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The Contradiction at the Heart of the Market
The S&P 500 was down about 2% from its all-time highs at the time of recording, a "stubbed toe" that barely registers. But beneath that placid surface, a violent rotation was underway. Michael and Ben catalogued a "bloodbath" in high-profile names: Oracle was more than 60% off its highs, Netflix 50%, and both Bitcoin and Ethereum had suffered severe drawdowns. Meanwhile, the broader market was doing just fine. Ben noted that 66% of stocks in the Russell 3000 were positive for the year, with a median return of 12.6%. This stark divergence—where "money goes to where it's treated best" and everything else gets destroyed—defined the current moment. The froth in overcrowded trades like semiconductors had been let out, which Ben argued was a healthy development for the long-term uptrend.
The Persistence of "Normal" and the End of Recessions
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What you'll learn
- 1 (02:08) **Market Snapshot: A 2% Pullback Hides a Bloodbath** - The S&P 500 is barely off its highs, but high-profile stocks like Oracle, Netflix, and crypto are down 40-60%.
- 2 (04:53) **Bubble Talk and the Russell 3000** - Michael pushes back on the bubble narrative, pointing out that 66% of stocks are positive year-to-date with a median return of 12.6%.
- 3 (05:57) **Michael's Mudroom Saga and Neighborly Grace** - A humorous detour into Michael's home renovation and a conflict with a neighbor who called the town inspector.
- 4 (09:57) **Korean Leverage: Volatility Surges to Record Highs** - The 30-year Korean bond volatility hits an all-time high, exceeding the dot-com bust and GFC.
- 5 (12:04) **The Case for a "Normal" Market** - Ben argues that GDP growth, inflation, and the 10-year yield are all near historical averages, making this a surprisingly normal year.
- 6 (14:56) **Retail Investors: Still Buying the Dip** - Despite the bloodbath in tech names, retail remains a strong structural buyer of equities, with no net sell days in July.
- 7 (19:26) **Nike's Lost Moat and the Fate of Legacy Brands** - Nike is down 75% from its highs, trading at the same price as 2014.
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Show Notes
On episode 474, Michael Batnick and Ben Carlson discuss: the bloodbath in certain tech stocks, investor behavior in South Korea, a normal market environment, the Mag 7 shine has worn off, Nike lost its moat, why we don't have recessions anymore, boomers aren't downsizing, stocks vs. housing as an investment, Netflix is crashing, movies are back, and more.
This episode is sponsored by YCharts and Vanguard.
- To learn more and get 20% off your initial YCharts Professional subscription to take Y for a spin (new customers only), visit https://go.ycharts.com/animal-spirits
- To learn more about Vanguard bonds, visit https://vanguard.com/audio
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Find complete show notes on our blogs:
Ben Carlson’s A Wealth of Common Sense
Michael Batnick’s The Irrelevant Investor
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