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Chapter 1: What is the main topic discussed in this episode?
All right, it is five o'clock on the East Coast. That means it is time for What Are Your Thoughts? Josh is away. So, let me turn myself up so I can hear this. So we brought in some young blood for the show tonight. We are going to talk all about the bull market. What any were in, what's going on with the software balance. And of course, we are going to cover the IPO bonanza that is coming.
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Chapter 2: How does experience influence investment strategies in a bull market?
I was about to say he needs none because he is quoted relentlessly early and often on every show that we do. But you know what, he deserves an introduction. He deserves to have his origin story heard as do as do you, Sean. So chart can Matt, let's start with you. What is your origin story? And let's keep this tight. Okay, don't ramble. You got you got 60 seconds tops. How did you find us?
And what what do you do here?
Chapter 3: What are the implications of the upcoming IPO bonanza?
Okay, absolutely, yeah. So my origin story, I was a super fan of The Compound in college. Between football practice, I would listen to The Compound and Friends, and one episode, you guys had Tom Leon, and he showed some charts, and I was like, man, this guy is so smart. I want to work for him. I sent Funstrat an email. They got back to me. I worked with Tom for two years. He taught me the ways.
He taught me how to chart. Unreal. That's like my master Yoda. I was like, this guy, he taught me the ways. And those same charts that I saw him present in the show, I was updating for him a few years later. So it felt amazing. Left Fundstrat in February 2024. A few months later, I reached out to you, Michael. I wanted to be the outsourced chart guy. You welcomed me in graciously.
I essentially became a research associate at Ritholtz. make all the charts for the podcast now with Sean, started Exhibit A, and now we're here.
Chapter 4: How can young investors navigate the current market conditions?
So it's really cool being on the other side of this as a fan, in college especially. Yeah, very grateful.
I'm beaming with pride. Unbelievable. That's the man right there. You really are a special person, Matt. All right, Sean.
go ahead i was also a fan very similar to matt uh working in banking and josh literally posted a research role on instagram of all places and i was like all right i'll just swipe up on that um because i followed the podcast i followed the blogs and twitter and all that other stuff uh and i just i love this stuff i love stocks and i vibed with these guys and i was i don't know four years ago so i was in denver and i was like all right i'm gonna apply and i happen to get the role thank god
and I'm now an investment analyst at Ritholtz, and like Matt said, I help with the content, I help with our investment committee, our team of advisors, all that good stuff. I make charts, but not as pretty as Matt's, and here we are. You got him there. How was our interview? How'd I do with you? you were actually really short. Like you're probably much more thorough these days.
Oh yeah? Yeah, I think so. You did not look happy with me when I'm in our call the first time. You were kind of confused exactly who I was. And within a few minutes, the entire thing changed. But I was buttoned up, suit and tie. And anyways, it ended up being amazing. But for a split second, I thought I messed up. What am I doing? All right.
Well, boys, I am super duper duper psyched to have you with us because we're talking about the bull market. And before we get into the regular program and we're going to discuss, we have tons of charts. We're going to start off with something a little bit different. And yes, I am going to be reading this because I wrote some notes. I thought, can I go off the cuff?
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Chapter 5: What role does AI play in shaping investment decisions?
And you know what? I'm just not that good. OK, so forgive me. I want to read some thoughts that I think are important. One of the most important qualities that investors need to make money in a bull market They need to be young and I'm only half kidding. I'm not really actually kidding. So if you will indulge me, just, I'm going to get on my soapbox for like, I don't know, three to four minutes.
Okay.
All right. So people think that experience is an advantage when it comes to investing and credit to me, I have always been dubious of this, even in my early days. And I think the, I think it really depends what kind of market environment you're in. If you are in a market that looks like the recent past, yeah, okay, probably then experiences is going to help you. But guess what?
Most of the time, the markets are changing. And just when you think you found the keys, they change the locks. I don't know who said that. Somebody said, I didn't make that up. Somebody said that. But if you are in a time of massive change and massive disruption like we are today, then experience can be an enormous disadvantage.
Not for everyone and not always, but for the most vocal market pundits, the ones that we've been seeing on the screen for the last 15 years, the I've seen this movie before type of investors, I found that to be pretty close to 100% true. That experience has hurt them. Ben Carlson often cites this awesome quote from tech investor Paul Graham.
He said, when experts are wrong, it's often because they are experts on an earlier version of the world. And I think there is so much truth to this when it comes to investing. And no disrespect to the elders. I'm not exactly like a spring chicken. I'm much older than you guys. But I think that most people with experience are using a dated playbook.
So even in this last, let's start the bull market in 2013, or even if you want to go back to 2009, whatever.
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Chapter 6: How do historical market behaviors inform current strategies?
How many stock pickers or macro guys are the face of this secular bull run? You might say Tom Lee. You might say Dan Ives, but Dan Ives came on the scene sort of recently. And they're not traditional Warren Buffett, Stan Druckenmiller type of investors. Like how many investors will history remember? And I know there's a lot of people that have done spectacularly well, but probably zero.
