How Many People Make $100,000? | Animal Spirits 430

Summary

• Investment Strategies: Invesco's fixed income solutions are highlighted as a means to find stability amidst Fed policy shifts, emphasizing the importance of experienced managers in navigating market conditions.
• Market Outlook: Historical data suggests that when the S&P 500 records a four-month winning streak closing at a new all-time high, it continues to rise nine out of ten times over the following months, indicating potential continued growth.
• Company Insights: Oracle's significant stock price increase is attributed to a major contract with OpenAI, showcasing the impact of AI-related developments on company valuations.
• Economic Indicators: Despite concerns, consumer spending remains robust, supported by strong credit card usage and spending data from companies like Capital One, Macy's, and Visa.
• Labor Market Dynamics: The labor market shows signs of stabilization after an unprecedented 32-month downturn in hiring, with prime-age labor force participation at its highest in 20 years.
• Private vs. Public Markets: The narrative that public markets lack alpha is challenged, with historical data showing IPOs often underperforming, suggesting that private market opportunities may not be as superior as claimed.
• Wealth Inequality: The disparity in wealth among young people is highlighted, with some achieving significant wealth through stock options and investments, contributing to social and economic tensions.
• Technological Impact: Apple's market dominance and pricing strategy are discussed, illustrating the company's ability to defy typical technological deflationary trends through brand strength and consumer demand.

Transcript

Today's show is brought to you by Invesco. Now might be a good time for some stability. Invesco's fixed income solutions are designed to help you find some. >> With the Fed's policy shifts creating both challenges and opportunities across the yield curve, having experienced fixed income managers in your corner has never been more important. Invesco's team of 182 fixed income investment professionals manage 518 billion in assets, giving them the scale and expertise to navigate any market conditions. Whether you're looking to add investment grade bonds or municipal bonds to your portfolio, Invesco's fixed income strategies are designed to help find the stability you may need. Visit invesco.com to learn more about their comprehensive fixed income solutions and how they can help strengthen your portfolio's foundation. >> Invesco, let's rethink possibility. All data from Invesco as of June 30th, 2025, fixed income investments are subject to credit risk of the issuer and effects of changing interest rates. Before investing, consider the funds investment objectives, risks, charges, and expenses. Visit invesco.com for a perspectus containing this information. Read it carefully before investing. Invesco Distributors, Inc. Welcome to Animal Spirits with Michael and Ben. Michael, we did a live future proof show last week, so let's do a future proof recap. Uh sometimes investing based on your gut most of the time is not a good idea, right? I think we can agree on that. If if you're just investing based on how you feel, a lot of times you're going to be wrong. Uh going into future proof last week, there was a time, I'd say it was like a half hour period where you and I kind of thought like, oh no, what if this thing in year four loses its luster? >> No. Oh no, no, no, no, no. There was no Oh, no. That definitely was not. That was definitely not. >> We were We were We were saying like, "What?" We were positing what if. >> No, no, no, no, no, no, no. I don't misrepresent my feelings. This is important. I was just saying I don't know how much longer I can do this. It's four years. I'm in for another couple, but like I don't necessarily know if I want to be doing future proof in 2030 in the same capacity that I'm doing it now. That's what I would say. But then >> personally now back to you. >> Yeah. So we just we're just wondering like oh man like what if this I don't know it gets stale or something and people have had enough of it and then we >> we had this conversation you know it >> I wasn't saying it was getting stale in 2024. No in 2024. >> No I we were we were just we were just worrying like what if this this happens and then we realized oh wait 52% of the people here have never been to Future Proof before which is a number that blew my mind. I thought it would be mostly returning people. And then we walked out to the Sunday night uh cocktail hour and we walk you and Josh and I walk down the stairs and it's just a sea of people and it the sunset is in the background and the palm trees and the beach and the vibes were just off the charts immaculate and we both go, "Oh, what are we talking about? This that was ridiculous. This is so much fun. What are we thinking of?" And it was again, >> it's like new alltime highs every year. >> You think, "Oh, that's the all-time high. It's not going to go high." it goes higher. That's my feeling of this year. >> Yes. So, that that part is definitely accurate. As we walked down the steps, we said, "Never mind." Uh it is wild how big it's gotten. There was 5,000 people there. And I can't tell you unfortunately how many people were there that I didn't see that I wanted to. That's how big it was. >> Yes. There was Yes. Same thing for me that those people like I know these people were there and I wanted to say hi to them and I didn't ever see them because it's like its own little mini city there now. >> It's unbelievable. Um but it is good to be back in the dock and our normal setting. The dock is unusually long this week. >> Well, we had two weeks between because we did kind of a retrospective show last week. >> It's 59 pages, so we're probably not going to get through everything, but let's do the best that we can. >> We'll see. Couple more future proof things just to just to get I want to say thank you to everyone. We had an Animal Spirits happy hour which was a blast. The only thing that broke my heart was that the frozen drink machine got broken because it like tripped a tripped a breaker and so we had nonfrozen Miami vices which was you can't do that. So it finally by the time the concerts rolled around it finally froze. But that >> well there there was two fails. There was two fails. The the liquid Miami Vice and also not being armed with the brown rum for the floaters. >> Yes. We had some though. We got some, didn't we? >> Did we? >> Yeah. Someone brought some. Yes. >> All right. Read Wait, read your this guy email of the week because you you mentioned this to me and I didn't see it. >> Okay. Um, for those of you who missed last week's episode, you might be a bit lost here, but I implore you to go back and relist because this might become a thing on Animal Spirits. I did a bit on the difference between this guy and there he is. And uh and actually the other day um Kobe like surprised me in he like popped out of a window. I don't remember where we were. Um and somebody was with laughed and I said this guy and I didn't even mean to this guy and my own son. >> Hi. >> Kobe isn't this guy. He's also there he is. He's both. But anyway. All right. So, this guy of the week email, this came in a couple of days before future proof. And the email was, "Longtime listener, first- time caller, executive at a top four bank. You guys have each had your fair share of horrible to bad takes over the years. From Miami Vices to a low IPA intake count to horrible car choices and worst music selections, this starting off great." Uh Bush and other musical specials at Future Proof have to top off the list of horrible takes across the years. Albeit said, "Respect for doubling down, sticking to what you like regardless of feedback. Word of caution. The reception at the festival will not be what you anticipate. Thank you for what you're doing. Keep up the great work." And it goes on a little bit more. But anyway, man, is this a this guy of the week email. What a You could say it's a boner of the week email. I mean, could this have aged more poorly? Talk about talk about how great was Blues Traveler and Bush. Are you kidding me? >> Yeah, I had a lot of fun last year at Third Eye Blind and and it wasn't even close. The We had so much fun and I Bush is one of those bands that I mean, if you if you list all the rock bands in the 90s, they're probably not in the top 10, maybe not in the top 15. There's so many good bands. >> Yeah, I would agree with that. >> And you you realize that I I haven't really thought of them since that first album. I have I have a little >> they they might they might be 15 15. >> So I I have like a '9s rock uh playlist that I put put on sometimes when I'm jogging and I'm a little lethargic and need a little pickme up and I've had Little Things and Machine Head on there forever. But beyond that, I haven't really thought much of Bush. And >> you were very excited to hear Little Things. >> Yeah, I jumped the gun a couple times. >> There's a little things. >> It is kind of funny when you hear one of these bands you haven't heard in a while and they play a song you know, everyone kind of goes, "Yeah." Yeah, like yeah, everyone gets really excited. And I think the biggest upset of the whole week was Gavin Rozdell still having the same '9s hair he had back then, like just tucked behind his ear. And you and I both said, "Man, that's a that's just a great looking man." >> Unbelievable. >> He still kind of got it. Um, the funny part to me was I I was we were talking in the cocktail hour before the shows were starting with some of the people from Future Proof, and we were we were brainstorming bands we could get to come next year, and I was thinking of other '9s nostalgia bands. And what they said was, "No, here's the problem. These bands are all so expensive these days because millennials have money now >> and millennials are like showing up to their tours >> in force." So, it's like even these bands that haven't had a hit in 20 years or whatever are charging premium prices because of Millennial. So, here's the thing, cuz you and I also saw Oasis. So, the millennial nostalgia was just off the chains for us last week. How do you invest in millennial '90s nostalgia? Cuz that's going to be a massive bull market. Live Nation, >> I guess. So, >> um, my one of my favorite parts of of the Bush concert was, speaking of generations, so 16 Stone came out in 1994. A lot of our people at the event weren't even born. One of our colleagues, definitely a lot of our colleagues wasn't born, but one in particular, and this gave me just the biggest smile ever. So Gavin Rosdale did uh Swallow just with his angelic uh voice cords. Voice cords. What are those things called? >> Yeah. So acoustics >> vocal cords. My god. Geez. Sorry my brain is