Animal Spirits Podcast Never Pay Off Your Mortgage (EP. 436)
42 snips
Oct 29, 2025 Explore how behavior influences bull markets and the surprising number of stocks that outperform the S&P 500. The hosts tackle the implications of 5x leveraged ETFs and debate the potential for bubbles fueled by widespread belief. Consumer spending habits emerge, with $20 lunch trends signaling new norms. They also dive into AI's potential impact on GDP and discuss the pressing need for lower housing prices. Intriguingly, the rise of Halloween decorations reflects shifting cultural values among millennials.
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Breadth Thrust Predicts Short-Term Gains
- Market breadth thrust signals human behavior and often precede large gains within six months to a year.
- Michael Batnick notes such signals have historically been followed by 100% positive six-month and one-year outcomes since 1950.
Narrow Leadership Fuels Index Fund Case
- Few stocks outperform the S&P each year and recent years show exceptionally narrow leadership.
- Ben Carlson and Michael Batnick argue this supports index funds and shows active managers underperform often for behavioral reasons.
Don’t Rely On Crowd Consensus To Avoid Bubbles
- Don't assume labeling a market condition as a 'bubble' prevents price risk; acknowledge the possibility and diversify.
- Ben Carlson recommends diversification as a practical hedge against valuation excesses.
