Episode summary
Welcome to 2026 | TCAF 223
Ask The Compound
· · Hosts: Michael Batnick, Josh Brown
Summary
The conversation centered on which beaten-down stocks might rebound in 2026, with the host and guests sorting through turnaround candidates in apparel, software, consumer brands, and platform businesses. Lululemon was the clearest cautionary tale: the group argued that fashion shifts, low-end competition, and stronger rivals like Alo and Vuori have left it without an obvious catalyst, even as an activist fight looms. By contrast, they were more constructive on names like Nike, Netflix, Uber, and Adobe, though in each case the bullish case came with caveats about timing, valuation, or competitive disruption.
A major theme was whether AI is an existential threat or a temporary overhang. The guests argued that software names such as Adobe and Salesforce are being punished because investors fear AI will compress their moats and pricing power, but they disagreed on how permanent that risk is. They also returned repeatedly to capex and the broader market, noting that a relatively small group of AI-linked companies has driven an outsized share of S&P 500 returns and U.S. growth.
The discussion ended with a broader debate about market concentration, active management, and what happens if the AI spending cycle stumbles. The group also flagged private credit, international stocks, and the possibility that 2026 could still produce another year of strong equity returns even if volatility and sector rotation remain intense.
Key takeaways
- The host and guests saw Lululemon as a difficult turnaround because fashion cycles, low-end competition, and better rivals have eroded its edge.
- The guest was constructive on Nike, citing the Caitlin Clark brand effect and a historically weak multi-year stretch for the stock.
- The host argued Netflix is still the best business in the group, but he would rather wait for the Warner Brothers overhang to clear before adding more.
- The guests said Uber’s autonomous-vehicle strategy matters because its upside depends on partnering with many AV providers rather than being displaced by Tesla or Waymo.
- The discussion framed AI capex as the biggest macro risk in 2026, because a relatively small cohort of AI-linked companies has powered an outsized share of market returns and U.S. growth.
- The host and guests noted that many Mag 7 names are cheaper on trailing multiples than a year ago, even after another strong market year.
Notable quotes
“I don't know how you how a retailer like Lulu gets its mojo back. I feel like it's it's over”
“what if the what if there is is no end to the story? And it just it it just keeps growing and growing and we don't get a conclusion”
“the business doesn't need to be turned around. The business is is as on fire as it's ever been”
“65 to 75% of S&P 500 returns, profit, and capital spending since the launch of Chat GPT have been derived from 42 companies linked to generative AI”
How the episode opens
Are we up? I think so. Yeah.
All right. All right. We're in the show.
All right. Hi everybody. Welcome to the first Compound and Friends of 2026.
You heard that beat drop, so you know it is time to get down to business. It's uh first trading day of 2026 and I'm so excited. We have Ben Carlson here.
Um you guys that are Compound fans, you know Ben from Animal Spirits and Ask the Compound. Ben is the director of institutional asset management at Rholtz Wealth where he helps shape portfolio strategy and investment policy for institutional clients. you know his shows, you know the blog, a wealth of common sense and the 12, 15, 20 or so books that he's written in the last uh 20 years.
Ben, welcome to the show.
Hey guys, — I don't have any uh I don't have any applause button, but you can imagine if I did, it would be uh — Be going crazy right now. All right. Um Michael Batnik, my co-host, is here. Uh Michael, say hello to the folks.
What's up, guys? I uh I'm kind of surprised that Lamb Research is the best S&P performing stock of 2026. I know it's early, but did not see that one coming. — We So, we wrote we wrote about we wrote about uh Lamb as being one of the best stocks last year that we had written up in our best stocks in the market column at CNBC Pro. I just wrote about it this morning.
Well, one minute into the year, — The trend remains. — Nice follow through. Nice follow through. All right. Um guys, let's uh let's give a quick shout out to uh let's give a quick shout out to today's sponsor.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- 2026 market outlook
- year ahead expectations
- stock market outlook
- investing themes
Watch the episode
Watch “Welcome to 2026 | TCAF 223” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
More from Ask The Compound
Ask The Compound, this episode and its artwork belong to The Compound. Octagon is not affiliated with the show; this page is an independent summary.