a bit fried. And one of our colleagues uh who wasn't familiar with Bush because he was probably born in 1997 98 took out his phone and was singing along and I texted her. I was like dude that was that was just unbelievable. Thank you for doing that. And he said couldn't let you guys have all the fun. >> H it was Yes. It was it was like a full moon in the background and it was it was just >> I have you on video. Look at the moon. >> Yes. So, so >> we enjoyed ourselves. >> This is a great email that came in um that you responded to recently on Animal Spirits. You guys discussed why the young generation isn't partying like we used to. Why is Burning Man just filled with a bunch of aging millennials? I don't get it. Why are they living for the moment? Why aren't they drinking themselves into oblivion and hook up hooking up with as many people as possible? I listen to you guys discuss this looking fondly back to those days yourselves saying that they're going to regret not partying more. And I have to ask, was it really all that good? the lack of purpose, the aimlessness, the sense of shame the next morning, the depression, the regrets and scars you'll carry the rest of your days. Was it really all that good or we all just pretending it was because that's what everyone else said? I suspect the latter. You're anchored to that way of thinking, but here's where the next generation is at and I think they're absolutely right about it. Longtime listener, I appreciate the show. Just thought I'd chime in and try to explain the oddness of the next generation. Watch the clip and ask yourself who will be happier. Okay, thanks guys. Blah blah. All right, so Ben, you responded, "Nah, it really was awesome. Some of the best times of my life. No depression. Made a ton of friends and memories. Lived it up and knew no regrets. The younger generation is the is the one that's depressed all the time. Wasn't a problem back in the day. And I know social media is a main culprit here. Listen, we have fun. We had fun and we still have fun. How much fun was Oasis? >> That I'm I know I don't know if this is like controversial, whatever. I listen, everyone is going to do what they want to do. I'm not telling anyone to do what they don't want to do. >> Yeah. >> But we like having a good time. I'm not going to apologize. Yes, there's nothing wrong with it if if Yes. And you again, you don't have to be one of those people that has to drink to have fun. >> I do. That's that's what I have to do. You can do whatever you want to do. >> Yeah. It is funny because in college obviously I I overdid it a lot because I am an introverted person and I found that drinking made me more extroverted and sometimes that I would take that too far to my detriment and I do look back and I don't have any regrets but I do think like man I I probably embarrassed myself more than I should have in some ways. But um >> I don't know that's part of the fun of it. I mean listen there's a line there. Yeah, that's being young and you figure out when you go. >> That's how you become that's how you become there he is. >> Yeah, exactly. Uh so anyway, to each their own. But yes, >> I'm a trends setter, am I not? >> With the bucket hats >> with with the fanny pack. >> Yeah, I I wore a fanny pack. I wore it as a messenger bag, though, so it wasn't really fanny pack. I didn't wear it >> pack. Did you Did you Was it practical? Did you get use out of it? >> I did. >> Are Are you going to wear it again? >> I had my Charger. Yeah, I got I I got a bright Nike one, and I got a lot of compliments on it, too. though. >> Okay. So, Fanny Pack and Bucket Hats. >> So, in your it was your call to go see Oasis like 10 months ago when they said they announced it happened to be the same weekend as Future Proof. And I thought like I liked Oasis. I had their first album. I wasn't a I wasn't a major fan, but I enjoyed them. I thought this would be cool. And the more closer we got to the concert, you start hearing these stories from the other concert goers about how it's amazing. And I've been thinking about it for weeks after the concert and it's like the hype was just growing. The hype machine was growing. And I thought like, can it really be that good? And it was it was epic. It was so much fun. The again the vibe was just unbelievable in the concert. They put on a great show. It made me realize there just are no rock bands anymore. Like oh wait people used to like play rock and roll. They don't really have that anymore. And it was just it was amazing. >> How great is California? >> Well that helped too. It was at the Rose Bowl and the so the the scene was amazing with the mountains in the background and the sun setting and yeah it was uh wow. So it did felt like it was all older millennials, young Gen X that had to be 90% of the people there and I don't know it was just it was awesome. It was so much fun. >> We stayed at >> unbelievable show. >> We stayed in an Airbnb in Burbank and the houses there are so interesting. It's like these little tiny things that were built in the I don't know 60. I have no idea. But there was a pool house and I think a lot I think a pool house is like pretty common. So there's a pool in the backyard and a little pool house which I stayed in and there was there was a lime tree with like actual fresh limes >> and we used it in our beers. >> It's it's interesting how feel like like California is sort of I don't know. It's like I don't know if look down is the is the wrong word but through the lens of social media which is we're going to get to later unfortunately people like you know it's a snarky California it's it's one of the greatest places in the world. >> There's a reason people are willing to pay so much money and so much taxes to live there. >> Yeah >> cuz it's a great I was thinking though the person about the party email um so my brother was a huge fan of concerts and it was never really my thing. thing. I was always more of a comedy show guy, but he loved going to live music and I've just thought I So, it's been like 7 months since he died. I've been thinking like I really want to enjoy these moments more and like in the moment have more grat like and I feel like that was the feeling that we had this past week there of like let's like be in the moment and actually really enjoy it and and appreciate it for what it is. >> And so I think there was a lot of that. That that Tuesday night when we did the concert, that was legitimately one of the best nights of my life. Like top 10 most fun I've ever had being with like my best friends and watching >> so much. We had the, >> you know, 10 feet in front of us. Unbelievable. So >> anyway, uh, future proof. >> I don't know what else to say. It's just incredible. And I that's that's the start of my fiscal year is September future proof. I can't wait. >> It is like a send off from the summer, right? >> Yeah. It's just it is just the absolute best. All right, let's talk about the stock market. >> Yeah, but but if you haven't come yet and we didn't just talk you into it, we're never going to because you have to come if you haven't been. >> So Steve Deppy tweeted, "Looking at the forest, I still see an overriding sentiment of this can't continue. No euphoria anywhere." Interestingly, when the S&P 500 records a four-month winning streak that closes at a new all-time high, it's continued nine and 10 months later, 18 times in a row. Anecdotally, and maybe this is like the I don't know, you know, when you say like people are saying I think I'm guilty of this. I know you do this a lot. It's like the voices in your head. People are saying it's people in your brain. You're just making it up that you're projecting. Oh, people saying this can't continue. >> No, it's usually like one person on social media, then you say people. It's person, but you say people. >> No, but I think it's projection. So, uh, but but but Steve says yes, this can continue. So, again, fourmonth winning streak, new alltime high. When this has happened, the last 18 times it's been higher nine than 10 months later. >> So, I saw another one that I saw to be broken, but like that's pretty damn good. >> And we're coming into a Fed rate cut potentially. The other one was this morning. I think bespoke had it that when the Fed cuts 12 months later there's like 100% chance of the stock being up stock market being up and it's up 15% on average. Yes, these rules are made to be broken. But you're right. Um here's here's one for the euphoric thing I think. How is it possible for a company like Oracle? I think it was $700 billion market cap before it had this big pop. How can it rise 40% in a day? I think it finished up 36% but it was up 40%. How can a company that big rise that much? That to me is absolutely insane. >> So I uh hand up. I don't I don't know what Oracle does. It's like data enterprise storage software cloud storage for the AI layer of the data store. I don't I honestly I don't know but but I did I did some learning and there's a reason the market is not dumb. There is a good reason why this happened. So Eric Newcomer wrote, "Seeing a 48-year-old database company suddenly grow by more than the size of a sales force over the course of a trading day is one of those occurrences that makes you wonder by the moment we're in. It's at once incredibly incredible, uncanny, and terrifying, like a grandfather doing a family reunion, gathering everyone around, tossing off his walker, and doing Parker. What the hell is going on?" So Wall Street Journal says, um, in the case of Oracle, the answer is open AI. the massive of the massive contracted revenue increase cats disclosed which was $363 billion. Okay, that was out of nowhere. 