So I know that there's people that are listening to this and they're like rolling their eyes like, Michael, come on, schmuck. Come back to me when the market gets cut in half. No, I get it. I get it, okay? I'm talking about making money in a bull market. I'm not talking about what happens on the other side, because that's definitely a different story.
I want to share something with you guys that when I first came across this, probably like, I don't know, 2013, maybe 2015, something like that, it was super impactful to me. I think that too many people think that learning from the past, and I was guilty of this, when I was your guy on stage, all I did was read books. Like, that's all that I did.
Because I thought, I think a lot of people think that the best way to see into the future is by looking into the past. If I learn about different market environments and I study history's best investors and things that change, then I will be able to do better. And I think for me personally, the opposite was true.
I think I knew too much and I think it really hurt my long-term returns, which is fine. you know, index funds worked, but like I didn't buy Nvidia, even like in 2022 or whenever November, like that was the most obvious trade of all time in hindsight, right? Like when ChatGPT launched, how did I not buy the infrastructure build out? Whatever, I didn't. Okay.
So here's what I want to share with you guys. Peter Bernstein, one of the absolute greatest investment writers of all time, Against the Gods is one of the best books. I cannot recommend it highly enough. He did an interview with PBS Frontline. It was a documentary in 1997. And this hit me so hard, like so, so hard when I first listened to him say this.
So he was talking about the difference between
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Chapter 7: What are the psychological factors affecting investor behavior?
in yields between stocks and bonds and the historical relationship. And I think you guys have probably heard me say this, like you too, and maybe the audience has heard me reference this. So here's me quoting Peter Bernstein. He said, you got twice as much income owning stocks as bonds.
And even though people felt it was very risky, he's talking about stocks, they felt, well, the difference in income made it worthwhile. And so then something absolutely amazing began to happen as the decade wore on. The stock market began to go up and dividends didn't go up that fast. So yields fell to around 4%. And in the meantime, the bond market, bond prices began to go down.
Business was very good. People began to worry about inflation for the first time. And so around 1958, if you bought a bond, the income on it was more than if you bought a stock. Dividend yields went below bond yields. This had never happened in history. This is me, not Peter. This was like an ironclad rule.
Anytime they diverged, or I'm sorry, anytime they converged, stocks were overpriced and stocks crashed. That was like an ironclad rule, like you knew what to do. Okay, so then Peter says, it was a really unique experience. It wasn't supposed to happen because stocks are supposed to be riskier than bonds. I had two older partners.
They were 15 years and more older and they were veterans of the depression. And my closest friend in the firm, he always calls me kid. He said, don't worry, kid, this will reverse itself. This is unreal and not to be sustained. This will reverse itself. Well, I'm still waiting. Stocks have yielded less than bonds ever since. And so in my experience, this was the single biggest event.
And I never forget it because it proved to me that when people say something can never happen,
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Chapter 8: How should investors approach emerging markets and tech stocks?
and for 200 years it couldn't, hadn't, then anything can happen. So then the interviewer was asking him about, he's like, wait, you're telling me that in the 1950s, which was a fantastic bull market, if you look at a chart of stocks by decade, 1950 is the only decade that literally went from the lower left to the upper right, almost uninterrupted.
Like it started at the low and ended at the high. It was a fantastic decade for the stock market. So Peter said, the reason that the 50s were the decade of disbelief was that most of the people, I really could say almost all of the people who were still in the stock market were veterans of the depression. No new people had come in.
So the memory of this event was very strong and you really had to go through about 10 years more so that the event was by 1959. It was 30 years since the crash. Those people were beginning to die off and a few younger people were beginning to come in because it began to look like a place where you could make some money. So gentlemen, what are your thoughts? Sean, let's start with you.
it's weird that you're bringing this up because like Matt and I were just talking earlier today, our desks right next to each other. And we were talking about how many crazy things have gone on and they are crazy and change is constant. But one thing that I was thinking about was like, has there ever been a decade where it just followed the playbook?
Like things aren't normal and it kind of feels like it's been not normal for so long that that is the playbook. And I don't, I don't know if that's like the normal thing to think, but that's like definitely how it feels. Well said.
In the same way that people in the 50s were an expert on the Great Depression, is it fair to say that people in the 2020s could be an expert on the 2008 financial crisis and that has contributed to their lack of participation in the bull market? I mean, I think... There's a concept that Tom taught me at Fundstrat and it's called Maslow's hammer.
And it's that people hold hammers and they look for nails. And in other words, if you're equipped with like a 2008 hammer and you know exactly what went wrong in that time period, you start to see everything through that lens in the same way that people might be seeing the rip in semis as this is tech bubble 2.0. And so sometimes I think actually a lack of experience
in certain moments of time that are extremes can actually contribute to your ability to adapt to new environments.
Absolutely. Very well said. I'm not trying to minimize what a bear market does in particularly like a crash, like what depression did to a generation. Think about investors of like people living, who gave a shit about the stock market in 1938 and people are so over it. And what 2008 did to the psyche. I think at the low in 2008, stocks were back to where they were.
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