Worst Quarter in 4 Years, Oil vs Stocks, Win Rates From Buying Corrections, the Case for T and VZ

Summary

The Compound and Friends — "Worst Quarter in 4 Years, Oil vs Stocks, Win Rates From Buying Corrections, the Case for T and VZ"

Date: March 31, 2026
Hosts: Josh Brown & Michael Batnick

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Episode Overview

In this lively episode, Josh Brown and Michael Batnick dissect a tumultuous quarter in the financial markets—the worst in four years. They unpack the drivers behind the volatility, discuss the impact of geopolitical events (notably tensions with Iran and oil price shocks), debate the narratives fueling investor behavior, and drill down into notable stock pitches and sector dynamics. The show is dense with insights, charts, and relatable takes, making sense of what just happened and what might come next.

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Key Discussion Points & Insights

1. Market Recap & Sudden Shifts

• Quarter Recap:
  • Nasdaq down over 10% at its worst; S&P down about 8%; Dow, about 6%. Bounce on final days.
  • "Today is the worst quarter for stocks in four years. That escalated quickly." (Josh, 17:57)
• Geopolitical Drama:
  • Markets whipsawed by Middle East tensions; rumors of de-escalation led to a massive Dow rally.
  • "A thousand point Dow Jones rally... That’s a lot of points and a lot of Joneses here." (Josh, 7:02)
• Key Lesson:
  • The market is often interrupted by unpredictable events—setups don’t guarantee outcomes (21:15).

2. Investor Psychology & Common Mistakes

• Don’t Panic Sell:
  • Avoid the temptation to capitulate at lows; evidence shows recoveries often swift and unforecastable.
  • “We don’t like panic selling on this channel. We’re not down with that at all.” (Josh, 0:41)
• Drawdowns Are Normal:
  • Average intra-year drawdown is 14%; narratives of looming disaster often overblown (8:59).

3. Sector & Stock Leadership Shifts

• Energy & Defensive Stocks:
  • Energy stocks soared during the quarter but saw profit-taking as geopolitical news shifted.
  • “S&P energy sector are up 39% this year, on track to notch their best quarterly performance in ever.” (Josh, 22:59)
• Rotation Out of "Mag 7":
  • Recent underperformance from prior tech leaders (MAG7) drove much of index weakness.
  • “Of the points S&P 500 lost...75% came from the Mag 7.” (Michael, 26:27)

4. Multiple Compression vs. Earnings

• Earnings Up, Multiples Down:
  • Unusual divergence: Stocks fell despite rising forward EPS estimates.
  • “You can’t control the multiple that investors are willing to pay at any given moment.” (Josh, 21:36)
• Notable:
  • “Never had stocks fall this much while the forward EPS is this high. There is an extreme dislocation.” (Michael, 41:59)

5. Bull/Bear Case — Historical Context and Breadth

• Breadth Myths Debunked:
  • This year saw broadening participation, but markets still fell, challenging the view that good breadth is always bullish.
  • “Common breadth indicators do not have any predictive value for market level returns.” (Josh quoting Adam Parker, 44:52)
• Buying Corrections — Historical Returns:
  • Data shows strong average returns one, three, and five years after buying big drawdowns, with win rates above 90%.
  • “If you bought stocks every time the month ended down 10% or worse...you were up 14%, 15%, 42%, and 72% in total one, three, and five years later, respectively.” (Josh, 59:42)

6. Notable Quotes & Memorable Moments

• On Trying to Time the Market:
  • “It’s a Costanza method.” (Michael, 4:38) — referencing the idea of buying when nervous, playing off emotion.
• On MAG7 Downturn:
  • “They took the market cap from where they wanted to sell...the stocks that gave you most of the gain over the last couple of years.” (Josh, 27:03)
• On Breadth:
  • “We just witnessed a three-year period where the reverse was true. Very, very bad breadth for a bull market in ’23 to ’25...” (Josh, 44:52)
• On Defensive Stocks:
  • “People would be more likely to skip the bill for their car lease than to let their phone turn off.” (Josh, 62:29) — arguing for the defensiveness of AT&T and Verizon.

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Segment Highlights with Timestamps

Market Reaction to Middle East Geopolitics (06:30–13:00)

• Markets responding in real time to news of possible de-escalation.
• Oil and energy price impacts: distinction between the U.S. as energy independent on gas but still affected by oil prices.

Analyzing the Selloff, Multiple Compression, and Earnings (16:50–22:50)

• Breakdown of the YTD drawdown by index & relative sector performance.
• Importance of understanding that stock prices can fall even amid strong earnings growth.

Fat Pitch Segment — StockPicks Discussion (28:10–41:40)

Quickfire on Recent “Fat Pitches”:

• IGV (Software ETF):
  • Collective bottoming process; likely a fat pitch for three-year horizon, if not absolute lows. (29:13)
• Nvidia:
  • “False breakdown all over it.” — looks attractive. (30:09)
• American Express:
  • 25% drop on no news; likely a market overreaction. (31:58)
• Oracle:
  • Not a fat pitch; too many fundamental clouds. (33:04)
• Paramount:
  • Deeply distressed; too much debt, “this is going to $6.” (35:11)
• Micron:
  • Caution flags around cyclical peak—good for traders, risky for long-term investors. (36:02)
• Robinhood:
  • “I think Vlad is going to have a 'year of efficiency' moment...” (Josh, 37:58)
• BlackRock:
  • Solid company; question whether it outperforms just holding the market. (40:00)

Breadth and Corrections — Lessons from History (42:55–60:53)

• Adam Parker and Ben Carlson referenced for their work on market breadth and correction win rates.
• “The system is rigged to go higher because everybody’s entire life is counting on growth.” (Michael, 60:53)

“Make the Case” – AT&T & Verizon (61:58–66:26)

• Pitched as defensive, post-turnaround stories with strong yield and new business focus.
• “In the age of AI, arguably, these are two of the most indispensable companies there are.” (Josh, 63:14)
• Verizon has raised its dividend for 20 consecutive years.

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Notable Quotes

| Timestamp | Quote | Speaker | |-----------|-------|---------| | 04:38 | "It's a Costanza method." | Michael Batnick | | 07:02 | "A thousand point Dow Jones rally... That’s a lot of points and a lot of Joneses here." | Josh Brown | | 17:57 | "Today is the worst quarter for stocks in four years. That escalated quickly." | Josh Brown | | 21:36 | "You can’t control the multiple that investors are willing to pay at any given moment." | Josh Brown | | 29:13 | "We are in fat pitch territory." | Josh Brown (on IGV) | | 33:04 | "Oracle to me, even if the war ends tonight... It's not a fat pitch." | Josh Brown | | 41:59 | "Never had stocks fall this much while the forward EPS is this high. There is an extreme dislocation." | Michael Batnick | | 44:52 | "Common breadth indicators do not have any predictive value for market level returns." | Josh Brown (quoting Adam Parker) | | 59:42 | "If you bought stocks every time the month ended down 10% or worse...on average, you were up 14%, 15%, 42%, and 72% in total one, three, and five years later, respectively." | Josh Brown | | 62:29 | "People would be more likely to skip the bill for their car lease than to let their phone turn off." | Josh Brown |

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Final Takeaways

• Despite a headline-grabbing correction and shift away from tech high-flyers, the underlying market story remains complex—with notable strength in energy and defensives, and continued growth in earnings.
• History and statistics back up buying at moments of peak negativity, as most deep corrections recover strongly.
• Breadth and sector leadership nuance matter, but don't overweigh these signals.
• The show ends with a case for looking beyond old narratives—whether it’s buying bombed-out software names or playing defense with AT&T and Verizon.
• Stay patient, don’t panic, and always question overhyped narratives.

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Useful Timestamps

• 06:30 – Market whiplash on Iran/Trump headlines
• 16:50 – Index performance and context for correction
• 28:10 – Fat Pitch rapid-fire stock verdicts
• 42:55 – Market breadth and what it really means
• 59:42 – Historical win rates for buying corrections
• 61:58 – The case for AT&T and Verizon

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The episode is filled with hard-earned wisdom, clear-eyed skepticism of market narratives, and a blend of data and intuition—making it essential listening (or reading) for investors navigating volatile times.

