The Stock Market Crashed. Now What? (EP.407)

23:46I don't have a business anymore. It's completely nuked. And there's going to be so many cases like that. And obviously, I think we heard an email from someone who said, I'm actually on the winning end of this because of steel or something. But he even said, I'm sure I'm going to be in the minority of this. So it's strong feelings on both sides. Like there are a lot of people cheering this on, and I want to give some examples of that. So I saw a thread from Russ Latino. He tweeted, I just got off the phone with a business owner in Mississippi. He's pumped millions into a business distributing a product he imports from China.

24:22His contract with the company prevents him from manufacturing in the US. He also contracts with a number of large retailers. He describes some of these contracts as inflexible, requiring him to sell a unit at a set price. He told me he anticipates paying over$1 million in tariffs next week and has no ability to simply upcharge his retail customers to cover the expense. In his words, Russ, I don't have 54 % profit. This puts me out of business stuff. I share this because there are probably tens of thousands of businesses in similar situations. I just happen to have one reach out to me. Here are some of the replies and some of the dialogue back and forth.

24:53But then this went viral and toxic and blew up. And somebody said, OK, well, maybe it's best you don't make a contract like that. I'm just a simple guy, but I would have never made a contract locking myself in. There's always a chance something like this could happen and there should have been provisions on the contract, period. This is simply making this political, to which Russ replied, no doubt you're a titan of international industry and are speaking authoritatively from a position of experience. There was another reply. There are countless businesses like this. They will all need to relearn the basic principles of free market economics.

25:24I mean, come on. And move manufacturing back to the US. And that's a good thing. To which Russ replied, nothing screams free markets like you just have to do that here if you want to be in business. Somebody said, if your business relies on exploiting Americans, we're happy to shut it down. Russ replied, his business literally saves American lives. This is the hypocrisy that gets me. It's the people who have been screaming for years about government manipulation and the government needs to get out of markets for free markets now want to see tariffs and price controls. This is literally controlling markets.

25:54And Colin's point from last week was, this is going to drive prices up not only because of tariffs, but because it's going to reduce competition and give the businesses that win have more pricing power and they essentially turn into a monopoly. And so that way you get lower quality goods for higher prices. The opposite of what you want, obviously. All right. I'm going to read an email that was kind of long, but I thought it was just really emblematic of the type of frustrations that people in this country are legitimately experiencing. To my favorite weekly podcast host, thank you. Your podcast brings up a survey a lot.

26:26It's a repeated survey whose conclusions are something like, my personal situation is good, but the whole economy other than me seems to be very bad. It's always come across to me the same as it comes across to you. People are just listening to too much Doomer media and things are actually pretty good. I have an econ degree from whatever and until very recently was a disciple concerning tariffs being bad. This despite growing up and returning to living in the Quad Cities, an area that has been truly devastated by factory moves in the past. I still believe in the comparative advantage stuff. Something clicked with me today while thinking of all this tariff news.

26:57Everyone in positions like yours are absolutely livid or freaking out. It seems like something seriously bad can come of this. It's frightening. But what are we defending here? I've got a good job. I'm the survey respondent that says I'm doing well. I am doing well. We make a lot more than the local average. But I didn't start trying to have kids until I was 35. I saw these plan closures when I was a kid. I still remember my father pulling me aside and telling me that I absolutely needed a degree in this info economy. I couldn't repeat his mistakes. So I did. I joined the Air Force to afford school.

27:24I worked hard to get a decent job out of school. I focused early on my career, the American dream baby, Ivy grad finance job. And then I was 35 and I just started having kids. I'm 39 now and having kids is tough, but I have one drive to work with my wife, which is nice. We drop off the kid at daycare along the way. And then I pick them up from daycare, return to my empty neighborhood, bereft of kids, maybe probably just like your neighborhood. Our community doesn't have its own little league anymore. I honestly don't know how to reliably get my kid playmates. What are we doing here? In the 1970s, before shopping containers, we all had cars, a house, food, some form of TV.

27:58And we had kids, people graduate, get a job that paid enough to have some form of life. And if kids in their early 20s in this information economy, it is really hard to have kids early. And I need a bit more animal spirits myself because let me tell you, it isn't easy having kids late and my neighborhood is empty. Everyone says the person on the other end of the survey that they are doing fine, but their neighborhood is empty too. Anyway, thanks for all you guys do. So I can't empathize with this or I can't relate to this because my neighborhood is the opposite of empty. Yeah. So it's mine. We have a ton of kids, but I get the whole thing behind thinking in the past people having kids.

28:28Cause that's a, that's a real concern is the fertility rate is dropping and people aren't having as many kids. I also wonder though, what young, so my wife and I had kids when we were, I was 32, I guess, 32, 33. And I think about what if we would have just had kids when we were like 22. I enjoyed having that extra buffer period to enjoy my life. I wonder how many people, young people want to grow up that quickly these days. You know, I think, I just think it's the, it's an affordability issue. So I don't think we're arguing whether it's good to have kids at 22 or 39. I think it's also a maturity issue in the past.

29:01People had to grow up and be more mature way earlier. And we, I don't think we, I don't think our young people are mature enough to have kids these days. So here's my takeaway from this email. This person represents millions of Americans, right? This is not a completely, this is not a total outlier. However, people, everyone's people have seen, especially in the Midwest towns that have been howled out that once we're manufacturing hubs that are not anymore. That's a, that's a real thing. Yeah. So if you are this type of person who lives in this type of America, of course you feel this way. It doesn't mean that it's representative of the economy.