300 billion of it came from the chatbt maker. The Oracle contract will require 4.5 gawatts of power capacity roughly comparable to the to the electricity produced by more than two Hoover dams or the amount consumed by about four million homes. >> Well, if you look at this, >> it was it was out of nowhere. That's why it was it was $363 billion in revenue contracted revenue that was not disclosed in the previous quarter. >> Yeah. So they're and they're also saying that I I guess for this their cloud infrastructure division the projection last year they made like $10 billion and it's projected by the end of the decade to be 144 billion. So 14 or 15 times that. Uh and if you look at the chart they show it here looks like Nvidia essentially in their data centers which is Yeah. So I to your point the stock market took this new information. How How does information like this not get out of there, though? How does it how do they keep this close to the vest? And one more question. Does OpenAI make any money? >> Yeah. Well, they don't >> they don't make they're not they're not like cash flow positive, >> right? >> I think they're they're losing money. And what was it? They don't I think Altman said they don't expect to be to be making money until 27 or 29. I can't remember what he said, but it's got to be. >> What's the revenue? Their revenue is $10 billion, 13 billion. Um actually so so Trump wants to do away with quarterly reports and make them semiannual and my first my first thought was like are you insane? What is it like more disclosure more more of that a good thing? And then my second thought like immediately I had three thoughts simultaneously. So that was my knee-jerk reaction. My second thought was well um do they really need to report every 90 days? Maybe it is overkill and >> it would make the stock market way more boring though, don't you think? >> And and maybe there's a lot of money wasted, a lot of time wasted. I can't imagine how much money these companies are spending preparing for these reports. All that goes into it. And anything that makes it easier for companies to come public is a good thing, right? And this is one of those this this would decrease the burden a little bit. >> I think that I think that's honestly a copout. the whole it's more cumbersome to be public company. I think it's more private capital. I think there's just more private capital that makes it easier to stay private >> because it's harder to go because it's more annoying to go public. The the two are the two are not unrelated. It's the the reason why there's so much private capital is because going public sucks. All right. And then my concluding thought was nah. It was like the the meme. >> Yeah. No. Um we need c we need because you know what? If we don't have reports and if we don't hear from the companies every 90 days, they're going to take advantage of their investors. >> Yeah, there's way more shenanigans going on. >> They're they're going to lie. Um, and when I say they, I don't mean all of them, obviously, but investors, I think, will will be harmed. And I was thinking about this because I I just listened to a book, uh, Apple and China. And in 20 I can't remember what the year was, but Tim Cook got lambasted for not disclosing some of the problems in China. And there was like a class action lawsuit, I believe. Um, and so if Apple was playing games, imagine what the average company would do if they only had to talk to their investors twice a year. >> Yeah. I think it would hurt individual investors. It would help like hedge funds and like it'd be like taking Reggg FD off the table. I don't I don't >> It's not black or white. I have to think more more about this, but it's not that that crazy. I don't think I like it though. All right. One last thing. So, uh I don't know if I clipped this from the journal or Eric Newcomer. So, I apologize, but is there any chance we don't get a bubble? And and and let me read this this clip. The Open AI and Oracle contract, which starts in 2027, is a risky gamble for both companies. Open AAI is a money- losing startup that disclosed in June it was generating roughly $10 billion in annual revenue. Oh, there it is. Less than 1ifth of the 60 billion it will have to pay on average every year. Oracle is concentrating a large chunk of its future revenue to one customer and will likely have to take on debt to buy the AI chips needed to power the data centers. >> I would say 80% chance of a bubble a bubble. It has to be I I don't see how we get through this without some sort of at least mini bubble. >> Now, let's define this. All right. I'm gonna say in order for something to qualify for a bubble, that means that it has to get to levels through which no in no in no scenario can they fulfill the promises that are being discounted to the price and therefore the bubble will pop and prices will fall 70%. So through that lens, what do you think? Do you still think 80% because that's pretty high, but that's what a bubble is. a bubble inflates to a large enough level so that it pops and falls a lot. >> 70% is a pretty high bar. I'd say 50% is pretty for a mini bubble. >> No. Well, but but but that's not a bubble. If the market can fall 50% just, you know, be not just because, but >> I would say to to to reach the record books of the do mania of the rail railroad of of the 1930s, you got to fall 70% if you want to be considered in that category. >> Okay? And that's where a lot of the comparisons are coming from. >> All right, I'm on record saying that I I don't think there's any way we could see the dot bubble just because these companies have so much make so much cash flow even if they get ahead of their skis and fall 40%. So yeah, >> there's also there's also a big big difference between a 50% fall and a 70% fall. It's not 20%. It's it's much bigger than that. So I would agree with you. >> All right, how about this? So Oracle when they had their big day that moved them to the 10th biggest company in the S&P 500. So you look at the just the top 10 list Oracle and above here from bespoke. What sticks out to you out of this list of the top 10 names? Because there's something that stuck out to me right away and I go, "Oh my gosh." >> Yeah, obviously. Go ahead. >> It's Warren Buffett. It's Warren Buffett and nine tech stocks. I think this is honestly one of his crowning achievements. >> The fact that he survived the dot bubble and now is surviving whatever we're calling this AI thing. And I I guess it I mean it seems like it's only a matter of time until I don't know Netflix comes up and it's all 10 tech. That feels like that's where we're going. >> Yeah. this thing ends when it's all the top 10 is all tech stocks and they come up with a new name for the top 10 >> and then it keeps going for and then it keeps going for another five years and we keep talking about it. When is it going to end? >> But don't you think that this is one of Buffett's most impressive things he's ever done? >> Mhm. >> That he's kept up with these tech stocks and he's in there in the mix and he's a trillion dollar company. It's it's unbelievable. I think >> who's going to be the first trillionaire? Larry Ellison became the richest man in the world the other day for a second. >> Yeah. You know what that's great for? Michigan football because his wife is a Michigan alum and they were big donors for the NIL fund for Michigan. So bullish Michigan football in the future because Larry Ellison's so rich. That's great for me. All those stories about how rich Larry Ellison is, send them all to me. I love it. That's great. Michigan's going to be Michigan's going to have the best quarterback for the next 20 years. All right, this is a this is a really interesting one to think about the dichotomy of AI bubble talk um versus what's actually going on. So first is Google versus chat GPT. This is this is the one that like there was all these conversations of Google's dead. There's no way. So I looked at Google since chat GPT came on board in November of 2022. Google's outperforming the Q's and the S&P by a pretty wide margin. A lot of the outperformances come recently, but they've Google essentially tracked the NASDAQ 100 throughout this whole time. Remember it had that one initial fall that lasted for what, a week maybe. >> And >> wait, what did what did >> Google had had a little bit of a downdraft. People said, "Oh no, >> Google." No, that was that was real, >> right? Um, this is >> so I I bought that dip. I bought that dip because I didn't believe the story that Chad GBT was going to kill Google because I I was using Gemini. It's like it's right in there. It's the first thing that comes up. And then I had CNBC on which I which I rarely do. And there was there was like a report about um some of the numbers being leaked about chat GBT usage. I can't remember what it was. Google fell 7% and I said, "Ah, I don't need this headache. Who needs this? I don't need this cloud hanging over me." And the stock is up like 50% since I sold it. It the the move is unbelievable. >> Yeah, it So, here's here's the a more surprising move to me. This is from Luke Caw at Sherwood News. Gold is outperforming the NASDAQ 100 since the launch of Cad GPT. No one ever could have possibly explained this and he gives some some reasons here. He's saying that a lot of it is like people worried about fiscal and monetary policy makers and inflation and then those sanctions imposed on Russia and the wake of the Ukraine. So a lot of other countries decided to start hoarding gold. If this is a bubble, it's one of the weirdest ones ever because that because the whole point is gold is this relic and technology should make gold obsolete and that has not happened. It's unbelievable the fact that the NASDAQ 100 can boom, Bitcoin can boom, Ethereum can boom, and gold can boom all at the same time. That almost doesn't seem possible. Yet, here we are. >> It is a weird market. And I think getting back to the point that that we opened the market talk with with Steve and there being a lot of disbelief, there are people who look at some of the dumb behavior going on in like smaller stocks and Nvidia being at $4 trillion and say, "How could you say that there's not euphoria?" But there's not euphoria. Uh S the Sax report just came out from Schwab and it's barely up over the last month. And the Russell 2000 is not at a new high. >> Still stick with Sax instead of stacks, huh? I'm still single with ESTAX. Uh there is not None of my friends are asking me about the stock market. >> I would say this this doesn't feel anything like 2021 to me. >> No. >> Right. 