Transcript

[Josh Brown]

Foreign. What's up, guys? Hey, gangsters. Well, I'm just looking at all the pounders that are here for the live. Michael, this is. This is an exciting day. I'm so excited to talk markets today.

[Michael Batnick]

Me too.

[Josh Brown]

I see some. Some Cliff Eastwood related commentary going on in the chat. Not sure what that's about.

[Michael Batnick]

What related. What's going on in the chat?

[Josh Brown]

Like Clint Eastwood movies.

[Michael Batnick]

Clint. Did he die?

[Josh Brown]

I don't know what's going on. All right, get off Denver. Denver Scribe says I feel superior to anyone who Panic sold late last week. Should I be more stoic or no? No, dude, talk your shit. Talk your shit. Good call. Should be proud of yourself. We don't like panic selling on this channel. We're not down with that at all, so. But by all means, Erier Whispers says. Can't wait for them to not get into politics. I don't. Is that sarcasm? You want us to do politics? You want Michael Batnik's politics? Are you interested in that? Maybe we'll start a. Maybe we'll start a new channel.

[Michael Batnick]

Let's do local politics.

[Josh Brown]

We don't do that here. We do stocks and occasionally bonds. All right, everybody's here. If I didn't shout you out today, I do see you and I appreciate you. We have a sponsor tonight. We have a lot to get to, so let's do this. Public, one of our favorite sponsors in the whole world today. The show is sponsored by Public, which is the investing platform for those who take it seriously. It's a place where you can build a multi asset portfolio of stocks, bonds, options, crypto and now generated assets which lets you take your ideas and turn them into an investable index using AI.

[Michael Batnick]

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[Josh Brown]

So go to public.com w a y t and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com watts paid for by Public Investing. Full disclosure in Podcast Description all right, put me on screen. Did you see what Public announced today? I thought it was pretty cool and I think our. Our. I think our audience probably want to know about this. They released a gentic AI that allows you to write rules into your portfolio and just have the AI execute while you're not even logged in or looking at it. And this was in the Wall Street Journal. JOHN ON screen so the Wall Street Journal wrote this up. And here AI agents could be deployed to buy protective puts should oil spike, hedging against potential stock losses and automatically sweep customers cash into higher yielding assets like bonds. You can also use the agents to add a 20% stop loss order on all your trades. So we're like, we're getting further and further into this moment where people have more of an ability to I guess automate the things that happen in their brokerage accounts. It's not just like we've had automated dividend reinvestment for a million years. We, you know, we've had certain things that are just like people expect. But now the tools are getting to the place where you can basically code your brokerage account. You could program it in advance for how you want it to act. So I wanted to give public a shout out for that because I really feel like they're pushing the envelope. What do you think?

[Michael Batnick]

Here's what I want. I want them to be able to read my blood pressure and buy stocks when I get nervous because sometimes it's hard to buy stocks when you get nervous.

[Josh Brown]

Like an aura, like you want, like a collaboration with the aura ring.

[Michael Batnick]

I want to.

[Josh Brown]

Or your Apple watch.

[Michael Batnick]

Yeah.

[Josh Brown]

So when your pulse quickens at like 10am because the market opens in a gap down. Yeah.

[Michael Batnick]

You got to buy it.

[Josh Brown]

Just you wanted to just circumvent your feelings and emotions. I mean, I don't know.

[Michael Batnick]

It's a Costanza method.

[Josh Brown]

Guys, I don't know where you, those of you who are trading your own money, I don't know what you trade but public.comwat is doing some cool stuff so just, just putting that out there. Today's show is sponsored by Janice Henderson Investors where we believe working together is the way to work better. Like combining your portfolio plans and our in depth strategy. Your valued assets and our valuable insights. Your mission and our vision always working in perfect harmony to find the right investment opportunities. JANICE HENDERSON Investors Investing in a brighter future together. Visit janice henderson.com so here's the, here's the narrative of today. The market was going to bounce anyway because Friday was just, Friday was just a puke. And then Monday there was a lot of dip buying happening out there. Not in every stock, but the software stocks as a group did go green. Mildly Green yesterday.

[Michael Batnick]

Very green.

[Josh Brown]

Yeah. And I think this morning the futures were higher. We were sort of going to drift higher. Jensen Huang went on TV and had some really bullish stuff to say about the Capex cycle. And it just, it seemed like one of those days where we were going to get more follow through than we got on from Monday. And then I'm on the halftime report and it's like 1248 and we're right in the middle of one of my solo segments and the judge interrupts me, he's like, listen, hold on, there's a headline from another news service. I think it was probably Bloomberg, right? And it was something, something, something, something. The prime minister of Iran is like willing to talk. And this is after here. Iran's president possess giants. Here's how political we're going to get. This is the furthest we're going to go. Says Iran is ready to end the war with the US but wants guarantees. According to the Wall Street Journal, Trump tells aides he's willing to end the war without reopening Hormuz. So that combination, two different headlines, ended up producing a thousand point Dow Jones rally. You know how I feel about those points.

[Michael Batnick]

It's a lot of Joneses.

[Josh Brown]

It's a lot of points and a lot of Joneses here. The Wall Street Journal reported that President Donald Trump has told aides he was willing to end military hostilities in the Middle east even if the Strait of Hormuz remain largely shut. The New York Post Charlie Gasparino later reported the President said he believes the Iran war will likely end soon with other nations taking the lead and reopening. So now though, what the premise from the White House is like, if we just stop bombing them and start pulling back, the strait will open because there's a lot of other countries that Iran actually does business with and the oil will flow which will reduce prices and we killed so many people anyway, it almost doesn't matter. So that's like sort of, that's the vibes today. And the market liked it. And we said last week this is pretty much what the market is waiting for. And you got it. What do you think?

[Michael Batnick]

I think that what we have been talking about, I think we were right about this one. There was this like why won't the market just capitulate already? Why won't, why is it just such a slow bleed down 1% every day? We're in an almost 10 correction, not even a single down 2% day with all these headlines flying out there like why aren't we Just getting the. The whoosh. Why is the vix not really spiking? And it's because the taco put was

[Josh Brown]

here and this was right. Today is the risk of getting. Getting out in a panic.

[Michael Batnick]

Right?

[Josh Brown]

Yeah. And nobody wants to answer for that. You think about how much money is managed by third parties on behalf of other people. Those are your clients. You want to call your clients and say you puked the lows, and then Trump throws in the towel on this whole thing, and it's like, what did we do? We. We. We. We got out of the lows for no reason because you felt like it. It's. It's like the worst feeling in the world, honestly.

[Michael Batnick]

I know this is our jam. We're beating this dead horse here, but we and every other advisor tells our clients, like, listen, this is. This is part of the deal. And every year there's a 14% draw down on average. That's a max entry year drawdown. And every time it happens, we act like it's the end. The bull market's over. Their narratives start to take hold. Last week, we started to hear the R word that there's a recession coming because the market was falling. And I think I rejected it. I hope I did. And who knows what tomorrow. What tomorrow holds. But absent. I mean, I feel like the lows got to be in God. It got. Is a strong word. God is a strong word.

[Josh Brown]

Twin. We did a show with James Leventhal not two weeks ago, and the title of the show was are we in a Bear Market?

[Michael Batnick]

Right.

[Josh Brown]

Like, that's the extent to which we. That's what I mean, we concluded. No, and obviously so did Jim. But, like, that's where we. That's where we got to.

[Michael Batnick]

But wait.

[Josh Brown]

But not that long ago.

[Michael Batnick]

But. And also, 40% of the index wasn't a bear market. So, yeah, I. The. The.

[Josh Brown]

Oh, it's a bear market. If you're in Home builders.

[Michael Batnick]

The conclusion. Conclusion that I. That I was operating. Operating under is that this is a good, clean washout that you love to see. It's a hopefully. Hold on, let me finish. What? Somebody's got your attention.

[Josh Brown]

No, I want to see. I want to see the. I want to see the map. The market map while you're talking.

