The Compound and Friends - Market Bubbles With Owen Lamont, Autonomous Vehicles Everywhere, Barron’s Roundtable

Episode Date: January 15, 2025

On this TCAF Tuesday, Josh Brown is joined by Owen Lamont, Senior Vice President and Portfolio Manager at Acadian Asset Management to discuss his piece “The Seven Pillars of Market Bubbles". Then at 40:44, hear an all-new episode of What Are Your Thoughts with Josh Brown and Michael Batnick! This episode is sponsored by F/M Investments and Rocket Money!  To learn more about F/m ETFs, visit: www.fminvest.com Cancel your unwanted subscriptions today by visiting: http://rocketmoney.com/compound   Sign up for The Compound Newsletter and never miss out! Instagram: https://instagram.com/thecompoundnews Twitter: https://twitter.com/thecompoundnews LinkedIn: https://www.linkedin.com/company/the-compound-media/ Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Josh Brown are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. The Compound Media, Incorporated, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ Learn more about your ad choices. Visit megaphone.fm/adchoices

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Go to rocketmoney.com slash compound right now. All right. We have a lot to do today. We talked to Owen Lamont. Owen is at Acadian Asset Management, and we get into this thing he wrote called the seven pillars of market bubbles. When I read it, I found myself kind of like nodding along because while we are not in a full-blown stock market bubble, there are tons of examples of bubble-ish psychology, bubble-ish

activity. And I think distinguishing between the big picture and the little bubbles all around the big picture becomes really important. So Owen was great, his first appearance on the compound and hopefully not his last. And then it's an only edition of What are your thoughts with Michael Batnik and I. We look at the financial ramifications of the tragic wildfire episode in Southern California. We also get into autonomous vehicles. I have a secret stock no one's ever heard of. Michael has a mystery chart. There's a lot happening there.

Really want you to hear that as well. Please stick around and we'll get you right into the show. Welcome to the compound and friends. All opinions expressed by Josh Brown, Michael Batnick and their cast mates are solely their own opinions and do not reflect the opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast.

Okay. We are here with Owen Lamont. Today we're going to talk about the seven pillars of market bubbles. And this is Owen's first time on the show. He is the senior vice president and portfolio manager at Acadian Asset Management, a Boston based global investment management firm founded in 1986, specializes in quantitative and systematic investment strategies. Oh, and thank you so much for joining us.

Are you in Boston right now? I am. All right. All right. Very cool. So I really liked what you had written because I don't currently view the entire market as being in a bubble, but there are undeniable bubble elements everywhere you look. I think before we go into the seven pillars, I think just broadly speaking, the only trouble I have with full-blown, this is a bubble diagnosis, full stop, is that the term bubble implies that people are making money primarily in either low quality or Ponzi-esque types of investments. And while those are everywhere, the bulk of the gains for investors in this era

have been through arguably the most high quality companies that have ever existed. Are they paying up for them? Totally. But are they tulips? Not really. So I just wanted to get kind of your overarching take and then I want to dive into what you wrote. So I totally agree that I am not, it is not obvious that like the S&P 500 is in a bubble. I think it's closer than it was six months ago. There are some items on my checklist

that I'm checking off, but I would not say that it is in a bubble today. And the main thing I would look, the main thing that might make me change my mind is if in 2025 there's like a huge wave of IPOs, like we saw in 99 or 2021, that would be a signal to me. It just hasn't happened yet. So totally agree that the broad stock market is, it looks pricey, but not obviously a bubble. Yeah. So to me, it feels like we're on our way to a full-blown bubble. And there's a lot of things that would take a fork in the road. But we're going off every checklist, boom, boom, boom.

I totally agree. And I had this conversation with Jason Zweig just a month and a half ago. And I said, we're not quite in madness. We're in the foothills of madness. We're in the foothills of madness. We're in the foothills of madness. Exactly right. And we can see the distant peak of utter insanity. The myths are clear. All right. Let's go through one through seven. Number one, I'm going to quote you, and then I want you to react to it. You said, there are idiots. Look around. This, of course, is apocryphally something that Larry Summers wrote in an unpublished paper.

It sounds like you got a chance to look at it. I don't know if it was this opening line, the way you talk about Call Me Ishmael from Moby Dick. It sounds like it would be a great opening line. What was Larry saying and what are the relevant aspects to this concept for today? Okay. So first of all, I have never seen it. Okay. But it's not apocryphal. There are many witnesses who have read it. It's apocryphal to me. It's like it's a, you know, it's like a forbidden scroll that you will never see. Okay. Might

be possible. Anyway, there are idiots. Look around. I think the relevance of that is when we think about bubbles in the stock market, they're partly rational and partly irrational. I would say that in the world of Bitcoin, there are irrational and rational people interacting. Nobody disagrees. There are idiots, or we could just say irrational or uninformed traders who are gambling, and no one disagrees that those people exist. The question is whether they impact the stock market

or impact Bitcoin or whatever. So there's been decades of research trying to plot out how rational and irrational people interact But to me when I think about Bitcoin I do think about a bunch of new new people flowing in who don't Definitely do not understand monetary economics don't really understand finance at all and they're just you know They're just buying the Bitcoin ETF because they're part of a movement. It's part of something cool. It's part of something lucrative.

And an interesting quote, a quote that I didn't include was George Soros's famous quote, when I see a bubble, I rush in. This is not irrational. So that there are other people out and other front running the idiots or what they're doing. But it's a, it's a complicated situation with different types of actors making different type. Everyone's trying to outwit everybody So this is what I wanted to ask you. There's an L. There's an element to this There's a cynicism and I'm not sure if it's generational or if it's pros versus retail But it's like well, I know there's this army of morons that's gonna keep buying

therefore, why would I sell? And so you have rational people deliberately, possibly acting irrationally, making the bet that there are even more irrational people right behind them. That's what's at the heart of the Soros quote. And I think if anything, all of society has grown increasingly cynical.

They turn politics into a game show. Why wouldn't we treat markets like on its face? The only use for it is greater fool. Yeah, I mean, it's always been true that there's been this, you know, what Keynes called the beauty contest, the animal spirits that we're all trying to front by each other. to judge the judges. But it seems like, like, let's just you're old enough to remember the tech stock bubble. There was a lot of that in the tech

stock bubble, but at least there was like a core of a good idea, which was there was this internet thing, as opposed to many of the cryptocurrencies where it's just, it's, it's everyone knows is crazy. And they're just, you know, they're, it's just, it's, it's, everyone knows it's crazy and they're just, you know, they're, it's just, they're just part of the game. They're just, they're just playing out with the other guy. And it's, it's a timeless thing, but just like you say, it seems worse.

And I totally agree. It's, it's a part of our culture of a meaninglessness or, or just like, you know, nor, I don't know what you want to call it, but it's a, it's a, it's just more of a thing. They call it financial, they call it financial economic nihilism. Yes.

I think that's the phrase of Matt Levine. That's definitely the meme stocks. That's what the meme stocks and many of the cryptocurrencies have in common. They stop pretending that there's an economic reason for it. Yeah. I think there's an element of that. And then to your point, I think there are players who genuinely hold these kind of like crypto libertarian views about the financial system. And they believe in what they're building and what they're doing and the purpose of

all of this. And they're willing to tolerate the carnival sideshow that's taking place in the tent next door, because in their way of thinking. And you wrote about this. Yes, there are idiots, but they don't matter because they cancel each other out. So if you're the CEO of Coinbase, you know you can't get rid of the idiots and maybe you make some money because they exist. But you're not really focused on that.

You're focused on building the Charles Schwab of the crypto era, and you're a true believer. Right, and in the defense of the crypto boosters, every great economic transformation has had nonsense and stupid people and crazy stuff. So, you know, railroads, and those were all good things that helped society. So I can see where they're coming from.

You can't really say that about the meme stocks and stuff. That's just pure nonsense. And it seems related and it seems like it might be kind of intersecting, especially the cult-like aspects of it. Yeah. So let's say, all right, let's say there's $4 trillion ish in crypto, most of it Bitcoin and Bitcoin related securities. Like let's, I know there's some overlap there, but let's just say that's like that universe of speculation. Then let's say the meme stocks are another, I don't know, they, do they add up to it's at 5 billion still with GameStop being half?

I don't even know. I don't know what a meme stock is. So I was told last week that the quantum computing stocks are the new meme stocks and they are super tiny. These are companies with effectively no market cap. So let's say the whole phenomenon though between crypto and these tiny meme stocks, let's say like all of it adds up to what I say $4 trillion plus $10 billion. I mean, I guess it would qualify as a bubble if this were 1997.

But in the context of the global economy and global market cap, it's not there yet. That's why I say Foothills. Yeah. I mean, in 2018, there was a crypto bubble, not as big in billions, and it really had nothing to do with the American stock market. And we've also seen these Chinese bubble. We saw one in 2018 and 2015. They're kind of like off in the corner doing their own bizarre thing, growing and bursting. But I do kind of think that as crypto and Bitcoin are becoming mainstream, they keep having these bubbles. As they get bigger, they're starting to intersect with the real world, where that would be my

concern. I don't really care there was a crypto bubble in 2018, but if crypto collapsed today, I would expect it would impact the stock market, at least some crypto related stocks. I mean, there's more crypto related stocks. There's stocks that are announcing that they're buying Bitcoin as Bitcoin treasury. So it's I would say it's infecting our stock market or it's like a contagion of crypto. In addition to meme stocks, there's crypto adjacent stocks.

