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Welcome to Animal Spirits with Michael and Ben. Michael, we are coming to Broadway in December. So the link went live today, so you can now buy your tickets. If you're signed up for our newsletter, you should have gotten that. I just want to talk real quick about the artwork here.
When you said we're coming to Broadway, you were a little... this is a little vague. We're not... it's not like you and I are going on a date to Broadway. I mean, I would love... you and I are going to go see Hamilton or Lion King, but we're doing a... we are on Broadway.
Yeah, we're doing a live show. You, Josh, and I. Plus, we're going to have who else? Tom Lee, Nick Kohlhas, Jessica Rabe, Ankur Crawford, and Adam Parker.
Mhm. It's going to be great.
Yeah. Early December. Tickets are on sale. Higher power in that lineup. Am I right?
Yeah, yeah. I got to talk about the ad real quick, though. Josh got Hamilton. You got the... what's it called?
Oh, sorry. Phantom of the Opera.
Do you know... you might not... you definitely don't know this about me. So, one of my earliest, I think pre-divorce memories, so I had to be five years old, was going to see Phantom of the Opera. And...
Not only did I like it, Ben, I still listen to the music.
Really? Okay. I would not have predicted you as a Broadway...
Mildly embarrassing to admit. I mean, I don't listen to it like every week, but here and there when I'm feeling some feelings.
Yeah. Josh got Hamilton, you got Phantom of the Opera, and I got The Lion King.
I feel like you think you were shafted. What's wrong with The Lion King?
Yeah, I guess it's... I don't know. It looks great. I did see The Lion King before. Um, okay. It's going to be fun. I can't wait.
Did you... you didn't take your kids to see The Lion King?
My kids have seen it though here. Not on Broadway. All right. I want to talk again about all the risks that everyone always talks about. So, right now, everyone has the same level of worry about everything, right? Worried about government debt levels. We're worried about higher interest rates. We're worried about an AI bubble. And we're worried about stock market concentration. Michael, what else are we worried about?
Ah, okay. Well, that's kind of hand in hand with concentration. It's funny how often that ebbs and flows, and the concentration thing really has been going on for a long time. So, Michael Semrad has some really good charts on this. It's funny. So, he shows share of returns, earnings growth, and capex from AI stocks since January 2024. And so it's two-thirds of the price return, 60% of earnings growth, and 81% of capex. So obviously everything's concentrated. And then he looks at also the percentage of stocks more than 20% below all-time highs when the S&P was within 1% of its all-time high. I feel like you've been doing some work on this too. Similar, right? That's the breadth thing. Maybe I'm stealing this from you, but is it possible that this stuff just doesn't matter anymore because of the way the market is constructed? So like the concentration thing could have mattered more in the past. So this is a crazy one of his. He shows, remember we talked a couple weeks ago about are these AI companies just immune to higher rates? And he shows the net interest costs versus the Fed funds rate. So this is net interest cost as a percentage of profits has continued to go down for these companies while rates have gone up. So they were able to lock in such low rates that this hasn't impacted them at all, or their profits have risen so much it hasn't impacted them at all.
This is a throwback chart. This was one of the face-blowing charts from 2022, maybe, when we were scratching our head trying to figure out why corporate America was hanging in there. I was like, 'Oh yeah, I forgot about what just happened over the last 18 months. They just borrowed at 0%. They're good.'
I guess the worry thing... so you posted, I saw you talked about on TCAF your old pie chart thing where you looked at the biggest companies. What did you do? The Mag Seven or the top five versus the rest. Here's my take on the concentration issue. And yes, we've spoken a lot about this, but we're revisiting it today. Michael Mauboussin has done work in the past that said, 'Be careful what you wish for.' I think people think that parity in the stock market is a good thing where you don't have like massive winners and losers. Wrong. When there is a widening of breadth, when a lot of stocks are beating the market, that tends to happen in a bear market. And as a matter of fact, it happened in 2001 dramatically so. But this concentration issue, these are natural monopolies that we've been talking about for the last 15 years, and...