29:35It doesn't mean that the economy isn't working. But for these people, it really isn't. And so I could cite Collins data points. And I am on the side that tariffs are not the answer to this, which is a separate conversation. So there are millions of Americans that feel this way, but their attitude towards people like us complaining about the stock market, I understand where they're coming from. Right? How could you not? I don't like, I don't agree with their solutions, obviously, but I understand. I understand why they feel how they feel. Frederick Lewis Allen had the, that great book only yesterday that talks, chronicles the roaring twenties and then the aftermath.

30:10And he talks about the roaring twenties were this unbelievable time in America. Obviously the war was over. The Spanish flu was over. People decided we're going to spend money and have fun. But he also showed, remember back in like the 1800s, 85 % of the country worked on a farm. And he said the 1920s, that was when people started going to manufacturing jobs for the first time. And he said that farmers of America got absolutely crushed as people went from working on farms to working in manufacturing. In that period of transition, the farmers were like, to them, it felt like a depression. But to everyone else, it felt like the biggest boom time in history.

30:44And now we're seeing - And that's capitalism. That's progress. And unfortunately, people are left behind. Yes. Unfortunately, that is kind of what happens. And I think - And so it's weird to scream at these people, you're wrong. Because what do you mean they're wrong about their own situation? Right. But the whole AI robotics thing is not going to make this – it's not going to lead to more manufacturing jobs. We're not going backwards. We're not going backwards. And so this idea that we're somehow getting ripped off to the bereft – I didn't use that word right. A for effort? Thank you. that the rest of the world is ripping us off.

31:24Not even close. Jeez. So somebody posted a chart. The United States renamed for countries with similar GDPs. And this goes back to 2019. But nevertheless, California does as much GDP as India, Texas as Brazil, Hong Kong, Illinois. I'm sorry, the Netherlands. I always get Illinois and Indiana backwards. So New York is Canada. Michigan is Belgium. So the point is that like. Like, we are the richest nation in the world by any metric. And this idea that the rest of the world is taking advantage of. And listen, I'm not going to pretend to be like an international cross-border economist. I don't know the details of how all this works.

32:06And I'm sure there are things that are – I'm sure there are areas in which it's unfair and we are getting ripped off. Can we discuss, though, too – there's the economic impact of this, obviously. Can we discuss how the internet has brought us to this place, too? Yeah. This does not happen without social media and the internet. right it feels like we are being run in some ways by commenters on twitter yeah it does because it's true and the hard thing is when you have a post that sort of blows up i had to mute a lot of conversations on twitter i was i'm not gonna lie uh through this the last couple weeks uh this is probably about as angry as i've been about a bear market usually i kind of like you know i think this is the dumbest bear market of all time yeah and if we go into recession to be the dumbest recession of all time.

32:46And so I was putting some tweets out there and I was venting. And the comments I get, it's hard to tell the difference between a bot that's programmed to think a certain way and the way that some people are replying. Because they just, you know exactly what they're going to say. Yeah. If tariffs are so bad, how come other countries do it? I think we've lost the ability to think critically. And that is a thing that worries me, that this is not just a one-time shot across the bow. This is something that is. So, and this is something that I want to talk to. We're going to talk to Derek Thompson about his new book in a couple of weeks.

33:17And I think one of the things I like about the book, I don't know if you've read it yet, is that it's an optimistic book. It's not a pessimistic book. And my biggest worry, and I want to ask him about this, do we as a society have the ability to back an optimistic message like that? And I don't think we do anymore. I disagree. I hope we do. I'm worried that we don't. Getting back to the execution of these ideas. So some of the towns that have been hollowed out and some of the areas where we're vulnerable, that we have no production, that we're just reliant on China for whatever. I think most reasonable people would agree that we do need to protect national security interests.

33:57That should be a bipartisan agreement. Yeah. Some of the stuff needs to get fixed. Then do it that way. Let's be a little bit more targeted. these blanket tariffs on everyone everywhere. This is not the way to do it. No, if it would have been, if it wouldn't actually been targeted, that would have made sense to me. Listen, we're not going to let China rip off our technology anymore. We're going to produce chips here. That sort of stuff would have made sense. The way that we're doing it now, just everyone's just going to end up paying higher prices and businesses are going to be hurt. And guess what happens?

34:29Businesses are going to protect their margins and that means they're going to cut costs. And what does that mean? Layoffs are coming. There's going to be a ton of layoffs coming in the months ahead. We'll say. Oh, no way. I almost can guarantee this. We're going to see a lot of layoffs because of this. Probably. Companies are not going to eat their margins. Let these eat their margins. What if they just make stuff with shittier products? Are we going to wear Nikes and they're just going to explode after the whole stitches are going to fall apart? Well, I tell you what, maybe we need to start making fishing poles in America again, because I bought like five fishing poles already on our trip.

35:05And every time I do, they break. Car dealership guy tweeted, Mercedes-Benz to, quote, protect the price of its vehicles in the month of April. Parts pricing for customers will also remain unchanged through April. Incentives and discounts continue to be defined monthly and remain available. Standby to standby. So I just saw a commercial down here for like a Tomyami Ford or however you say that word. Like they were having a pre-tariff sale. Buy your car now before the tariffs hit. You know what else is going to happen too is used car prices are going to skyrocket. So maybe you can actually sell your Jeep for more than it's worth.

