the second best company or buy the competitor, it's just like it's. Sometimes it works but just in. In general it's like a flawed concept. Totally like oh if you miss this.

[Michael Batnick]

By the catch up. So just, just for the record, if this rolls over again, it takes out Those lows at 118ish. I'm out.

[Josh Brown]

Which probably just a. What a. What a disaster for. For the longs there. 3rd worst stock in the market. Pepsi. I guess it's understandable. I think in 23 you pointed this out in a previous show. They had gotten by with price increases which masqueraded slowing growth masqueraded which masked slowing revenue growth. There's only so much more you can add on price.

[Michael Batnick]

Yeah.

[Josh Brown]

Without volumes being affected. And I think volumes were affected. They just, they just. And. And when you stop raising prices. This is what it looks like.

[Michael Batnick]

I think the data point that I gave on. On one of their earnest calls last year or maybe two years ago, can't remember was like same sales were up 11% but transactions were up like 0.1%. So to your point people just stopped buying or slow down.

[Josh Brown]

That's all right, let's do Merck. We spoke about health care. Not to belabor the point. Down 6%. Disaster. Next stock is JNJ. You know it's funny. Down 5%. These, these companies are nowhere in terms of GOP semaglutide. Tirzepatide. They're just not, they don't have anything.

[Michael Batnick]

And what are you, a chemist?

[Josh Brown]

What they have. Yes, what they have. What they have is a dividend. And as we pointed out earlier, dividend was the worst factor. Josh, to wait on.

[Michael Batnick]

I'm looking at a long term chart. This thing is hanging on by a thin.

[Josh Brown]

Which one? J and J by a thread.

[Michael Batnick]

If it's. I mean, this has been. There's a lot of prior support at 144 and it is hanging. If this breaks 144.

[Josh Brown]

Yeah. You know what? I think the narrative on these stocks now is, yes, they're cheap, but under, under a Trump regime, like is a limit to what they're going to be able to get away with in terms of drug pricing. And he loves sending tweets at these companies, CEOs and just, it's just like of all the things you need, you really need a catalyst to get bullish on these stocks. Not good enough that they're cheap, I think. And I'm in another piece of shit, Pfizer, which I've been in since last November. And again, my worst stock of the year, it's not down, it's just not up.

[Michael Batnick]

Yeah.

[Josh Brown]

And for me, that feels, that feels just as bad. All right, you're up.

[Michael Batnick]

All right, I'm going to. We're going to move quickly here because that was a long one. All right, let's go. Consumer trends. So there's this substack that I subscribe to. It is called. What is it called? It's called the New Consumer by Dan Frommer. He's a former consumer analyst.

[Josh Brown]

I believe it's pronounced from a.

[Michael Batnick]

From a. Okay, maybe this is really amazing. So we're looking at the E commerce share of US retail sales. And of course, we all remember that when the world shut down, we were buying everything on the Internet and that pulled back, but we're basically back to new highs. So this is a secular trend. The percentage of things that we buy off of the Internet, I don't know how high this is going, but it's going much higher.

[Josh Brown]

Right. So that step back after, after 2020 was not really a step back. Like it wasn't, it wasn't like it peaked and then fell. It just kind of, it just kind of like bited its time and then people went right back to Internet.

[Michael Batnick]

So the next one is great.

[Josh Brown]

Even after the reopen.

[Michael Batnick]

E commerce spending has more than doubled in the past five years. More than doubled in the past five years. That's a holy. It's as over the last 12 months at the end of September, 1.16 trillion again, going higher. And one of the big places where people are buying is TikTok. So TikTok shop is already bigger than Shine, Sephora, and how do you pronounce this? Curate, which is HSN and qvc. I mean, just an explosion.

[Josh Brown]

And those and, and those comps make sense because what they're buying from TikTok is the clothes people are wearing and the makeup on the girls faces. Like the, the girls are doing these makeup tutorials, the products they use. And then they'll link like an affiliate, like a regular affiliate link. Like if you want to be as pretty as me, click here and. Yeah, and that's not gonna. That's obviously not gonna stop. The other thing I'd point out on this E Commerce thing before we move on Walmart and Target, like when you listen to their earnings report, that's all they want to talk about.

[Michael Batnick]

I'm in the Target parking lot three times a week picking stuff up.

[Josh Brown]

Yeah. All right.

[Michael Batnick]

Okay. One of the charts of the decade that has potentially enormous ramifications for every part of the economy. The prevalence of obesity among US adults age 20 and older, which was in a secular bull market, finally has finally peaked, perhaps.