2021 that was that to me that was a crazy little mini bubble because we did see 50 to 70% drops in a lot of stocks and some of them haven't come back. >> A lot of the hot stocks over the past couple of weeks now some have rebounded a little bit but a lot of the uh the moment names got smoked. I do feel like the 2022 bare market is going to go down a history of like, oh, that was a run-of-the-mill bare market, but there were some stocks that got absolutely annihilated. And that one's going to be kind of lost to history a little bit. >> Totally agree. Totally agree. Um, all right. I want to give a shout out to Daily Chart book, which just the best compilation of charts every day. A lot of the work, a lot of the things that we use here are are from that site. So, >> I look at it every day in my inbox and every day there's nine or 10 charts I've never seen before. Yeah, there's gold. So, so here's one. Who is this from? This is from macrobond. Um, they say that margins tend to decline in rec tend to decline before recessions. Um, and that is definitely So, there's a great chart showing uh the path of margins before recession versus where we are today. And there's just it's not it's not there. It's not happening. >> Margins are breaking out. Can we do some technical analysis on the margins? Right. >> Out the new highs. >> Um, okay. So, we had Wes Krill from DFA on Talk Your Book this week talking about a bunch of different things, but he made he made a great point. We asked him because DFA has historically been a that's how they got their start is with small caps. And one of the things and you're you talked about earlier the IPO thing. One of the things that people have said is small caps aren't going to be good anymore going forward because I companies are staying private longer, right? So, Torsson lock has this chart. the median age of IPOs is currently 14 years and that's that's gone up, right? And the there's this idea like there's the old stat of Amazon went public at $400 million and that will never happen again today and people are missing out. And so his point was listen that sounds great in theory but in practice IPOs are terrible investments as a whole. You take the group of IPOs and I thought man why didn't I ever think of this? So Jay Ritter is a professor at the University of Florida and he's kept track of IPO data forever. And so I pulled up his mo he updates on an annual basis. So I I pulled this up and looked at his IPO data and you look at this average three-year buy and hold return and he looks at IPOs and they market adjust it meaning like compared to the market and look at from 1980 to 2023 the average IPO over a three-year window underperformed by 20% annually. against the market. It's a massive number. IPOs are terrible investments as a whole. And he looked at this this next one shows three-year buy and hold return. Um he shows 60% of IPOs had a negative three-year return from the first close. Almost 40% of them had a return of negative 50% from the first close. >> So >> now you could say you could say listen it's different in the last 5 years or something or different in the last 10 maybe. But history shows actually you're not missing out that much by not getting in on all these private companies. What do you think about that? >> Well, I I said this to you. I said, "Why are we so sure that successful IPOs are pulling up the the Russell 2000, >> right?" >> Um, >> you would say that's not the case at all. So, but I do wonder if Amazon's rise from $400 million to say a billion, two billion cancels out all of the other small IPOs that come public at 100 million and go to zero. >> Like, I don't know about that. >> But then the other part is all right, but but these companies, they graduate out of the Russell 2000 very quickly. >> That's a thing, >> right? So, let's say that Amazon leaves the Russell 2000, goes from 400 million to 2 billion. I'm making up the numbers. And then it's gone. and then all the other and then it goes into the midcaps and it goes to the >> 500. And so yeah, I don't know that I buy the argument that it's a lack of IPOs that are causing the Russell 2000 to perform. >> Facebook went public at 100 billion dollars I think roughly. >> It's up almost 2,000% since it went public in 2012, 2013, whatever it was. It's up 25% annually since it went public. It went way bigger than Amazon, right? And it's still done fantastically well. So it I I think that might be just a little bit of of a misnomer. Uh I got some new charts from Goldman Sachs. Uh this is interesting. So they looked at the average allocation of 401k account balances. Now this is not euphoria, but this is just risk-taking. So how's that? There's no euphoria. There's definitely a larger appetite for risk >> for sure. >> How's that? So participants in their 20s from 2013 to 2022 went from 76% in in equities to 90%. All ages went from 66 to 71%. So people have definitely increased their allocation to equities in a pretty decent way. >> Well, you know what? Somebody shared with me a video um that was on YouTube. Fidelity was I think it was from Fidelity. They were interviewing people. What year was it? 1990 I can't remember if it was 94 97. But either way, people's attitude about the stock market just seems so different than it is today. >> Yeah. Well, look at this next chart. So, this shows the average allocation to stocks, bonds, and cash. And for the 70s, 80s, and first part of the 90s until probably the.com bubble, people had just as much money in bonds as they did in stocks, which is kind of crazy because if you think this is the baby boomers back in the day and they were still relatively young. So the fact that there's more money in equities now makes a lot more sense than that did. Like there shouldn't have been a 50/50 mix. And it was stocks, bonds, and cash. And I know that rates were higher back then, but this was essentially like a 1/3 in stocks, bonds, and cash for the aggregate allocation of investors. And that that makes no sense. >> It shouldn't it should be equity should be way higher like it is today. >> Yeah. >> Um this this was an interesting too. So they show that equities as a share of household assets in the US, Japan, UK, EU, and China. I think we looked at something like this before, but it's 50% or so for the US, 13% for Japan, 10% for UK and the EU, and 9% for China. So, the fact that we've accepted risk, um, it hasn't quite been accepted around the globe yet. And I think that's actually a bullish case for stocks in the future. These countries are going to catch up to us. I had a conversation with someone at Future Proof saying like, >> listen, the advisers uh in Canada are a couple years behind you guys. the advisers in Europe are like 5 years behind you in terms of the US. >> I think Australia is the closest >> saying like it's it's coming. This stuff is coming. >> All right. So, we get this question a lot like why doesn't the stock market care about the labor market? Um, and how is it possible that corporate profits keep rising faster than GDP? I never seen this chart before, but somebody who is this from Wells Fargo. Yeah, Sam Ro posted this one. >> Okay. S&P 500 EPS is almost evenly split between goods and services. All right. So, basically 50-50 split. Stark difference versus GDP composition. So, the biggest difference is that goods only make up 16% of GDP, but 47% of earnings per share in the S&P 500. And boy, do we buy a lot of Speaking of one of the >> This is the ultimate this stock market is not the economy kind of chart. So 72% services on GDP and then 11% government spending. One of the big takeaways, so we I got home Wednesday night at around midnight from future proof. Robin woke me up at 6:00 the next morning and said, "Get up. We're moving." Uh, one of the big takeaways is we buy a lot of We hold a lot of We hoard a lot of At least my wife does. But everything ends up in the garbage eventually, including us. >> Especially when you have kids. >> Like >> we did. We we've been purging for the last 6 weeks because we redid some of our house and it's like, God, we have a lot of stuff. But this is this is why moving is so good for economic activity. Why the housing we need the housing market as like a hedge because when people start moving, they throw stuff away and they buy new stuff. >> You spend a lot of money moving. >> Bingo. You also don't realize how much like why do I have why do I have four packs of 9V the little batteries that don't go in anything? Why do I have so many of those? But you're 100% right. We threw out We threw out almost all of our kitchen stuff, all of our kitchen stuff is either I don't even know how it shows up. Some honestly, some of this plastic stuff that we have, I don't even know where it came from, but the the the the real stuff that we have, like the ceramic stuff is from our wedding in 2013. So, I said, "Whatever, we could go we could replace all of this on Amazon for $200." Like, all of it. >> Yeah. that that's why the housing activity is going to be a really I think it's going to be like a shock absorber for the slowing economy if rates fall. I think housing activity is going to be that shock absorber. All right. So so these next two charts are very important. The the it's like make it make sense. A lot of talk about the disconnect, right? How people feel, how the economy is doing. And obviously, not to re, you know, not to relitigate that point, but it's all about two things. It's highincome people and it's retirees. And that's the entire story. Mystery solved. Both of those groups are are not as impacted as other groups by what's going on in the economy. >> Correct. Especially >> in some ways, they're immune to it, which is sounds crazy to say, but they are. So this chart is in Bloomberg and it shows high income Americans are are behind roughly half of all US consumer spending up from about a third in the early 1990s. >> The crazy thing to me is that this century alone it's basically been around 40 to 45%. >> So it's it's been high for this whole century pretty much. >> We just now have the data to back it up and it's going higher obviously. >> All right. And one other chart that pairs nicely with this from variant perception via daily chart book. All right, this is amazing. Retirees continue to make up more and more of us consumption less sensitive to job market feedback loops, although still sensitive to wealth effects from home values, etc. So this chart goes back to the turn of the century and it shows 65 years and older as a percentage of total consumption. And this chart has gone from 15% in 2020 up to around 25% today. And it's projected to just keep going up and to the right. And retirees are obviously not completely immune to the economy and certainly they're not immune to the stock market, but like the labor market, assuming that it's not assuming that the labor market isn't crashing because the economy is crashing, they just keep spending. So that's why you can see jobs uh job openings go down, job hiring go down, and spending continue to march along. We got retail sales today, and it's more the same. >> Just think about boomers, how they're the wealthiest generation ever, tons of equity in their home, their houses are mostly paid off, stock portfolios that are way bigger than they ever could have hoped in the 2010s. You're right. What's what's going to slow them down from continuing to travel and spend their money? It would have to be a recession. But the the chicken and the egg problem here is like they need to slow their spending for there to be a recession. You'd think. All right. I want to I want to zag a little on the labor market here. This this is not me actually believing that the labor market is still strong, but I just want to ran Russell this and say like I'm actually more impressed with the job market than people think. Okay. Can I do that? >> We we sure the job market's actually slowing? I mean, >> all right. So no that there's I obvious here but look at this. I just want to play this out. >> Okay. >> Labor force participation rate prime age which is 25 to 54. So this takes away the boomers that are retiring is as high as it's been in the last 20 years almost 84%. Way higher than it was in the 2010s. It was falling. Now it's been rising. People keep saying the US