[Michael Batnick]

All right, so what's. So I'm kind of interested on what didn't bounce today. So the credit card companies like visa, up 90 basis points. That's kind of weak sauce. Don't really like that MasterCard and these stocks have gotten pummeled. So you had you have give back on the energy stocks. These have been the winners. Some give back on the staples didn't rally. You'd expect that. I know it's only one day. They were super strong yesterday. But Salesforce up 90 basis points today. Adobe 81. That's it. ServiceNow is down into it, up 78. Not great. So no follow through with the software names. But here's, here's, here's the bigger point and we're going to get to this in the show. You have multiple compression across the board with earnings at all time highs.

[Josh Brown]

Yeah.

[Michael Batnick]

And you had a lot of, a lot of CEOs come out reinforcing that. They're not seeing a lot of demand destruction. And, and assuming that this war is going to end whether it was today or even if you said it's going to go on longer than we thought it ends in, in June or July on the back half of this oil retreating, interest rates coming down, inflation coming down. You don't, and I was saying this last week, the bulls will be back and I don't know if that was today but it's a good start.

[Josh Brown]

Well, I think so. I don't know if we get follow through tomorrow but to your point, what today does is it reminds people. All right. Like this is what the market does when for one second we forget about all our problems every time. And it's a great reminder. Give me the crude oil chart. This is five days. The intraday move was smaller than I would have thought. So this is wti. I think I would have thought we would see more of a fall off. You can see that knee jerk was like way lower and then it sort of picked back up because the reality is what the guy from Iran said and who the, who the even knows if that's the guy that has the power to do anything, it's impossible to know. But like there was literally nothing in his statement that was new. It says they're willing to talk if so long as certain conditions are met. They said that last like they've always been saying that you know what those conditions are. They want reparations for the shit we blew up. They want like certain guarantees that we're not prepared to give them. Like it's, it's really not news, news, news. Which is why I think the oil sell off didn't really stick. And you saw it sort of rebound into the afternoon. Let me show you the S and P. This is five day. So I mean the gap. The gap. It's the gap held and it and it was retested shortly after and then it just went. And that's the nightmare scenario for the people that swung, quote, unquote, swung to cash.

[Michael Batnick]

Well, also yesterday was another, another reason for people to sell. You tried to open high on Monday. I don't know what it was up at the highs, but we gave it all back. I was like, all right, enough. I guess it's just not going to happen. But here's the thing, here's the other thing that really matters. Bloomberg had a chart of European natural gas prices and 40 to 50% of their homes are powered by natural gas or heated by natural gas. Yeah, that chart has gone vertical. We are an energy independent company and thank God.

[Josh Brown]

Country.

[Michael Batnick]

What did I say? Company country. Thank God we are, because our natural gas prices have been basically unimpacted. There was a quick spike, came all the way back down. And so we're just not impacted by the price of crude oil and the price of, of natural gas international. Well, the way the rest of the world is.

[Josh Brown]

Yeah, you're right. But let's like draw an important distinction. We are absolutely impacted by the price of oil. Not because we don't have a lot of oil, we do. And in fact we can be a net exporter if we wanted to. It's the price of gasoline that matters. And we absolutely had a huge gasoline spike. Natural gas is different. We are actually the Saudi Arabia of natural gas. We have somewhere between a 100 and 200 year supply, so much so that we're shipping it out as fast as we can from terminals they built in Louisiana for people that follow the stock. LNG, that's Cheniere Energy, they spent 2012 years financing these export terminals in the, in the Gulf of Mexico. And those terminals are active because the world needs natural gas. A lot of the supply comes from Qatar. That was temporarily impacted thanks to the Strait of Hormuz. And you had a lot of assets get hit in the Gulf region by $12,000 drones. This is actually one of the most interesting thing about this conflict. Let's say we have like a ceasefire or a truce. You know what American companies are going to do during that ceasefire? We're trying to build cheaper projectiles to knock out these drones. We're firing million dollar missiles at $12,000 drones. That's like, financially, economically that is problematic. And so there's a lot of interesting things happening with this particular conflict. But in the. Give me the NASDAQ guys. So this is, this is like another, another gap. And the stock just kept going. And I Think seeing the software rebound was really important psychologically for the rest of the market. It's not like it was just semis ripping. Like we had 3, 4, and 5% moves in some big software stocks and I think and communication stocks. The market needed to see that.

[Michael Batnick]

When we had. When we had John Boyer on last week, it was Thursday. I said, why the hell is Facebook down 9%? Yeah, like what? Outside of Liberation Day and earnings, this just doesn't happen. It just doesn't fall 9% in a day. And it was up. It was up 7% today. So the buyers are back.

[Josh Brown]

Give me the XLE. So here's the energy sector, immediate sell off, Huge profit taking. I mean, these stocks are up 30, 40% on the year. But then you see, like into the close, they bought them.

[Michael Batnick]

It's down 1% today.

[Josh Brown]

They bought them. Here's the semiconductors. Not as dramatic of a same this. It looks the same shape of the bounce, but not as dramatic because these stocks were barely down a few that were down. But, you know, in general, here's the. Now here's the igv. So I bought this on Friday at literally at the low timestamped, right? I text, I slapped you. Could I have timed that trade any better? Probably not. Right.

[Michael Batnick]

Well, I'm going to the tape because

[Josh Brown]

I said to you, 77, I think I'm the smartest man alive.

[Michael Batnick]

All right, take it easy.

[Josh Brown]

I mean, it's. It says pristine of a bottom call as you'll ever see in your. Your career.

[Michael Batnick]

Okay, for sure. I said on 223. All right, I want to buy something. Josh, you're good at this. What bounces hardest on Monday? If there's a positive headline over the weekend.

[Josh Brown]

What did I say?

[Michael Batnick]

And then you said, palantir. Terrible, but. But then seven minutes later, after maybe I encouraged you to get in, then you bought. So you're welcome.

[Josh Brown]

Whatever. Still one. The money's still green. All right, so we're finishing. We're finishing the quarter. Today is the point. Tomorrow's April 1st. Happy April Fool's Day. It is the worst quarter for stocks in four years. That that escalated quickly is a Wall Street Journal article. Let's put this chart up real quick. This is just index performance year to date. Give you guys a little bit of context. We're looking at the percent decline on the Y axis for the Dow s and P. NASDAQ, NASDAQ. The worst, down a little bit more than 10% going into today. That probably got somewhat better, but just directionally it's Been almost straight down since the first week of February. S and p probably negative 8% at its worst. And Dow Jones a little bit better, negative 6% at its worst. And again today we got a bounce.

[Michael Batnick]

What's better? What's better than multiple compression on investor anxiety that doesn't come to fruition because if you get the multiple compression then, and then you get the earnings falling. Yeah, that's, that's, that's a deadly combo.

[Josh Brown]

We didn't get that, but.

[Michael Batnick]

Well, we'll see. I mean, I hope not. But, but absent that, absent like the fundamentals changing, investors wanting to pay less for the same dollar of earnings as they're growing. I don't know. I like that. 9 times out of 10.

[Josh Brown]

What's this strategus chart? You want to pop this?

[Michael Batnick]

So people. Yeah, people are unexcited about the stock market. In fact, Todd shows that this is the weakest inflow for equity markets. Equity ETF specifically in nine months. Nine months.

[Josh Brown]

Yeah. People are, people have just, people have had it. They've lost interest.

[Michael Batnick]

So. And again there. They could change their mind very quickly. And let's see if today was the day.

[Josh Brown]

All right, here's the Journal. U.S. stocks set to deliver their worst quarter in nearly four years. And the point that they're making is it wasn't that long ago that this was supposed to be an awesome year. Still could be. We're only three months in. Here's the Journal. Flashback to December. Economic growth was accelerating. The Federal Reserve appeared poised to make further interest rate cuts. And markets had moved past the uncertainty created by U.S. disputes with its international trading partners. Together the trends pointed to the potential for double digit returns. And investors came into 26 confident. The rally was about to sweep up many of the stocks that sat out the rise of big tech and AI Quote. We had a perfect backdrop for a broadening. All the stars aligned. That's Michael Cancerous from Piper Sandler. I like him. Then this just put a huge pause in it. Okay, lesson number one. I don't care what the setup is. And this goes for a bullish setup like what was just described or a bearish setup. Something will always, almost always come along and interrupt. It doesn't have to be a permanent interruption that changes the direction of the trend. But absolutely, it's never going to be easy.