[Josh Brown]

So 40% of US adults 20 and older, over 40% were obese. Now it's back down below 40%. And I think it falls from here. Yeah, I think we're undergoing a health care revolution with this new class of drugs, and there's no going back. Nobody's. Nobody's given up the. Nobody's giving up the lifestyle improvements that they've experienced. So the pills, Viking Therapeutics is the stock that you want to watch if you think the pills are going to be the next stage of this. That's obviously a rock and roll stock. Yeah, dudes, they, they have. And I don't think they have a partner on this drug either. They have the closest version of weight loss pills based on the. Based on all the GLP1 agonist stuff. And if, if those hit the market, it's lights out for obesity.

[Michael Batnick]

So this stock went from 17 in January up to 100, and now it's back down to 40. That's a massive gap filled. Wow. Okay.

[Josh Brown]

Stock.

[Michael Batnick]

All right, this is a bit depressing, but we know it. We know what it is. 60 of Americans think the US is currently in a recession. Obviously it isn't. And 17 thinks it's in a bad recession. Wow.

[Josh Brown]

These are so the people saying this either they're politically unhappy with election outcomes, or they're generally in a position where they're struggling with high prices and they're no longer getting the wage gains, and it feels like shit.

[Michael Batnick]

Yeah.

[Josh Brown]

And, you know, if you're not in the investor class, all this stuff that we're talking about just washes over you.

[Michael Batnick]

Yeah, I learned my lesson. I'm not dismissing how people feel anymore.

[Josh Brown]

No, no. Like, people are people. People that are not, like, sitting in cash, getting the high yields. All they're facing down is higher debt rates. Yeah, they're not enjoying that. And people that don't have 401k balances, they don't understand why everyone else doesn't feel as. As angry as they do.

[Michael Batnick]

Okay, let's end on a high note. Holiday E Commerce spending set new records and is accelerating over last year. So they're showing Cyber Week, Black Friday, Cyber Monday, and the holiday season shopping, and it's all 7 to 10% higher than it was a year ago. So. And this isn't just higher prices. This is people that are spending more money, buying more things.

[Josh Brown]

We spent 131 and a half billion dollars between November 1st and December 2nd.

[Michael Batnick]

Yeah. And what do you think?

[Josh Brown]

9% versus December 2nd through the end of the year?

[Michael Batnick]

Probably even more than that.

[Josh Brown]

Oh, it's got to be more than that. Yeah. Well, if they didn't spend it after a year like this, when. Yeah, when would they spend?

[Michael Batnick]

All right, next topic.

[Josh Brown]

I wanted to ask you about your reaction to the Harvey Schwartz interview that we did, and just the rise of private equity as a wealth management topic. What. What are your thoughts?

[Michael Batnick]

All right, so before we get to the topic, I just want to talk about Harvey for a second. I think you and I were talking about this on the walk back. Like, his story might not ever happen again in the current world that we live in. This. This idea that this guy could by the skin of his teeth, somehow somebody taps him on a shoulder, saves him, gets him into college after having a pretty rough high school education. And then all of the breaks that he got along the way, all the breaks that. That were fortunate, all the breaks that he made happen, like that can't happen in today's world where it's all about resume screeners and whatever, whatever. Like the CEO of Goldman Sachs in 30 years or. Or Carlisle for that matter, will not have gone to Rutgers and had that sort of path. So, really incredible story.

[Josh Brown]

I think in finance. Yes. I think in tech, they're all still going to be college dropouts that are too smart to be sitting through these classes.

[Michael Batnick]

Yeah, I'm talking about finance specifically.

[Josh Brown]

Yeah, I think in finance you're right. I think, I think if you ask me, what will the pedigrees be of the top five private equity and Wall street executives in 10 years? They're all going to be Harvard, Princeton, there's no question. So it's a miraculous story as far.

[Michael Batnick]

As the topic goes. I think that we are in the early innings of a secular shift from public to private and the lines being blurred and private market investments getting into publicly traded vehicles and getting into 401ks and getting to wealth managers. And I understand that at first, like there's going to be a skeptical, maybe even a cynical eye towards this. You've got guaranteed higher prices like that. Right. Like that's a fact. The, the expenses of the cost of these products are higher, they're less liquid, if not fully outright illiquid. And so it's fine. And you probably should be very careful and thoughtful about how you think about allocating to these assets. But I think the explosion is on balance going to be a good thing. Even though I think returns are going to be lower in the future than they were in the past just because there's so much more capital. And the illiquidity premium that used to get was in part because of lower valuations and all that good stuff that obviously isn't here anymore. But what you're also going to get is professionalization of the asset class, which obviously existed for institutional, but it's coming for the RIA market and you get lower fees because there is so much competition and the costs are to come down and the access is to get easier. And so of course it's not going to be all good or all bad. But it's coming. You could, you could fight it, you might not like it, but it's here, it's coming.