35:42So what about this? We're going to see a lot of unusual data, people buying before tariffs, and there's going to be a surge in the hard data and Trump's going to declare victory. It's possible we see that. It's also – No, there will be funky data in the next month or two. Probably. As people get ahead of this. It is going to be weird. Somebody emailed us. Guys, last week our team at a bank was debating, what's the opposite of animal spirits where we came into the year with? And they landed at sober resignation. Oh, that's pretty good. I have to think about that one. All right. I like sober resignation.

36:18All right, last thing before we get to the market's reaction. Um, we got small business optimism this morning. Mike Sicardi tweets that the index fell 3.3 points to 97. It's lowest level since October, 2024. And it's largest decline since June, 2022 down three months in a row. I guess this is the thing like the, the Ron Burgundy. I don't believe you again. Maybe I'm just a complete idiot, but I don't believe him. I don't believe, because if I'm wrong and these are not a negotiating tactic, which I think they are, and these policies go through, Ben, I do agree with you that we will be down another 40 % from these levels.

37:03So I made this point in a blog post. You remember the old story from Art Cashin about during the Cuban Missile Crisis, how he talked to the old trader and he said, we have to sell everything now. There's going to be a potential nuclear war. And the old trader said, no, no, no, no, no. when the missiles are flying, you buy. Because guess what? If the missiles actually come and hit our shore, it's not going to matter what you own anyway, because the market won't be open anymore. But if the missiles don't come and you buy, you're going to look a genius. And that's, it does seem like that last week, your whole point was a binary outcome.

37:34It feels like that, because again, if these tariffs are implemented as he laid them out in that stupid sheet of paper that he's holding, if they're laid out like that, the market is going to be down 30, 40, 50%. And again, I don't say that lightly, but I really believe this. Yeah, so do I, for the record. Okay, so do you think, so I got a flashback to 2008 on Sunday night. So Thursday, down 5%. Friday, down 6%. When futures opened down 5 % or 6 % Sunday night, that reminded me of 2008. because every time over the weekend, something really bad would happen and futures would get slaughtered. So I looked at this, the two days, in the two days, Thursday and Friday, the Dow was down 9%, S &P was down 11%, NASDAQ was down 11%, Amazon was down 13%, JP Morgan was down 15%, NVIDIA down 15%, Apple was down 16%, and Boeing was down 19 % in two days.

38:34It was pretty close to a Black Monday-ish for two days, which is just nuts. Yeah, market did not like that. Joel Weisensault said, this is the 11th worst three-day performance of all time. And if you look at this list, it's recessions, 1929, World War II, depression. It's the worst of the worst, essentially. This is a great looking chart from Luke Stein. I've never seen data displayed this way. We just finished the 10th worst week for the S &P 500, down 9%. 10th worst week since 1940. You ever see it laid out this way? No, it would take me a really long time to learn how to do this on Excel. Yeah, no idea.

39:17All right, so we got, where do we go here? Let's start here. So wait, let me just lay out where I was at on Thursday and Friday. So Thursday, the day after, remember we were all watching the futures market because he did the announcement at 4 p.m. or whatever. And the futures market originally was okay. By the way, it was weird because we rallied pretty hard into Liberation Day. Yes, because people are trading on rumors and who knows. And Thursday starts off and the stock market is shellacked. And then it keeps going down and down and down. And we flew out for spring break at like 1.30. So I'm watching the markets on my phone all day, seeing what's going on, what are the announcements.

39:58And I'm taking off for spring break. And then the next day, Friday, we get into Florida. The next day, we had planned to go to a water park on Friday. We bought the tickets ahead of time and I'm watching the market just melt down in real time. And the stock market goes on 6%. One of the worst days, I mean, since 2020, but one of the worst days of all time. What was, I don't know what it, where it hid in the hierarchy, but probably one of the what, 25 worst days of all time, something like that. It was bad. And so we go to a water park and, and I had fun at the water park all day with the kids and wrote a bunch of rides.

40:32You know those water slides where you go down the water slide straight down, and at the very beginning, you feel like you come like six inches off the water slide, like you're floating in midair? Have you ever done one of those before? Yes, yes. Then you come down, and you scream at the bottom, and it just gives you a huge wedgie. Right? We had one of those slides, and we did it a bunch. My kids loved it. And that's what the stock market felt like that day. But here's the thing that I realized. Me sitting in front of the computer screen was not going to make the sell-off any better. I almost felt guilty that I wasn't sitting in front of my screen all day watching.

41:08But I also thought, what good would that do to sit and watch the stock market get hammered all day? It's not like I could put my hands in a steering wheel and control it any better. I couldn't make it go up. So not being in front of the screen and watching it, it was actually a freeing feeling because there was nothing I could do. And my whole thinking was, life goes on. It does. right? You can't let like a couple of bad days in the stock market throw you off from doing what you were doing anyway. Although I'm sure you were in front of the screen all day. I was, I sure was. Were you trying to push it higher on your own?

41:47I was doing some buying. I'll get to that in a minute. Bill Ackman tweeted, if you haven't noticed by now, I speak the truth regardless of the consequences to me personally or what other people think. Somebody responded, good job speaking out, but it seems like you should have foreseen the chaos. Your anger toward Dems clouded your judgment in my opinion. Ackman tweeted back, I have no anger toward Dems, just disappointment. This is the part that I want to italicize in bold. I don't think this was foreseeable. I assumed economic rationality would be paramount. My bad. And that's where I was. That's a lot of people, obviously.