It's not a problem until it is. So, it's been a warning for so long. For so, so long. Remember in 2018, that was the first time Apple crossed a trillion dollars. And there were so many people who thought they were so clever, thinking how poetic it would be that that would be the top, a trillion-dollar company. Give me a break. How could there be a trillion-dollar company? So in July 2018, I made a pie chart and I showed that the top five stocks in the market, and at the time it doesn't matter what it was, we know what it was, they were equal to the bottom 282 companies in the index. And it was like, whoa, how can this be? Like, pause. How can this be? So that was June, July 2018. I reran those numbers today and the top five stocks are now equal to the bottom 434. It went from the bottom 282 to the bottom 434. So I went through which bottom 434, by the way, that's stocks like 67 through 500.
The funny thing is your chart here, you can see it falling. When was it falling? In the last decade, to your point about bull markets versus bear markets, right? So we have a chart that shows the top five equals the bottom X over time, and it's been going up and to the right for a long time. So I think it's more nuanced than concentration doesn't matter. But a lot of the breadth stuff that we are seeing today, where the index can be up here and so many stocks can be down here, is a feature of the modern bull market. And I'm not saying that it's good, bad, or otherwise. It just is. And so that's why you have all these data points that look completely screwy. We've never had a market this concentrated, and it's fine until it's not.
So the thing is, the problem though is this could last for... this could be a 20 to 30-year secular thing. This is not something that could all of a sudden just end. Like concentration just could be something we're dealing with. I look...
We've been saying that forever. No, I mean, I feel like I've been pushing back on this for a long time. Every decade you have the top 10 stocks, and they always change. And I feel like for a long time I've said, I don't know, I feel like this is different. Like Apple and Amazon are very different than General Electric and AT&T and Ford.
Well, the risk was 10 years ago people said, well, the biggest risk here is that the government is going to break up these companies. And I think what we've discovered is that first of all, the government doesn't want to. And second of all, consumers don't want them to either. It would have to come from them. And the 2018, that must have been right when people really started worrying because that's when you produced your chart. And I looked, when's the first time I wrote about this? And I found this piece in July 2018, and it said CNBC said that three stocks, Amazon, Netflix, and Microsoft, make up 70% of the gains in the S&P, the NASDAQ. And so they're showing how concerned they were about Amazon, Netflix, Microsoft, Apple, Alphabet, and Facebook in 2018 being too much of the return for the S&P. Scott Galloway's book came out, The Four. That was, I think, what really made this take off because he gave that incredible talk that went viral. Remember that?
That was October 2017. So he had to have been working on that book in 2015, 2016. We've been talking about this for a full decade.
But the strange thing is that this year, if you look at just year-to-date returns this year, people are worried about concentration. Again, small-cap stocks, the Russell 2000 is up 15%, which is actually outperforming the S&P by a decent amount. The S&P is up, I don't know, 12%, 13%. The equal weight is up almost 13%. Mid-caps are up almost 12%. So it's not like these other stocks are just getting killed and not going anywhere. The other stocks are actually doing okay now.
There's a bunch of stocks that are getting killed.
Well, of course, but I'm saying if you look at small caps, mid-caps, equal weight, they're all double digits this year.
You're right. You're right. And this is very important because anytime we talk about these numbers, you have to bring the fundamentals back into the story just to show that this is not completely...
Yeah, it's grounded in reality.
So, the trailing 12-month net income of the top five stocks is also equal to the bottom 436 companies. It lines up almost perfectly.
Yeah, the share of profits is following the share of the stocks. The other thing is, if you're really worried about concentration risk, especially, that's the other worry I guess people would say, like this is all one trade. That's what everyone is saying now, right? This is all one trade.
And I'm not trying to poo-poo this, but if you want to hedge the concentration risk, it's easy. Here's your playbook. You buy bonds because if the AI trade stops, inflation will fall, rates will fall. You buy European equities because if...
No, listen. I'm just kidding.
But if AI... there's not as much tech exposure there. If AI blows up, the dollar will fall, because this is a US story.
So if AI blows up, the dollar will fall. European equities will do fine. They don't have the big tech sector. You buy REITs, rate-sensitive stuff, anything value, quality, dividend-paying. Like, that's your playbook for how to hedge this if you're really worried about concentration. It's easy to diversify it.
Great point. Great point.
But one more thing, do you remember when the narrative was that the only reason growth stocks worked was because of ZERP?
Yes. Like it was like, 'Hey, listen, we can pay anything for these stocks because rates are low. When rates come back up, then they actually have to have a story.' And guess what? The rates came back up, and growth stocks are still working.
Well, you're right. That narrative was definitely true for the shitty growth stocks, right? Like the stocks that can never grow into their...