[Josh Brown]

So that's what I think. I think so too. But my version of that is like there was a moment 10 years ago where we thought venture was going to make a really big dent in wealth management. And you saw Fidelity and a lot of big mutual funds like Open End 1940 act mutual funds incorporate 10% or less privately held growth companies. And the theory was in, in a normal environment, these companies would already be public. And not giving people exposure to them is going to reduce their potential upside. So you have to. So now vent Fidelity is going to go out and buy private market stakes in these companies before they come public. And I like the idea, I like the theory of it, I don't, I didn't love the execution because the markdowns were like bewildering. But then you realize that's the nature of the asset class. From my perspective, that was the wrong starting point. I think private, privately held, professionally managed companies, not venture backed startups, is a better entree to private markets for a mutual fund structure.

[Michael Batnick]

Think about, think about the fact that 88% of the businesses in the United States that are generating $100 million in revenue are privately held.

[Josh Brown]

Is that true? 88% of $100 million plus. So only 12% of the available investing opportunity is covered by the NASDAQ and the New York Stock Exchange.

[Michael Batnick]

Correct?

[Josh Brown]

Yeah. You're also seeing the exchanges make a big push into private markets because they see this coming to NASDAQ's going all in on.

[Michael Batnick]

And so, so the future for wealth managers I think is model portfolios and BlackRock is making a big push into that. All of the other asset managers are going to follow suit. So it's, it's coming.

[Josh Brown]

Well, you know who's skeptical? Our friend Jason Zweig. On screen, please. Jason published this on December 20th, you're invited to Wall Street's private party. Say you're busy subheader. Small time investors may soon gain access, easier access to so called private markets. That usually means higher fees, greater risk, more conflicts of interest and a harder time selling. All true, all true, all true so far. But to your point, we know the fees are coming down because there aren't going to be 100 winners in the asset management landscape providing these products to retail. There's going to be like 10 and those 10 are going to lower prices in order to gain share because they can afford to. And so I don't think the traditional fee structures that have been, let's face it, not great for small investors are going to stay where they are. I don't know if they'll get great, but they'll be better.

[Michael Batnick]

It's a spectrum. Jason's also right. There's going to be a proliferation of really shitty products and really bad investor outcomes and people that don't understand what they're getting themselves into. So yeah, you have to be careful for sure.

[Josh Brown]

Jason said hold on to your wallet. Wall street is gearing up for a sales push that could enrich the middlemen and impoverish you. I am talking about private or alternative assets investments outside the public stock and bond markets. In the right hands, these assets work wonders. In the wrong hands, they wreak havoc. This coming year with Wall street and Washington likely opening the floodgates in unison. Your financial advisor may inundate you with pitches to buy private assets. Definitely. You should evaluate them with more skepticism than ever. All right.

[Michael Batnick]

If you're getting pitched Hunt, he's hundred percent right?

[Josh Brown]

Yeah. If you're getting sold something, it's not great. This is the one thing I would say. What's the worst reason to invest in private?

[Michael Batnick]

14% yields.

[Josh Brown]

Right. Not. Not realistic. What's the second worst reason?

[Michael Batnick]

What's the second worst reason to invest?

[Josh Brown]

Second worst reason to invest? I would say non correlation.

[Michael Batnick]

Oh, you can be break. Yeah.

[Josh Brown]

It's only not correlated until they remark the portfolio next quarter.

[Michael Batnick]

Listen, okay, Private equity and public equity, they're both businesses, right? So one trades every day and one trades, you know, whenever one gets market.

[Josh Brown]

Well, this is what I want to say. If we're going to blur the lines in terms of allocation, we're going to have to blur the lines in terms of how we look at the performance. And the way they measure performance in private market assets is very different than the way we measure. How did the S P 500 do?

[Michael Batnick]

I was. I was listening to a podcast. Michael. Oh, my God. All it goes mainstream. Why am I drawing a blanketti? No, I was. I listened. I listened to three of his podcasts on the beach. I'm sorry, I talked to this guy. I'm drawing a blanket. His name. Hold on a second. No, no, no. I'm worried.

[Josh Brown]

He's. He's not listening.

[Michael Batnick]

All right, his pockets. It says Michael on a substack. What's your last name? Michael. Forgive me for drawing a blank. Anyway, Michael.

[Josh Brown]

Michael. Private assets.

[Michael Batnick]

I. My God, I can't believe. I can't remember his last name. All right, whatever. Somebody was on his podcast saying that in 2023, private equity marked down their portfolio. I'm sorry, in 2022 by like 8%. And we know 2022 is a really rough year.

[Josh Brown]

Yeah.

[Michael Batnick]

In 2023, they only marked it up by 2%. So now in 2023, you might be an investor, say, what the hell? The S and p is up 26%. How are you up 2%?

