The Best Stocks in History (EP. 457)

·1 hr 18 min·5 clips

Michael and Ben argue why the stock market hasn't crashed despite Middle East war fears and oil price spikes.

This episode of Animal Spirits features hosts Michael Batnick and Ben Carlson discussing current market dynamics and investor psychology. Batnick and Carlson are financial writers and podcasters who analyze markets and investing behavior. They begin by debating whether birthdays still matter in middle age, with Batnick expressing indifference and Carlson valuing the nostalgic check-ins. The hosts examine how military announcements now appear coordinated around market hours, referencing a tweet by Mike Bird. They discuss the market's resilience despite Middle East tensions, noting the S&P 500 remained up 1% even after an Iranian official contradicted U.S. claims. Batnick observes that 40% of the index is in a bear market beneath the surface, though the overall index hasn't rolled over. They reference unusual, large futures trades placed just before a Trump announcement on Iran, suggesting potential insider trading. Carlson shares a tweet from Dan McMurtry arguing that bearish narratives often sound smart but ignore billions of people working to solve problems. The hosts note energy spending now constitutes only 2% of U.S. household budgets, down from over 6% in the early 1980s. They cite Pantheon Macro's Carl Quintana, who modeled a scenario where oil at $150 could push inflation to 6%. Market-implied inflation expectations for the next 12 months have surged above 5%, while expectations for Fed rate cuts have flipped to hikes. Batnick proposes that gold's sharp decline may be an "ATM effect," where investors sell winning assets like gold to raise cash. Carlson points to data showing gold ETF outflows at their worst since 2013. The hosts critique a New York Times op-ed by Rick Bookstaber warning of a crisis worse than 2008, calling it vague and unoriginal. They discuss updated research from Bessembinder showing 46 firms now account for half of all net wealth creation in the U.S. stock market since 1926. NVIDIA is highlighted with a 37% annualized return over at least 20 years, while lesser-known companies like Axon Enterprise and Plenum Publishing also appear on the top performers list. The hosts analyze a Jason Furman op-ed showing economic metrics under Biden and Trump are remarkably similar, despite polarized consumer sentiment. Pending home sales have hit their lowest level in history, yet the housing market's struggles haven't dragged the broader economy down. The tone is conversational and analytical, blending market commentary with personal anecdotes and cultural references. Listeners interested in market psychology, current events, and long-term investing research will appreciate this episode. Those seeking highly structured financial advice or technical analysis might find the free-flowing discussion less applicable.

As heard by us

A chart-minded look at how the same economy can feel like two different ones.

Animal Spirits starts with birthday banter and then turns to a brisk comparison of the Biden and Trump economies, making the case that they can look almost the same on paper while landing very differently in public.

Read the full review in PlayNext →

Why you'd press play

You want a sanity check on why the same economy can feel different under different presidents.

Read the full recommendation in PlayNext →

Listen to the show on

Apple Podcasts Spotify

Play clips from this episode More from Animal Spirits Podcast