Video · 2026-08-12 · 1h 21m · 6 moments

Depressed Day Traders | Animal Spirits 477

✦ AI generated

timeline · colored by role

Claim◆

AI is the only thing that matters for the stock market right now, and its continued expansion of capex is what has allowed the market to ignore every major crisis and headline.

The hosts argue that despite numerous crises including pandemic, inflation, wars, tariffs, and banking failures, the AI trade has single-handedly kept the market at all-time highs.

transcript

Ben Carlson: I the the reason why none of this has mattered uh really and truly, I do believe it's the AI trade. I mean, I don't think I'm going out on a limb there. So, look at this chart. Uh Well, actually, you know what? The consumer part of it is also a a a big part of the story. The fact that the consumer has been able to be resilient through all of this is remarkable, but through the lens of the stock market, what matters obviously is is uh is the AI trade and the continued expansion of CapEx numbers.

explains mechanism · 1rebuts · 1supports · 2

Data◆

Hyperscaler capex spending is now projected to reach $3 trillion on a rolling 12-month forward basis, up from $500 billion in December 2022, representing an unprecedented commitment to long-term AI infrastructure.

The combined capex of Amazon, Google, Meta, Oracle, and Microsoft has grown sixfold in three years, with the hosts noting these companies deserve credit for pivoting from short-term share buybacks to massive long-term investments.

transcript

Michael Batnick: Look at this chart from Hyperscaler Farmer uh or Hyperscale Farmer. Bloomberg consensus on a rolling basis now should pass $3 trillion. So, we're looking at the three-year sum on a rolling 12-month forward basis for Amazon, Google, Metal Meta, Oracle, and Microsoft. And in December 2022 when this thing started, it was at it was at $500 billion and and it's gone up and up and up and up and now it's going vertical and we're looking at $3 trillion over the next 3 years I suppose. Is that what we're looking at here? That's amazing. I think one of these things these companies don't get enough credit for is the fact that for years it was kind of like uh all these companies are too short-term in nature and they just care about share buybacks and and and now look at these companies are investing everything they have essentially into back into long-term projects.

provides context · 1supports · 1

Claim

Emerging markets have become essentially an AI play, with Taiwan and South Korea now comprising 45-46% of the index and technology making up 41%, yet they trade at a record 50% discount to the S&P 500.

The hosts note that the composition of emerging markets has transformed from energy and banks to semiconductors and AI-related companies, creating a potential value opportunity compared to U.S. tech at double the valuation.

transcript

Michael Batnick: Taiwan and South Korea now make up 45, 46% of the Emerging Markets Index. China is another 20%, India's 12. So, those are the biggest ones. Technology now makes up 41%. So, obviously, you're getting a big part of this like if you think the US stock market is concentrated, emerging markets are more concentrated. But it's interesting to think about this as a thought exercise. What would you rather own for the next 5 years? If this Let's say the AI trade continues, okay? Would you rather own emerging markets trading at a 10 times forward earnings forward PE or the S&P trading at 20 times forward earnings?

gives example · 1provides context · 1

Claim

While Michael Burry's prediction of a 1987-style crash is unrealistic, the modern market structure and speed of information flow make sudden air pocket events of 7-12% single-day declines more probable than in the past.

One host agrees with Burry's general sentiment about swift market downturns but rejects the specific 1987 comparison, arguing that algorithmic trading and information speed create higher probability of severe single-day drops.

transcript

Ben Carlson: I do think that the way the market is structured now and with the speed at which things move, a an air pocket situation is way a much higher probability event than it was in the past. And that to me, that's like a down seven, down eight, down 10, or down 12% day if something really bad happens.

explains mechanism · 1extends · 1

Example

The hedge fund Situational Awareness, which nearly collapsed, is already receiving new investor capital because wealthy investors operate under different rules than retail traders and always get second chances.

The hosts discuss how a hedge fund that nearly blew up is attracting new money, contrasting this with how a retail investor with $5,000 in a Robinhood account would be labeled a degenerate for similar losses.

transcript

Michael Batnick: Investors clamor to bet on AI whiz kid's fund after situational awareness turnover tur- turmoil. Uh Hey, they use wunderkind in here again. A week after the hedge fund blew up nearly blew up, he's already getting requests from investors looking to place more money with the artificial intelligence wunderkind. Apparently, he says uh he's not taking new money yet. Uh and then this guy from Sequoia says, 'Our suspicion is that he's going to be a fixture in Silicon Valley for a long time to come.' And that's why like people are backing this guy and trying to give him more money.

Fact◆

Two-thirds of young men aged 18-29 who trade stocks daily report feeling like failures, revealing that daily trading is psychologically damaging for the vast majority of participants.

A Bloomberg study found that while one quarter of young men claim to trade stocks daily, two-thirds of them feel like failures, highlighting the psychological toll of treating the stock market like a casino.

transcript

Ben Carlson: young men who trade stocks daily feel like failures. You don't say. You don't say. Um one quarter of men aged 18 to 29 said they trade stocks daily. All right, let's just think about that for a second. One out of four men said they trade stocks daily. No. Two thirds of them report feeling like failures. All right, that part of it I believe.

Highlight slides

The AI Trade: Why Nothing Else Matters✦ from: AI is the only thing that matters for the stock market right now, and its continued expansion of capex is what has allowed the market to ignore every major crisis and headline.Consumer Resilience: A Supporting Factor✦ from: AI is the only thing that matters for the stock market right now, and its continued expansion of capex is what has allowed the market to ignore every major crisis and headline.Hyperscaler Capex Hits $3 Trillion✦ from: Hyperscaler capex spending is now projected to reach $3 trillion on a rolling 12-month forward basis, up from $500 billion in December 2022, representing an unprecedented commitment to long-term AI infrastructure.Strategic Shift to Long-Term AI Investment✦ from: Hyperscaler capex spending is now projected to reach $3 trillion on a rolling 12-month forward basis, up from $500 billion in December 2022, representing an unprecedented commitment to long-term AI infrastructure.Daily Trading Takes Psychological Toll on Young Men✦ from: Two-thirds of young men aged 18-29 who trade stocks daily report feeling like failures, revealing that daily trading is psychologically damaging for the vast majority of participants.The Numbers Behind the Crisis✦ from: Two-thirds of young men aged 18-29 who trade stocks daily report feeling like failures, revealing that daily trading is psychologically damaging for the vast majority of participants.

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