42:18That's where I was. No one possibly could have assumed the president is going to crash the market like this on purpose. Especially the pro-business president, the guy who all he does, his first administration, and his tweet about the stock market and any down day in Biden's administration tweet about how Biden should be impeached because the Dow was down or whatever. So the analogy that I gave was there was a red button on his desk that said, push to destroy the economy. And he pushed it. I just, I couldn't believe that he would do that. And so that is still where I'm at. I still think that this is a negotiation executed terribly.

42:49Tom Lee tweeted, or Tom Lee was on TV saying, we want to apologize. And credit to Tom for doing this. We got it wrong. We want to apologize as a terms of tariff liberation day. were far worse than we expected. The resulting market theory is not due to a reaction to a trade war, but rather the fact that the White House broke a core covenant of capitalism. So Tom Lee owning up, myself, and Bill Ackman, I think it was representative of a lot of people on Wall Street felt. By the way, I love that you just put yourself in with Tom Lee and Bill Ackman. Me, Tom, Bill. Me, Tom, Bill, Stan. There aren't enough rich people who will say, you know what, hand up, I was wrong.

43:24And I think a lot of people say, oh, thanks. A little too late for you, Ackman. I think that's a lot of people think, but at least you're saying. And again, I think a lot of people should just say, I thought we were getting deregulation and lower taxes. I didn't sign up for this. Yeah, it's okay. Listen, wrong all the time. Publicly wrong, it happens. Yes. NBD. So I did write this in the doc, and I had to delete a lot of the stuff that was in the doc because it aged so quickly, so poorly, or so poorly, so quickly. One of the things that I wrote was, this was, I guess, over the weekend. I'm a little bit nervous that I wasn't nervous.

44:01I wasn't feeling any sort of panic whatsoever. Sunday night, I felt it. I felt the feelings of like, okay, okay. Sunday felt like the ship was going down a little bit. Yeah, Sunday night, futures open, down, whatever. I don't know, 4%, 5 % at its worst. We finished green on Monday. But what was interesting on Monday was Walter Bloomberg, who we've been talking about, but I think he made the joke. Is this a robot? Like literally, is it? I'm pretty sure he's an AI. Walter Bloomberg at Delta One tweeted, has it, quote, Trump is considering a 90-day pause in tariffs. And we had the craziest intraday volatility I've ever personally seen in my career.

44:42It was up 7%. The Nasdaq was in like 20 minutes, then gave it all the way back, and then it finished up on the day. But I think the fact that the market isn't down a lot more and the fact that you get this sort of rally on any type of news reaffirms my position that if we do get a resolution that the market will scream higher. I don't know, man. We were down almost, we were down 20 % in like, like that. You don't think that was scary enough? What do you mean? You just said that the market, that the market isn't down more. The market went down very fast. If you look at a drawdown chart of the S &P, it looks like it fell Oh, yeah, yeah, yeah.

45:18Trung Fan, this is fantastic. You see this meme? It's Walter and Jesse from Breaking Bad sitting at the diner. And Jesse says, you follow Walter Bloomberg? Huh? So there's this anonymous ex-account, Walter Bloomberg, Swiss dude, but his real name isn't Walter and he doesn't work for Bloomberg. Weird. He takes paywall to financial news and pops it to 850 ,000 people on his feed. This morning, he said Trump was going to delay tariffs by 90 days. Markets ripped, and it won the$2 trillion in minutes. Turns out it was fake news. Markets dumped again. He misheard a CNBC Q &A with a White House official.

45:55Then CNBC published a story with him as a source, which he then sources his source. People wondering if he could do it again and trade on it. Would be insane. Anyway, Farcoin is up somehow 100 % since Liberation Day. Walter says, Jesse, what the f*** are you talking about? Wait, Walter Bloomberg is from Switzerland? Mm-hmm. Okay. So, all right. A core tenant that I have when investing, and I can't help it. I'm proud of it. It's what I do. I have to do. When the market crashes, when the market panics, I buy. I have to. When the market's around 5 % in a day, I was buying on Thursday and Friday. As bad as it felt, I was too.

46:35And those maybe turn out to be way early, and it felt like it after the fact. because again, I still think the prospect of a 30 % crash in total is still very much on the table. Agreed. But what else are you supposed to do? So Pierce Crosby tweeted, U.S. economic policy uncertainty index. And obviously spiked basically highs on record. Then he shows S &P 500 returns a year after the spike and not a perfect track record, 0.1, 0.8. We were down more a year later. But a lot of people, and I don't know if this has me nervous. Listen, this muscle memory, it's going to take a while to unwind. Bank of America tweeted, I didn't tweet this, somebody else tweeted it.

47:22Client US equity inflows were the fourth largest in our data history since 2008. Balthunas tweeted, VOO took in$4 billion yesterday. We're recording this on Tuesday, by the way. Its biggest inflow in about three years. so people are at least retail is buying and we asked like what would have to happen for this to reverse for the buy the dip the every two weeks like for there to not be some sort of and I don't know if it puts a floor underneath the market I don't see how you could say that because we could still go a lot lower just to fight that people are into the 401k but Jeffrey Patel we asked like well what do people do in 2022 too.

48:04And there were outflows from mutual funds as there always are. And the outflows from mutual funds exceeded the inflow into ETFs, but the VOOs of the world, they bought them. Yeah. So that's the thing. My whole plan, I was kind of laying it out in a blog post. Every week I buy stocks in my brokerage account. Every month I buy stocks in my SEP IRA. Every other week I buy stocks in my 401k. I'm not going to change that because of this. If anything, it makes me feel better making those purchases because stocks are lower. And the thing is, if you're a young person, this is not going to feel like a blessing if we get a complete wipeout in a recession.