[Michael Batnick]

Yeah, there's a little jab. Well, jab.

[Josh Brown]

We did have a great setup. Think about it. We had like financials rocking last year. The health care stocks joined the party.

[Michael Batnick]

Not just last year. Not just last year. Rsp the equal. It hit an all time high in March. In March. In March. So all of this bad quarter stuff, it happened in the last 30 days.

[Josh Brown]

Yeah. And, and so that's, that's lesson number one here. Hold on quote. By some measures, stocks remain on solid footing. Analysts are projecting a sixth straight quarter of double digit earnings growth for s and P500 companies during the first three months of 2026, according to FactSet. These are the earnings we're about to get in about 10, 10 days from now. Some investors are impressed. Stocks haven't fared even worse this month given the circumstances. So this is lesson two. I don't care what you think the outlook is for earnings. I don't care what your bottoms up analysis tells you. I don't care if you sit on every conference call under the sun and do channel checks and whatever bullshit you do. You can't control the multiple that investors are willing to pay at any given moment. That's a moving target. There is absolutely no way to predict it. There's no way to know when it's going to expand. There's no way to know it's going to fall. A lot of people think they have inside. Oh, rates are coming down. So multiples should expand. Oh yeah. Has that been your experience this year? We've had a 19% multiple contraction this year and the last moves from interest rates were lower.

[Michael Batnick]

25% on tech with double digit earnings growth.

[Josh Brown]

Right. So that's lesson two. Let me read the rest of this quote. The recent volatility has minted some winners. Stocks in the S and P energy sector are up 39% this year, on track to notch their best quarterly performance in ever other asset heavy industries. They wanted to say hello, but they were afraid to, such as materials also outperformed. As investors scout for companies that would be tougher AI to disrupt. Why can't they just put my name? That's literally. They're saying it without saying it. And many analysts are sticking to their original targets of modest stock market. So that's lesson three. It's not like in a normal correction, every stock goes down. In 2008. Every stock goes down. Most corrections are not 2008, which is, I know people think like, oh, Correlations go to 1. Yes.

[Michael Batnick]

In a crisis.

[Josh Brown]

Yeah, in a crisis.

[Michael Batnick]

That's.

[Josh Brown]

That's right. In a dip. In a correction. It's not true that you're going to get this washout where all stocks go to a correlation of one and everything is red every day. It really doesn't work that way. It's very rare. And in this particular moment, you absolutely did have safe havens in your equity portfolio. Stocks that did not fall with the rest of the market.

[Michael Batnick]

A lot of.

[Josh Brown]

At least not till the end, dude.

[Michael Batnick]

Walmart, very green. Costco, very green. Caterpillar and Deer, bright green. The hardware, computer hardware, SanDisk up 168%. Like, a lot of things worked this quarter. Johnson and Johnson. I mean, not to say nothing about energy, of course.

[Josh Brown]

Sorry, Jay Hampton says Halo has been around forever. Jay, I will throw you out a window. It is absolutely not. I invented it on February 8th. All right, what do we do? Oh.

[Michael Batnick]

Oh.

[Josh Brown]

So here's the Donald Trump truth social. All of those countries that can't get jet fuel because of the Strait of Hormuz, like the United Kingdom, which refused to get involved in the decapitation of Iran. I have a suggestion for you.

[Michael Batnick]

Wait, what?

[Josh Brown]

This is Trump number. This is prior to the rally. Number one, buy from the U.S. we have plenty. And number two, build up some delayed courage. Go to the straight and just take it.

[Michael Batnick]

You'll have to sign that.

[Josh Brown]

Yeah, you'll have to start learning how to fight for yourself. The USA won't be there to help you anymore, just like you weren't there for us. Iran has been essentially decimated. The hard part is done. Go get your own oil. President DJT I love this. Get your own oil. In other words. All right, you don't want to help, no problem. You're the ones that have the problem getting the oil, though, not us. I mean, it's factually true. It's a problem for the whole world to have gas prices at $4 rather than 3. But the oil issue itself is really. It's Japan's problem, it's Korea's problem, it's Europe's problem more so than it's ours. Now, we created this problem, but I mean, it's factually the case. Get your own oil is not bad. I don't hate it.

[Michael Batnick]

Okay. The last couple of years, it's been all about the Mag 7, strip them out. And the S and P has gone nowhere. Earnings have gone nowhere. I mean, that's not entirely true, but, you know, I'm exaggerating. And the reverse. The reverse happened in the first quarter. So of the. Of the whatever. Of the. How many points did we lose of the 500 something points that the S&P, 500 lost in the first quarter? 75 of those points. Chat on, please, John. 75. 75 of those percent of those points came from the MAG7 with Microsoft and it's 34% decline leading the charge.

[Josh Brown]

Wow.

[Michael Batnick]

How about that?

[Josh Brown]

Look at this, look at this. I've never really seen a point attribution done this way. This truck had. Matt, obviously this is pretty impressive. So these are the stocks that gave you the, that gave you most, not, not all, but most of the gain over the last couple of years. And that's exactly where they took the market cap from when they wanted to sell. Is that the right way to interpret this?

[Michael Batnick]

So the story is very easy. We all understand where the compression is coming from as these companies transition from asset light to asset heavy. Ostensibly. There we go, I said it. Their cash flow is going to come down, their march is going to come down and investors front run that to the tune of a 34% decline. And now Facebook's trading at 16 times earnings.

[Josh Brown]

So Nvidia, Nvidia 15 on next year's number. They're going to grow earnings 74% this year, 30 something percent the following year. All right, so it's a good solid sub 20 multiple. So I've got, are we doing, I've

[Michael Batnick]

got nine stocks for you that I'm, that we don't spend a minute on each, tops. I want to ask you, are these, are these stocks. I got one ETF of these fat pitches and we could define the fat pitch as either, yes, this is the bottom, or maybe it's not the bottom, but just hold your nose and come back in three years.

[Josh Brown]

Sorry, to clarify, we're saying fat pitches.

[Michael Batnick]

Is this a fat pitch? What you thought I said something different?

[Josh Brown]

It's a fat pitch.

[Michael Batnick]

Right. So all of these stocks, all of these stocks got whacked off to varying degrees. And now I'm asking you, Mr. Brown,

[Josh Brown]

did the, did the whack off of these stocks create a fat pitch?

[Michael Batnick]

That's right. That's right. Okay, so we're going to start with, with IGV. These names were in a 35% drawdown and credit to you for buying them on Friday. They are obviously at critical potential support. Fat pitch, bottom.

[Josh Brown]

Yes. Oh, I. So do these two things have to be the same?

[Michael Batnick]

No, no they don't.

[Josh Brown]

So we could say fat pitch, but possibly not the bottom because that's how I feel about software stocks.

[Michael Batnick]

That's. Yes, that's fair. That's fair.

[Josh Brown]

Okay. Some of these software stocks may have bottomed. Unless we're have like a, like a market wide crash. Then forget everything I'm saying.

[Michael Batnick]

I'm talking about the group. We understand there'll be winners and losers. So in three years, will this have appeared, in hindsight, to be a fat pitch?

[Josh Brown]

Yeah, I think so. Even if it's not the ultimate low, it's we are in fat pitch territory. And I love all the little pitches that are in this index. Like, when I look at the individual names, I look at the individual IGV holdings, there's things in there like Palo Alto and CrowdStrike and Palantir is in there. And of course, Microsoft is in there. There's just a. There's all sorts of pitches in there.

[Michael Batnick]

Yeah. So, all right, Nvidia was. That was in a 15% drawdown. And this says JC. False breakdown.

[Josh Brown]

False breakdown all over it. Yeah.

[Michael Batnick]

Who.

[Josh Brown]

So who. Who is selling Nvidia. Nvidia falls from 215 to 170. And then there are sellers in the high one 60s, I think.

[Michael Batnick]

I think.