Yeah. But all these other ones actually did grow into their valuations. That's the crazy part.
All right. I'm just going to shoehorn this Ray Dalio quote in here. So, Yahoo Finance posted...
Ray Dalio was kind of like your nemesis lately.
Ray Dalio says, 'Bubbles usually pop when people have to sell to spend their paper worth.' Okay, here's a quote: Everybody says I'm worth a billion dollars, but okay, try to spend that. This guy's out of touch.
Everybody says, 'I'm worth a billion dollars.' By the way, I was marinating over that take last week. Everybody's out of touch. Yeah, of course. You know what? We're all in touch with our own lives. I don't know what your life is like. I don't know what most...
Everyone's out of touch. The funny thing is, what would actually cause rich people to have to spend their wealth, like their paper wealth?
Everybody says I'm worth a billion dollars.
But this sounds like a really smart quote. Like, just what happens if everyone has to go sell, right? But what would cause really rich people to actually have to go sell all their assets?
What happens when boomers sell all their stocks in their 401ks?
Just get out of here with the nonsense.
All right. This is kind of impressive. You talked about the growth stocks that got killed. This is from the Wall Street Journal. They're talking about the fact that options activity is back to where it was in the 2021 heights. And that was a mini bubble to me.
Yeah, in a lot of ways it was. But so they look at average single-stock option volume daily is right back up to... it crashed big time after 2021, and now it's right back there. This is actually kind of impressive that these degenerates did not go away quietly. That was the whole thing. Once this blows up, they're going away. They're back.
You know what's not back?
One of the stocks from the mania... Stitch Fix. The stock is at $2.75, and you are doing your damnedest to keep this company in business. That is a snazzy-looking... What is that? A cardigan, overcoat, peacoat? What are we looking at? I don't know what...
Dunno, I was talking maybe a military jacket. The funny thing is, I actually bought... the CEO for that company was on Patrick O'Shaughnessy's podcast, and she told a great story, and I bought the stock and actually did really well. And then she quit, and I was like, okay, I'm out. And the stock is down like 95% since then. It got... I don't know. I'm like, I must be the only one who still uses them. You can now like...
What a pandemic story this was. I mean, obviously this company's going to work. Nobody could shop. But isn't this why like some of the stuff about shopping using an AI agent is a little overblown? I think people have shown that they enjoy shopping.
Maybe not for everything, but the whole idea that like your AI agent is going to do all the shopping for you and pick it... like I think people still want to do that. I think people get whatever the dopamine hit that is from shopping. Like I enjoy shopping.
I love shopping. Who doesn't like spending money?
Okay. Yeah, good point. All right. Here's a story where the headline of the story does not match what's actually going on in the story. So this says, this is on Bloomberg: 'High earners stop maxing out 401ks, betting they can outsmart retirement savings. Armed with a flood of online investing advice, savvy savers on a hunt for better ways to grow their money.' Now, you look at this and you go, 'Oh boy, this is a sign of the times.'
Right? You read that headline and you go, 'This is not good.' But if you look at the actual story, they interviewed a bunch of financial advisers, and they're asking like, why is this happening? I guess people are not maxing out their 401ks anymore as much as they did in the past. Even wealthy people, people who make like $150,000 or more, are not doing it. And they say, well, why is this happening? And a lot of people have decided that it's just more flexibility if you have money in a brokerage account even though you're paying taxes. And we've gotten like on Ask the Compound, we've gotten a million questions from people going, you know what, I saved for my first 20 years of my career. I'm in my late 40s now. What if I want to retire early and all my money is in a tax-deferred retirement account? I think it's actually better for me to put money in a brokerage even though there is a potential tax hit there and even though a 401k is more convenient.
My take, and this is a personal take: I am so much better behaved in my retirement accounts. I have never done anything stupid. Not one time have I done something that I regret in my retirement account. Do you know how many times I've regretted doing something in my brokerage account?
How often do you check your 401k balance? Basically never, probably, right?
It's linked to my Fidelity brokerage. So I see it, but I'm not...
But it's not like your brokerage where you're constantly checking the performance and the...
Yeah, and I don't think I'm an outlier here. I need my retirement account to keep my hands off the wheel.
I agree that there's something just convenient about it, especially it comes right out of your account. It's easy. It's automated. I agree that there's something to that. I think these are more people who are really trying to, you know, over-optimize, but...