[Josh Brown]

So to your point, delayed reaction.

[Michael Batnick]

Exactly.

[Josh Brown]

All right, we'll have more to say on this. What's this? Let's just do this really quickly. What's this chart? Challenges for financial advisors And.

[Michael Batnick]

Okay, so. Oh, Michael Sidmore. My God. Sorry, Michael. So there were so. Okay, so grain of salt. Because of the context of this, the survey, this is the state of alternative investments and wealth Management from Mercer and Case. All right, so these are people that were at a Case Alternative Investment Summit. So they're probably more likely to be invested in alts anyhow. But challenges, but, but these challenges remain challenges for financial advisors and adopting alternatives. And the number one is high level of administrative and paperwork, lack of liquidity and concerns around due diligence and compliance. And I think the third one is really what hit hits home for me.

[Josh Brown]

And then fees and expenses are only number four. That's interesting.

[Michael Batnick]

So we might feel very comfortable with some of these giant asset managers doing the diligence on our behalf for our clients. But how do we really diligence the investments? I understand the story, I understand what they're doing. Am I looking at the documents? And even if I was, what am I looking?

[Josh Brown]

You can only do your due diligence on the manager. And that's why I think the established firms have a really big advantage, like the Apollos and the Aries.

[Michael Batnick]

Blackstone.

[Josh Brown]

I agree, Blackstone, you probably are.

[Michael Batnick]

So there's a lot of this talk about, like a lot of the alpha is from emerging managers. That might be true in venture.

[Josh Brown]

That's not what we're looking for.

[Michael Batnick]

Not here. You want scale. All right, next chart. Current allocation to alternatives. Most people, at least the majority of respondents, are at 1 to 5 and 6 to 10. And listen, this is no secret. This is why they're here, right? The Runway for them, they're already at 30 to 40%, in some cases higher, of institutional investor portfolios. The Runway that they have to hit the wealth managers is miles and miles and miles long. So they're hitting it.

[Josh Brown]

And then last, I think it's a trillion. I think it's a trillion dollar opportunity.

[Michael Batnick]

More. More.

[Josh Brown]

Just no, like in the opening innings, this.

[Michael Batnick]

And then lastly, current allocation to alternative asset classes. What stood out to me here are hedge funds. So most people, the majority of respondents that have. That have at least more than zero. So some allocation is private debt and private equity, which makes sense to Josh's point as a starting point. And the number of investors that have more than 10% of hedge funds is down to 2%. So this is the idea of an experiment for alternatives coming to wealth managers that did not work out very well.

[Josh Brown]

Can I tell you like the conversation, the due diligence conversation between a wealth management firm, CIO and whoever's selling them an alt from. From private equity, the cut. Here's how that conversation ends. You think you're doing due diligence, but come on, these companies are investing in companies that don't file SEC paperwork. Like, you're not. What are you gonna like, fly out to the paper mill and meet. So what's, what it's really gonna boil down to is. Remember the scene in Almost Famous where William like has his story, he's gonna leave the tour and the Stillwater guys are like, it's almost like, what do you want me to write? Or whatever. And I think Russell Hammond says to him, he's like, just make us look cool. If you're an advisor, the worst thing that can happen is you look like an asshole in front of your client. So you just say to like the private equity. It's like, am I really going to do this? Like, push me over the edge. Can you make me look cool?

[Michael Batnick]

Don't blow.

[Josh Brown]

And if Blackrock, if Blackrock and Carlisle can say to the advisor, we're going to make you look good, like, that's, that's probably where the due diligence is going to stop. I hate to say that out loud, but I also know, I know, I know how people work.

[Michael Batnick]

All right, let's move on again. Trying to move fast here. All right. There was a story in the Journal, another one about, about the, the explosion in options. About 48 million options contracts have changed hands daily on an average this year. That's normal on pace for a record in data going back to 1973. That is up 9% from last year and would mark the fifth straight year of fresh all time highs. The irony here, and they pointed this out, is that options, like traditionally at least have been like hedging instruments. Right? Like, I want to protect this position. I want to protect my portfolio.

[Josh Brown]

No, they're prop bets now.

[Michael Batnick]

They're prop bets. That's exactly right. Amateur traders made up 29% of US options activities as of September, up from 23% at the start of 2020. So it's.

[Josh Brown]

We're all in.

[Michael Batnick]

And Josh, I was at Baja Mar over the last week, by the way. Future Proof is doing Bahamar in October and what an incredible venue. I. That is my, my happy place.

[Josh Brown]

I was there in April. I was there in April.

[Michael Batnick]

So I'm waiting. There's only. There's two kiosks for, for bets and there's these two knuckleheads in front of me.