[Josh Brown]

What is that like a more. Is that like a moron?

[Michael Batnick]

This is all computers. I think it's just like, all right, it's breaking a level. Just, you know, dump it. So that's.

[Josh Brown]

To me, that's the sexiest pitch.

[Michael Batnick]

I think. This is. This is. This is obvious. If. If yesterday's lows don't hold, then the next 10% is lower.

[Josh Brown]

My average cost is too low for me to add to it. But this is exactly what I would be. I would be doing if I ran a mutual fund. I wouldn't even care if I was a growth manager or a value manager. I'd be buying it either way. All right, Sell it all. Sell it all to me.

[Michael Batnick]

I want to read you a quote. This is from Delta Airlines CEO. Okay. This is a recent quote. Our consumer is really healthy. We live at the top end of the K that people talk about, the premium end of the K. And that's where over 90% of our revenue is sourced from that group of folks want to travel. They're investing in themselves. They're investing in the experience economy. We've seen eight of the top ten sales days in our history this quarter, and five of those just within the past two weeks. Within just the last week of this past March. Even with fuel prices, even with the war going on, our bookings are up 25 year over year. So I ask you, Josh, American Express, there is a high degree of overlap. This stock fell 25, I think on fears that there will be.

[Josh Brown]

What is this pricing in that there will be crazy.

[Michael Batnick]

I'll tell you what, it's white collar displacement. It's the AI fears.

[Josh Brown]

Okay?

[Michael Batnick]

It's citrini stuff. Right.

[Josh Brown]

Okay. Okay.

[Michael Batnick]

Is this a fat pitch? Down 25% based on nothing.

[Josh Brown]

You know what? I would. I'm. I'm heavy, long Berkshire Hathaway, which has a huge American Express position, but I would buy this stock right now if not.

[Michael Batnick]

Okay. I think that's. I think that's a fat pitch. I think that they're. I think that you're going to look back and say that that fell 25% for no reason.

[Josh Brown]

Yeah. You know how? I'd freeze that. Freeze it If. If you buy American Express. How. How. How much is it down? 25.

[Michael Batnick]

It was down 25% on no news.

[Josh Brown]

Okay. If you buy American Express down 25 and there's another 20 further from here.

[Michael Batnick]

Back it up.

[Josh Brown]

Everything else got destroyed, too.

[Michael Batnick]

Yeah.

[Josh Brown]

You didn't look any dumber than somebody buying any other consumer discretionary name, financial name, what have you.

[Michael Batnick]

Yeah. All right.

[Josh Brown]

I would buy it, John.

[Michael Batnick]

I think it might be out of order. What's my next chart here? This is Oracle.

[Josh Brown]

Okay. No.

[Michael Batnick]

All right.

[Josh Brown]

Not a bad pitch. It's definitely a pitch.

[Michael Batnick]

I'm glad you asked.

[Josh Brown]

It's a little pitch.

[Michael Batnick]

Oracle was down 58%. Technically. I do love the setup. The risk reward is so clean. Like you're out is so freaking obvious. But not a fat pitch.

[Josh Brown]

But it's like a dirty little pitch because every one of these bounces along the way looked so convincing in the moment. But when we have somebody in the chat, hire human ass to find fat pitch, please. So, like, when you're in the batter's box in baseball, the fat pitch is like the strike thrown right down the middle that all you have to do is swing and the fat part of your bat is going to. Is going to hit the ball, and you can almost close your eyes and hit it into the outfield or further. That's a. That's a fat pitch. So Oracle to me, even if the war ends tonight. Yeah. And even if they deliver on earnings this quarter, neither one of those things is going to erase the questions that have driven this stock into this very intense downtrend. It may. It may be bottoming now, maybe forming a bottom. It's not a fat pitch. Because it's hard for me to picture a V. It's hard for me to picture it getting back to the. It never belonged at those highs is part of the problem here.

[Michael Batnick]

I love the. I love the stock setup, but the case that you just made is spot on. And they're obviously under pressure from OpenAI's lack of ability to pay them $300 billion in the next five years or whatever they committed to. All right, what do we got next? Sean?

[Josh Brown]

Yeah. Not all pitches are worth hitting.

[Michael Batnick]

All right. This is a little. This is not a stock we talk a ton about. But Paramount, it won the deal. It's buying Warner Brothers and quietly. Worst short I've ever seen in my Quietly. The stock is down like quietly 55%.

[Josh Brown]

I dare you to buy it.

[Michael Batnick]

I'm. I'm not buying it.

[Josh Brown]

How much? They're going to have $120 billion in debt.

[Michael Batnick]

Lots of debt.

[Josh Brown]

I would rather buy the debt than the equity. I, I don't know what the. I have no idea what the coupon is. I'm pretty sure they won't go bankrupt.

[Michael Batnick]

Throw that chart on one more time, John. This is. This chart. Sub. 10 bucks.

[Josh Brown]

This is going to $6.

[Michael Batnick]

All right, I'll buy it at 6.

[Josh Brown]

This is going to $6. Not for me.

[Michael Batnick]

Next chart. All right. Micron. Oh, so.

[Josh Brown]

So I missed the whole run.

[Michael Batnick]

All right, here we go. No, you didn't. No, you didn't. So they just reported a couple weeks ago the revenue was up 75% quarter over quarter and 196 year over year. Their DRAM, which is 79 of their total revenue was up 207% year over year. And yet. So the stock hit an all time high on March 18th and then it fell 30% and it put him a big fat hammer today. Fat pitcher.

[Josh Brown]

Now I think for a trader is absolutely qualifies for an investor. I'm not sure agree.

[Michael Batnick]

I agree.

[Josh Brown]

History. The history with these stocks is that they always top concurrent with the top of the memory pricing cycle, not the demand cycle. Don't get me twisted. There's a difference. The demanding. The demand for the four memory chips versus the pricing of ND or flash memory back in the day. It's not, it's not this. So these stocks historically price up top when pricing tops. And then of course the demand stays strong and the analysts defended and it just becomes like a. It becomes. It's like, it's like Vietnam. If you're an investor. It's. It's real tough to be in these things on the way down. So I could be wrong. Great, great company, great stock. Right. Biff Grebels is pointing something out important. It's so cyclical that by the time it's topping, that's when it looks the cheapest. It's like four times earnings. And people that don't understand how cyclical this space is, they'll be like, oh, it's so cheap. Yeah, that's the point. That's what, that's what cyclicals trade. They're the most expensive at trough earnings. So they deceive you. You think that they're, you think that the valuation is out of whack. No, what you're missing is that the site, the earnings cycle is going to kick in and then when they're trading at 5 times earnings, 8 times earnings, you get deceived because you don't understand the earnings are about to evaporate and that's why they're so cheap. And these are, these are tough stocks because they're doing unbelievably well.

[Michael Batnick]

I got two.

[Josh Brown]

Unbelievably well.

[Michael Batnick]

I got two, maybe three more. I think the short term momentum looks good. I totally agree with you. All right, what's next? Robinhood down 57. 57. A perfect storm. A perfect storm of crypto getting killed and of retail traders saying this, I don't want this anymore. It's not fun.

[Josh Brown]

Okay. I think this is going to be reminiscent of Facebook 2022. I think Vlad is going to have a year of efficiency moment. I think he, I think they're not as focused as they need to be right now. They, a year, six months ago, this was like the hottest stock in the world. I think it was one of the best S&P 500 names of 2025. That's not long ago.

[Michael Batnick]

And now it's all about venture and prediction markets.

[Josh Brown]

So they had like every asset class that they were levered to, every hot trade they were like they were getting credit for. And a lot of that stuff is reversed. And people don't want private assets, they don't want venture. I mean they want SpaceX, but it's just not the same fever pitch. Nobody wants Bitcoin, nobody wants eth, nobody wants stablecoins, nobody wants to hear about tokenized stocks. It like the moment passed. And in the meanwhile they're going into a lot of areas like RIA custody that it's not clear that they'll ever make money there. So I think at a certain point he's going to have to face his shareholders and say, okay, here's the deal. We're going to get more focused. We're not going to go in 12 different directions at once. We're going to double down on the things that are really profitable and the market will like it when he does it. I don't know how much more pain has to happen in the share price before he has that realization.