I understand, and there are people that are optimizers, that are machines like Nick Maggiulli that can do it. I'm not one of those people.
Yes. I agree. Most people need that barrier.
I need like, nope, this is 30 years. All right. Out of sight, out of mind.
All right. So, I had a shoe-shine moment at the airport this past week. I traveled a little bit last week. I've got to tell you this. I almost recorded this conversation. I almost wanted to. So, I'm sitting at a flight, and our flight gets delayed. And I've got a story about that later for the travel section. And there's a young 20-something bro who's got like his hat on backwards, and he's got his AirPods in. He's got his sunglasses on in the airport, and he's walking back and forth having a conversation with another bro on the phone. Okay? And I hear him talking, and he's talking very loudly so everyone can hear him. You know those people, right? They want everyone to hear their conversation. And he's talking about how he's spending all this money on concerts. He's like, 'Dude, I blew 1,500 bucks on this concert,' and 'I spent this much on this concert.' And he goes, 'Bro,' you know, he's one of those guys that uses bro every other... it's a crutch, right? I can't judge because when I was younger, it was dude. We said dude for every other word. So the people who now use bro...
I say dude and bro. I call it Chris. Dude, bro, dude. You don't say dude or bro?
Yeah. I do it ironically to my son because he says it all the time. So this guy says, 'Listen, man, luckily I was able to sell some stocks to pay for this because otherwise I was going to go in debt.' And he goes, 'If the stock market stops going up, I'm...' Like, put a hand on his shoulder and just say, listen, I think this is just something everyone needs to learn. It was just...
In my brain before, as you're telling that story, I'm like, ah, shoe-shine story. Everybody knows everything about the stock market. There's no more signal there. And I don't think that's... I mean, that's just... that is pretty funny. That's a good one.
Yes. Okay. All right, I don't want to be totally locked in as the anti-survey guy all the time that questions everything, but I do think it's worth questioning stuff. So, I want to talk about this story in the Wall Street Journal that was going around and kind of went viral. So, every three years, the Fed does this Survey of Consumer Finances. And this thing is like the gold standard of wealth in America, right? So, Nick wrote a book using a lot of this data. They do it every three years. So 2019, 2022, 2025 just came out. All the econ Twitter went crazy for this. Okay, so look at the change in median net worth adjusted for inflation by age, and it shows for people who are 75 or older, it went up 35%. For people who are 35 and younger, it was down more than 20%. And it was kind of uneven for most of these people. And I looked at this data and I thought something about it doesn't make sense to me because 2022 was a bear market. Stocks down, bonds down, both down big. 2022 is also a peak for inflation. Do you know what the average inflation rate is from 2023 to 2025 if you had to guess?
3% per year. Not that high. So all the high inflation, that already kind of happened.
So you had, and again this is all inflation-adjusted data. So I kind of went and looked into this because it's crazy. So Cullen said that median real household wealth has exploded 91% since 2013. That's a massive number adjusted for inflation. So I looked at a lot of these numbers and I couldn't quite wrap my head around it. And a lot of it is there was like a 140% increase for under-35 from 2019 to 2022. So even with the decrease of 23% in the last three years, that group has seen the biggest increase, under 35. But I also dug into the data, and they have this, and I said, well, how many people are actually answering these surveys? And again, this is the gold standard. So I'm not trying to totally debunk it, but look at this. This is from this survey. In 2016, the general population, the people you send this to, 65% of people would respond. Now it's 45%. But wealthy people used to be 33%, now it's 24%. So rich people are no longer answering surveys, and do so at a much lower rate. And so I'm just wondering if these numbers are going to start getting screwy and not be representative, because the last three years has been a raging bull market. I know not everyone owns financial assets. A lot of the data showed if you own financial assets, you did really well. If you didn't, you didn't do as well. But I'm kind of questioning these numbers a little bit because rich people aren't answering surveys anymore. So I think it's underreporting the wealth of the country. Do you think that's a fair take?
Well, it's beyond fair. It's just, I mean, I feel like what you just said, you laid out a case that's not based on opinion. It's based on numbers. And if you have less wealthy people answering, then the outcome will be skewed lower. No?
Exactly. Am I missing something?
I don't know that there's a way to fix this. But that's why I think The Millionaire Next Door book was so good because they used actual tax returns of people. They went to the actual source of the data and got it. They didn't ask people, how do you feel? How are you doing financially? They looked at the actual numbers. That's why I think that book was so important.