[Josh Brown]

The sports book.

[Michael Batnick]

Sports.

[Josh Brown]

The Hyatt.

[Michael Batnick]

Yeah, yeah.

[Josh Brown]

It's not that big.

[Michael Batnick]

Yeah. So there's two dudes that are just taking forever and I'm looking over their shoulder and this one, Jacqueline, is placing a bet for the first player to hit a TD. Now that's usually like plus 400 to plus 800, depending on like who you're betting on, right? Like if you're betting on Saquon to get the first touch out of the game, it's probably plus 400, something like that. This guy did four of those and the odds were astronomical. For four players in a parlay to hit the first touchdown, it was probably like plus. It was probably 20,000 to one. It's never gonna happen. But this is what we do. We're a gambling nation.

[Josh Brown]

Not we, we is going a little.

[Michael Batnick]

No, no, no, no, no. Dude, fine.

[Josh Brown]

They, they, we don't do that shit.

[Michael Batnick]

But we are a nation of gamblers.

[Josh Brown]

So, you know, if I want to scare any, if I want to scare any of these options people straight, like very simply, I would just show them the real estate portfolio of Ken Griffin in Brickell Key in Miami.

[Michael Batnick]

They don't care.

[Josh Brown]

That's where their money is. That's where their money is going. But this, every building in Brickell, this.

[Michael Batnick]

Dude in front of me was betting 15 bucks. And so a lot of these people, it's literally gambling. So that's what it is.

[Josh Brown]

You know, what if that's. If that's what it takes to, to get you going, I guess.

[Michael Batnick]

All right, let's move on. What's the harb?

[Josh Brown]

I don't care who had the best and worst year this year, Winners and losers. So these were the obvious ones to me, Elon Musk. Well, wait, before we put that up, take that off. I think Elon Musk is what most people would guess. Basically, he elected the President, single handedly swung Pennsylvania. He now inhabits the little bungalow next door to the dining room at Mar a Lago. He can basically sleep there anytime he wants. He can walk in unimpeded. On conversations between the President, there was a story where Trump was meeting with Jeff Bezos in the dining room at Mar a Lago.

[Michael Batnick]

Oh, no.

[Josh Brown]

Elon just fucking sashayed in like he owns the place.

[Michael Batnick]

By the way, an extension winner is Donald Trump.

[Josh Brown]

Yeah, but I'm trying to stick to somewhat investing in finance. But yeah, obviously Peter Thiel Palantir, best stock in the market. That's one of his babies. He's got another one called and all that'll probably go public in the next year or so. Defense tech is red hot. Anything to do with AI. And Peter is also very heavily involved in conservative politics. And I just think it's like very obvious that this was an amazing year for Peter.

[Michael Batnick]

Thiel, how about this for billionaires?

[Josh Brown]

Like I said in general, sure.

[Michael Batnick]

500 billionaires out of $10 trillion or now have $10 trillion in assets.

[Josh Brown]

Undeniable. Michael Saylor, I think this was. I think he's one of the biggest winners of the year.

[Michael Batnick]

Monster.

[Josh Brown]

This is insane trade that doesn't sound so insane. Now that it's worked out, we don't know where it ends. But I think right now, even if you've been a critic of bitcoin or of MicroStrategy or of Michael Saylor, you have to at least tip your hat to the fact that he's got investors chomping at the bit anytime he wants to sell stock. And, and every time he sells stock, he buys even more Bitcoin, which then almost immediately rewards the existing shareholders who were just diluted. They're thrilled at the dilution. And this thing is still trading at an at a premium to nav, which I am completely shocked by, given that we have ETFs. It's not like MicroStrategy up until the ETFs was like the best way to express a long position in Bitcoin in the public markets. Now it's definitely not. And guess what? Stock just had the best year it's ever had. So this is just a remarkable win ship for a sailor. Let's put this chart up. Now. This is MicroStrategy. 422 and a half percent this year added 56 billion in market cap. Palantir added 139 billion in market cap. Tesla only up 73%, added 548 billion. It's not at 548 billion. That's what it added this year.

[Michael Batnick]

But you know, it's nuts. Prior to the election, Tesla was in the dot, was in the dumps.

[Josh Brown]

Yeah, no shit.

[Michael Batnick]

Like in the summer it was in a 30% drawdown from its highs or whatever. Like it was bad.

[Josh Brown]

I think he spent, he spent $30 million to make $300 billion.

[Michael Batnick]

It's weird. Like Tesla had a bad year, but Elon Musk had a great year. I know Tesla stock had a good year, but like the company, well, he's.

[Josh Brown]

Got a much bigger stake in Space X. And if you listen to certain people who are in the know talk about the opportunity in Space X, they think it makes Tesla look like a joke. So that's a, that's a little kernel. He's also got his own AI thing going. X. AI.

