Video · 2026-07-22 · 1h 18m · 6 moments

Say Bubble One More Time. I Dare You! | Animal Spirits 474

✦ AI generated

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Claim◆

Inside the stock market, there is a violent separation happening in 2026 — money goes to where it is treated best; if a stock is not working, it is getting destroyed, and if it is working, it is working really, really well.

Michael describes 2026 as defined by extreme divergence: winning stocks soar while losers get crushed, even as the overall S&P 500 barely budges from highs.

transcript

Michael: Inside the stock market. There is a violent separation. You know the phrase money goes to where it's treated best. I feel like that is like the theme of 2026. If it's not working, it's getting destroyed. And if it's working, it's working really, really well.

Data

Two-thirds of U.S. stocks are positive year-to-date with a median return of 12.6%, even as many high-profile name-brand companies are getting slaughtered.

Ben highlights a striking contrast: 66% of stocks in the Russell 3000 are positive YTD with a 12.6% median return, even as marquee names like Oracle and Netflix suffer 50%+ drawdowns.

transcript

Ben: 66% of stocks are positive year-to-date in the US stock market. Median return is 12.6%. That's pretty good. Two-thirds of stocks are positive. That's a pretty good year. I'm just saying it's really surprising that a lot of these name brand companies are getting slaughtered while this is happening to all the rest of the stock market.

supports · 2

Claim

Nike has lost its moat. The stock is down 75% from its highs and the fundamentals of the business are not good — the company is not what it used to be and may never regain its former dominance.

Michael and Ben discuss Nike's dramatic decline, noting the stock is at 2014 levels, its fundamentals are poor, and it risks joining once-dominant brands like MTV and Sports Illustrated in irrelevance.

transcript

Michael: I can't believe that Nike lost its moat. Nike is down 75% from the highs. I think it's at the same price it was at 2014. The fundamentals of Nike's business sucks. It's not doing well, right? Yeah, they kind of blew it. Put the stock price aside. I don't think we're going to be talking about how Nike regained its mojo.

gives example · 2

Claim◆

This is not a stock market bubble. Forward P/E ratios are compressing across sectors, and the market is already pricing in that AI earnings are not sustainable — that is why semiconductor stocks trade at roughly 12 times forward earnings.

Michael argues against bubble calls by pointing to compressing forward P/E ratios across sectors and the market's own skepticism already embedded in semiconductor valuations.

transcript

Michael: I don't see a bubble in the stock market. And if people say, 'Well, the earnings aren't sustainable, and that's where the bubble is.' Hey, dude, the market agrees. The market is saying the earnings aren't sustainable. You think this is like a great insight, right? That's why these companies are trading like 12 times forward earnings.

explains mechanism · 1

Claim

We do not have recessions anymore — at least not with the frequency and severity of the past. Since the early 1980s, recessions have become shorter, fewer, and milder, and policymakers have figured out how to manage the economy better.

Ben argues the U.S. has entered an era of fewer and milder recessions due to better policymaking, a more diversified service-based economy, and the stabilizing role of fiscal and monetary intervention.

transcript

Ben: Why don't we have recessions anymore? It feels like now a lot of people I put this question out there and I looked at the National Bureau of Economic Research has it the data going back to 1857. Pretty much for a hundred years we averaged four to five recessions every 20 years. And since the 70s, early 80s, that has completely flipped. The recessions are shorter in months and we have they're fewer in magnitude. We don't have recessions anymore.

Data

Boomers are not downsizing in retirement — they are buying bigger homes. Wealthy older Americans are ripping up the traditional retirement script, with many upsizing rather than downsizing.

Ben reports that wealthy boomers are increasingly buying larger homes in retirement, driven by desires for space for grandchildren and the financial means to do so, further tightening housing supply for younger generations.

transcript

Ben: Wealthy older Americans are ripping up the traditional script for aging. The script is you have to buy a home because it's your biggest and best investment. And then when you retire, you downsize and then young people will move into those homes because boomers don't need bigger houses anymore. And they say, especially for wealthy people who have a lot of money, that's just not the case.

Highlight slides

2026: The Great Divergence Inside the S&P 500✦ from: Inside the stock market, there is a violent separation happening in 2026 — money goes to where it is treated best; if a stock is not working, it is getting destroyed, and if it is working, it is working really, really well.Winners Fly, Losers Are Destroyed✦ from: Inside the stock market, there is a violent separation happening in 2026 — money goes to where it is treated best; if a stock is not working, it is getting destroyed, and if it is working, it is working really, really well.Forward P/E Compression Signals No Bubble✦ from: This is not a stock market bubble. Forward P/E ratios are compressing across sectors, and the market is already pricing in that AI earnings are not sustainable — that is why semiconductor stocks trade at roughly 12 times forward earnings.

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