48:44We've said you don't cheer for a recession. You don't want to play that game. Again, that's Russian roulette, where if you lose your job, who cares how low stock prices are or if home prices come down or if interest rates come down. But the fact that stock prices are 15%, 20 % off their highs, and for individual stocks in some cases, it's more like 40%, 50%, 60%. You still think of this as a good thing. You don't try to overthink it. Okay. Here's the thing, though. Here's my worry is interest rates began to creep up again yesterday. That is a big problem. If we do get a spike in inflation and rates go up and the Fed says we can't cut rates, Like this, that's where this thing is not just like one or two announcements and everything's back to normal.

49:34This is, this is, this is where this turns into a multi-year kind of thing and trust is broken. And then we see a sideways bear market for three years. And that is the thing that breaks some people's backs. Totally possible. Sentiment Trader tweeted the S &P 500 after the VIX hits, hits a high of over 45 for the first time in a month. So I feel like you and I have switched roles here. Usually in the downturns, you're the one who's not panicking, but you're feeling bearish. I feel like we've switched roles where I've felt very bearish. And I'm not trying to take a victory out for last week, but what I felt, what I worried about was actually what happened.

50:12And I think it might have been worse than I thought. Yeah. So again, I'm a little bit nervous, and I'm still not nervous. But when Vic's over 45, so basically this looks at panic. And generally speaking, so two months later, it's higher 67 % of the time. So certainly not always. Three months later, it's higher 83 % of the time. Six months, 92%. 12 months, 82%. So those are the odds, okay? Like this goes back to 1990. Those are the odds. Positive 82 % of the time after a panic. Not 100%. There's no such thing as a certainty with investing. Subutrade tweeted, what happens to the S &P 500 after two consecutive days of negative 4 % declines?

50:52and... Which obviously doesn't happen very often. No, six months later, it was negative. So there's like N equals whatever, 11 here maybe? Positive later, 90 % of the time, six months, 80 % a year later. Look at those 1929 ones. It happened three consecutive weeks in the 1920s. So, and this is not to make fun. We got a lot of people sending this to us. This has nothing to do with Matthew Shaughnessy, so I'm not dunking on somebody that's not a financial expert. I'm just, I'm not dunking on the Wall Street Journal. People know that we like these stories. It's just funny that the Wall Street Journal does this.

51:22Whatever. Can't help it. Tickles my funny bone. I'm just sending out as much cash as possible, said Matthew Shaughnessy, who runs an auto repair shop and pet spa in Idaho. If I try to catch this falling knife, I'm just going to get cut over and over and over on the way down. The 43-year-old said he holds his shares in Rivian and Roblox in the days he sold. I'm sorry. He sold the shares in Rivian and Roblox in the days leading to Trump's Rose Garden tariff announcement. He's still on shares of Novo Nordisk, and he has some$10 ,000 in cash in a brokerage account, Shaughnessy said. He doesn't plan to buy any more stocks until the market carnage subsides.

51:52I don't know why this is necessary. Again, no disrespect to Matthew Shaughnessy whatsoever. It's just kind of funny. He's waiting for the dust to clear, right? Okay, so this morning Trump tweeted, or he socialed, or I don't know what they're calling it. I just had a great call with the acting presidents of South Korea. We talked about their tremendous and unsustainable surplus. We are likewise dealing with many other countries. He says China also wants to make a deal badly, but they don't know how to get it started. We are waiting for their call. It will happen. God bless the USA. He's negotiating as far as I'm concerned.

52:23I hope so. Because if he's not, then things are going to keep getting worse. All right. So is it premature to buy? Should you wait for the dust to settle? Here's how I see things and why. And this is not blanket advice. You do what you want to do, right? There are many different personality types. That's what you have to understand when you're listening to different people. My personality, my investing personality may be 180 degrees different than yours. It's fine. There are many different ways to do this. For me, for me, I buy panic. Because I know that if we get the bounce and roll over, then there will be a point in time where I'm too scared to buy.

52:59So I'd rather like just buy before that point happens. Okay. I always buy too early as well. So here's the thinking. You might be like, Michael, how dumb are you? You're buying stocks. We haven't even, we're day four. The tariff, it's not even April 9th. What are you doing, you dumb, bald asshole? Just can you can we just see how this shakes out? Here's the problem. The market doesn't wait. The market. Obviously, the market didn't the market didn't even wait. I wonder how surprised they were in the White House to see the market just get completely slaughtered. And back to the thing of the stock market not caring what you say, you can tell the stock market all you want that these are going to be wonderful, beautiful policies.

53:37It does not care. So here's the thing. To your point about being early in the stock market moving way faster than ever before, we could see the stock market rallying in the face of a recession. Big time. 100%. Like we could, the recession might get here six, 12 months, whenever it happens, if he keeps going down this road. Just think about 2020. Yeah. Remember when we made all-time highs later in the year? And you're like, you're telling me that stock XYZ is better today than it was in 2019? How does that make any sense? And people, myself included, it didn't make any sense to me. But that's how the market behaves.

54:12It bottoms way in advance of the things turning. So we have this chart from JP Morgan that I suspect will be shown for a long time. And it shows the course of it's from Sembolist. The S &P 500, earnings, payrolls, GDP. The market on average bottoms five months before GDP troughs. So the news will continue to get worse and worse and worse. And the market will stop going down. You're gonna say, what? Why isn't the market going down? Because it already went down. It already went down. Apple fell. How much did Apple fall? 30%. NVIDIA was down 40%. in like a couple of weeks. It already did it. So we have this great chart from a chart goat, Matt, chart can Matt showing since 1957, all of the bear markets, there was 11 of them, the stock market bottoms on average nine months before earnings bottom.