[Michael Batnick]

Yeah. They just announced their monster race, so they're raising money or something.

[Josh Brown]

So Elon could pick up the check. All right, Jamie Dimon Financials were the best sector overall other than communications. And even the big banks, they, they acted like fintech stocks. Let's put this chart up. I'm showing you JP Morgan Chase, total return including dividends versus the S&P 500s, total return 45% versus 27%. And just an incredible year for a relatively conservative banking giant. And I mean, Jamie did not pursue higher office. He wasn't. Doesn't appear that he was looking to be the treasury secretary or anything like that. He just did what he's always done. And this stock is one of the biggest blue chip winners of the year. Mark Rowan at Apollo chart on Apollo went up 85 and a half percent this year. Blackstone went up 34%.

[Michael Batnick]

By the way, KKR, this is exactly what we were talking about earlier. KKR has been investing heavily in the R market from early, the early days and huge beneficiary.

[Josh Brown]

So, all right, so KKR up 80%. Goldman up 53. Ares up 54. Mark Rowan is becoming a little bit of a household name in private equity and now has crossed over. Is like a, now a Wall street name in the way that Steve Schwarzman from blackrock already is. Blackstone, Blackstone, excuse me. I think, I think Apollo is going to make a lot of noise this year. I think we're only seeing the very beginning of how big and important this firm is becoming on the street. Sam Altman, we have here in the winner category, OpenAI raised the largest venture deal in history, raised 6.6 billion. OpenAI is now valued at 157 billion. Last week he said no end in sight to the spending deficit. Spend she would call it, because there's no way they're making that much money. If it were public, it would be number 60 out of the top S&P 500 market caps. As a comparison, BlackRock is worth 157 billion. So OpenAI and BlackRock are worth the same. Does that sound right to you? Yes. Honestly, no. So OpenAI's valuation is up 1700 percent in the last two years. They launched GPT4O, which was a huge success. And ChatGPT hit 3.6 billion visits in the month of October alone. As a comparison, Instagram is 6 billion. So it's a MA. I mean, it's a massive platform. Zuckerberg, big year for Meta stock. Andy Jassy, Big year for Amazon. Big comeback, I should say. Let's put this chart up. This is the last three years annualized. Amazon nowhere near the gains in Meta, but both good stocks this year. Meta's total return this year is 67%. Total return from the lows in 2022 567%. I have Bob Iger on the list. What do you think about that?

[Michael Batnick]

I don't know.

[Josh Brown]

Can I make the case?

[Michael Batnick]

Yeah, go ahead.

[Josh Brown]

Pull up the chart. This is a five year chart, but pay attention to 2024. You see this big rally in the spring. This is where he tells Nelson Peltz to get the out and wins the proxy fight in April. No notable box office bombs this year. The biggest movie of the year. You might not know this. Inside out too.

[Michael Batnick]

I do know that. I don't think. I don't think MUFAS is doing very well.

[Josh Brown]

But nope. Doesn't matter. Inside out too is the big box office winner. He bent the knee to Trump and the shareholders and stakeholders didn't. Didn't flip out on him. He kicked the can on Snow White into next year. Could not have that bomb this year with the proxy fight. Couldn't afford it. No more woke problems. They're done making content that pisses off half the country. They're done replacing all the traditional Disney characters with other genders and races. They're going to stop doing that stuff because it's not working at the box office and it's not helping in the fight against activists.

[Michael Batnick]

Disney plus is a winner for sure. Cash flow positive.

[Josh Brown]

So I was going to say Disney plus generated a quarterly profit of $47 million. First time ever Disney's direct to consumer streaming was profitable. You pull out ESPN plus, it's a slight loss, but overall Disney streaming is doing much better now and nobody's complaining about it. Also they're done with the multiverse Marvel bullshit. So they figured out in Deadpool 2 there were some big jokes about what a bomb that's been. So they're putting a lot of problems behind them. I think Iger won this year.

[Michael Batnick]

Wait, but wait, but wait there. But they had a good year and I own the stock. But they're still not out of the woods. They're not sure what to do with ESPN yet.

[Josh Brown]

They still stop the bleeding.

[Michael Batnick]

Yeah, they still have a succession question for sure. Borderline problem. What are they going to do when he's done and then the slate for next year on the. On the movies is not looking great at all.