unemployment rate for ages 16 to 24 is like this crisis right now because it's over 10%. But if you look historically, the average is almost 12%. It's below average still. Now, every time this has ticked up in the past, it's kind of led to recession, but it's this, >> but not this time. >> 10% unemployment rate for 16 to 22 is not ordinary. >> Every time this goes up, at least there's a recession. >> But it's just it's just funny to me that people think 16 to 24 having a high unemployment rate is a terrible thing. Like, of course it is. That it's much harder to get a job and you you're in and out of the labor. I don't know. It doesn't seem to be. And finally, wage growth is still above 4%. It was never that high in the 2010s, not once. It's falling, but it's still pretty high. Look at this from Slack. Uh layoffs and discharge rate still way, way lower than anything we saw in the 2010s. >> Yes. >> So, I think how about this? You can't make the claim that the labor market is strong. Obviously, it's weakening, but I'd say some combination of AI, immigration, the crackdown there, and baby boomers retiring is going to make it really hard to understand what exactly is going on in the underlying labor market. I think all those forces coming together at once is going to make it really weird for a while. >> Yeah. Um, I would agree with you. And this from Zip Recruiter CEO, uh, blew my face a little bit. Uh, I got this from the transcript which also shout out to them just do phenomenal work every week. All right. What we have just witnessed was an unprecedented downturn in the labor market that lasted for 32 months straight. For 32 months in a row, there was less hiring each month than the previous month. To put that in context for you guys, if you go back to the 2008 financial crisis, that downturn in hiring lasted 22 months. Uh, so this is rare. However, finally, for the last two quarters, we have started to see stabilization. Um, all right. So, this was a face blower, but also context is required. I think there's a lot of overhiring coming out of the pandemic. >> Yeah. Doesn't this just mean in 2021 there was a ton a ton of hiring? >> Yeah, it Yeah. But but nevertheless, it's still a surprising. Like that's a pretty wild stat. 32 straight months. Um remember when people were worried about GDP now crashing? That was >> Yeah, it's back above 3%. >> H >> right. the stock market or the or the GDP estimates are not worried about the labor market. >> Not yet. >> Yet. Um, okay. Good one from I want to talk about wages real quick here. Good one from this was from Fortune. It's kind of going around social media a little bit. Americans think you should land your dream job by 29, buy your first home at 30, and earn six figures by 35, but they're in for a reality check. So, they they kind of fact check some of this. So, they said, uh, this is interesting. Research shows that the average person changes job 12 times in their lifetime between 18 and 56. the average age of a first-time home buyer is now 38 years old, which is kind of depressing. Uh, and I don't know what the breakdown of this, but they say um only 18% of individuals earn more than $100,000. Uh, so just saying that like these and this was probably a survey or something. Um, they've the survey found that um people need $500,000 or more to feel comfortable, but only one >> need. >> Yeah. well need uh if they wanted to feel comfortable, but only8% of all positions according to ADP make 5,000 $500,000 or more. >> I mean, this is American exceptionalism. >> We're so ambitious and delusional >> that we all think we can be rich. >> But this is the thing. We are still by far the richest country. Uh Jar Herbal says uh they're looking he's looking at new census data. median family income is at an all-time inflationadjusted high of 105,800 in 2024. He has another one that shows uh onethird of American families now have um over $150,000 of income, the first time in history. And this is adjusted for inflation. And this is this chart always gets me because the middle class is shrinking, but it's because the upper class is rising and it's people moving because the lower class has gone down too. people are moving up in the world. >> Huh. >> And this is this is crazy. This is another one. So on top of this, Tom Harwood says 34% of American families make more than $150,000. By comparison, just 2 to 3% of British households earn more than that. >> Yeah, but you know what? Not a Yeah, but in addition to and also we also consume a hell of a lot more. So relatively speaking, the average American definitely probably doesn't feel richer because they're spending so much of it >> probably. But people are spending a lot more overseas as well and they're not making as much money as we are. >> So do do you think that this job opening thing matters? Because I remember when there was so many job openings and I think Josh was the one who said like someone on TCA said most of these job openings are probably fake anyway because people are trying to hoard >> Yeah. >> employees right now. So there's been a lot of charts going around that show that there are more unemployed people than there are job openings. Then it starts in 2020, right? So like this has never happened before. Wrong. I a chart can make this. If you zoom out, this is almost always the case. This is a post-pandemic phenomenon where there was more job openings than to your point, Ben. Who even knows if they were real? >> Yeah. That was the abnormal situation, right? >> Yeah. Um, but >> so I didn't sorry to cut you off. I didn't realize that this it's been so much of a spread for so long before. I didn't see it go back this far before. >> Yeah. >> The rest of the century was always more unemployed people than job openings. >> Which kind of makes sense, right? >> Yeah. Right. It shouldn't Yeah. There shouldn't just be a job waiting for probably not going to be a job waiting for everyone, >> right? >> All the time. So labor obviously obviously obviously obviously had the upper hand from post pandemic to I don't know a year ago two years ago remember job switchers that chart best way to get a raise was to switch jobs not anymore Sherman Williams suspends 401k matching amid weak sales um not great especially considering that the numbers that they've done net income wise >> can you buy this stock >> yeah I saw I sold it yesterday funny you should Okay. >> I I saw it yesterday cuz this just feels I don't I don't want to be associated with a company that does this. >> Well, to me, this is just a housing story, right? This is um Oh, you're you're you're selling in uh solidarity with the people who are having the 41k. >> I mean, I don't need I don't need to own the stock. You know what I mean? Like I I just I rolled it into Home Depot. It's just I'm trying to get housing. >> Yeah. This is the housing related thing to me because it makes sense that there wouldn't be as many people painting houses. Like if you move a house, you first thing you do when you come in, I'll paint all the walls. >> No, but my my point is like how shitty is this? And it's just a it's just a it's just a >> another example of where we are in the labor market. >> Yeah. Yeah, you're right. That there's got to be a million other things they could cut before a 401k match. I agree. That's that's a really crappy thing to do. >> Okay. So, and this is a point that I will that I've I've been making and I will continue to hammer. Maybe even more viciferously if I use that word right. Listen to the companies, not the headlines, not the tweets, not the newspapers. Listen to what the companies are saying. Companies tell you the truth. They have no reason to lie. If they lie, the market punishes them. Okay? The market keeps them honest and quarterly reports keep them honest. So, in thinking about the consumer, I'm going to read a couple of quotes from the transcript. And it's not to say that everything is hunky dory because obviously there's pockets of weakness, obviously. But my god, is it not as bad as it seems. Capital One. So as I've been saying for a long time that I still very much feel that the consumer is an anchor of strength I think in our current economy. There are a number of indicators that continue to be very strong. Uh uh consumer debt burn is very comparable to prepandemic levels and historically at a relatively modest place. Macy's the consumer has been resilient. We are pleased with second quarter results and momentum has continued third quarter to date. Uh Walmart Sam's Club I would tell you that in general members are pretty rational. The consumer behavior is pretty consistent and so far the impact from tariffs has been fairly muted. PNC consumer remains really strong. We saw record spending I think this quarter across both our debit and credit cards. Mastercard consumer spending continues to be healthy. This is very consistent with what I shared at our second quarter earnings call. The consumer continues to spend at a healthy clip. And finally, Visa. Uh the requisite how is spending going question. The word that comes to mind is strong. >> All right. You're you're an odds you're an odds guy. If I had to place odds on there will be a recession by the end of this decade, right? So four more years, whatever would what would your odds be on Yes, there will be a recession in the next four years. >> Uh I would say better than 50/50. Let's say 60%. >> That sounds about right. >> I don't want to pound the table, but it's been a while. And could we get could we by the end of the decade could we be getting some of the AI uh fairy dust wearing? >> That would have to be the thing. I'm just starting to come around. >> No, no, wouldn't. No, it wouldn't because recessions happen out of nowhere all the time. Who knows what's going to happen. >> Well, yeah, true. Well, all the time. There haven't been that many recessions this that this there's been three recessions this century alone. >> Uh and one of them was caused by a pandemic. I'm just saying it wouldn't shock me if there really wasn't a recession by the end of this decade. >> Oh, it definitely wouldn't shock me either. >> I mean, the AI stuff is obviously that that would be the easiest one. Like, okay, of course that led to a recession. Uh, but it wouldn't shock me if we didn't get one. >> Ben, last week I I asked the audience or maybe I was talking to you and asked the audience for help. Hey, how do I get uh how do I turn like an all caps paragraph into lowercase? And we got a few emails and then it hit me there's no excuse for asking questions anymore like hey you know when your your your friend ask you a question it's just like you want to send them like just Google it >> now more than ever and I had to remind myself that because why did I ask you in the audience I could just I put into chat GBT I said I accidentally have been writing on all