Yeah, MicroStrategy being obviously the most well known. Several others, Riot, Blockchain, Mara, a bunch of ETFs. I guess what I would ask you is, do you think we're now at the point where crypto investing has or crypto assets have become so financialized that they are effectively systemically important or the dollar amounts not there yet. And specifically, I guess I would think of like stable coins, which Tether has long been looked at as how do we really know what's going on there? Well, what's going on there is now they make a lot of money because they own a lot of bonds. Are they now is that now a systemically important pool of capital for not just crypto, but for all of us?

So these are like the new questions we need to ask as this asset class grows in size. Okay, so there's kind of like two things. One is you in 1999, we had a huge tech stock bubble. Tech stocks went up, tech stocks went down. There was no global financial collapse. Why? Because that was 100% equity. That was an equity-based thing.

Heard a lot of people invested in tech stock, but it didn't cause a global collapse. What is the difference? The difference is debt. My former colleague at the University of Chicago, Doug Diamond, the one at the Nobel Prize, has this quote. Let me try to get it right. Financial crises are always and everywhere about short term debt. So I totally agree with you that the rise of Tether and other stable coins are would be a really serious thing. Like forget about these meme stocks. That's like a side show if somehow we had a shadow banking.

Crisis that would be concerning i don't know for their that that's like over my pay grade but. That would definitely if we had a. A messed up financial system that was half libertarian and half regulated that's the libertarianarian part being the crypto, the regulator part being the bank. That's a recipe for disaster right there. Well we sort of are in the opening innings of that when we have brokerage accounts that can seamlessly, where you can move money seamlessly between the crypto libertarian type of world and the traditional finance world. And it's not just Robinhood at this point.

Now it's Fidelity. And Schwab said right after the election, okay, we're going to do this too. So that's the Foothills idea. That's where we're going. I mean, the amazing thing is how many people have changed their mind about Bitcoin. You know, it used to be this terrible thing. Now it's like, hey, we're starting this Bitcoin ETF or whatever. So there's a tendency to join the winning team and that's what's happening.

Having a kid in college and this being Fraternity and Sorority Bid Week, I can tell you right now the feeling of belonging or not belonging is maybe one of the most primal human urges and the behavioral financial, you know, psychology that comes along with those ideas. I almost feel like that's the whole, if you understand how badly people have this like urge to be in the in-group and not on the outskirts of the bonfire where they might fall prey to a hyena. It's just 100,000 years of human development. Especially young men.

Young men want to form their band that goes out and fights against injustice and brings home the... Brings home... Go to the hunt and bring home the prey. So it's kind of like, it's not a bull market it's a bro market it's about masculinity you know mark zuckerberg's out this week we need more masculinity and it's that's really it's a distinctive feature i guess you know it's a it's it's all part of a cultural moment we're in yeah where have all the cowboys gone they're uh they're on their phones they phones. They're trading and sports gambling.

Alright. Number two, Everyone Ought to Be Rich. You say that's the title of John Jay Raskub's spectacularly ill-timed article urging Americans to buy equities in the August 1929 Ladies Home Journal. I guess the joke there is, by the time it's in ladies home journal, it has now permeated every possible avenue to reach the masses because that would not be the first place you would see an article about investing appear at least not 100 years ago. Yeah, Raskop was a he was he worked for General Motors and he kind of invented a I'm probably

going to say it wrong, but he was part of the whole like installment plan and how to buy a car He was a he was a legitimate pioneer of household finance. Let's say your consumer finance. But anyway That this relates back to the the crypto libertarianism. It's kind of like We have this You know, we're we we there's an element of society that's like, there's no way, the whole system is rigged against me. Just working hard will not work. What I need to do is take a big risk and go bold with this crypto stuff.

I would say that the crypto has always been part of a utopian vision of starting with the correct premise that we have an inefficient financial system, but then leaping to this like, Hey, this Bitcoin thing is going to solve everything. It's going to be everywhere. It's going to transform society and you know, it's going to GDP will go up a million times. So when I hear democratizing, all right, let's start with this. We have democratized blank.

To me means hold your wallet. Because nobody in any kind of position of power, any kind of gatekeeper of returns or capital is going out of their way to democratize anything unless there's money to be made. And that doesn't mean anything's wrong with that. But instead of leading with, hey, we're doing this because we think it's good for business. No, no, no, no, no, no, no. We're doing this because we have such incredible lives and it's just keeping us up at night that no one else does.

And we want to bring you into the club. It's always f*****g bulls**t. It's never not bulls**t. I think it's maybe just a spectrum where it's like a little bit more altruistic and then completely Completely a masquerade I don't totally hate the message. I just know it's fake Yeah, I mean Josh is gonna be a boring video because we just agree on everything but you know democratizing is Sounds good, but not everything should be democratized like democratizing surgery. I do not want my surgeon elected

I want to pick an elite. I want elite surgeons not the Democratic surgeons So I I think it's often been the case that like there have been well-meaning attempts to like we're gonna promote financial literacy and they backfire. It would be like promoting surgical, you know, giving out a scalpel and saying you could do surgery, it's inevitably going to backfire. There's a well-known paper that looked at the results of promoting financial literacy and what they noted after looking at actual investor behavior on the heels of this democratization is that it actually ended up promoting overconfidence and people did worse in the markets, believing

that they were now literate. All right. So there's a lot of that. There's a lot of that. And it's not just in crypto and meme stocks, which obviously it's a big feature of that. We're starting to see that in private equity, private credit. Just this concept of we are liberating you to come into our highly sophisticated market.

And now you're part of the gang. In a million ways, we know how that will go wrong. We don't know the timetable. Okay, number three three nobody knows anything This is as William Goldman famous William Goldman quote. Yeah, he's a he's a guy who wrote many great Hollywood scripts I'm any wonderful books Yeah, nobody knows anything was like, you know, nobody no Hollywood executive knows which movie will succeed That's why they you know, they make a million Marvel movies and some of them

succeed. So nobody knows anything. Oh, and here's the full quote. Nobody knows anything. Not one person in the entire motion picture field knows for a certainty what's going to work. Every time out it's a guess. And if you're lucky and educated one. Yeah. So in finance, we have a special version of that called the random walk theory, which says whatever the price is today, that's our best guess for what it'll be tomorrow. So that nobody, the whole theory is it is impossible, it's utterly impossible to predict financial outcomes.

And people often criticize finance professors for like, you failed to predict the global financial crisis or whatever, well, we have a theory that says it's impossible to predict financial outcomes because people are trying to anticipate it today and the expectations are already embedded in today's prices. So anyway, the main point of nobody knows anything is we're all existing in a total fog of war here in finance.

And that's a situation which gives rise to charlatans who claim to know something but don't know anything. So it's kind of a, I know I don't sound very humble, but I think we should be humble in the face of market prices. So if Bitcoin is at $100,000 now, I should humbly say, even if I think it's worth zero, I don't think it's the best to say it's gonna go to zero tomorrow So nobody knows anything is we live in such uncertainty that it's hard to evaluate People making crazy claims people when people make crazy claims it sounds right

So we go with it one of the one of the most helpful things I ever heard a traditional finance person say about the price of Bitcoin. And he had no... I think he might have had a target, but he admitted the target was made up. But William Miller, one of the greatest all-time equity fund managers and also had some of the most notable blowups. But his comment probably 10 years ago now on Bitcoin is the supply is only

going to rise by one or two percent a year. So do you think demand will rise more or less than one or two percent a year? And if the answer is demand will rise more then it's an investable asset. The one thing we know for certain, or we think we know for certain, is that there is a finite supply of this, which I like better than dot com IPOs, of which there can be an endless amount. My trouble with that is always, well, somebody will do Bitcoin 2 and Bitcoin 3. That's obviously not been correct. We've got all types of cryptocurrencies, but none of them have attained anywhere near the network effects of this one. But is that kind of what you're saying?

Is that like, you can have predictions and you can kind of have theories, but they should not be stridently held in the face of this fog of war that you described? I mean, I think it's a little more than that, that we could, if somebody says, I am sure Bitcoin is going to $13 million, you know, in 10 years, I think we can safely say that person is a Charlatan or, you know, or maybe he's a direct line to God that I don't have. But I mean, you're exactly right about Bitcoin.

The genius of Bitcoin is the limited supply. And that is the difference between Bitcoin and Beanie Babies. Beanie Babies were produced by a company that eventually made a lot of Beanie Babies. It's not going to happen with Bitcoin. And you're right that it's a puzzle that people will not accept substitutes for Bitcoin. There's thousands and thousands of alternatives. So far, no substitute. There's also like a kind of, I don't know if it's a Giffen good or a Veblen good aspect

to this where the higher the price goes, the more desirable it is to buy. Which metaphor am I supposed to be using? It's not a Giffen good. I think that there's a famous quote, it's by the guy who wrote Reminiscences of a Stock Operator, what's his name? Lefebvre? Well, Edward Lefebvre writing about Jesse Livermore. Right, he said, the higher the stock price, the better. That was one of the quotes I didn't put in here, but he was talking about in 1929 and in the South Sea

bubble, they specifically designed the South Sea bubble, they specifically designed the South Sea bubble that like when the price went up, it benefited the existing shareholders. So it was like everybody had a incentive to be a cheerleader. So I don't think it's a Giffen good. It's not a normal good. Maybe there's a term, I don't know. Okay. I think it's a Veblen good. Maybe there's a term I don't know. Okay. I think it's a Veblen good, just

what I would at least what a luxury product that has a direct relationship between price and demand, which is the opposite of economic theory. So the more expensive a Lamborghini is the more people want it. Okay. It has an upward sloping demand curve, meaning that demand increases as the price increases. Okay. So that's, that's what I think this is. Um, all right. I wanted to, where was I going to? Oh, number four, a fanatic is someone who can't change his mind and won't change the subject.