Another good data point in here is the change since 2019. I saw a few people sharing this, right? Under 35 is up almost 90% after inflation, so that's the biggest increase. So it could be that maybe some of that original increase in the three years prior was too high and this one was too low, and when you average them out, they look better. But yeah, that's the point. After inflation, everyone is doing a lot better. So still good news, I'd say. But I'm questioning a little bit. All right. Is AI good for the economy and bad for the economy? You saw this Jason Furman chart here.
Real construction spending year-over-year. Data centers up 65%. Everything else almost — multifamily, single-family home, residential, healthcare, commercial, education, offices, lodging, manufacturing — all down. And manufacturing was down huge. So from this chart, it looks like over the last year the only thing getting built is AI stuff. So it's funny that everyone says, 'Well, AI is propping up the economy, but it's also kind of crowding stuff out and holding everything else back.' Is that fair?
So, is there any possibility that we could see a flipping of this if AI suffers and this stuff comes back a little bit?
Probably not in time to...
No, it's not like the stock market...
Where they could just pass the baton. Yeah. I think this is going to take a while. This might get worse. But do you remember, so manufacturing down 24%. Remember that was the big thing from the tariffs that Scott Bessent said, it's time, no more Wall Street, it's time for Main Street. We're going to bring manufacturing back. That was the whole idea of tariffs. We're bringing manufacturing back to our shores. That was the idea. Obviously, that didn't happen. And if you look at it, the New York Fed did this report, I'm sure you saw this. By February 2026, tariffs had contributed 2.9 percentage points to goods price inflation. Without them, goods prices would have fallen significantly. So they show what happened. They look at what happened. It says tariffs raise consumer goods prices, and it was a 3 percentage point difference. Dog coming in.
She is having a great time.
It's a tough life. Tough life being a dog, isn't it?
Hello. I'm not sure what she's doing.
They show the counterfactual without tariffs and with tariffs. What happened? And we got a 3 percentage point increase in goods prices.
I think this is possibly one of the worst economic ideas we've ever had. There's no tangible benefit that you can say, well, it did actually bring more manufacturing jobs. It did bring... there was no benefit whatsoever to this. Not one.
One of the rare times where I think most sane people said this is a terrible idea. Not even like a partisan type of thing. I feel like everybody was like, whoa.
Other than the people on the TV, everybody said like, this is nope, let's not do...
You remember there was people going on CNBC saying we need to have a recession to do this, to make this manufacturing stuff happen. Now, you could say, listen, hey, there's a ton of new construction jobs for creating data centers. That's probably something that you could...
Am I misremembering them saying that, Bessent saying the economy needs to take its medicine?
Yeah, there's a lot of people saying we need to go, we need to have a recession.
Not people like... literally, was Bessent saying it? I can't quite remember.
I'm sure, I don't know. There was a lot of people who said that. All right. I have a controversial take for you because I think right now... So did you read the book The Price of Time by Edward Chancellor?
It's one of those books, Ben, that's been on my shelf that I probably will never read. I would like to, but...
It's like the... it's bonds, right?
TLDR. It's the story of why we need interest rates. And it's kind of like the pricing of risk, and interest rates are like the price of time and the price of risk. And the whole point was 0% interest rates are causing way more problems than they're fixing, right? And the point was this is going to lead to huge imbalances and big problems. And I think you could make the case... Everyone talked about how bad ZERP was going to be and how it's going to cause a crisis that never happened. I think you could say that right now higher interest rates are worse than ZERP was for the economy. ZERP really didn't cause any... I mean, sure there was some venture capital risks being taken and stuff funded. I think you could make the case the current situation is so bad for the economy, for how bad it is for housing, how bad it is for borrowing, that this right now is worse than ZERP.
Okay. I feel like that's an interesting point that I don't feel qualified to answer. I'd like to hear like Neel Kashkari debate somebody. I don't even know which side Neel would be on, but I feel like that's an economist. That's...
Housing. The housing activity is absolutely dead. That's 20% of the economy. I'm not saying we should go back to ZERP, but I'm saying...
Okay, my knee-jerk reaction is no, that's not right. I don't think...
For our current economy, lower rates, say 2 to 3% versus 4 to 5%, lower rates are better than higher rates.
Yeah. Wow. How quickly you just moved the goalpost, Ben Carlson.