caps for a whole page how do I fix this boom two seconds so we are still for as much as we talk about AI it's It's the It's the zeroth inning. The game hasn't even started yet because I use it and I'm still not using it. >> Yes, probably. There there I'm sure the way that we're using it right now is is not close to that we should be using it. There's people that are using it for way more way better things than we are. I I did have a I'm putting this in the dock right now. I had a half hour battle with Chad JBT yesterday. I was trying to get it to make me into a little infographic. I wrote a post about the 10 things I've learned in wealth management in the last 10 years. And look at the I put it in here >> and >> No, look at it closer. I didn't look at this close enough. >> Oh, there's two sixes. Oh, yeah. Yeah. >> It couldn't get the numbers right. It lit I kept saying, "No, the numbers are wrong. It's got to be 1 through 10." And I I swear I battled chat GBD for half hour and it couldn't it literally could not do it. >> This is part of my point. Why did >> it only going to get better obviously, but I I couldn't believe how >> it could but you could have used Gemini or something else. >> I guess maybe I should have. The fact that you didn't even think about that just goes to show my point. >> It's it's funny how it can do these complicated things, but the simple things it can't do. I feel like there's there's like a lesson there. >> It does look good. Numbers notwithstanding. >> Yeah, it looks good if if it could learn how to count. Uh and and I finally in the end I said I said, "Why can't you get this?" And it said, "I'm sorry. My bad." Basically, that's all it said. Like, sorry. Uh I'm shoehorning this in here, but um from Edardenni uh speaking of profit margins, he said there is no sign that rising tariff costs and labor shortages are squeezing profit margins. >> We have to conclude that productivity growth must be strong. >> The thing is though, what stops this train? If we're getting AI as a productivity tool, what stops margins from continuing to rise? There's there's no this is not a mean reverting series anymore. No, >> because for years I was taught this is the most mean- reverting series in all finance. It has to be because if profit margins are high, competition rushes in. >> Yeah. These companies are too big, they nobody can compete. >> That's the that's the problem. >> You know, you know, Poris Poris five forces. I think that needs to be uh relooked at. >> It might be. Um I bet they still teach that at all the NBA classes, right? They got to >> Yeah, it's timeless, but but maybe not so much. >> All right, let's talk about crypto. Um, this guy posted this thing about board apes and how he bought one for 400 grand or$425 and sold it for $37,000. Now, I don't know. I can't Sometimes with crypto, I can't tell if this stuff is real or if it's satire because social media everything is fake, I guess. Now, um, whatever the case is. Uh, I mean, remember how big this stuff was when it first came out? Uh, Jimmy Fallon had Paris Hilton on his show to talk about they both owned a board. I think they got sued for it cuz they were like pumping it cuz they owned it. Um I pulled up a chart of the price over time and it it did it peaked at in 2022 at like $400,000 per one of these and it was going to be this big community that was going to be formed and it was going to be this brand and they were going to do TV shows and movies and that's the kind of thing that doesn't exist today. That sort of suspension of reality. Oh, >> doorbell. One second. be right back. That was National Grid, which is a local utility company and uh so we moved in on Thursday and I called the plumber because I'm like, "Hot water's not working." And he looks at it and whatever. He comes to he goes, "Hey, is your gas on?" I'm like, "Yeah, why? Why wouldn't it be?" He goes, "Call National Grid." So, I called them and my gas wasn't on. So, I'm like, "Wait, I have an account number." My wife said that she called you guys. And they said, "Yeah, she did, but you didn't set up a a service appointment." I said, "Hang on. Why would you let your customer set up a new account and not >> right >> make an appointment?" So, she said, "Uh, sir, we we we sent you an email uh that we were going to be contacting you." I don't even know what she said, but I'm like, "But wait." So, I'm like, "Robin, give me your phone. The email says that nothing else needs to be done. You will be contacted in 48 hours." We were never contacted. How How is this re I have kids. I need warm water. Uh, so for the last six days, we've been, it's a good thing we didn't close on our house that we sold because we've been going back and forth having them shower and uh do laundry at the old house. So Kobe goes to me, "Daddy, are we like the Vanderbilts?" So I said, "What do you mean?" He goes, "Because we have two houses." And I said, "Uh, yeah. No, not not exactly. Not exactly." >> Wait, were you making him listen to the Vanderbilt book with you? No, I should have. But when we went to the breakers, I was telling him about the Vanderbilts and how they >> So Robin was asking me what happened. I said they lost all their money because they bought too many houses and wasted their money. And >> good segue because someone said, "Michael, we need more updates on your selling and buying your house. How was it dealing with agents? Did you pay buyers fee?" >> I I'll Yeah, I have I have a lot to said there. I'll do that next week. Um so anyway, yeah, the the board apes uh it looks like it effectively went to zero or close to it. Not quite. I guess 37,000, whatever the floor price is. You know what's interesting though? I I don't follow this stuff closely, obviously. I I thought it was uh it was wild at the time, but crypto punks are still are still >> Okay, that's a thing, >> I think. And uh JC owns a He says those are doing well. >> But yeah, that but that type of behavior, just the unbridled speculation. No, listen people, we were home, right? Like >> that sort of thing is is not in the market anymore. >> Um, >> but price Yeah. So the housing market, >> I do wonder what is what we're going to see over the next couple of months as as rates come down because rates are at the lowest level they've been at in a while. >> I think once we get into the fives, you'll start to see some movement. Uh Mike Simson posted this days on market per state and uh this is interesting. So, it's way high in the South East. Florida is high. Alabama, Mississippi, Louisiana. The quickest sales are happening in the Midwest. Michigan, Wisconsin, Indiana, Illinois, Ohio, still flying off the shelves here. I think a lot of this is just catch-up to be honest. These other states already had it. The Midwest is playing catch-up a little bit, but we haven't really had a slowdown in real estate here. It's like we had a house go up for sale in our neighborhood. It sold the day it got listed. Immediately immediate sale. Yeah. Day it got listed. Gone. Crazy. >> Yep. There's not as there's no supply yet. >> The Wall Street Journal did an article about people staying married because >> Yes, I read it says they're divorced. >> If only mortgage rates If only mortgage rates were low in the in the 90s, maybe my life would have been ruined. >> Can So, they finalized her divorce in April. She lives in a a trailer in the yard and they keep their loan which is refinanced at 2%. That's quite a financial sacrifice there, >> right? >> Yeah. >> At that point, why don't you just stay married? >> You're more in love with your mortgage than your spouse. >> Seriously. But I they were saying that they they gave a few other anecdotes. It's not that a lot of people are doing it apparently. >> Well, listen, I understand. All jokes aside, like a lot of people, a lot a lot of people need can't afford to financially be separated, >> right? You need two places to live. You're pay it's too you're paying for your own place. >> Um there was a lot of shenanigans in 2021, not just board apes, >> but how wide remember how much we spoke about the unicorns, >> these privately held companies that were had a billion dollar valuation. This is a great chart. I think >> all the funding rounds were insane. >> I took this from SGMore. Um, in 2025, almost four out of five 2021 unicorns are still unprofitable. >> Wow. >> According to Silicon Valley Banks, uh, >> holy smokes. >> Only a quarter have at least $300 million in annual revenue. So, 79% are unprofitable, 75% have less than $300 million in revenue, and 28% are not even growing year-over-year. >> So, these companies are are not not going public because of reporting restrictions and stuff. They're just they got thrown way too much private money and so they're you don't call these zombie companies or anything, but they they have such a long runway because they got so much money. >> Valuations were completely insane. So this this was a bubble. >> Yes. >> Right. Like a lot of these companies are down 70%. All right. Um speaking of private markets, so Torson Slack, who obviously does a lot of great work. Listen, not mad. He works for Apollo. Okay. So they're talking their book. We talk our book. I get it. Um, but this arked me a little bit. He he he wrote no alpha left in public markets. And I'm thinking, no alpha? What? The S&P is up 15%. Who cares about alpha? Who needs to outperform when the index is up 15% a year? He said there are fewer public companies to invest in and firms that decide to do an IPO. I mean, we we've heard this before. Um, combined with the domination of of passive investing, failure of active managers, and high concentration in public markets, and high concentration in a few stocks, the reality is that there's no alpha left in public markets, implying that the alpha is in private markets. And maybe that's true, but it just struck me as a little bit. Come on. >> Yeah, I would say that the alpha in profit in private markets has shrunk considerably as well. Yeah, >> it was there in the 80s and 90s. It's not much there anymore, >> right? Uh the other thing is like the the active mutual funds and ETFs aren't outperforming. You know, they're still underperforming, but individuals I think are outperforming more than they ever have been. Yeah, you know what? >> I uh I've been following uh Strazza's work and and the whole group at All-Star Charts and they're one of a million examples of incredible quality research for individual investors and >> that didn't exist in the past >> that just you didn't have access to stuff like that. Now, obviously, it's on you to to execute and blah blah blah blah blah, but like there's a lot of truth in the fact that Joe's are smoking pros. Remember Joe's Versus Pros? That was that TV show or what was it on? Great show. It >> was on ESPN. >> No. Was it? >> No. Okay, maybe. All right. I've got a new