We don't know who said this. Sometimes Churchill, sometimes Truman, probably neither, but the zealotry in meme stocks, in crypto, in a lot of corners of the tech stock market, it's undeniable, it's getting louder, and they are in ascendance because they've been right. They now are being appointed to government positions. It's a very tough thing if you're on the outside

looking in to fight the urge to join the people who look like they're winning. And that reinforces the fanaticism. Yes. Well, first of all, they're right today. Two years ago, they were wrong. And we see them as going up and down, but they see them as like linearly getting ever closer to Bitcoin utopia. The

one thing we all lived through was COVID. And we all lived through this idea of like, there's infections and they come in waves and waves. And that is an idea that is also spreading in economics that like the best way to understand some social phenomena is like a contagion effect. And it just like you say, part of it is the bandwagon effect that when one side is winning, everybody defects to that side. So I do see the dynamics of like contagion or infection or whatever you want to call it, epidemiology working and it's like spread by social media and other ways of communication. We've always had rumors in the stock market and fads and stuff, but it seems to be getting bigger

and the magnitude and the speed seems to be going up. I mentioned a paper by Lasse Feddersen where he modeled this and it was like the fanatics are a key part of this story because the fanatics are always there. It's like a disease reservoir. It's always reinfecting the population. When new people enter the population, they get reinfected. Fanatical optimists play an important role in generating mispricing. They continually transmit their bullish message operating as influencers or thought leaders

whose ideas spread through the information ecosystem. So to your point, they're not going away. They get more or less attention based on the recency of how right they look, but they never exactly disappear. But this is phenomenal. And also, where after a huge drawdown, and I think Bitcoin has been cut in half five times in 10 years or something, after a huge drawdown and then the subsequent comeback, which by

the way, these events seem to be happening at a quickening pace, it emboldens them even more. I told you it would be volatile and I told you to buy the dip and You know like so it's It's it there's a lot of power amongst the loudest of the fanatics yeah, I mean the the power of human beings to justify and Rationalized events to fit their worldview is amazing It's like these doomsday cult where the guy predicts the doomsday will happen and it doesn't happen. It's like, oh I you know, I just miscalculated it's gonna happen next year and and some people leave when

that happened but other people like double up. They're like committed to this idea. So yeah but you know again I'm looking stupid today because I think Bitcoin's worthless. They're looking like geniuses. Yeah so they say they put a date that's 20 years in the future and it's a random Tuesday, the date comes and goes and these people that have been living with them on the compound for 20 years. So then Tuesday goes into Wednesday, nothing happened. The guy turns around and he says, well, that's because we weren't worthy.

We were all supposed to ascend to heaven, but you haven't been listening to me. Yeah. You know, if only you were believed Bitcoin more, it would go up. Yeah. All right. Five, the more confusion, the better. Why is crypto? This is you.

Why is crypto good? What's the use case for crypto for Bitcoin? These are simple questions, but they do not have simple answers. And the answers provided seem to change every year. OK, so there's a lot of mission creep. This used to be about banking the unbanked LOL. All of the money in crypto is held by rich people or people who have recently gotten rich. I don't see a lot of soup kitchens that have been transformed into Peter Lugers

as a result of Bitcoin. I don't really hear a lot of stories about people whose lives have changed. However, the kernel of truth is there were a lot of lower income people who, because of social media, were infected and bought Bitcoin at $1,500, $2,000, $3,000, you can't deny that this has absolutely changed their lives. I don't know how many of them there are, but I do know they exist. Okay, so gambling is always, you know,

some people always benefit from gambling while the majority of people, and it certainly changes their life usually for the better when they win. The original quote, more confusion the better, is from this guy from the South Sea bubble. So I would say part of the success of Bitcoin is that people just don't understand it and they think it's cool because they don't understand it. And Bob Schiller has talked about the mystique of Bitcoin, the mathematical mystique of Bitcoin.

I think part of it is, I don't know what your experience is, but if you've ever taken a money and banking course, I took one in college, it is the most boring thing in the world. Money and banking has an impenetrable wall of board of protecting you from understanding it, like fractional reserve interest on deposit, it's just boring so bitcoin is exciting there's like a hero there's a villain you're fighting as part of this thing and it's a video game yeah it's exactly like a video game bing bing bing number go up and there's there's a villain which is the evil fiat currency people who are trying to put down Bitcoin. The regulators lately who are trying to stop us from making money. Okay.

But there is this aspect to a lot of areas in finance and crypto is one of them where that flexibility of convictions about what the thing is even for or how it works is a really powerful recruiting tool because it could be anything to anyone. There's no accountability. They keep saying, you know, okay, Bitcoin is going to provide this free Wi-Fi to everybody or there are these games that you play and the bit that the cryptocurrency associated with it. And these projects all collapsed because they weren't good ideas.

And we're on to the next justification of Bitcoin, the next use case. Yeah. One of the things about the movie Dumb Money, they do a really good, it's not a great movie, but they do a really good job in the movie showing the transmission of how the first people buying GameStop and AMC because of the short squeeze They kind of like understand the concept of why it should work But then they show that like game of telephone as they tell their friends and their friends tell their friends

By the fourth generation of people hearing about it. They have no idea how short selling works or what any of it means What they've picked up on though is that everyone else is doing it. So I don't think the people who just put $50,000 into the BlackRock Bitcoin ETF for the first time last week have read the white paper, the Satoshi white paper. Okay. But I mean, in their defense, you know, I drive a car, I don't know how it works, I use a computer.

It's part of dealing with uncertainty. We do it all the time in modern society. It's just that the types of things that are sneaking in are getting more absurd. Okay, we got two more. Number go up. This is you. You don't need to tell me that the number go up captures central dynamic and financial markets. You can call it extrapolation, FOMO, or as I've previously suggested, the iron law of return chasing flows. Money chases trailing returns. I don't know if you know Zeke.

I know Zeke, the author of the book. Great reporter, really funny guy. The book is hilarious. Isn't number go up though in the end like the only thing? And when it stops going up up then there might be consequences, but it's been going up all year and You know people really aren't paying attention to anything other than that. I think Yeah. Yeah. I mean anybody everybody in the asset management business knows

Number go up is what you want. That's what's that's what gets your clients. That's what's gets your customers that's what's getting in flows and The question is like how how long can number go up and what makes numbers stop going up? so There are many things that could make the number stop going up and I don't know if I'm saying that English correctly last time around I guess it was FTX and SBF and the revelation of fraud. That's often part of bubbles. It was part of the South Sea bubble and other bubbles that some of the agents out there are not honest. But yeah, number go up. I would say that in our brains, there's two things going on. There's value and momentum

and they're fighting with each other. Because when something gets more, it's kind of like what you were saying about your Devlin good. When the Lamborghini gets more expensive, well you know, I have less money, I don't want to buy it. But maybe as it gets more expensive I think it's going to go up even more. So it's like value and momentum are at war and number go up is the momentum part. I think probably nothing really puts an end to this now from a regulatory perspective. I don't think an SBF at this point can do the damage that he was able to do three years ago because of how institutional this market has now become. So FTX was important in a world where fidelity couldn't be a broker, but fidelity can be a broker here.

And these assets are trading on the CME as options contracts. They're, you know, they're, so it's for me, I feel like you kind of need an economic event where people need the money. Um, that I'm not saying it can't stop going up, I'm just saying like, how does it have a long term decline? Is people need to live on the money and can't afford to use it to speculate. A lot of people.

So we haven't seen that yet. People forget, for the last 15 years, we've only been in recession for two months. April and May of 2020. And it was manmade. We actually have not had a business cycles in the post great financial crisis period. That's the entirety of crypto's existence. Show me what Bitcoin does in a recession.

You can't. We haven't had one. So to me, that's the risk here. It's another financial asset and people live on their financial assets when times are tough. All right. Last one. This time it's different. Full quotation from Sir John Templeton. The investor who says this time is different when in fact it's virtually a repeat of an earlier situation

has uttered among the foremost costly words in the annal of investing. Of course, the well-known corollary is that to some extent it's always different. But I still think that's a meaningful quote because the markets change, the securities in question change, the political situation changes, the securities in question change, the political situation changes, but the constant is fear and greed. It's the core of human behavior is stemming from those two ideas. So I think that's what you're getting on here as well. Yeah, I mean, it's kind of the same as number go up. Like, we see this thing where the price goes up, it goes up more, it attracts more people, it goes up again. There's this whole psychology of bubble beliefs that build and we've seen it so many times.

Yeah, I don't really know how the fear is like when it ends, but the greed is there, yeah. Yeah, and you point out Charles McKay, who wrote the extraordinary popular Delusions in the Madness of Crowds, which is a book about historical bubbles, Charles McKay who wrote the extraordinary popular delusions of the madness of crowds, which is a book about historical bubbles, arguably the urtext on financial bubbles.

He himself fell victim to the British railway bubble and blew himself up. Yeah, so first of all, that book that he wrote is not reliable, is widely criticized for it. Just making up stories and repeating nonsense. But it is pretty cool that he was, and he was all huffy about it in that quote. It's like, well, you know, if you're stupid,

you think that it's repeating itself. But actually, the railway bubble is different. And he had a point, like the railway bubble was a real thing, unlike the tulips that really generated profits and stuff. So again, this goes back to rationalization. People are always rationalizing what they're doing, and they're able to come up with stories

that explains why they're bullish. We're very good at that. All right, we'll leave it there. Oh, and I wanna thank you so much for the writing that you do and the research, and appreciate you coming on. Where can people find more of your market commentary and make sure they get that delivered

to them when you write? It's on the Acadian Asset Management website. It's called Owenomics and you can sign up and get an email to you when it comes out. All right. Owen Lamont, ladies and gentlemen, make sure to check out Akkadian-Asset.com and you can find Owenomics and all sorts of other good stuff. Thanks so much for joining us.