54:58So on the one hand, I understand how it feels way premature because this shit could get way worse, but that doesn't mean that the markets could be like, all right, guys, come on in. We're all clear. We're just going to stop going down and we're going to let everybody back in. Everybody come back in before we rally. It doesn't work like that. Yeah. The stock market bottom in 2009 in March and the unemployment rate went up all the way through October until it finally peaked in October, which was whatever, seven months later. The thing is the stock market moves so much faster than it did in all of these periods too.

55:29So this is looking at all these different periods in the fifties and seventies and eighties. And even, even the early two thousands, for the great financial crisis, the market moves way faster than it did back then. Yes. All right, let's just talk about some economic data real quick. Because people are waiting for the hard data to fall off a cliff. And we got non-farm payrolls data last week. Significantly better than expected. Yeah, the market obviously didn't. Don't you think, though, that at this point you cut it off and whatever has just happened in the past 6-12 months for the economy, it doesn't matter anymore?

56:07I don't think it does. I think you have to start new and we have to see what happens from here. This is a total pivot point. This is a before and after. I agree. I do agree. So while I don't think that we're going to look back on 2025 as like a global inflection point before and after, I could be wrong, I do agree that the data will continue to soften as a result of the lack of confidence in business. But what if we do look at this as a global inflection point? What does that mean? Then it's really bad. For everyone or just for us? Because I don't know. How could the rest of the world do great if the largest consumer in the world is sucking wind?

56:47I don't see how that's possible. We are the global importer. It's true. That's the thing that concerns me, though. What if in a small way, things are just different? And, you know, like if you're - Come on, you think, you think, I don't know. You think we're going to let that happen? I sure, I sure hope not. Do you really think we're going to let that happen? I do think that if we, if we had a 40 % stock market crash and the economy went into recession because of these idiotic policies. These people are going to be like rats in a sinking ship. Yeah, I do. I do agree with that, that I told eventually, I can't believe Congress hasn't stepped in to try to take these powers away from him yet.

57:27Like grandpa, give us the keys. You don't drive anymore. Ben, what you just mentioned, the way that you just said, that's generally how the market behaves. The stock market, investors tend to expect the worst. And the worst doesn't usually come to pass. Now, again, I could hear somebody saying, Michael, we're flat year over year. What are you talking about? This hasn't even started. I get it. I get it. Unemployment rate, still pretty low. Creeping a little bit higher, but still low. All right. Anything else you have to say? That's what makes this so infuriating is that he inherited a pretty darn good economy with low inflation, low unemployment rate, and he's just going to blow it up for no good reason.

58:09That's the problem that I think so many finance people are just ripping their hair out right now. What are you doing? Why are you focusing on this? You focus on a hundred other different things. Why this? And again, this idea that this is going to only hurt rich people is so foolish. It is so foolish. Yes. Guess who will be able to weather the storm? Rich people. They'll be fine. Okay. One thing on AI that I thought was kind of cool, and this is a plug for Exhibit A. So Michael Kitsis put Exhibit A on the Advisor Technology Heat Map, or I don't want to call it a heat map. And I uploaded this onto ChatGPT, and I said, put a red square around Exhibit A.

58:57and it did it, but it changed a lot of the images, which is weird. But back in the day, you would have to use Snip, maybe paste it to a spreadsheet, hit the square button, remove the shading or the color. And it did it for you? Let's talk about crypto real quick. We haven't talked much about that. So it was very bizarre. I think you even sent me a message, me and Josh, being like, crypto is holding up really, really well right now. And last week, as everything was crashing— That was on Friday. Yes, I think Friday, Bitcoin held up pretty good. It might have even risen a little bit as the stock market is crashing.

59:34It seemed weird. And then over the weekend, one of the Winklevoss twins said, look, Bitcoin is finally decoupling from risk assets. And almost to the minute after he tweeted that, crypto just completely crashed. But why was it, for that one day, why was crypto still doing okay? I mean, there must have been some flow. I have no idea. So this tweet from Punk9059 says, this chart looks at S &P 500 daily returns versus Bitcoin over the past 15 months. And he said pretty much every day the S &P was down 2%. Bitcoin was also in negative territory. So I don't know. I can't tell you why. It was an outlier.

1:00:11Certainly not holding up. But then it played catch up over the weekend. And do you think that's why futures were down so much too? Because it was following crypto's lead? I don't know. Okay. I think absent crypto, futures would have still been down quite a bit. Anything else you have to say about the market? Listen, I'm still not naive to the risks, right? Like if this is not a negotiation and the tariffs are the point, then lower we go. I'll believe it when I say it. I am still a long-term optimist. And again, I think the stock market eventually will be just fine. My biggest worry is that there wasn't a huge margin of safety coming into this.

1:00:47Yeah. In terms of the consumer balance sheets there is. So I think the consumer's not going to get crushed right away by any means. But in terms of valuations for U.S. stocks, there wasn't a huge margin of safety. I suppose that's the concern. Just the valuation premium, if that compresses along with earnings, that's the, okay, this isn't going to be very fun. We shall see. All right, I have some travel thoughts. Airplane first. This has happened the last two times I've flown. the rush the aisle people when you land because they either have they want to get off the plane or because they think they had and it's just like when you cut someone off in traffic to get in and you've given the wave like just say something just hey i'm really have to catch my flight but the people they run up and then they pretend they look ahead like you're not there and i just want to be like nothing grinds my gears more than somebody who who uh cuts in front of you to like as you're pulling into a red light it's it's the rudest yes all i want is a hey i really have to do you mind if I just go real quick?