theory for you. >> Go ahead. >> I can't back this up with numbers. I'm just basing it on anecdotes and vibes. I think we've never had wealth inequality this great among young people. And this is one of the reasons that a lot of them are so unhappy. So I got a I I get the emails all the time from people who are in their 20s and early 30s. I'm talking about how rich they are because of stock options. This I put a one in here. This is from ask compound. Uh this guy and his wife are 27 and they have a 21 21 houses they own worth $4.5 million. And so I stuff about stock options and getting rich on crypto. And I think that it's never you did not hear stories like this in the 2010s like about people in their 20s getting wealthy. that there literally wasn't one story like this about someone in their 20s getting obscenely wealthy >> and now they're hold I had $37 in my Mass Mutual pension. >> Okay. Plus, you're shorting the S&P so that help >> but you're right. Then this was not a thing. >> So I think wealth inequality and the ability to see people get rich on stock options and crypto and I bought this stock and it went to the moon. I bought Nvidia or Tesla or whatever and I got in at the right time. I think wealth inequality among young people is probably as great as it's ever been. >> Yes. And when you when you combine this cocktail with what's going on with social media, it has some really nasty nasty ramifications. So, uh Jake, our friend Economic, tweeted this uh from Sam Harris. Since deleting my Twitter account nearly three years ago, I've generally ignored social media. However, in the past 48 hours, I've spent enough time studying the response to Kirk's death to be further convinced that platforms like X and Tik Tok are destroying our culture. No metaphor does a problem justice. I've compared social media to a dangerous psychological experiment, a hallucination machine, a funhouse mirror, a digital sewer, but nothing captures the ludicrous insults, moral injuries, and delusions that millions of us avatly produce and consume our mind. If the medium is the message, the message is mass psychosis, and it will send us careening from one political emergency to the next. the fact that some of the most deranging and divisive content is being created or amplified by foreign adversaries and that we've literally built and monetized our capacity to do this beggars's belief. We are poisoning ourselves and inviting others to po poison us. >> So my hope is that for my kids cuz this worries me about my kids coming up in age that um they're going to recognize this and they're going to go we don't need this crap. We don't need to like pollute our brains and we're going to do something else. That's my hope that it's it's gone it's gotten so crazy >> and there's so many insane people on it and God knows if they're even real people at some point like the every reply on Twitter for me now is a bot. Um they're all very positive but they're all bots and they're not real people and I wonder if it's just going to be pe bots talking to each other in the future and the young people are going to go why do we need to be part of this? >> Yeah, thank you. I I I hope that's good. I completely lost my train of thought, but um yeah, so social media has been an absolute disaster for the world. Like just hard stop. Are are there good aspects of it? Obviously, like we we you know, to say that we owe a lot to social media is an understatement, but my god, it is it is so so so so bad. >> Think how many lives it's ruined. People have literally lost their jobs because of stuff they said on social media. >> This happened last week to people. >> All right. I was going to say something, but I guess it was not that that profound. But this is this is a great example on on a on a much much different scale. But I was reading this article from the Financial Times and just in terms of like attention and uh the way that communication works these days. So they have they wrote an article, US public pension funds pair allocations to private credit and on the front of it is Cincinnati's $2.4 billion retirement fund is growing cautious about private credit investments. All right. So they go through this whole par article about private credit and how dangerous it is and loose covenants and they literally end it with this. Steven Meyer, CIO of the $295 billion New York City retirement system said the fund was looking to increase its private credit allocation. And it and it goes on um we have completely committed to to private credit. He said this article is backward. It should have said uh US public pension funds are completely committed to private credit and then ended with however not all are convinced. Okay, it leads with a $2.4 billion fund from Cincinnati and it ends with a $295 billion fund in New York City which is completely the opposite of what it should say. And this is exactly what is soed up with media and social media and attention and rewards and monetization. And it is so crippling to our society. And of course, we all feel very powerless and hopeless and down and and sad. And it is just really really reallying terrible and scary. And I don't know I don't know how any of this gets policed or regulated. There's no incentive to regulate it. Um Elon Musk is obviously the most powerful man in the world. It's just horrendous, horrendous, horrendous, horrendous. Ripping our society apart. >> Well, then you realize when you go in the real world and you go, "Oh, yeah. People aren't really like this in real life. They're just like this online. It's like two It's like a bipolar reality." >> It's like how people behave in their car >> on but but it's that on on faults. >> Yeah. >> Where do you want to go next? >> Let's do something a little lighter. Uh Matt Bellin says Rotten Tomatoes Rotten Tomato scores are rigged. Um he looks at the average score from 2014 to 2024 and they're all way higher. And he's saying that like studios can complain. They can get people to give reviews that they shouldn't. Uh he said two years ago New uh New York reported on the PR firms that uh recruited littleknown critics and paid them to write or change reviews that boosted Rotten Tomato scores. one film was elevated from 46% to 62 after manipulation. It's all very gross. He went through all these different examples of how they can how basically Rotten Tomato scores are totally useless. They bring in people who aren't really critics. They uh get people to vote in and change scores. This is why I'm I am an IMDb guy. When I look for a score of a TV show or a movie, I don't go to Rotten Tomatoes. I go to IMDb. >> You know, I hear you. I get you. All that being said, I'm I'm Rotten Tomatoes. Although, you know what? I I found myself looking at it way less than I used to. Here's where I look at it. If I'm if I'm on an airplane and just and the only reason why I look is if there's a movie that I've never heard of, I just want to make sure it's not a 12. You know what I mean? Like, so if I see a 53, would that stop me from watching it? Absolutely not. But if I see like a 12 or a 20, yeah, I'm probably going to pass. >> It also depends on what type of movie it is. If it's like a drama or a thriller, it's got to be a higher score versus a comedy. You can accept a lower score for a comedy. >> True. Ultra. >> All right, back to the Vanderbilt stuff. This is a comment we got. Fun fact on the Vanderbilt family. The two most famous living descendants are Anderson Cooper and Tim Timothy Olivand. >> So, I think everybody knew the Anderson bit. I I had no idea that was >> I didn't either. I love him, too. He's great. >> Yeah. No idea. >> He was in that stick show Wilson. Good. Good. Uh good one. >> Uh Ben observed horror movies don't car struggling to turn over anymore because cars should start. Uh the guys have previously discussed the enormous increase in the durability and quality of cars. Goes hand in hand with higher medium price. They're just better machines now. You can't get a new 20k Kmart style anymore. >> Uh yeah, true. >> That is true. All the sensors and stuff and the cameras like it makes sense. Cars are more expensive. >> But this was the point. He said he was talking about like how how people are financing cars longer, which is like dangerous. But maybe he's like when cars are were trash after six or seven years, why would you finance them for very long? Of course he wouldn't. So he said when cars are completely solid with ordinary maintenance for 8 10 12 years smooth smooth the cash flow by extending the loan giant exception when whatever Michael's driving that man has a nose for a lemon risk sniffer. True. I am a huge risk sniffer. Um all right >> you have you you have picked some really bad cars. >> Yeah I have. Um let's book end the show with uh there he is email of the week shall we? Longtime listener and fan of the show. I was wondering if you thought you already did a there he is or you did a that guy. No, I did a this guy email of the week. >> Oh, okay. >> This is a there he is email. >> You're really trying You're really trying to make this a thing. >> Long time listener, fan of the show. I was wondering if you could rank your top three to five things you yell when watching football in the fall, especially when the Giants. You know how depressing the Giants are? I didn't even watch week two. I mean, granted, I I was moving and stuff, but I I can't I don't think I've ever not watched week two. I don't care. Uh, all right. So, this is this is his Midwest Midwest fan version. You got to get rid of it. What are you guys doing? Gez, this is very Midwest. Wow. Uh, that was nice. Did you see that? But you're watching the game alone. Well, who do we play next week? Mid-second quarter. So true. These refs, I can't do it this year. Uh oh, they'll get that right with the replay. They got to overturn that one. Not bad. Pretty good list. >> You know, mine is um I just My daughter always comments on this and thinks it's so funny. I say whatever the announcer is about to say. I do that like 10 times a game. because I'm explaining the game to her and I'll say and then the announcer says it after me and I'm like, "Yeah, that's right." All right. So, there's this idea that the monoculture doesn't exist anymore. And I think this is a total bunk theory. So, people say because we're not all quoting the same movies and watching the same movies or TV show or music as we did like in the '90s that monoculture is dead, right? There's not everyone there's not 40 million people watching the same show anymore besides the Super Bowl, right? And uh I think it totally exists and I think it's more prevalent than ever because my daughter is 11 going on 12 and she feels like she's already like a teenager. And um the youths now they all know the same memes. They know the same sayings of memes. Like they're instead of quoting movies