We'll talk to you soon. All right, Tuesday night, 5 p.m. in the East. You know what that means. It's time for another all new edition of What Are Your Thoughts? This is the longest running show on the Compound YouTube channel. I think this predates the Animal Spirits video, right? Yep. Yep. Yep. 2018? 19? Guys, we gotta tell you, we appreciate the love so much. The views on this channel to start the year have just been absolutely titanic.

You guys are awesome. And we got a full chat tonight. We got the live gangsters are all here. All my compounders. Debbie Dantes is here. Rick G. Michael Griffiths. Somebody asked an interesting question.

If you're a Giants or a Jets fan, do you now root for the Bills? I think you root for the Bills if you're a football fan, because you want to see Detroit Buffalo. That's a classic sort of Super Bowl. Isn't that the right answer to that? Well, I don't know. You think people... You just make it shit up.

People are rooting for the bills just cause what? Cause that's a nice super bowl? Cause Josh Allen, if you don't get Patrick Mahomes, Josh Allen is probably the best replacement for him. Have you heard of the MVP, Lamar Jackson? Yeah. I don't know if that, I think he's awesome. I just don't know if people get as excited for that.

I'm not sure. Okay. I'm not sure. Okay. Does Lamar Jackson get MVP without Derek Henry, making it so everybody has to focus to the left or the right of him every down? Let's move on.

All right. I want to mention that tonight, we have a very special sponsor. It's a new sponsor. Michael's going to tell us all about them. Not new to me. Not new to me. So FM Investments had this really great concept.

What if you could just buy this part of the yield curve inside of an ETF? Who wants to deal with government websites and pain in the butt ways of buying Treasury bonds? Boom, you want the 10-year? You got the 10-year. You want the three month or the six ways of buying treasury bonds. Boom, you want the 10 year? You got the 10 year. You want the three month or the six month? You got it. And now they're launching some new credit series products. Really interesting.

They nailed the timing of this product launch. And so check them out, FM Investments. Wait a minute. So the downside is limited. No, no, no, no, no, no. There's nothing like that. What do you... Okay.

So how does this work exactly? Give me like the, give me like the elevator pitch. Okay. The elevator pitch is this. If you want access to the 10 year, not just like a 10 year that might've been issued a couple of months ago or a couple of years ago that's gonna mature.

If you just want to buy the 10 year bonds, you could do it inside of an ETF or whatever maturity that you're looking at. That's the pitch. Okay. Oh, I like that. Love it. It's a good idea.

So it's a new idea. It feels like it's something that people should have invented prior to now. Well, dude, five years ago, there's no interest rates. Who cared? All right. Hey, if you guys want to learn more about this, go to FMInvest.com. You can read all about how it works. You could read all the disclaimers.

And Ben and I have had Alex Morris on the pod multiple times talking about this. If you want to learn more, Google animal spirits, Alex Morris FM Investments. All right. Very cool. So tonight, oh, tonight we do have to mention that, let's start with this. We normally stay far away from covering natural disasters or geopolitical events or school shootings or terrorist acts. We did talk a lot about COVID because it fed into the markets, but we weren't every night reporting on the horrific aspects of it, the death

count, the infection count. Like we don't do that. The way that we've always thought about the compound is that we stay in our lane, we talk about what we're experts in or the things that are relevant to investing. And you guys have a million places to get news. So we're not CNN, we're not 60 minutes. So we try to give you an escape, I guess. But the story over the last week and a half, two weeks,

and you can't take your eyes off of it, are the wildfires out West. It is, I was talking to my brother who lives in Calabasas, and basically, from his perspective, this is like Los Angeles's 9-11. It is just probably going to go down in history as one of the costliest disasters. We have 24 people dead, 30-something people still missing.

We've got people who are going to be displaced for months, if not years, and an entire way of life in a couple of these towns just completely over. And it's not clear what the rebuilding is even going to look like. But it'll never be the same. So we are going to talk about it a little bit at the outset. I saw some data on this in terms of the scale of the impact. So 19,000 acres, which is 31 square miles, 5,000 plus structures and almost 70,000 people are like directly impacted by this. Like within the areas.

It's so big. This like the scale of this disaster because the nature of it is wind blowing the disaster from one roof to another. So you were explaining this to me the other night. This was completely foreign to me, that they have these high winds there. They haven't had a substantial rainfall in LA since May.

So they had a really rainy spring, and then they had a bone dry summer, and what that ended up producing was an excess of vegetation, which then dried out. And so that's like basically just kindling. And then you get these Santa Ana winds. And what they're doing now because they're back on alert is the utilities are voluntarily shutting down their equipment so that something doesn't spark and start this all over again,

which means you have hundreds of thousands of households and structures without power right now. Some because the equipment in their area has been burned to the ground and some because they're trying to prevent it from happening and have a fourth and a fifth fire. They haven't even put out the fires from last week yet fully.

They've contained them, but they're still raging. So it's not over. It's unlike a hurricane that blows itself out in a day or two. This is like a lingering disaster and it's not clear that we've seen, you know, hopefully we've seen the worst of it. But it's a financial story, which is why it's relevant to us, every bit as much as it is a humanitarian crisis. And I want to point to this Wall Street Journal piece, because I think this really gets to the heart of why it's a financial story. Basically they profile it.

The title is, Their Wealth is in Their Homes, Their Homes are Now Ash. And they profile people who are like regular people, not Steve Guttenberg, not movie stars, who basically like most of their net worth is the house that they happen to have bought. And that house has appreciated substantially along with all other real estate in the last few years. And now it's zero. So let me just give you the opening, Michael, and then I want to get your reaction. Sylvia Sweeney and her husband Bob Honeychurch, great names, bought their three-bedroom home nestled in the foothills of the San Gabriel Valley for $780,000 in 2009.

At the start of this year, it was worth more than double that, $1.6 million by one estimate. Sweeney is 69 years old, worked at a church. These are not high-flying celebrity people in the Pacific Palisades. These are amongst the thousands of people who just their entire net worth evaporated along with the place they live. It's like a double penalty to wake up to that reality. I don't know, man. This is a lot of people and the journal profiles all sorts of people who are in this situation.

Yeah, Ben and I were talking about this on the pod today that there's a big difference between the stock market and the real estate market in the sense that the top 1%, the top 0.1% because they're founders, they own the majority of the shares, they own the stock market effectively. And the crumbs are for the rest of us. With real estate, it's not like that. To your point, these are not all Hollywood celebrities. These are regular people. Some have been there for 20, 30, 40 years and more. And to see your home wiped out, I mean, you can't put yourself in that situation. It's hard to imagine what these poor people

are dealing with. So I don't know where they go from here. I know that there is like, obviously, a shortage of housing. So it's a nightmare. I don't really have many profound words. It's just an absolute nightmare. Yeah, there's a 77 year old woman in the piece.

She was told that insurance would cover $800,000 to rebuild and $12,000 a month in rent. She's like, I can afford a $2,285 monthly mortgage payment basically. So $800,000 sounds really generous from an insurance company until you realize that it's probably not going to go far in the Palisades area. It sounds like a lot of money if you live somewhere else. If you live there, it's almost like a punchline to be able to rebuild something from scratch. And so they say the typical home in the Palisades is worth $3.4 million, maybe not anymore, obviously, because the community has been decimated. But it's just as messed up a situation.

And then where do you live? So we have an advisor in Southern California, Michelle, and she's got, obviously, a ton of clients in that area. And it's a combination of people staying with family or hotels. If you were lucky enough in the early days to find an Airbnb, great. Most of those are now taken and for huge dollar amounts. And there are people out there that don't care about the money because they could back it up, but most people can't. So that's like a whole other issue is like, where do you even go if you don't have a family member that's got a house in the area?

There's a limit to how many hotel rooms there are. So you hear stories now about people's kids started school yesterday, Monday morning, in an entirely different district, just wherever would take them. Imagine being an eight or nine year old being sent into a school where you know no one, just because you need to be in school. So there are like a lot of aspects to this

that are just, you've never had to think about these things. They're sort of on, it's like sort of unimaginable. aspects to this that are just you've never had to think about these things. It's sort of unimaginable. No, it's 100% unimaginable. Our friend Dave Mazza lost his house and his school. So his kids are going to your point. It's like, how do you, I don't know how these people begin to pick up the pieces of this and figure out a way forward. It's beyond words. So another interesting aspect of this, the journal's got a chart showing the median home ownership tenure by city. And of all the major cities, Los Angeles has the highest, meaning people stay with their

houses in LA. I don't know if that means the lowest turnover. I don't know if that means the lowest turnover. I don't know if that's quite the same thing, but people, Los Angeles is 18.7 years. The next highest is San Jose at 17.8, then San Francisco at 16.7. So comparably, Vegas is eight years, Tampa is nine, Miami is 11, New York City is 15. So people tend to keep their houses in California and not move around all that much. So this is like a double shock for people who have been in one place their whole lives and that place is no longer going to be inhabitable. I wanted to talk about the

insurance stocks for a minute. One of the weird things about these types of natural disaster moments and see people, Jerry Gould's talking about Sandy. That was sort of our miniature version of this back in 2012. One of the weird things is that the first thing that happens in the property casualty insurance stocks is they crash or they fall because obviously they're going to owe a lot of money. But then sooner or later, they come back hard. And there are four main reasons for why the property casualty insurers have such an obvious

comeback. The first is increased demand. So natural disasters lead to more people looking for more coverage, which of course allows insurers to raise premiums. The rate increases after a catastrophe. It's like one of the biggest no-brainers that everyone is able to charge more and justify why they're charging more. Pricing power is long lasting. doesn't go away after a year. People still

where we live talk about Hurricane Sandy and flood insurance, which is a big thing in the town that Michael and I live in, is mandatory. And then the last thing is underwriting improvements. Catastrophic events prompt insurers to refine their own risk assessments and their own underwriting improvements. Catastrophic events prompt insurers to refine their own risk assessments and their own underwriting practices which leads to better long-term performance. So basically, they don't have to model a crisis anymore. They live through one and they know exactly how to underwrite as a result of that. So typically, what happens is these stocks end up becoming, I would say, intermediate term winners once the checks have been paid out and the hit to earnings has happened.