1:01:47Cause I really have to catch a flight or I have to get off the plane. Um, but the people that like, like run ahead four seats and then just get stuck. It's like, what are you doing? You're going to make it off 60 seconds earlier. All right. Cabanas are out of control. We got to put a stop to this. There's, there's way too much cabana. So the first week got into town, we couldn't get into our house until Saturday. So we stayed in a, in a hotel and by the pool, there's all these cabanas. And then the next day we go to the water park. There's all these cabanas. You have to pay to rent them. Obviously.

1:02:13I know that there's some places that are these really, really nice cabanas and they have like TVs and air missers and stuff. And you pay like$600 and it's really nice. But these are like, we're talking like Bed Bath & Beyond cabanas, you know, that all it is is shade and two lounge chairs and they're charging, I don't know,$150,$200 just to get some shade. It's too much. Why does that bother you? It seems like a weird net to pick. When did we start charging people for shade in the sun? Did we, when you were growing up, do they ever rent out cabanas? I feel like this is a new thing. It's just a new way to rip people off.

1:02:45Shade is a scarce resource. I just think these cabanas aren't even nice, right? And then you look at them and most of the time they're all empty and just sitting there. No one's using them. Yeah. Well, the nice cabanas are really nice. And those are way more than$200. Yeah, they're really expensive. I had a sentimental moment with my kids the other day. So I'm still the entertainment dad where I have to, hey, dad, you got to come in the pool with those. Hey, dad, you got to ride the bikes with. My kids do stuff on their own sometimes. So they still want me to like be their entertainment and I have to play games and throw balls.

1:03:16And, and sometimes I kind of like, can I just sit here and not do this? But I think I'm going to really miss it when it's gone. Like what the day that they stop asking you to do stuff and not be the entertainment dad anymore, that's going to be painful. I'm already feeling it. I was in the moment playing with my kid, you know, I throw the ball and they jump in and we play paddleboard or whatever. I'm really going to feel it when they don't want me to do that anymore. I'm the opposite. And I think I wish I was more like you in that sense. My kids are very self-sufficient in terms of like entertaining themselves.

1:03:45Sure. They want me to come in the pool and like the lazy room and stuff. And I do, but they are not reliant on me to entertain them. And I don't know that I'm going to miss that part of it. Maybe I'm wrong. Maybe I will. Time will tell. All right. So for some reason, the laptop, I'm doing this from an Airbnb in Marco Island and the lap, the camera on my laptop for some reason has never worked. We've had the tech people in our team look at it, the production people. No one can figure out how to get the camera to work on my laptop. Where was your laptop made, China? Seriously. And it's never worked.

1:04:19I can't figure it out. And I got down here and I realized, yesterday, I don't have a camera to do the podcast. And I ordered a camera on Amazon at 6 p.m. yesterday. It was here by 4 a.m. this morning. That is a benefit. Who says we don't have it good? Right. Another one, I got a lot of emails about the Canadian geese. Holy moly, did we get a lot of emails. A lot of them. My favorite ones were the fact that a lot of people call them cobra chickens. That is a great nickname for Canadian geese. Yeah, that's good. I like the cobra chickens. Yes. Did you see this, Ben? Somebody tweeted, you're hearing the first howl of a dire wolf in over 10 ,000 years back from extinction.

1:05:02I saw the story on the news this morning about it. Using ancient DNA from fossils up to 72 ,000 years old, Colossal reconstructed a full genome through precise CRISPR edits and brought the species to life. Holy moly, that's kind of neat. They interviewed the scientist, and she's like, this isn't Jurassic Park, and she kind of gave a nervous laugh. It's like, this is Jurassic Park. What are you talking about? Yeah. So these are giant wolves? What are we going to do with them? It's like the big wolf on Game of Thrones. They're going to protect blind kids. Quick plug for Future Proof Leaders Retreat.

1:05:31May 12th through May 15th at the Broadmoor in Colorado Springs. The Broadmoor is a gorgeous hotel. There will be no booths, no overcrowded panels or anything like that. These are wealth management CEOs, CIOs, CTOs, COOs, CMOs, industry executives from asset management, fintech, financial services. One of the great things about this event, in contrast with all the others, is it's much smaller and more intimate. I think last year there was, not I think, I know there was less than 1 ,000 people there. I don't want to give an exact number because I'm not quite sure. But the experience as an attendee last year was different in the sense that it was much more intimate.

1:06:10And there's a lot of people that came that the feedback I got, and I totally got this. Listen, I wanted to hang out with you guys. I didn't want to be one of 4 ,000 people. So sign up May 12th, May 15th, Colorado Springs. People love those one-on-one meetings too. Yeah, they do. People get a lot out of those. It's nice. All right, recommendations. Ben, what do you got? All right. So I told you my daughter and I are going through the list of good classic sports movies. And we watched Hoosiers before, which you said was underrated, or overrated, which I hope you were lying about. So we watched your favorite of all time, Field of Dreams, which is nice because they have Netflix in hotel rooms now.

1:06:48And I don't know, I hadn't seen this movie in 25 years probably. And there's no better way to describe it than it's just a magical movie. The whole time I just had a big smile on my face. It's perfect. And at the end, I totally lost it because he's playing catch with his dad, and his dad's name is John. And so I lost it. My daughter's like, why are you crying? Just leave me alone. But there's the part where him and James Earl Jones go to the Red Sox game, and they get two beers and two hot dogs at Fenway. And this is 1986 or something when this movie came out, maybe? 87, something like that? How much did two beers and two hot dogs cost at Fenway back then?