they quote stuff from YouTube. It's like they all the kids say the stupid 67 thing which I still don't get. >> Oh my kids do the 67. What is that? >> Yeah. I don't know but it's a it's a meme. My kids it's a meme. and my daughter, all the kids wear the exact same clothes. Like if you go to a football game and want see all the kids there, they're all wearing the same exact thing. And today it's sandals with socks. Like they all look exactly the same. >> Sandals with socks. I really have a trends setter. >> I told that's what I told him. I said, "You guys don't realize that when dads used to wear sandals with socks, that was considered that they were like the nerdiest person there. But now it's actual trend." But so the kids now that they have texting and they see everything on YouTube, they are the monoculture is probably stronger than ever. >> Did Did Did your kids watch the Demon Slayers or the Demon Slayers? The K-pop Demon Hunters? >> I got to be honest, I watched a little bit with them. I'm surprised it was as big as it was. I I thought it was just okay. I watched a little bit with them. I'm surp They liked it. They didn't love it. I mean, they like the songs and stuff, but I can't believe such a massive phenomenon. >> This is the greatest thing ever. My friend texted me this. His friend, his kids share a room. They live in the city. Uh, and these kids are whatever. Um, the age doesn't really matter that much, although the Aiden whatever years old. Listen to this. So, the boy shares room with his sister and apparently she likes this movie. >> This is the most shittiest crap on earth. Can't believe I I'm forced to listen to thising stuff every night. >> Wow. >> The most shittiest crap on earth. That kid has taste. >> All right. That's a New Yorker right there. Obviously. >> Um, do you know about the Savannah Bananas? >> Yeah, of course. I've seen the videos and highlights and stuff. >> So, we went on Saturday. They sold out Yankee Stadium. >> Oh, h how did you like it? >> We've been before. It's great. 49,000 people there. >> So, they're they're just the Harlem Globe Trotters of baseball, right? >> Yeah. It's great fun. So, um, one of the added benefits is it tells you how much time is left in the game. Although, I guess if the sixth inning, you know where the ninth thing is, but whatever. It tells you that there's like 30 minutes left. So, I said to Robin, "All right, we got to go." And she goes, "Wait, but they're having so much fun." I said, she goes, I said, "I got I have to teach him about leaving early. There's 49,000 people here. We're in the Bronx. It's going to be a disaster getting >> kids. that's a that there's no way that you can do that. >> So I said, "All right, Kobe, here's the story." And I explained to him, "We could stay until the end, but it could take an hour to get out of here, or we could just leave now." And he goes, "Let's go." >> Yep. >> So, they're on board. Um, >> you're teaching something, right? >> All right, Ben. Recommendations. What do you got? >> Okay, so Duncan re after we saw Oasis and everyone we talked about at Future Proof was probably sick of us talking about it because we were giving glowing reviews to everyone. But Duncan said, "You have to see the the uh documentary on that." I hadn't seen it. It came out in 2016. It's called Oasis Supersonic and I read it this weekend. >> Where do you watch it? >> I had to rent it on Amazon. 3.99 or whatever. It it wasn't on any streaming services. Um, and it was fantastic. It's just they decided like we are going to be the epitome of a rock and roll band and we're going to drink and we're going to do drugs and we're going to mess stuff up. There was just some excellent stories. Like the first ever um overseas show they did, they took a casino ferry to Amsterdam and I guess they just got really drunk and they were messing up the casino and throwing chips everywhere. and Liam's like, "Yeah, we're rock and roll stars. That's what we do." So, they never made it to the concert. Um, they had some great quotes. So, they talked about how democracy never works in a band. They both thought they were prime the prime minister and that's like one of the reasons they broke up. But, this is a good one. So, null was the songwriter and Liam was the lead man, right? Which made you could see at the show that was Liam was the lead. So, they talked about how like why their relationship got sour over the years and and null said Liam was this is like a total personal finance thing. I think Liam was always cooler than me. He had a better walk and clothes looked better on him and he was taller and he had a better haircut and he was funnier. >> Did you see him wearing the sbrero at in Mexico City? >> So Liam clearly would have liked to have my talent as a songwriter and there's not a day that goes by where I don't wish I could rock a parker like that man. And he did at the show he had he looked excellent in his Parker, but he's he's saying listen I was jealous of everything Liam had and he was jealous of my songwriting. It's like you can never have it all. I thought that was a really good um anyway, the doc is really well done. They talked about how null left the tour because he met a girl and he said, "I need a break from the tour. I can't stand all the shenanigans Liam's doing." They were doing, you know, lots of drugs and just being crazy. He said, "I I met this girl in San Francisco after a concert and I went to go stay a weekend with her. I don't remember her name. I don't remember what she looked like, but after staying with her and talking with her about the band, I wrote a song. It was called Talk Tonight, which they played at the show." And just like stories like that. There's excellent stories. really good. All right, one more. Did you watch Tasket on HBO? >> Yeah. >> Okay, so I watched the first two episodes and I'm totally in. It's the guy who wrote Marav Town and it's like two or three different shows in one and there's drug heists and there's a biker gang and there's FBI agents and the guy who plays Laura Lenny's brother in Ozark is so good as the lovable, you know, he's going to mess up but he's still you still really like him. >> Oh yeah, it's the same type of role. You're It's just he's so good at that. And so I I'm really in on this show. I really like it. >> Yeah. >> You in? >> Oh, I'm in. I'm all in. Um did you watch the Speaking of Crazy Drokes, did you watch the Sheen do? >> Not yet. I don't know. >> Remember how crazy that was in real time? >> Yeah. >> Like the whole winning thing when he did that interview. >> Mhm. >> And it was just like watching the most famous person in the world lose their >> I don't know if I can watch that kind of train wreck. I don't know if I'm gonna watch that one. >> Okay. Um All right. So, Apple and China, phenomenal book. Um, this stat seemed fake. >> Is this one you listen to? >> Yeah, I had to I had to look this up. Apple has gained remember when Steve Jobs died and there was obviously a lot of question about the future of Apple. Who the hell >> I bought the stock the day after Steve Jobs died? And I can't believe I sold it like 5 years later. >> Why' you buy it? >> I I thought like this is way overdone. Like it's still a great I think I was just like a betting on the iPhone and I held it for like five years but I sold it in like 2016. >> Huh. So there's there's so much good stuff in that book. Listening to the story of how Apple did what they did. Um there's so much revisionist history when looking at a line on the chart, right? Like you look back 15 years of Apple, it's like up to the right. No, it wasn't. >> There was so much there was so much in there. So many things had to go right. It's a miracle that they do what they did. Um but here's a stat that I thought was fake. Apple has gained $600 million a day in market cap for 365 days in the year since 2011. >> Geez. >> $600 million a day. >> Wow. >> One of the things that's remarkable about Apple, I had chart can make this chart. >> Um I also listen to the 90s by Chuck Clusterman. You read that book, right? >> Very good. So they spoke a lot about about how much like the first VHS cost. I think top T top gun was like $90 inflation adjusted. How technology is the most deflationary force. By the way, somebody sent me an email about how uh not a hot tape of like Michael is right about when you're in a new a new place walking around listening to whatever. So I was walking around Burbank, went to the Warner Brothers uh Water Tower studio listening to the 90s. What a vibe. Love California. Um anyway, the iPhone is the biggest technological force that goes against the grain. Their prices keep going up. Look at this chart. >> They were way underpriced at the beginning to get people hooked. >> But the price of the iPhone will never go down. >> So all these stories about like about you know how Galloway was like calling Apple a status symbol and like blew us away. It was like, "Oh my god, what an insight." But it really was. Uh, there was people in China that were selling there. There was one guy that sold his kidney for an iPhone. There's one guy. >> Were they also getting subsidized by the phone companies at first, too, though? >> Uh, yeah. Well, was it at first? I don't remember. One person, a guy in China, took out a 30% loan. I'm sorry. I'm sorry. I'm sorry. Spent 30% of his annual income on an iPhone. He was a mailman. He said, "Because when I have an iPhone, I'm not a mailman anymore." So they they they couldn't calculate the demand. They were so by every economic metric that you would look at. They were so wildly off. Anyway, phenomenal book. All right. We've gone we've gone way way way too long. Uh >> so to catch up on >> and Daniel and John and everybody else who's involved in editing this. >> Um all right. >> All right. >> One more thing because we it kind of ties it all nice and neat. So, at the end of the Oasis doc, they talked about how they had this huge concert somewhere in in the English countryside and it was 250,000 people there and they talked about how it felt like it was the last time before the internet age really hit and how like it was just it really was a different time and I think Cloman talks about that in his book too. >> Yes. And it really there's no going back now, but it listening to him talk about how great it was and how people could just be in the moment and not on their phones and not on social media posting about it. >> And uh people always say that like people are you're nostalgic for the past and it wasn't really that great. >> But no, the '90s really were that great. And people who say that like don't like the '90s were they just were better. They really were in a lot of ways. >> Yeah. >> Signed middle-aged guy. Get off my lawn. All right, animal spirits at the compoundnews.com. Thank you for listening. We will see you next week. [Music]