Episode summary
Depressed Day Traders | Animal Spirits 477
Animal Spirits
· · 1 hr 21 min · Hosts: Michael Batnick, Ben Carlson
Summary
The hosts argue that the stock market’s new all-time highs are being driven primarily by the AI buildout, not by a clean macro backdrop. They point to the rapid rise in hyperscaler capex expectations, strong Q2 earnings growth, and the concentration of spending among the largest technology companies as the main reason the market has kept climbing through wars, inflation, tariffs, and higher rates. They also note that operating earnings and small-cap performance have improved, but argue that the market remains unusually dependent on a handful of giants.
Key takeaways
- The hosts say AI is the dominant market driver and that hyperscaler capex has risen from about $500 billion to roughly $3 trillion on a rolling three-year basis.
- They argue that S&P 500 earnings are still growing fast even after stripping out one-time markups from private AI-related holdings.
- They think emerging markets look unusually cheap at about 9.9 times estimated earnings versus roughly 20 times for the S&P 500, with Taiwan and South Korea making up a huge share of the index.
- They say crash calls like a 1987-style fall are hard to predict, but a fast air-pocket drawdown is more plausible in today’s market structure.
- They argue that day trading and sports betting are mostly losers’ games, with most people overestimating their ability to win consistently.
Notable quotes
“AI is the only thing that matters”
“this many all-time highs given all of the headlines would have surprised a lot of people”
“we think we share a chart from them like every once a week”
“Young men who trade stocks daily feel like failures”
How the episode opens
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Welcome to Animal Spirits with Michael and Ben. Michael, how many new all-time highs has the S&P 500 hit since 1950? What's your guess?
Ballpark it.
1468. It's like 1,379. You're pretty close. — Holy — Did you just pull that out of your ass? — Not bad. I'm very proud of myself.
More or less. Okay. So, I think that's like 7% of all trading days.
Say this because last week we hit alltime highs again. You and I talked about this a little bit. Uh some charts from exhibit A here that show when this happens.
26 new alltime highs so far this year. The average since 1990 is about 21. We're a little ahead of schedule here, but the average is obviously skewed and varied and in the good years, there's a lot of them because there's been plenty of years where there wasn't any.
Look at those. Look at that 2000 to 2012 range. A lot of zeros, a lot of nothing.
So, you have to take this when you can in the good times. Uh I think that this many all-time highs given all of the headlines would have surprised a lot of people.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- stock market highs
- ai investing
- emerging markets
- 1987 crash
- day trading psychology
Watch the episode
Watch “Depressed Day Traders | Animal Spirits 477” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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