I'm not trying to say that we need to go back.
Ah, what a take. Ben Carlson says that 2.5% rates are better than 5% in this current economy. Stop the presses.
No, my big take is I think higher rates, current level rates right now, are worse for the economy than ZERP was in all the 2010s.
Okay. So do you really believe that?
What did ZERP cause? What imbalances did ZERP cause that led to a crisis? Give it a week and let's rehash this. I feel like you need to really think about this.
Yeah, I know. I want you to think about it. I've thought about it.
I feel, you know what, I'm very busy. I'm going to see Metallica though this weekend. I don't feel like thinking about it. You think about it.
0% interest rates led to no crisis. There was not a crisis that came about because of it. Higher rates are going to probably cause a crisis, and they already have in the housing market.
All right, here's another take. Ready? I'm full of takes today, so I'm just going to keep throwing them at you.
So, Joe Weisenthal shared this thing from Egan-Jones.
Wait, hang on. I have just one thing to say. I think there are people that draw a direct line from the ZERP era to like populism, right? Like ZERP caused wealth inequality, and I reject that wholeheartedly. To me, that's nonsense. Our system causes wealth inequality because right now when rates are higher, people go, 'Well, this is bad for wealth inequality because it's just rich asset owners who are getting higher interest rates now.'
So any situation you can say this is bad for wealth inequality.
All right. What's your next take?
All right. It's really weird that the two biggest economies of the last 50 years besides the United States, we can't use them to compare to our economy at all. Japan was like the biggest outlier ever. Same thing with China. It's very bizarre that the two other biggest economies have no bearing in reality to like economic theory.
So Egan-Jones shows, because think about Japan. 30 years of deflation, low interest rates. It's kind of like, yeah, but that was Japan. That's an outlier. China, they show nominal GDP, they show all these economic statistics from 2004 to 2025. Nominal GDP growth, China smoked us. Real GDP growth, smoked us. Average wage growth, their wages were up 13 times. Ours were up 2.2 times, 2000 to 2024. But then they showed the shareholder, our stock return, our profits, our return on capital, all this other stuff. There's no relationship between China's economic performance and the performance of their financial markets. And so it's like they're another outlier. You have to just kind of be like, 'Yeah, but that's China. Throw them away.' Like the two biggest other economies are total outliers that make no sense.
Absolutely no sense in the last 50 years. There's no...
You are on a heater, my friend.
I got a lot of thoughts going on up here.
All right. Did you listen to the Mark Zuckerberg thing with John Collison? Were they drinking? What's it called? Pint something. Did you listen to any of it?
No, but I did see him try and drink it. And that was funny.
Guess what? Mark Zuckerberg probably can't split the G like yours truly.
That was very funny. He took a sip of it and it looked like someone had just like... I don't know.
Did he swirl it around a little bit?
He drank a pint and a half, they said. And so they sit and they talk, and it was him and Alexander Wang, who's like the head of their AI build-out. And this is obvious, but they were talking about like the huge, huge investment that they had to make to get this. And Zuckerberg's like, listen, there's no like dipping your toe in the water here. It's like you either write a huge, huge check and try to make this happen or you don't do it at all. And they were like, 'But our CFO said, listen, if this is good, it's all good. If we get a return on this and it works, it's fine. But we're spending so much money that if it's bad...'
Yeah. But she's... this is her CFO being like, 'Listen, guys, if we spend this money and we get no return on this, it doesn't work, this is going to be really, really, really bad.' And they're like, 'Yeah, there's no middle ground here.' So this is the thing. I guess this is why the people who keep worrying about AI risks, is that there's no soft landing scenario here if this doesn't work, right? This is either it has to work or there's a hard landing.
So I've got a take. The only rational take for people that are speaking into the microphone or onto their keyboard, for people that are communicating, trying to have an opinion with the public, be optimistic. It's sort of like talking about the stock market. If the stock market crashes, you don't get any points, everybody's still pissed off. But if things go okay and you're the boy who cried wolf, people just think you're a joke. And I think there's parallels here. Let's assume the world doesn't end, right? Like just act as if this is not Terminator 2. Great. Everything's fine. But if it's 2034 and you're still like hemming and hawing about we're all going to die, it's just like you become an unserious person.