The last number that is out there is like a $20 billion cost, which would make this the costliest wildfire event in US history. I'd probably take the over knowing absolutely nothing. It just seems like we don't know how much the damage is yet. So if that's the number that they have out there, it's probably too low. The three publicly traded insurers with the greatest exposure in the state, Allstate, Chubb, and Travelers.

State Farm is there there but not public. Let's put up Allstate. I don't know, did it bottom for the crisis yet or is that the head fake bottom? We'll find out, I guess. I don't know. For me, it seems early, but let's do Chubb. They all have the same chart, guys. I mean, they were aggressively bought in the last few days. Again, I hate to make it about these stocks, but that's what we're talking about. Yeah.

Here's Travelers. All these charts are the same. And maybe this was the bottom or maybe this is the trapdoor bottom and there's a lower bottom a month from now. But these should be on a value investor's radar, just given how much market cap they've given up relative to what the future opportunity will be as they're writing policies in California, assuming they stay in the market. Yeah.

Well, and then there was a lot of hemming and hawing, of course, about the insurance companies dropping the homes because of the regulations in place and how much they are able to increase premiums. And they said, well, the math doesn't math, so we have to pull out. And now there's all these poor people who are left uninsured. It's just, it's, I don't know. I don't know if that's a Gavin Newsom thing. I obviously wasn't following that story before this all happened, but they're legislatively, they put a cap on how much you could, what premiums you could charge people for insurance in the state. And there's a formula

and state farm said, okay, there's a thousand policies in the Pacific Palisades area that we will not renew when they come up based on that cap because the level of risk that we're assuming doesn't add up. So what happens if these people didn't pick up other insurance? So they just like completely- The state has to provide. So in California, they have a fair plan. And this is no different from where we live. A lot of the insurers don't don't want to renew the houses that

are on the water in the wake of Sandy and other flooding episodes. So the state has to have like a backup insurance plan. It's it. It's a mess, dude. Yeah, it's a mess. And what's really interesting is I don't feel like the country has come together over this one based on what I see online. If you go on Blue Sky, you basically have people talking about climate change. And we told you so.

If you go on Twitter, they're talking about DEI and they're pointing out that the fire chief is a lesbian and the mayor is a diversity hire and it's just like can we not do this guys? Yeah. Like can we or can we wait to have the climate change versus DEI debate until everybody that's missing is found and the fires it's the ugly. The fires are out. It's the ugliest part of the internet is when shit like this happens. It's just like immediate mud flinging. But I guess, so there was no Twitter after 9-11.

But I guess I just can't pick. Maybe I'm dead wrong. And the red team versus blue team stuff would have been just as prevalent as it is now. Maybe I'm wrong. I just don't think it was that way 25 years ago. I think it's worse now. And you would think after a tragedy, that's the moment where people stop saying the grossest

thing that comes to their mind. But that's, I guess we didn't have that now. I don't know, man. I think if this is dark, but if Twitter was around back then, there'd be people like, well, we were warned. We ignored the warnings. Oh, no, you would have, right. You would have you would have like pro terrorist marches in New York City.

Like you would have like people fully like, yeah, this is great. I'm glad this happened because we had that last year. So we know that exists. And Twitter surfaces it in a way that it just did not exist in 2001. All right. Now that we've put everyone in a great mood, let's move back to... Oh, I wanted to mention we have a friend, Jason Ligita at Street Cred PR who reps us and Jason is a resident of the area and they lost the school and the house. What, or his house is okay?

What was the last thing that we heard about? I don't know. All right. It's a wreck. Anyway, Nicole has just put in the live chat. There's a GoFundMe that Jason has launched. It's going directly to the California community. I forget the full name of the organization,

but it's going right into supporting recovery efforts and people who were affected. So if you have not given any money yet, you don't know where to give money, I guess this is as good a place as any. So if you wanna copy and paste that link from Nicole and make a donation, it's all going to the right place. So thank you, Nicole.

Okay. All right. We can move on. Yeah, just our thoughts with everyone there. It's just the worst thing ever. Okay. All right. Clean slate.

Let's talk about the market. So I viewed this as, are we even technically in correcting territory? I view this as the best possible reason for a stock market sell-off. And the TLDR is that there are going to be- Wait, what's the reason? I'm literally- Oh, okay. It's the best reason, but that was a tease. You're going to tell us the reason.

The reason is that due to the strength of the economy, the Federal Reserve is going to have to cut rates fewer times than was originally anticipated and higher terminal rates, higher bar and cost, lower stocks, whatever. I think the market was looking for an excuse to sell and what better possible reason for a sell off for the end investor than, uh-oh, the economy is too strong, the Fed's not going to be as accommodative. It's beautiful. Now, we'll see. I'm not saying that it's over and there's no risk. Of course, there's always risks. But I view this as the best possible reason for a stock market sell-off. So last week on TCAF,

we used some charts for Todd's own. It was a spaghetti chart. It was all of the S&P 500 paths in the year three of a bull market. And Todd is back again with a better follow up to this image. So we're in year three of a bull market chart on. So year one, we're looking at the average versus where this bull market started. So a little bit of an underperformance relative to the average year for bull marketing, year one.

Year two blew away the average year two. And year three tends to be choppy, which makes a lot of sense. Stocks can't go up forever and ever and ever. This just makes intuitive sense. So I love how Todd broke this down. Do you love this too, Josh? I do. And just like you say finance and I say finance.

Okay. You say choppy, I say consolidation. Okay, tomato, tomato. I can go either way. Year three on average is a year of consolidating the gains of the prior year. Doesn't mean giving it all back. Also doesn't mean screaming vertically higher just because everybody's chasing. It's kind of like a,

it's kind of like a back and fill kind of situation. Doesn't mean we'll get it. That would be, I agree. That is a best case scenario. The best case scenario is not plus 20% this year. That would set us up. Because then we're crashing. Then we're crashing. I agree. Yeah. I love this idea, but can we back up? Are we both sold on this idea that the reason the market is selling is the economy is too strong for more rate cuts?

Because I think it's one- Well, it's two reasons. It's that and- Taxing related and nothing really more than that. Wait, hold on. I'll be proven right. Hang on. Hang on, you froze out. Did you just say that it was taxes?

What is this shit you're making up now? Yeah. Taxes. No, I'm not making it up. That's what I think happened. Wait, I froze. You did freeze. Am I back?

You're back. Okay, so the reason why the stock market is selling off, and I can't prove this because, you know, that's not how the market works. It's because the dollar is ripping and rates are ripping and there are fewer prices, fewer rate cuts price into the market and it's selling off. And if you want to say tax taxes, all right, fine. But you're well, I look at what's going up and what's going down.

And what I saw, what a late up and what's going down. And what I saw late last week. What? Go ahead. No, I what I saw last week was a big drop in tech stocks, which were the biggest winners of last year. And nobody wanted to take gains in those stocks before December 31st. And then I saw rallies in healthcare and energy. I roll. Both of which.

Really? Oh yeah. How? How? All the way. I mean this is just come on, this is Clown Show. People just decide to take gains in January 1st because. Wait I'm, wait hold on.

I'm uh. I'm not waiting for you. I gotta. I'm not waiting. I'm not waiting for you. I'm not waiting. I'm not waiting. I'm keeping going. You could catch up. All right. I got to go and come back. Stay here. Tell a joke. I got to go and come back. Okay. So I apologize for Josh's lousy internet. And I'm even more sorry that you had to listen to that nonsensical explanation for why stocks are selling off. So I will wait for Josh to get back for the show so that we can move on. No, I won't wait. Let's keep going.

All right, John, chart on, please. So only 22% of stocks in the S&P 500. There you are. Josh, only 22% of stocks in the S&P 500 are above their 50 day, which is not quite a bullish washout. I had ChartKid look at where do stocks bottom or where does the S&P bottom in terms of like a, so it's not quite there. But listen, this is good.

It's a reset. It's a reset. You got to go lower before you go higher. That's how I roll. Do you think my internet cut out because it knew I was going to say some crazy shit that was going to piss you off? It was offended. It was offended by what you already said.

Forget about what you were going to say. All right, so let's look inside the market. So the equal weight S&P is in a 6.8% correction. Try it on please, John. We've got mag 7. Mag 7 taking it. On the chin is a bit of a stretch, but it's given you an opportunity.