[Josh Brown]

Well, they need Captain America to work this spring and I'll take the under on that. Okay. And then they need this Thunderbolts thing to be like a Guardians of the galaxy type of unknown breakout thing which might work. They still have content problems though. You're right. The acolyte which is the Star wars show was a bomb. The new Marvel show, Agatha all along did not connect. And Netflix beat the shit out of them on sub growth and revenue growth. Which brings me to Netflix. Reid Hoffman, fastest subscriber growth and revenue growth since 2020. Launched Christmas Day NFL acquired and launched WWE Raw on Netflix. Mike Tyson versus Jake Paul was the biggest live sports spectacle of the year outside of the Super Bowl. Gotta say, Netflix is a big winner.

[Michael Batnick]

Wait, hold on. That's not Reid Hoffman. It's Hastings and Reed Hastings. No, no, it's. It's Sarandos and Greg Peters.

[Josh Brown]

Yeah, I guess on the programming side is where you would, would put the credit. Sarandos. Just a, just another year of, of masterful performance. To have them accelerate on subs this year is just crazy to me.

[Michael Batnick]

And the content was awesome.

[Josh Brown]

And they're now, and now they're a serious player in live sports. Maybe the most serious player that everybody else has to worry about. Vistra, we talked about it earlier, pulled off a feat that no other utility stock has managed since 2001. It topped the leaderboard of the S&P 500 index again, plus 264. We have never had a utility in the last 20 years be the best performer. And I think in 2001 it might have been Enron. I'm not a thousand percent sure, but I think, oh boy, I'm not sure. I might, I might have just pulled that out of my ass, but I think it's true. Can we just do this? Vista versus Nvidia. You see what I'm saying?

[Michael Batnick]

Yeah.

[Josh Brown]

This is nuts. All right. Worst year. Gary Gensler was the first name that came to mind.

[Michael Batnick]

Yep, that works.

[Josh Brown]

The election pushed him out of the SEC, but it wasn't going well. Anyway, the ETFs came public, became the most popular ETF launch of all time. They lost a whole bunch of court actions against various crypto players. It just has not gone well for, for Gary. Elizabeth Warren, I think is a big loser too for a lot of the same reasons. The banks have never been bigger. They had an incredible year and she's not getting her way.

[Michael Batnick]

Who else? Some losers to. To add to that, pollsters and mainstream media.

[Josh Brown]

Yeah. So a little bit, a little bit further away from our area. But you're right. Lisa sue, just the CEO of amd.

[Michael Batnick]

Wasn't she on the COVID Was she What?

[Josh Brown]

Was she on the COVID of everything?

[Michael Batnick]

Yeah.

[Josh Brown]

They love putting these people on the COVID But like, like Mary Barra, she always, like she always being celebrated. For some reason the stock price never goes up. So I think Lisa sue had a really good 2023. This was just not a great year for AMD shareholders. What, what actually happened is people like oh, if you missed Nvidia by amd, the reality is the trade was by Broadcom. Let's put this chart on. I'm showing you AMD versus Broadcom this year. The orange is Broadcom. Bottom pain is market cap. Broadcom's now 1.1 trillion dollar comp, 1.1 trillion dollar company. AMD is under 200 billion and lost market cap this year. Perma Bears. We're not going to name anybody publicly. I would just say if you have to issue a mea culpa every 24 months, your approach to market insight probably just isn't good. You may want to consider doing something else with your life. So if you're always looking for asterisks or cherry picking things from your commentary that you were right about or doubling down out of spite, it's not helping other people and it's not going to help you. So this was another year the Perma Bears lost. The last one is last couple here. Sorry Value investors chart on self explanatory 13.9% in the Russell 1000 value this year. Not catastrophic but just another year of lagging performance. Let's do this. Large cap value versus growth next chart. Here's the long term. So, so like I'm not cherry picking. I'm taking you back to 2006. This is not a good strategy to invest in companies on the basis of which are the cheapest stocks. It's just, it's not like you, you could say well it's going to mean revert. Dude, I'm showing you 20 years. How, like how, how much, how much more evidence is required? 50 years, you'll be dead. You'll be dead. What else do we have? Oh, I'm gonna skip this one. The Carl Icahn probably the worst year. Probably, probably one of the big losers of the year. Last year the stock IEP fell 59%. This year it fell another 36%. No comeback. IEP is now 87% below the all time highs. Next chart. It lost 14.8 billion in market cap. Carl Icon has personally lost 15 billion in net worth. And going out, going out this year on the absolute low. So definitely one of the people that has not won in 2024. Thoughts?