That's a good take. I also like the idea that I think too many people have thought about the dot-com risk and how that was like a 12-year bear market for stocks. Like I think if there was a hard landing, it would be very swift. We'd get a swift kick to the pants, and then guess what? AI is still probably going to work. Well, I guess the counterpoint to that would be there's just a lot of money that's trapped burning on fire, and what sort of damage does that cause throughout the economy?
There's trillions of dollars that might just be gone in that case.
But this is not like a metaverse Web3 situation where it's like, okay, that was absolutely nothing. That whole thing was, what were we thinking? This...
Is this too simple? This has to work and it has to work.
I think so. That's kind of what they were saying, like we literally, we have to make this work.
All right. So maybe it doesn't. I don't know. I choose to believe in the dorks on this one.
No, but I tend to think that we're going to get a like 30% bear market from this. I'm 57% positive about this. Okay. There's probably going to be like a 30% swift bear market because some hiccup in AI, and then it's still...
I say 90% likelihood of that happening. I mean, at some point, obviously...
Come on. But it's going to be like an unbelievable buying opportunity, and we're still going to get everything they say and more about AI.
Okay. I hope you're right. I coded for the first time. This is exciting. Ben, who says you can't teach an old bald dog new tricks. So after every Animal Spirits show, we've got like, I don't know, 15 to 20 categories in the doc: stock market, economy, personal finance, AI, blah blah blah blah blah. And when we're done with the show, somebody on our team goes in there and will delete everything for us. But oftentimes — not often, it happens, I don't know, whatever — it happens where we're done with the show, 20 minutes later I see something I want to drop in the doc. The doc isn't clean. I have to clean the doc. Not a huge deal. It's just a little bit tedious. Certainly for the person whose job it is to do it or whose responsibility is to do it. And for us, it's just annoying. So I typed into Claude, 'Hey, we've got 15 categories in big bold red font. Can you help me delete everything between every section?' So it gave me a bunch of code. It told me what to do. I copied and pasted it into somewhere inside of Google. And now on top where it says file, edit, view, insert, format, right? You know those buttons on top of the Google doc? There's a button that says episode tools...
I mean, how great is that?
You didn't really code. You AI-coded for you and you copy and pasted it.
Of course. But I see it. It's on here and it works.
So all of the trillions of dollars that they're spending to save me six minutes.
Yeah. That's worth a trillion dollars. All right. Here's a good one. This guy on Twitter, Jameson, Big Deck Energy. So he builds decks for people, and he said, 'Here's how AI has helped me with my real-world physical job.'
So he's a deck builder at people's houses, like that type of deck.
Yes. He goes and builds decks. So you've had this happen, I'm sure. Someone comes and gives you a quote, and then there's like for the next four weeks there's back and forth. You get the quote...
With the HVAC people, with my... Yeah, of course.
You get the quote like 10 days later or something. So he says, 'Listen, what I do,' he has this AI tool that takes all the measurements for him. He's recording everything. So he has a conversation with clients, he's recording what he's saying. So there's the back and forth, there's nothing that gets lost. So he says he gets done, he goes into his truck right afterwards, he uploads all of the recording, he transfers all the data that he's done for his measurements, he copies the transcript into ChatGPT. Then he says, 'Send a recap to the clients from AI. Also, take this information in terms of like the measurements and everything, compare it to all of our other proposals, create a proposal based on previous proposals.' And he says it sends it to him, and the proposal is probably 90% right. He says, 'Good enough.' The person gets a proposal immediately with action steps. This is a great idea.
Great idea. I feel like oftentimes when you're looking for jobs, whoever sends you the proposal first wins. That happened with... what was I doing? Oh, whatever, I was doing a project.
Yeah. By the way, speaking of like fast corrections, DRAM, the Roundhill Memory ETF, down 32%.
Yeah. Well, South Korea has like a mini blow-up every two months, it seems like. This was, we mentioned this, this was like the super-duper successful ETF that came out of nowhere. Assets...
Down 5% again today. Assets are still $23 billion. I mean, money is not coming out of this thing. But uh, yeah, memory stocks down 32% real quick.
Wow. 35% correction. That's pretty good. So, if you believe in this stuff, hey, buying opportunity.
My beloved Western Digital, a stock that we own inside of uh our momentum strategy, which obviously this thing has lost it. Uh, Western Digital is holy cut in half.
Wow. Yeah, these these stocks are all getting killed again today.
Wow. SanDisk, I assume, is in the same boat.
SanDisk, Micron, only 40%.