[Michael Batnick]

Last one, BlackRock. So BlackRock is getting hit. Stock was down 20, 23% I believe and it got swept up in the private credit stuff. They do own hps which is a serious contender in the space, but yet it's a. That's not a rounding error. It's about, I don't know, 2% of total assets. It's a much bigger part of their earnings because these are, these are higher fee products. But BlackRock is BlackRock. And this is a fat pitch.

[Josh Brown]

This is one of the obvious. Blackrock, one of the best companies in all of financial services. One of the top corporations on the planet. It's not clear to me though the investment case in the equity of BlackRock. It's basically. It trades based on the strength of the markets. We had a terrible quarter for stocks and bonds in Q1, therefore the stock is down. If the stock and bond markets rally in Q2, yeah, you'll make money long BlackRock, but you'll also make money long the markets.

[Michael Batnick]

I would bet you that BlackRock's earnings.

[Josh Brown]

Do you understand what I mean though?

[Michael Batnick]

I understand exactly what you mean. It's a proxy for the market is what you're saying. I get it. And you're not wrong. Blackrock, I would bet, has out earned the index for almost every year for the last 15 years because they take

[Josh Brown]

market share every year.

[Michael Batnick]

It's.

[Josh Brown]

It's incredible. It's an incredible business. I don't. I'm just not sure the. Because effectively what they sell is access to public and private markets and investment strategies that are directly. The AUM fees that they bill on all of their strategies are almost perfectly correlated with the rising and falling of those assets. So if you're already invested in stocks and in bonds, do you also need BlackRock?

[Michael Batnick]

Well, I don't understand anything. It fell double what the market did. More than double the market did on fears that do not necessarily pertain to the core part of the business.

[Josh Brown]

Okay, so it could absolutely be a fat pitch that I just feel like there are so many others that it's like not the one. It's not the only fat pitch in the, you know, in the, in the ether. There's so many. So.

[Michael Batnick]

And that's that. That concludes our, our segment.

[Josh Brown]

That was fun. Did you agree with most of my takes? I feel like we, we agreed on almost everything.

[Michael Batnick]

I do.

[Josh Brown]

Okay. Oh, this is good. Adam Parker basically stomped on all this poppycock about.

[Michael Batnick]

Shit. I'm sorry, can I just say one thing? I apologize. I forgot to lead the segment with this. And this is just. This is important, John. My bad. So I have two charts in here in topic two that are very important, otherwise we would skip over them. So Sherwood's has a chart that shows an unprecedented divergence between stock prices and earnings estimates. In other words, you've never had stocks fall this much. While the forward EPS is this high. There is an extreme dislocation. And not only that, not only that, but earnings revisions are going higher, higher. They're being taken up now. This might be way wrong, but this is a positive backdrop given the multiple compression that we just started. All right, back to you. Sorry about that.

[Josh Brown]

I think that's why you can't panic sell now if earnings, if earnings revisions level off and start and even go in reverse, we'll have a different conversation. You and I would be the first people to talk about it.

[Michael Batnick]

Correct.

[Josh Brown]

You know, we're not here to. We're not here to cheerlead the market and defend every single thing that happens we call balls and strikes. But like if you think earnings are the most important thing when it comes to like future returns of stocks, and I think most rational people do, what do you want us to tell you that that earnings are going to be negative? Because they're not. At least not based on the consensus. All right. Adam Parker basically was like why, why are you still talking about breadth and internals? I'm just going to quote him and then we're going to flash this table. He wrote this over the weekend. The S&P 500 price is down 6.96% year to date. The worst quarter of this holds since Q2 2022. Only 18% of quarters in the last 98 years of data we analyzed have been worse. So that's something. And almost all of those instances were in deep recessions or crises. This year reflects a combination of near universal bullishness at the beginning of the year resulting in high earnings expectations, a belief that AI productivity would create an incremental impact and an accommodate a Fed. Geopolitical unrest has certainly caused a large unwind. But under the surface there have been enormous single stock moves and askew that should have led to many long only managers outperforming the index. While the index is down 7%, 57% of stocks have beaten the market so far this year and 42% are up in absolute terms 108 stocks are up more than 10% this year. Give me the table. This is taking those numbers I just read and showing you what that looks like in terms of the stocks that are doing better than the market or worse. Adam says we point this out because every time we do tv, I don't know why he refers to himself as we. Someone says that they think breadth is good for equity markets. Chart off. We have shown several times over the years in our research that common breadth indicators do not have any predictive value for market level returns. And while that might sound like a good sound bite to those who don't know better, it's actually sort of particularly silly given how much the market was up in 2023-2025 with low breadth and it's down this year with good breadth. So this idea that we need to have a certain amount of stocks going up, we've just witnessed a three year period where the reverse was true. Very, very bad breadth for a bull market in 23 and 24 and 25. Most people would agree and yet did way better than how we're doing now that we have all this broadening. I think it's a really fair point. What do you think?

[Michael Batnick]

I think, yes. Listen, if you are bullish in a bull market, you would ideally like to see more participation. But to your point in Adams, that is hardly a prerequisite for the market going higher in the short term or long term.

[Josh Brown]

It works either way. It works either way.

[Michael Batnick]

Right. So I think that where it's. Where I. It's particularly interesting is at turning points. So for example, if you see indexes making new lows, but the number of stocks making new lows is not confirming the. The decline like you're seeing that number of new lows dry up or not expand to JC What JC would say. I like that. Right. You would like, oh, okay, maybe it's okay. But absent that, absent extremes, turning points, which are really hard to define anyway. I think people spend way too much time on this. I think he's right.

[Josh Brown]

Okay. Sam Rowe on earnings. This is a fun one. He references this moment in 2011 where David Bianco. Do you remember that name?

[Michael Batnick]

I do, yeah.

[Josh Brown]

I think he was at Merrill at the time. He was the only strategist who was raising his forecasts for earnings and stocks, US stocks. That's a courage in 2011. So for people that weren't trading in 2011, we were in the midst of what looked like another 2008. Less than three years later, it was double dip recession. And in Europe they had an actual recession and a stock price crash, a bond market crash, sovereign currency crash. And he was raising his expectations. And Bianco ended up being right by 2012 we were headed back toward the 07 highs. And Sam brings this up because another strategist had the balls last week to raise his S&P 500 price target for this year.

[Michael Batnick]

You're damn right I did.

[Josh Brown]

So yeah, wasn't you. So I'll tell. I'll tell you the story via Sam. He said I was reminded of this episode referring to the David Bianco thing this week because Barclays Vinu Krishna raised raised his year end target for the s&p from 7650 to 27650 from 7400. This despite the market pulling back amid heightened uncertainty and elevated energy prices stemming from the conflict in Iran. Quote this is. This is Venu Krishna. Our baseline is that concerns over AI disruption, private credit and geopolitics reflect real and material risks but ones that will nonetheless fall short of derailing the current growth cycle at this point in time. And the key to his call is earnings. He is looking for $321 a share up from where he started the year at $305. And Sam reminds us if you only have one metric it should be earnings. They're the most important long term driver of stock prices. Here is why he's raising his. Here's why Krishna is raising his number from 305 to 321 per share for the S and P. Big tech beat and raised cycle Q4 25 earnings confirmed. Big tech and broader TMT continue to outperform an AI related demand industrial production inflecting. Barclay sees industrials as direct beneficiary of the cyclical backdrop and capex stickier inflation equals higher nominal earnings per share. Put that in your pipe and smoke it. Their economists are predicting higher core PCE which actually increases the earnings expectation. Give me this table. This is Krishna's bull case, base case and bear case. His bear case is a 10% fall from here 5,900 on the S&P which would be an 18 and a half multiple on 11% year over year earnings growth. The bull case is 25% higher than here. Michael, what do you think about that?

[Michael Batnick]

I love it. I do love it.