No, it's legit, dude. It's 8.2% drawdown. Yeah, it's not nothing. It's not nothing. So Apple's giving some back, and Nvidia's giving you a chance to get in. Microsoft. And then home builders are getting shellacked as people

are, I guess, taking profits in tax. I don't know what the hell you're talking about. Is that not a great story, too? Yeah. Did you see the KB Homes earnings report? They're crushing it, dude. I think this sell off in home builders is overdone. I just look, I'm not one of these people that always thinks I'm smarter than the market. I know a head fake when I see one. We're not going to 8% mortgage rates. The Fed is not considering hiking. The economy is not that great, like relative to last year.

It's definitely not better. Corporate layoff news all over the tape over the last week or so. Actually Neil Dutta collected a whole bunch and it's Microsoft and it's Metta and it's also non-technology companies trimming 5% of the workforce, 10%, blah, blah, blah. We're not in 2023, and I don't believe that 10-year rally. I think it's fake. I don't believe these home builders should be in a 16% drawdown. If you ask me, of these three trades, put that back up equal weight S and P mag

seven home builders of these three draw downs, which one do I want to fade the most? I think it's, I think it's XHB more than it's a, a mag seven. Yeah, I agree. You, you're with me on this. I am. I am with you on this. And I think the next chart, well, I don't know if the next chart supports it. Dude, no matter what happens in the 10 year, we are five million homes short of what we need

based on existing demand. And we are in the midst of a demographic tailwind, the likes of which we haven't seen since the boomers were in their 20s. Yeah, I'm with you. And the rate doesn't change that reality. So if they want to knock these home builders down 15%, 20% to start the year, I'm not a seller, I'm a buyer.

All right, we're with you. All right, a couple of months ago, we had Katie Stockton on, I think it was a Katie Stockton show, and the title of our show on YouTube was The Most Bullish Chart in the World. And I want to bring that chart back because I'm not worried about this sell off at all. And this is the chart that's given me confidence. Chart on please. OK. What we're looking at are the equal weighted version of consumer discretionary stocks, which is really important because XLY or the cap weighted version is basically half Tesla

and Amazon. OK. So you equal weight the consumer discretionary names. And in the denominator are the equal weighted consumer staples names. And over the past five, three, and one year, it's up and to the right, no give back whatsoever. This is something that you do not see in a bear market, to quote the great J.C. Peretz. Now you equal weight the discretionaries because if you don't, you end up with an Amazon

Tesla chart. Do I have that right? That's right, sir. Okay. So by equal weighting it, you get a more representative look of discretionary stocks of which there are many well-known companies, just most of them are in a trillion dollars plus. Equal weight to staples is probably just for symmetry. That's right.

Because I think you have a lot more market cap parity there than you have on the discretionary side. Yes, but I would say the weighted average market cap in XLP is significantly higher, right? Because you've got Costco, you've got Walmart, you've got... Oh, yeah, I guess. But nevertheless... All right, so you have to do it for both anyway.

Apples to apples. It's apples to apples. Yeah. Oh, I like that chart. Lot of love for Katie Stockton in the chat. We haven't seen her in a while. No, no, no, we had her in the fourth quarter, no? I don't know, Tom guy's too. I don't think so.

OK, maybe you're right. I think in the summer, we got to get her back. Shouts to Katie. The Barron's roundtable. You've participated, so be careful. I know, I was never in the Barron's roundtable. You weren't? I went with you. No, no. Baren's round table? No way. What did we do? You never put me in this. We went, this must be 10 years ago.

Savita was there. Chainless was there. Okay. That was the Fortune magazine. Oh, okay. It was less round table. It was more like a look ahead. And I was hosting it. I wasn't, I was like asking, I was like,

I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like, I was like Fortune magazine. It was less roundtable. It was more like a look ahead. And I was hosting it. I wasn't, I was like asking, I was like the, I was like Vanna White. Yeah, nobody gave a shit about your pictures. You were the moderator. I thought. All right, so fire away.

So fire away. Let's throw some arrows. I'm so torn. I love Barron's. I'm a subscriber my entire life. Like back to 1998. It was the first thing somebody told me to subscribe to when I got into the business and I never canceled.

You know what's so funny? I went to the Merrick- I'm the last Barron subscriber. I went to the Merrick Library, this was probably 2007 or 2008. I'm trying to learn about the market and I'm like, do you have Barron's magazine? The Merrick Library?

Did they? Yeah, hell yeah. Oh, you did? All right. I like Barron's. I like all the writers. I like the editors. I like the covers.

For me, it's like one of the last traditions left from the early days of my career. I got to be honest. I don't read it cover to cover the way I used to. And that's not partially my fault, because I'm too busy. No dude, that's a reflection of you, not them. No, I think it's a reflection of the times we live in. They used to only publish on Friday night,

or Saturday morning. Now they're publishing seven days a week, like everyone else. And there's nothing special about like, oh let me read this article, because it came out on Tuesday. True. So it's just that it's not the same experience and it's not their fault.

The roundtable is is severely problematic. And these are some of the smartest people maybe ever on Wall Street. So this is no disrespect. That being said, hang on. Bill priest, John Rogers, David Jarreau, Henry Ellen, uh, uh, Ellen Boggan. Yeah. Meryl Whitmer, Mario Gabelli, Scott Black, Abby Joseph Cohen. These are like brilliant people. Yeah.

So this is no disrespect to anyone. Um, but all right. So they do, they're like their like, how many bulls, how many bears do we have in the house? It's like the most consensus. It's like, listen to the reasoning that they give. This is like watching an hour of CNBC basically. Here, first to the bears, why their gloom.

Levitating bond yields, which reflect fears of insurgent inflation, levitated equity valuations, price for perfection, inexorable growth of government debt, policy uncertainty, Trump, thanks. Right. So, you know, it's not again, not their fault. It's just like not that interesting because we're in a 24-7 financial news cycle now. It's not their fault. This is the time of the optimists. Guess what they say? Aoi Aoi strong economy, double digit,

digital earnings growth, government deregulation wave of M and a, a widespread adoption of AI. Uh, it'll be choppy but ingredients for more games. Again, it's 30 minutes of CNBC, basically. It's just like ingest everything everyone else is saying. And then here's like the, all right. So I don't love that. Again, it's not their fault.

It's just that time has marched on. This is what they should maybe stop doing. The picks are so bad. Like they do, and credit to Barron's, they do a report card for the prior year and they tell you everything. Like this is what this person said in January, here were their picks and here's how they did. And can I tell you something? None of them look good. It's like 12 people. Last year was like the worst year for stock pickers ever.

Fine, but it's beyond bad. And I wanted to get your take on why. And I'm not picking on Abby Joseph Cohen, who I have a ton of respect for, but let's just use her as an example because I think she's probably the longest tenured person. So I've talked to people at Goldman. I know how this sausage gets made. It's like November and Abby's handler is like, hey, she's gonna be there early January

for the round table, let's get some picks. And then like maybe she sort of shapes like sectors, but for the most part, it's like the analysts at Goldman like come up with their like best, best, best ideas to give to Abby. And then she studies them and shows up at the hotel ballroom and lays them out. And here they were. This was January 2024 picks. Chevron total return 0.6%. Pfizer, who would buy that?

Pfizer, total return minus 4.3%. Estee Lauder minus 43.7%. I mean, it's almost impossible to do this. Linus Rare Earths, which trades in Australia, minus 4.2%. Nippon Prologis REIT, negative 14.9%. One positive, Japan Hotel REIT investment, 6.8%. But wait, there's more, unfortunately. Next slide.

So then they bring these people back in June for the half, the mid--year update and it's like worse Sam so new picks Samsung negative 39% spider S&P value 5.4% positive National Vision Holdings EYE never heard of it negative 14% Ishares footsie 250 which is UK, negative 0.6%. So there's two gains out of, what is that? Is that 11 picks, two gains? Even the gains vastly underperform the

S&P. I think these international stocks underperform the international markets too. All right. Stock is hard. Like in other words, in 24, it's not a lot of Samsung's negative 39%. It's almost like I don't think you could do this if you tried. Like I don't think you could be this wrong if you tried. And again, they all look terrible. So it's not just about the notorious AJC. I just think this is an impossible task. I don't think I would do better than that. I don't think that I would be good at this exercise. And I'm starting to think the problems here. Let me hear what you think are the problems, and then I'll tell you what I think.

What are the problems with what? Picking 10 stocks for the year? Just A, the exercise itself, and B, the way the stock pickers are carrying it out. I think that stock picking is always and forever really difficult. Well, granted, but that's why people are interested in stock picks. And I think that 2024 was a particularly brutal year, as have been a lot of the last years, let's be honest. It's been a really difficult environment because all you need to do is own the MAG-7 in hindsight,

right? So what do you think is the problem? Please take me to school. So I just disagree. I just disagree. With what part? There are hundreds of stocks that were up double digits last year. Like so many. So many. Okay. So what's the problem?

I understand that Mag 7 did really well last year, but Microsoft went up like low double digits, like 10 or 12%. It's not like seven stocks went up and everything went down. Right. Okay. So what's the problem? Off the top of my head, I could tell you 50 big stocks that went up huge last year. 50 big stocks that went up huge last year. I think there's a couple of elements to this. First of all, I think the round table itself is more heavily value investors than growth investors. I think there are a few token

growth investors, but I think it's very steeped in the tradition of value investing. And so right off the bat, over the last 20 years, there haven't been a lot of years where value has done better than growth. So it's not that value stocks can't work. A lot of value stocks worked really well last year. It's that the pond has less fish in it. Like you're fishing in the wrong pond, especially the year like last year.