[Michael Batnick]

Keep it Moving rough here for Carl. All right, all right. I thought this was a useful analog from bespoke. I'm generally not a fan of these overlay charts, but I thought this was good because there was context involved. The last year for the S P500 has looked most similar to the year leading up to mid June 1996. This ties into the chat GBT Netscape analog we've been discussing in our research. So if you think about where we are not just on the line chart but in terms of the hype cycle and, and the techno logical revolution, I thought this drive then I think as we go into 2025 and you think about where we are, where we came from, where we're going, we're on track for a third straight year of 20% gains. And the only other time this happened, it got close a few times actually in the, in the 40s and 50s, but we had this in the 90s. You actually had five years in a row of 20% returns. And we're on track to do that again. So the question is, is this sustainable? What happens next? And of course we don't know, but here's what history says. So these are the year, these are the years after 20% back to back gains. Okay, so we've had a bunch of those. So it's mixed. I mean on average it's 7% higher. So we'll see what happens next year.

[Josh Brown]

Oh my God, that, that negative 9% in the year 2000 is so misleading, it's scary. Yeah, that is a year where value did incredibly well because The NASDAQ fell 80%. So if, if you threw away all of your non tech stocks at the end of 1999 because they were getting in your way, man. Did you pay for it? The stock of the year 2000 I think was Berkshire Hathaway.

[Michael Batnick]

Well, to your previous comments, let's hope that that does not happen again.

[Josh Brown]

I, I would, I would agree with that.

[Michael Batnick]

All right, what do you make?

[Josh Brown]

We'll make the case and then we'll, we'll wrap the show with mystery chart since inception in 1980 when Nike came public, this is the first time Nike will have had three consecutive negative years earned. Put this chart up. Look at this dude. Three straight years of negative returns. Do we go for four or is this, is this the year to take a shot at Nike on a potential turnaround?

[Michael Batnick]

That's not for me. I think, I think it bounces around all year, goes nowhere.

[Josh Brown]

I mean I just like, I know it's not believe how bad the Story is.

[Michael Batnick]

But it's not just the price, Mike, isn't it?

[Josh Brown]

Your question? Cash, your question. When this is at 100, halfway through next year, aren't we going to look back and say that was the time to buy it?

[Michael Batnick]

Perhaps.

[Josh Brown]

I kind of think that that's what might happen here.

[Michael Batnick]

Okay. I just think, I just think they.

[Josh Brown]

I don't own it.

[Michael Batnick]

They blew it.

[Josh Brown]

Like okay, this one, I do own Starbucks. This is the first time since inception in 1992 that Starbucks will have had three consecutive negative years. Assuming, assuming nothing. This is the last day of the year. So this is as bad as it gets for Starbucks.

[Michael Batnick]

Yeah.

[Josh Brown]

Never had three down years.

[Michael Batnick]

They also blew it. But they got rid of the perpetrator. And I think technically I like what it's doing. It got into the gap, it held. Who knows if it was over, but we'll see.

[Josh Brown]

Well, I'm making, I'm making the case that if you just buy both stocks, one of them is going to have a turnaround that maybe both that negates whatever the downside is in the other one, if there even is. So I think, I think most pair trades you buy one, sell another. I think you buy both of these and one of them is really going to work big. And I do own Starbucks.

[Michael Batnick]

Okay. All right. My mystery chart. This is a stock that I don't think we've spoken about once this year. Is it still in the Dow? Let's see. This is an old tech company. It's been around forever. It had been a leading stock forever. It definitely was in the Dow and it made a new all time high this year. So why am I bringing it up? Made a new all time high this year and I. Julie Packard. No. Good guess, but I don't think. Is he still in the Dow? Dow Jones average components. Keep.

[Josh Brown]

Keep.

[Michael Batnick]

You're close.

[Josh Brown]

No, it's not. It was in the Dow.

[Michael Batnick]

Yeah, you're close.

[Josh Brown]

ST Packard was in the Dow longer than most public trade. Is this IBM?

[Michael Batnick]

It's still in the Dow. Yep, it's IBM.

[Josh Brown]

Okay.

[Michael Batnick]

Kind of interesting we haven't, we haven't mentioned it once this year and hit an all time high.

[Josh Brown]

Yeah. And I know they're obviously a player in AI and they built Watson 20 years ago as like a kind of sort of proto version of what is being built now. I don't really follow it. Maybe I should start following it.

[Michael Batnick]

35% all time high. Yeah, I'll wait till about it.

[Josh Brown]

I'll wait till it gets to a trillion in market cap again and I'll start following it. All right, guys, thank you so much for listening and watching a super sized version. This is maybe the longest one we've ever done of what are your thoughts? But we really wanted to do justice to the year that was Michael. And I appreciate so much all of the likes and the shares and the subscriptions and all the stuff that you, the audience do. So please, let's keep it rolling into the new year. Thanks so much to the crew and everyone who helps put the show together. And we will see you guys in the year 2020. Whether you're just getting started as an investor or you're managing a multi million dollar portfolio, Ritholtz Wealth Management has the solution for you. It all starts with building the right financial plan. To speak with a certified financial planner today, visit ritholswealth.com.