[Josh Brown]

Josh, is there anything else in here? It's all about tech earnings upside or not all about but very much about. And then let's skip to I don't know what chart this is. S&P 500 calendar year 2026 I forget

[Michael Batnick]

about that calendar year go to go to match charts. So same thing. So this is. This is at exhibit a for advice.com for advisors. If you want to get this for you. This is the actual earnings trends. Okay. This is real reported numbers for both the large, the mid and the small cap indexes. And they're going up into the right. And also look at the consensus expected earnings estimates for the next 12 months. Up big league. And if you expect this to materialize, I. We don't trade the economy or the labor market.

[Josh Brown]

Trade stocks.

[Michael Batnick]

We trade stocks, people that everybody is well aware of. All the rest involved and the economy is not great. We covered that last week. But. But that's not what we're trading. We're trading businesses. So they're going up business.

[Josh Brown]

Yeah. One more thing in this segment. It's been a show for 6040.

[Michael Batnick]

Stop it.

[Josh Brown]

Well, I mean, it has.

[Michael Batnick]

No, it hasn't.

[Josh Brown]

No, no, it literally has. No, give me that chart. So this is the yield on the ten year treasury and you can see they indicate the start of the war. We were just below 4% now at 4.5% and that happened fast. A traditional portfolio of 60% stocks and 40% bonds has lost 6.3% since the fighting started in late February. At the same time, falling bond prices have driven up the yield, lifting borrowing costs 6%. I'm just saying.

[Michael Batnick]

6%. Come on.

[Josh Brown]

Mortgage rates jumped to 6.38% last week. Not great. It's yet another bad quarter for stocks where bonds didn't help. And we've been having a bunch of those in recent years in the last five years.

[Michael Batnick]

It does seem like more recently you have this environment where higher interest rates spook stocks. And that's not good for stocks and it's not good for bonds.

[Josh Brown]

Obviously it's not good for the 6040

[Michael Batnick]

because great for private credit. All right, so here's the opposite of private credit. There is, there is this phenomenon on, on Wall street where we are getting products where there's a mismatch of liquidity of what can be traded. So where I'm going with this is Matt Levine wrote about this. Fundrise has a venture fund. Now this venture fund is I think four years old. So it was a legitimate private placement for investors to access privately traded companies. And then it came public. I guess this is a, this is a closed end fund. I don't know what this is. Is it an etf? I don't know.

[Josh Brown]

Either way, it's a closed end fund and not all of the assets in it can trade. Okay, but the share price is gon, the share price is going to reflect either a premium or a discount to the assets that it holds. So it's the story.

[Michael Batnick]

The story is the float is little float is low on, on this product because there is a lockup. So if you invest in the private placement, sort of like an ipo, you can't just dump it onto the open market. So there's a lot more demand than there is supply. So Matt says Fundrise innovation has about $679 million in assets under management and more than 10 of the fund is not locked up, according to a spokesperson. That's it. Wow. Okay. So this is the opposite of the private credit problem. A lot of individual investors want exposure to SpaceX and anthropic and open AI and the other hot private companies in the fund. Those companies all have more or less visible stock prices, but normal individual investors can't buy those stocks. So you could do it through this thing. So this thing came public. Trot on, please. It ran up 450.

[Josh Brown]

This is the dumbest thing.

[Michael Batnick]

It went from 100 to 600 basically in like five days. And then it crashed. 80. And this is we doing. And this is not the first time this has happened. This happened with a fund X over X O VR. And there was another one with dxyz. What is that?

[Josh Brown]

Dxyz.

[Michael Batnick]

DXYZ was another one. So these are public proxies for private companies. And this is now the third time. It just doesn't go well.

[Josh Brown]

It's really just. It's really just four or five stocks that people want access to. They want x, they want SpaceX, because it's like SpaceX, Starlink, Xai, it's all in one thing. They want and are all. They want stripe, they want databricks.

[Michael Batnick]

Anthropic.

[Josh Brown]

Anthropic. There's like, there's like a small handful of private companies that should be public based on how big they are. And some of them will come public later this year. And so these vehicles are accumulating shares in those companies from insiders who need to get liquid. Mostly employees. Right. Maybe some VCs selling, but for the most part it's employees who are able to get liquidity for their shares.

[Michael Batnick]

So anyway, the fund did well. Like if you invested in this fund when it was a private place.

[Josh Brown]

Privately.

[Michael Batnick]

Yeah.

[Josh Brown]

Why do we know why they came public? Well, there had to be a reason.

[Michael Batnick]

Democratization, I don't know.

[Josh Brown]

They couldn't have done it for this.

[Michael Batnick]

I don't know.

[Josh Brown]

Democrat, I don't know.

[Michael Batnick]

But anyway, just be careful out there.

[Josh Brown]

What is the lesson? Like, because. Because you're saying like the liquidity mismatch. So.

[Michael Batnick]

Well, I mean, the obvious lesson is. Yeah, this is the obvious. Probably don't buy something that ran up five times in four days. I mean, for starters, probably, probably not a great thing to do. Let's keep it moving.

[Josh Brown]

Why do people need to own this SpaceX so badly that they'll do this themselves? What do you, what do you think it's like a, like a status thing or.

[Michael Batnick]

I, I also, I think there's a lot of just greater fool stuff in here. It's like it was a good trade. Listen, if you bought it at 100, you got a 300, you tripled your money in two days.

[Josh Brown]

Was this like a meme stock on, like on Reddit or Robin Hood, like people? Well, anything that goes from 100 to 600 is going to become me, Mimi. Like, of course. Because think about, think about how much attention that that attracts. There's a SpaceX proxy in the publicly traded market right now. It's called Rocket Lab RK LB. If you're so horny for SpaceX that you need to buy some contraption that owns a little bit of SpaceX stock, I'm not saying like run out and buy Rocket Labs, but it's the same story. And arguably it's two companies competing for the same contracts and it's its own publicly traded company. How about it? All right, let's do this quickly. Win rates after corrections. This is from our friend, your boyfriend, but my friend Ben Carlson, who reminds us that down months, while not pleasant, are completely normal. And well, let's do this. First give me the volatility in stocks chart. Ben goes back to 1928. So it's 100 years of data, give or take. He shows we have had 56 times we've seen a 10% or worse drawdown. Now obviously a few of those get way worse, which you can see here, only three of them have been 50% haircuts. There are people who spend every minute of, of every hour of every day of their life worried about that. Three out of 56. You know what I mean?

[Michael Batnick]

Yeah. So wait, can I just say one thing about that? As, as, as ridiculous as it is to spend your entire life obsessing about the worst case scenario. Yeah, those worst case scenarios do happen and they do shit up like those 50% not haircuts crashes wipe out a generation of investors. They can. So even though I think it's, it's overdone how much people spent, how much time and energy people spend worrying about it, they're pretty devastating when they do happen.

[Josh Brown]

If, if, yeah, when you have leverage and you have every dollar you'll ever earn fully invested, how many people does that really apply to?

[Michael Batnick]

Right, right.

[Josh Brown]

I mean, I was buying the aftermath of 2008. I had no choice. I was like 30. Like, I don't even. Like you have to be 90 and worried about not being able to feed yourself until you're 95, because who else is that really applicable to? Let me get this straight. Every dollar you will ever earn is fully invested in stocks and you have leverage? In that circumstance, I give you permission to obsess over the next 2008. In any other circumstance, I do not.

[Michael Batnick]

Right.

[Josh Brown]

Okay.

[Michael Batnick]

Let's just say, all right, well, but I'm retired. I won't earn any more money. Yeah, fine.

[Josh Brown]

The professionals, what then?

[Michael Batnick]

You know, money in stocks.

[Josh Brown]

The professionals, who. Their whole personality is. Wait till the next 2008. Those people should be ashamed of themselves because they should know these, these probabilities. Yeah, those people should absolutely be ashamed of themselves. Anyway, Ben says, Since 1950, if you bought stocks every time the month ended down 10% or worse, on average, you were up 14, 15%, 42% and 72% in total one, three, and five years later, respectively. And obviously, if you bought down 20% or worse, it's, it's similar, even better. And then, of course, 30% or worse, it's similar, but better. These are averages. So Ben says, look at the win rates, the guys, the diamonds across the top are the win rates. So forget about, for example, the three year average buying 10% a month, that's down 10%. The three year average return is 42%. That sounds great. Focus on the fact that it, it works 93% of the time. Do you agree with that? Take.