So I think that's one element. Then it looks like people are playing the game as though there are extra points awarded for difficulty. Like, here's a precious metals company in Australia. Like what are we doing here? I guarantee you nobody read Barons and bought that stock. Okay, counterpoint, if they give you Apple, don't you think people will be like, why are you making it Barons and bought that stock. Okay counterpoint if they give you Apple Don't you think people be like? Why you make it like this? I'm so glad you said that I think that people would prefer to see

That work out and not make fun of it. Like oh, thanks. You told me Apple but but but again and by the way If you look at some of the people for the mid-year update They showed up with Oracle and, and, uh, and, uh, Netflix and whatever. Like, in other words, people pick the most bizarre things they could think of in January, deep value, Chinese, like Japanese property. And then they came back in June with like Max, Max Seve. Yeah. And then they came back in June with like Max Seve. Look, to recap, I think this needs to be done differently. I think it would be more fun if there were a virtual investing ongoing thing

where you could log into Barron's and see this stuff in real time and let these guys and gals make trades into a year. Because think about how hard this exercise is. Pick a stock in December or January that you're going to want to stick with for the whole year because it's your report card. Like, who could literally do that? What if the news changes? I feel like they're setting... I like Mario Gabelli, I like Abby Joseph Cohen, Scott Black, these people are brilliant and I look up to them and I feel like this exercise is setting them up to fail. They're probably less upset about it than I am, by the way, but as a fan of Barron's

and as a fan of the people on the round table, I really want to see them do this differently. So what would you propose? I would do a virtual portfolio. Come on, you want them to have paper portfolios? Yeah. Because I want them to have the opportunity to make changes throughout the course of the year. Maybe not unlimited changes, but it's 2025.

Everything is real time. Okay. Counterpoint, counterpoint. And this is a sample size of one, but our boy Eddie crossing Wall Street, the buy list. Well, that's just a savant. You can't compare. You can't compare anyone to Eddie's Eddie Elfenbein. Come on.

Look, I'm just saying we've it's not 1998 anymore where this stuff is in dry ink. People will check the website every week to see who's leading. Make it fun. Make it competitive. I'll jump in and do it if they think it would help. Let's put some life into this and make it winnable. Otherwise, it's just embarrassing. And I feel like they're setting people up to look stupid.

None of these people are stupid. So I was a little disappointed with this. And maybe they'll do the mid-year differently. Maybe somebody will listen to me and reconsider. I don't know. Any other thoughts on this? Nope. Okay.

All right, where are we going next? Oh, let's talk about self-driving cars. So this is a quote from Johnson Wang via the transcript. Right now, the self-driving car business is already a $5 billion business for us. Imagine how big it's going to be when we have 100 million new cars per year. Wait, what? That sounds weird. 100 million new cars.

Wait, what? Literally? How many cars are sold? Bro, 100 million? How many cars are sold in the world each year? Did AOE write this? Anyway, this is likely to become one of the largest robotics industries in the world and one of the largest computing industries. Yeah, I fully believe that autonomous vehicles are a blockbuster video for a blockbuster video for a blockbuster video a blockbuster

line of business for Nvidia and One of the main reasons for this that's so interesting is that yes, you need the cloud For for autonomous vehicles, but you also need a ton of hardware on the car itself Because I want you to imagine a scenario where the car is barreling toward a pedestrian who's maybe crossing the street where they shouldn't. We don't have time for the car to talk to the cloud to get instructions about whether it should stop or swerve.

That decision has to be made on the car level, which is chips in the car that are making that call. We can't have the cloud controlling what happens with the vehicles themselves. So of course this is a huge opportunity for semiconductors. It might be, and it might arguably be in the fullness of time, one of the biggest. So the chat is saying 90 million cars produced a year. So OK. All right. All right.

So why are we second guessing Jensen? Far be it from us, you dumb asshole. OK. So Eric Newcomer, who's sub stack I subscribe to, did a post on these self-driving cars. And this chart is a face blower, Josh. I got to tell you, we're looking at the San Francisco Operating Zone market share of gross bookings.

And Uber's steady, 60-ish%. But coming up the rear, out of nowhere from zero, is Waymo. And it is taking share from Lyft. And I feel like this is under-discussed and under-appreciated, the fact that there is magic in the world. And we don't see this in New York. So maybe it's sort of out of sight, out of mind, but this shit is like happening. There are self-driving cars, magic. A hundred percent. I shared with you the Zooks carriage that is now ferrying people back and

forth from the airport to hotels in Las Vegas. ZUX is wholly owned by Amazon. It looks like something out of Cinderella, but futuristic. It's got no front and no back. There's a windshield on both ends of the thing because it's bi-directional. It could drive forward or backward. The people sitting in the car are facing each other. They're not oriented toward one direction or the other. The doors are sliding doors on both sides.

So you can get out of this thing on whichever side the traffic isn't. Like wherever the sidewalk happens to be on the left or the right. That's not futuristic. That's right now. At CES last week, Zoukz was giving tech journalists rides to the various events they had to be at. And there's no human driver, there's no steering wheel, there's no gas pedal, there's no driver's seat.

It's not a car that became autonomous. It's literally born autonomous. And I agree with you. It looks like magic. People like to scoff, like, oh, we were promised self flying cars. Like, dude, we, but what he's talking about, I don't know what people are,

but you know what I mean? Like it's not, it's a much bigger deal than I think it's getting attention for. Because we only have time to focus on the negative. Yeah. Oh, we were promised flying car. Where are you going in a flying car, dumbass?

You're not that important. Nobody needs you there any faster than you already get there. You ever notice it's that guy? All right. I think what's really, I think, so this is really meaningful to me, this topic, because I'm long Uber and Uber has expressed that their place in the future of autonomous taxis is they want to be the hub and all of the companies that own the autonomous rides will be different spokes.

Well, I plug into their network. Yeah. So look, it costs a ton of money to put these cars on the road. I know long term it's more cost effective because you don't have the human driver. You don't have the meat in the front that has to get health care. So I understand that. But in the short term, the CapEx has to get health care. So I understand that, but in the short term, the CapEx here is off the charts. So you want your autonomous car to have as many opportunities to make money as possible. And the way that's going to work, I think, is that Uber has the capacity and

has the riders. The risk in Uber is that Waymo sidesteps them and just says, what do we need you for? We have enough people booking directly on the Waymo app. So that fear has knocked Uber down from 87 to 60. Well, I bought it. You bought what? Uber. Oh, yeah. Yeah.

I own both stocks, but that fear, it's a legitimate concern. What both stocks? What? You mean the Google? Yeah, I own Alphabet and I own Uber. So Waymo is worth 45 billion in the private market. They raised 5.8 billion two weeks ago from Andreessen and like all the names, they're all in it. So Alphabet doesn't completely own the whole thing, but they control its destiny.

And Waymo is going to be everywhere. That's it. Like, it's going to be. It might not be midtown Manhattan, like tomorrow. So one thing is that it'll be in all the major cities. It's not going to be in rural areas, but it'll be in all the major cities, if not Manhattan. It'll be where you need it to be.

So this stood out to me though, because this is, I don't know how you scale this or how you solve this issue. So here's a quote from the article. No matter what, someone has to take care of the cars, said Josh Maurer, a former Uber executive who managed the company's first push into New York. Maurer told us he's skeptical of Waymo's ability to scale in no small part because of the messy car issue.

In contrast to a house sharing platform like Airbnb, the turnover between Waymo users is minutes, not days, which doesn't leave much room for cleaning. So what happens if some drunk idiot vomits in the car? The car's busted forever, you know what I mean? That shit doesn't come out. Yeah, so there's a whole list of what happens if, what happens if, and ultimately it's messy at first,

but those issues get solved. I will say that fleet maintenance is a business. And Uber is in a position uniquely to offer fleet maintenance to 10 different autonomous vehicle companies. That's what you're pointing out is a huge issue. If the cars don't have an owner, like a driver, who's responsible for the car and has an economic stake in it, who's going to take care of it? Nobody.

So, you can count on people having perfect etiquette and not taking out their gum and sticking it to the seat. Like, you can count on that. Or you could ask the next question, which is, uh, keep any who benefits, who is positioned to service these vehicles, um, for money. And I think that could be an avenue where Uber makes the case to Waymo. You need us as a partner because we're in market. We have facilities.

We have companies that we work with that do this sort of fleet maintenance. And your cars are going to need not just cleaning, but servicing. And you might not want to build all that infrastructure yourself. So let's put up this Uber chart. So at $86, I was beating my chest like I won the Super Bowl. And then this prick, Elon, comes out and makes his CyberCab announcement and the stock tumbled. It's since recovered. I think the CyberCab was sort of underwhelming, the spectacle of it, which was over the summer. But the stock really hasn't come back.

Uber really has not come back yet. So I think people are genuinely worried that there are going to be enough autonomous cabs that go right around them. And maybe it's a legitimate concern. And I'm just talking my book and I'm wrong. I guess we'll all find out together. OK, moving on. What do you got?

Oh, me. This is still me. OK, it on. What do you got? Oh, me. This is still me. OK, it's me again. All right, so not we. The general population spends a lot of time vilifying and demonizing billionaires. And I just want to take a second to give a shout to the goat billionaire, Orrin Buffett.

So this flew under the radar because I guess whatever, nobody cares. But a couple of weeks ago, actually a couple months ago, it was back in November, he announced that he's converting 1,600 A shares into 2.4 billion shares. I'm sorry, 2.4 million B shares in order to give these B shares to four family foundations. 1.5 million.

