Is Twitter Dead? (EP.316)

Episode Summary

Executive Summary: The episode mixes market commentary, behavioral finance, and pop-culture riffs. The hosts argue that bear-market pessimism is often the best time to buy, note older investors and retail traders are increasingly exposed to equities, and highlight how pandemic-era distortions broke many economic relationships. They also discuss rates, housing, tech, Threads vs. Twitter, and media/entertainment winners and losers.

Main Topics: Bear markets and long-term investing (Priority: 5/5): The hosts revisit prior bearishness from late 2022 and argue that deep market declines often create strong long-term buying opportunities, even if conditions feel uncertain at the time. Retail flows and investor behavior (Priority: 4/5): They examine flow data showing retail investors returning to stocks and ETFs, and argue that flow patterns are more momentum-driven than predictive, making them weak timing signals. Rates, inflation, and housing (Priority: 5/5): Discussion centers on cooling used-car inflation, rising mortgage rates, and housing prices still increasing despite higher financing costs, illustrating how constrained supply and policy shifts distort normal relationships. Labor market strength and post-pandemic distortions (Priority: 4/5): They highlight continued job growth, high prime-age labor-force participation, and shrinking inequality, emphasizing that the pandemic reshaped wage, employment, and inflation dynamics. Twitter, Threads, and social media competition (Priority: 5/5): The hosts contrast Twitter’s deterioration under Elon Musk with Threads’ rapid adoption, arguing that Meta exploited Twitter’s weakness and that the social-media landscape may now support both products. Media, streaming, and entertainment performance (Priority: 3/5): They discuss Disney’s troubles, Amazon’s expensive streaming failures, and movie recommendations, using entertainment as another example of changing consumer behavior and poor capital allocation. Advisors, execution, and financial decision-making (Priority: 4/5): The episode closes on the value of advisors, automation, and execution—arguing that the main challenge is not just knowing what to do, but consistently doing it.

Key Arguments: Deep market drawdowns are often the best long-term entry points because future returns after large declines have historically been strong. Investors should automate contributions rather than try to time bear markets or move to cash when fear is highest. Retail and institutional flow data are more reflective of market momentum than reliable predictive signals. Older investors are holding more stocks because they’ve learned equities are the main long-term wealth-building vehicle in retirement accounts. Pandemic-era policy, labor shifts, and inflation shocks temporarily broke historical economic relationships, so past analogs may mislead future forecasts. Housing can rise even with 7%+ mortgage rates when supply is tight; rate hikes do not mechanically crush every asset class. Twitter’s product and business deteriorated under Musk, creating a window for Threads to gain adoption quickly. Advice value comes from peace of mind, expertise, objectivity, and execution, not just picking securities or making forecasts.

Data Points: S&P 500 drawdown cited in late 2022: about 25% - Referenced as a historical level where subsequent long-term returns were often strong. NASDAQ drawdown cited in late 2022: 30% or worse - Used as another example of a bear-market threshold with favorable future returns. S&P 500 performance since the cited 2022 low: up almost 25% - Return from the end of Q3 2022 through the present discussion. NASDAQ performance since the cited 2022 low: up 38% - Return from the end of Q3 2022 through the present discussion. S&P 500 distance from all-time highs: less than 6% - On a total return basis at the time of discussion. NASDAQ distance from all-time highs: less than 9% - On a total return basis at the time of discussion. Vanguard 401(k) investors age 55+ with >70% in stocks: half - Actively managing investors, excluding target-date funds. Vanguard figure in 2011: 38% - Comparison point for older investors holding over 70% in stocks. Fidelity investors ages 65-69 with two-thirds or more in stocks: nearly 4 in 10 - Shows high equity exposure among older retirement savers. Vanguard taxable brokerage investors age 85+ with nearly all assets in stocks: one-fifth - Highlights persistent equity exposure even at advanced ages. Vanguard taxable brokerage investors age 75-84 with nearly all assets in stocks: almost a quarter - Shows rising stock concentration among older investors. S&P 500 best-performing stocks in June: Carnival Cruise and Norwegian Cruise Line - Both cruise lines led monthly performance according to YCharts. Carnival Cruise performance: up 70% - Mentioned as one of the best-performing S&P 500 stocks for June. Royal Caribbean performance: up 30% - Cited in discussion of cruise-line stock strength. Used vehicle prices year-over-year: down 10.3% - Described as the second-largest annual decline ever. TSA passengers screened in one day: 2.8 to almost 2.9 million - A record number of travelers screened nationwide on July 1. Disney World slowdown: one of the slowest Independence Day weekends in nearly a decade - Travel data showed unusually weak theme-park traffic. Google/Amazon/Microsoft/Facebook job openings change since Q1: up 100%, 40%, 85%, and 162% respectively - Used to argue big tech hiring has resumed after a slowdown. Prime-age labor-force participation: over 83%, almost 84% - Highest level since 2001 for ages 25 to 54. Jobs added in the last year: 3.8 million - Joey Politano breakdown of U.S. job gains. Average hourly earnings at restaurants/hotels: up 28% from 2020 to 2022 - Highlighted as a major post-pandemic wage increase. Average 30-year fixed mortgage rate: 7.22% - Lance Lambert cited recent mortgage-market levels. Threads signups: 100 million in five days - Used to show rapid adoption and a real challenge to Twitter. Twitter/X valuation estimate in discussion: sub $10 billion to $15-$20 billion if unchanged - Hosts argue Twitter is worth far less than Elon Musk paid. Amazon Prime Video global platform demand share: 10.8% - Compared with Netflix’s 38% in streaming originals share. Netflix current price in example: $433 - Used to critique Goldman Sachs’ revised rating and target. Goldman Sachs Netflix target change: $230 to $400 - Despite nearly doubling the target, the firm still called the stock neutral. Disney+ related comment: estimates were exceeded but stock still lagged - Hosts noted Disney’s streaming success did not translate into stock performance. ARK fund level: highest since August 2022 - Cited as evidence riskier tech has rebounded strongly.

Pivotal Quotes: "when stocks fall a lot like this, like, when is a better time to buy?" — Michael Batnick: Arguing that bear-market pessimism often creates the best long-term opportunities. "The sub-3% 30-year fixed rate mortgage will be the greatest gift ever bestowed to you as homeowners." — Michael Antonelli (quoted by hosts): Used in a discussion about whether ultra-low mortgage rates will ever return. "This past year, for the first time, I could see the end of the road for Twitter." — Eugene Wei (quoted by hosts): Read aloud to explain Twitter’s decline and the appeal of Threads.

Implications: Listeners should focus less on short-term forecasts and more on automation, diversification, and behavior. Markets, housing, labor, and media are all being reshaped by post-pandemic policy and platform shifts, so old rules may mislead.