[Michael Batnick]

I do. Listen, McMurtry. McMurtry posted about this on, on, on Twitter a couple weeks ago. This system is rigged to go higher because everybody's entire life is counting on growth. Everybody wakes up for the most part and says, hey, I want to have a better existence for myself and my family and I want to make more money and I want to do better. And guess what? That's the system that we live in.

[Josh Brown]

We made this system.

[Michael Batnick]

It's a great system.

[Josh Brown]

It's society. Yeah, yeah. The system is rigged. Who is it rigged by? Oh, every investment bank, every asset manager, every law firm, every 401k plan, every employee working at a public company, every executive at a public company, every solo investor, every family office. Yes, it's A big conspiracy, and you're sitting in cash talking about 2008. You should have your head examined. Shut up. Stop tweeting. All right, let's do make the case. I pitched this on TV and then I got interrupted by Trump.

[Michael Batnick]

But go ahead. Jenny Harrington.

[Josh Brown]

Today. Yeah, I know today was. Today was a risk on day, so these stocks didn't do much. They were fine. But these stocks are working all year, and we never talk about this stuff. AT&T and Verizon. If you're worried about the economy, these are the stocks that you're looking at. And there are plenty of reasons to be worried about the economy. I think in today's day and age, people would be more likely to skip the bill for their car lease than they would to let their phone turn off. I think this might be literally the most defensive trade that there is. Cell phone towers and the wireless carriers.

[Michael Batnick]

Do you know what the story is here? Like, AT&T doubled in the last year or the last two years? Like, there's got to be. What happened?

[Josh Brown]

I would love to tell you the story. These two companies, Verizon and AT&T. Five years ago, the analysts who covered the space had a nickname for these companies. Do you know what it was?

[Michael Batnick]

I don't.

[Josh Brown]

Dumb and dumb and dumber. Verizon spent $10 billion acquiring AOL. I'm not joking. And Yahoo and Yahoo.

[Michael Batnick]

That was good. That was a good purchase.

[Josh Brown]

And neither of those worked. Obvious to everyone at the time. And now Blackstone owns Yahoo. AT&T was worse. They bought Time Warner for $85 billion. Then the way the way Warner Brothers came into existence was AT&T threw it up. AT&T leaned out the car window in the wake of 2021 and. And. And threw it up into the street and into the waiting arms of Discovery, which is, you know, Malone stuff. And it was like a merger of Discovery and the Time Warner business, and it became Warner Brothers. And they saddled it with $45 billion in debt as like a wedding gift. And AT&T went like this. That's why the stocks doubled, because they got this anvil off their. Off their back. Anyway, that was then. These companies have become leaner and meaner. They've been deleveraging. They've been doing all sorts of restructuring, all sorts of financial transactions to get out from under all that debt and all that bullshit. And now, in the age of AI, arguably, these are two of the most indispensable companies there are. They've made huge bets and built out massive broadband networks. They're selling broadband hand over fist and they've got the wireless subscriber business. Verizon actually put up a great quarter and shocked people with how low their churn was for their subs. I should be mentioned there was a knockdown, drag out fight between these two companies and T Mobile. T Mobile got very aggressive, very promotional on pricing and these three companies just went at it like three piranha in a goldfish bowl. And that era seems to be coming to a close and rational pricing is recovering. And so these stocks are both working in my column for best stocks in the market. Sean and I did all the levels, all the risk management, but I think these are, you know, I think these are stocks that people don't follow anymore. Verizon is one of the top 20 yields in the S&P 500, close to 6%.

[Michael Batnick]

So boring.

[Josh Brown]

But they're not as boring now. They're broadband plays and their, their wireless subscriber business is solid and they got out of a lot of dumb businesses. And they're halo. They're extraordinarily halo. I mean, it's undeniable. You can't do anything with AI or if you don't, if you don't have WI fi and broadband and like none of that stuff works. So I, I like these stocks and I think in the case of AT&T, I think you have a, I think you have a breakout common. $30 a share to me looks like a very obvious level of resistance. And if it breaks, this thing could be 33, 34 in a second. And you're being paid a decent dividend while you wait for that to happen. Verizon raised its dividend 20 years in a row.

[Michael Batnick]

Remember being paid to wait. You don't hear that much anymore.

[Josh Brown]

You're being paid to wait, my friend. Anyway, I, I've made the case. Would you buy either of these?

[Michael Batnick]

No, they look good. I just, I don't, I don't buy these stocks. All right, great.

[Josh Brown]

Can I have that last five minutes? My life back.

[Michael Batnick]

Listen, you can't buy every stock, can you, Josh?

[Josh Brown]

I might buy one of the, I might around and buy one of these.

[Michael Batnick]

I, so I like, I like the way that AT&T looks way better.

[Josh Brown]

Like way, way it's going to go. I think it's going to go. And, and they're in now. They're in the right businesses now. They're, they, they bought Frontier. They're focused on the, the businesses where they make a lot of money and you know, they're out of the media game. And I, I think it's a different stock now.

[Michael Batnick]

All right, I've got two quick mystery charts and we'll get out of here. Chart one, please. This is a longer term view of a. It's a ratio. I did it. So just based on this, Josh, do you think the primary trend of the primary downtrend. It's still a downtrend. Okay. Still downtrend. Okay, fair enough.

[Josh Brown]

Am I, am I guessing at what it is?

[Michael Batnick]

I've got one more for you. And zoom in. This is the last year.

[Josh Brown]

So it looks, it looks better when you just show it to me. The last year. Yeah, I don't, I don't trust it.

[Michael Batnick]

Okay, so this is. Man, how do I give this clue? This is like we spoke about this earlier in the show. It's, it's, it was all the discussion over the last three years about which is going to work better, this group of stocks or that group of stocks

[Josh Brown]

in the last three years.

[Michael Batnick]

I mean, the last 10 years we've been have this conversation.

[Josh Brown]

Okay, so it's United States versus.

[Michael Batnick]

You're on the right track, but no ifa. You're on the right track.

[Josh Brown]

S P versus, yes. Rest of world. I don't know. What is it?

[Michael Batnick]

Show me. It's. It's the equal weight versus the cap weight.

[Josh Brown]

Oh, okay, so I was wrong.

[Michael Batnick]

Yeah, but, but so, but so your instincts were that the cap.

[Josh Brown]

I don't trust it.

[Michael Batnick]

The cap weight still has the benefit of the doubt versus the equal.

[Josh Brown]

Dude, just. But just buy Apple and Nvidia and shut up. Because I'm telling you right now, if stock's going to work this year, this is where you want to be. What are we doing here? We're going to look for the seventh best regional bank in the Russell 2000 and that's what we're going to get Alpha from. We're on the verge of Apple's AI product and Nvidia is 15 times forward earnings. What do we talk? Right, what are we talking about? Broadening. For what? Not rhetorical. I'm serious.

[Michael Batnick]

It's just a mystery chart.

[Josh Brown]

Okay. Not a bit. Not a bad mystery chart. All right. Hey, guys. Tomorrow is Wednesday, which means an all new edition of Animal Spirits starring Michael and Ben. If you like this show and you've not checked out Animal Spirits, you're gonna love it. It's way better than this because I'm not on it. It's a little more sane but informationally highly nutritious. We'll do ask the compound later that day. And then on Friday we are back with an all new compound and friends. Thank you guys so much for joining us for the live. We appreciate it. Go ahead smash that like button, hit subscribe, go on the app that you're listening to this and leave a review for the love of comp God and we'll see you soon. Thanks guys. Good night.

[Podcast Disclaimer]

Ritholtz Wealth Management is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Ritholtz Wealth Management and its representatives are properly licensed or exempt from licensure. Nothing on this podcast should be construed as and may not be used in connection with an offer to sell or solicitation of an offer to buy or hold hold an interest in any security or investment product. Past performance is no guarantee of future results. Investing involves risk and possible loss of principal capital. No advice may be rendered by Ritholtz Wealth Management unless a client service agreement is in place.