Doesn't really matter where they're going. But he said, the gifts I'm making today reduce my holdings at Berkshire Hathaway Class A shares to 206,000, a 56% decrease since my 2006 pledge. So Warren Buffett is giving away tens of billions of dollars. And I bring this up because I wanted to give a plug to you, Warren Buffett, but also to our friend Alex Morris, who wrote a book called Buffett and Munger Unscripted. And what Alex did painstakingly, I haven't read the book yet, but I'm excited to was he watched because they became available.

Alex watched all I think it's 30 something years of Berkshire annual meetings, and he grabbed the best shit from it. So I would highly recommend it. And in addition, because Alex is a mensch, he's giving 50% of after tax net proceeds to charity. So credit to Warren Buffett and credit to Alex Morris for following Windows Footsteps. Yeah.

So on the audio Compact and Friends pod, I covered this. I covered this announcement. I think I did this with Bill Sweet, maybe. So the money is going to his kids' foundations. There's four foundations. His children, I'm calling them kids. They're in their 70s. Yeah.

His children have dedicated their lives to philanthropy. So one of the things that Warren Buffett said is like, I don't know exactly how the money's going to be used. I just know that I trust my children to do the right thing with it. I don't need to micromanage every decision because they were born into this philanthropic role and they've been doing it for decades. And I think the other thing that's crazy is like, he probably never expected the valuation of his holdings to appreciate at the rate that it has. Yeah, like he like under shot how much money he would have by now. But one of the things he said in that letter, which I thought was funny, bittersweet funny,

is like, my kids might die. He's like, originally, the goal was I would die and then my kids would have decades to give it away. But now they're in their 70s, I'm almost 100. I got to accelerate this and do it now. So I thought that was kind of interesting. We're gonna do make the case and then you're gonna do a mystery chart

and we'll get out of here. I have a secret stock for you. Oh, a secret stock, okay. Do you like secrets? No, I hate them to be honest. Okay, well I'm gonna tell you one and you and the rest of the compound viewers. Okay.

This is a secret company that nobody knows about. and you and the rest of the compound viewers. This is a secret company that nobody knows about. It has two or three analysts covering it, barely. People aren't even writing about this on Seeking Alpha. It almost doesn't exist and it's $25 billion in market cap right now. Let's put this up. The ticker symbol is UI. The name of the company is Ubiquiti. Just looking at the chart alone, I know you've never heard of it. Just looking at the chart alone, is this a buy or a sell? Come on. You know the answer to that question. How good does this look? Yeah. Stupid, right?

Mm-hmm. Okay. Have you ever heard of the company? Have you ever heard anyone talk about it even if you don't know what it is? Nope. Okay. I'm going to tell you why it's a secret. A very, very closely kept secret that I think is starting to get out. It's two companies in one. Number one, it's a very small, slow-growth product provider for tiny internet service providers. So it sells equipment to like little ISPs. But number two, the reason why the stock is ripping is because it's got an enterprise products group

that effectively starts off giving people internet access wherever they are, like rural places or all over the world, places where Wi-Fi coverage is spotty. You set up this equipment and you can build ubiquitous Wi-Fi wherever you are. That's why it's called Ubiquiti. Millions of customers for their products, UniFi is the brand name that you most frequently see these products sold under. And a software platform that is now enabling people to connect not only devices sold by

Ubiquiti but other third-party devices, security cameras, for example. And now there's a whole AI angle to the story. So just the network that people set up for themselves, enabling them to do a lot more with it and connect a lot more devices. The founder is this guy, Robert Para. He worked at Apple for two years from 03 to 05, and then he realized, I want to build my own products and make my own Apple. I don't want to sit here and work under Tim Cook.

So he left Apple as basically a kid and he started building this company. He owns 93% of the shares outstanding. So only 7% of the shares of Ubiquiti are freely traded in the market. Came public in 2011. The old symbol was UBNT. A year after the IPO, he bought the Memphis Grizzlies. So he bought the Memphis Grizzlies for $300 million, which now is probably worth, I don't know. Why did he even go public?

I've never heard of such a thing. It's crazy because it's secret. So at the time, in 2011, he needed capital to build these products. We're talking about physical. This is not internet shit. This is not like software. These are like devices that are enabling people to build their own Wi-Fi wherever they are. So he needed to raise capital.

So he raised $30 million in an IPO, bought the Grizzlies a year later, became the youngest owner in NBA history. I think he was 33 years old and then he disappeared. I mean, off the grid, man. Black ops. I'm telling you, he disappeared. He's never done an interview. He's never been on CNBC or Bloomberg.

He never talks to the Wall Street Journal. no conference calls, no shareholder letter, literal, doesn't even talk to customers. He spends all his time in R&D building better and better products and the word gets out amongst the users who become the evangelists for Ubiquity's products. He basically disappeared. And this company, while he's been gone, has ballooned to a $23 billion valuation. He is the most invisible tech billionaire CEO. If he owns 93% of $23 billion, he's worth $17 billion? Sounds like Kajger Sose. Yeah. He does show up at Grizzlies games and there's like one photograph of him

high-fiving Justin Timberlake. Is he bald? No, he's not bald. That's him in the black suit. Oh, he looks very young. So you will never see him anywhere. There have only been two episodes in recent history where people have seen him publicly.

One is Andrew Left alleged that this was a fraud in 2017. Pull that chart up. Sounds vaguely familiar. You see the first arrow, September 2017, that's where Citron put out a short report and said there was like a revenue recognition scam with the accounting. The stock is obviously substantially higher since then.

During Covid, everybody wanted to turn their house into a into an office. So everybody was buying ubiquities, Wi-Fi products, and you could see the stock went crazy. And then they had all of these problems because they couldn't get microchips, just like the auto manufacturers. They had all of these problems because they couldn't get microchips just like the auto manufacturers. They had out of stock products. They had like a huge manufacturing issue and they just like completely crashed. The stock in the last six months has come all the way back and is now about to break above the COVID high.

So you claim. So you claim. Well it's I mean what do you think is going to happen here? I don't know. You had the guests. So let me ask you this. I mean, you're not actually I know you're not actually making a stock right now, but like, you know, but you can't buy this. Come on.

I have one thing I want to show you before you make that decision. John, if you please. This is his house on on I think it's Star Island in Miami. Of course it is. Now I, I think it's star Island in Miami. Of course it is. Now I want to buy it. You see that big building in the back with the solar panels on the top rectangle.

I do. That's an indoor full basketball court with bleachers, locker rooms and its own jumbotron. John, do we have a picture of the jumbotron? You can see this thing lit up from like a half a mile away. His neighbors were bitching and moaning about this thing being lit all night. This is the Jumbotron inside of his home basketball court. You know who his neighbors are?

Diddy, who's probably not complaining right now. Anyway, this is the stock that no one's ever heard of that is now large enough to qualify for the S&P 500. He doesn't talk to the stockholders. He doesn't give conference calls. Nobody has any idea what's going on with it. And it just goes up and up. And I just think this is like one of the most secretive publicly traded companies I've ever

seen or heard of. Have you ever seen anything like this? Mm-hmm. How many shares can I put you down for sir? Zero. Why wouldn't you buy it? Look, I don't buy charts like that. Sorry. Was it too parabolic? Yeah Why do you I they had a great earnings report in November, but that can't explain that whole thing. Can it? I Don't know man taxes. What's the opposite of taxes? I don't know. I'm out.

Listen, it's great story. Good pitch. I don't give financial advice on this channel, so please nobody buy this or any stock we mentioned. I currently have no position here. I'm just fascinated by it. This is remarkable. Hit me with a mystery chart.

Okay, sir. So you know the tendency for people to only focus on the negative, right? This is like, yeah. So this mystery chart is a great example of that. And this is a very obvious mystery chart. So whatever, I just want to talk about the story. So this business had a massive, massive hiccup. I think that's understating it in 2024. And it was headlines, it was responsible for a lot of outages and shit like that. And

the stock fully recovered basically, nobody cares. Well, at outage, I know you care about CrowdStrike. Yeah. All right. Let's let's do the reveal. Give me my drum roll and my applause. But it's all the way back. Nobody cares. Nobody talks about it. You know, you and I are going to have a debate on Thursday on Compound and Friends. We don't have time for this now.

Well, with the guest? Or you and I are going to debate? Yeah, we'll include the guest. But you and I just have such a different world view about it. I'm not going to debate, Jerry. I'm not going to debate. No, we are going to debate. No, that's a farce. Otherwise, it's, you and I just have such a different worldview. I'm not going to debate Jerry. I'm not going to debate. No, we are going to debate. Well, otherwise, otherwise it's no fun.

We have to have a debate. All right, go ahead. What are we debating? Do you know what kind of, do you know what kind of balls it took to hold this crowd strike thing through the, through that summer where it looked like they sabotaged the company forever? You're going to tell me there's no skill whatsoever involved in not selling? I'm not talking about that.

Well, we are going to talk about it Thursday. We don't have time to get into it today. But you're moving the goalposts of the argument that we had. I think it takes a lot of guts to stick with a crowd strike and some of us didn't and some of us did. And we're going to have to leave it there. Hey everybody, did you know tomorrow is Wednesday, which means my favorite podcast, Animal Spirits, is up with an all new episode. It's Michael Bannack. It's Ben Carlson, What

Not to Like. We'll have a new Ask the Compound Thursday and an all new Compound and Friends on Friday. Please keep it locked. We appreciate you and we'll talk to you soon. day, visit riddholtzwealth.com. Don't forget to check us out at youtube.com slash the compound RWM. Make sure to leave a rating and review on your favorite podcasting app. If you love investing podcasts, check out Michael and Ben every Wednesday morning on Animal Spirits. Thanks for listening.