1:07:21Two beers and two hot dogs? $9? Seven bucks. That stood out to me. that would be what would that be today fifty dollars maybe two yeah um we've been watching 1923 again lately season two i think we have one episode left wait i thought it just started no it's all it's all out i i thought that i would be done after one season and it took me a while to get back into it but it's still a good show and there are some there's some things that happen in the show like the foreshadowing is like they couldn't be winking at you harder like there's this part where she gets over on a boat from Africa and she gets off and there, and she's in a, the grand central terminal in New York and five people tell her like, be careful.

1:08:03There's a lot of pickpockets around here. And it's like, be careful. Someone's going to see her stuff. And then of course someone pickpockets her and steal all her stuff, but it's still, it's, I'm surprised I still like it. It's like a fun background show, right? Yes. It's, it's still pretty good. Let's, let's save white Lotus for the end. Cause we'll do some spoilers. So why don't you go? Okay. Um, I rewatched, I did it. some Valcomer stuff this week. By the way, maybe I, I don't know. It's weird like you just, you don't appreciate these people until they're gone. Unfortunately, that's just reality of life.

1:08:32He was one of my favorite childhood actors and I didn't really, I don't know that I would have listed him as one of them, but Willow was my first favorite movie ever. Oh, I loved Willow too. So, I re-watched, I watched, I watched that one. Some new, some ones, not new, some ones that I hadn't seen, but I re-watched Heat. I haven't re-watched Heat in a while. I re-watched that one every two or three years probably. They should do a release in IMAX because to see that on a giant screen with the machine guns. Plus like the Dolby speakers for all the sound. Close to a perfect movie as you get. You agree?

1:09:07Yes. It's the best heist movie ever made, obviously. Why is the pit only on Max? I didn't even realize until I went to watch it live on whatever night it was out and Rob said, no, you have to go to Max. I didn't know that either. I guess I just watch everything on Max now. Because I'm a YouTube TV guy. Weird though, right? It is weird. All right. So I love the studio. I will make no apologies. I love the third episode. I love the second episode. I understand some of the criticisms of why it's too much like Curb. I don't care. I love it. You're taking a little bit of contraind stance here. I don't think so.

1:09:42The consensus that I've seen has been wonderful. Okay. My only problem is I think it's a little too over the top. It needs to be a little subtler. That's my only note. I love it. But it's great to see all those Hollywood people in one place. Wait. Oh, yeah, go ahead. I'm sorry, I'm done. All right, White Lotus. I watched the season finale. So spoilers, if anyone wants to turn it off, they haven't watched it yet. I can't believe Tim Ratliff tried to kill his family with pina coladas. I told my family, listen, I have respect. If I ever try to kill you, and we're all going to drink the Kool-Aid together.

1:10:20We're going to do Miami Vice's. Okay? Right? Is that fair? I thought it was pretty good. It's the worst season so far, but it still was high quality and really well done and I still liked it. Agreed. Worst season of the three. Excellent seasons, but I still had a great time. And I was happy with the episode. A lot of nits to pick, but landing the plane on these shows is very difficult. And I had fun. No complaints. the shootout and the he always kind of surprised you like the fact that the women friends went back and they were all still friends together and I didn't expect that so I enjoyed it I'm ready for another season I know a lot of people are pushing back saying they didn't like this season I still enjoy myself alright Ben in conclusion these are scary times we're recording this at 1pm or so on Tuesday scary times provide opportunities I'm sorry, that is a core tenet of my investing beliefs.

1:11:19Not saying that this is the bottom or that the reward that you, or that the risk that you take will be rewarded tomorrow might get more painful. But I still believe this is the best way to build in wealth. And I don't think that there is anything that could change my mind. I know that there are crashes, right? We've seen that, we've been there, we've done that. I know that's part of the game. This is why there's a risk premium though. The fact that the stock market could fall 20 % in the blink of an eye like that, that's the reason that you get the long-term premium because of the risk there. I also, this is one of the things that just, I will never back down on to having a automating good decisions ahead of time is so important because that, that was the other thing that made me feel okay to go on spring break, even though the market is falling apart around me.

1:12:00I've already made the good decisions ahead of time for not knowing that it'll happen like this, but knowing that the market could fall out of bed like this. Ben, in a hundred years from now, do you think you're going to be upset you added to stocks this week? I don't. No. I mean, by that point, I'll probably be like a, you know, I'll just exist in the computer, right? But in a hundred years, my great-green kids will thank me. The S &P is trading at six times 2134 earnings. So pretty optimistic about that one. At this time next week, are stocks higher or lower than they are today? not that we're short term, but I'm just either we're down another 10 % or we're screaming back 5 % or 7 % higher, I think.

1:12:42I'd say higher, but sorry if I'm wrong. All right. Your handicapping skills haven't been that great the last couple weeks, but hey, keep trying. Hey, shoot or shoot. All right. AnimalSpirits at the compound news.com. Thank you to everybody for the emails. We'd love to see it. Stay staying out there. See you next week. This is like scary times, but it's still if you can take a step back, it's still just fascinating to see that this kind of stuff can happen in markets still. If you get rid of the losses and all the potential ramifications, the fact that this can happen in markets is one of the reasons that I think that it's the greatest game that there is.

1:13:25See you next time.

1:13:33Bye.