Radio Show with Michael Batnick & Ben Carlson of RWM | #435

Episode Summary

Executive Summary: Meb Faber interviews Michael Batnick and Ben Carlson about the evolution of financial content, the role of podcasts/blogs in advisor marketing, the growth of Ritholtz Wealth Management, the upcoming Future Proof festival, and investing debates around trend following, valuation, and market behavior. The conversation mixes industry history, humor, and practical views on how content, trust, and simple rules can improve investing and client relationships.

Main Topics: Financial content as a business tool (Priority: 5/5): The guests explain how blogging, podcasts, YouTube, and social media became integral to growing and serving clients, and how content helps advisors scale communication and trust. The rise of podcasting and digital media (Priority: 5/5): They discuss the transition from old-school blogging and HTML posts to podcasts and video, noting that audio is easier, more enjoyable, and often better suited to modern attention spans and audience segments. Trend following and managed futures (Priority: 5/5): Meb and the guests debate why trend following remains one of the strongest portfolio diversifiers despite long stretches of poor performance and the difficulty investors have sticking with it. Valuation, CAPE, and market timing (Priority: 5/5): They explore CAPE ratio skepticism, the relationship between valuation and future returns, and why valuation signals are more useful for risk management and rebalancing than precise top-and-bottom calls. Future Proof festival and networking culture (Priority: 4/5): The conversation promotes Future Proof as a more social, festival-like alternative to traditional finance conferences, with live podcasts, music, beach activities, and broader IRL networking. Social media, Twitter, and reputational risk (Priority: 4/5): The speakers reflect on how Twitter changed discourse, rewarded dunking, and became more hostile, while still being a powerful platform for ideas, distribution, and professional visibility. Books, movies, and broader worldview (Priority: 2/5): The discussion ends with lighter reflections on books, fossil fuels, supply chains, and a shared appreciation for how real-world context shapes investing and economics.

Key Arguments: Content is not a side activity for advisors; it is part of the business model because it builds trust, improves client communication, and helps filter for fit. Podcasts have become more practical than writing for many practitioners because they are faster to produce, easier to sustain, and more enjoyable than blogs or long-form posts. Trend following is valuable because it can improve return, risk, correlation, and drawdown characteristics across a wide set of markets, but investors struggle to own it through bad periods. The speed of modern markets does not invalidate trend following; most real trend systems trade many markets and can benefit from both long and short exposure. Valuation metrics like CAPE are better viewed as long-horizon return and risk tools rather than precise timing indicators. Rebalancing and even modest valuation tilts can meaningfully improve portfolio outcomes without requiring all-out market timing. Twitter and social media can be useful for reach and idea-sharing, but the tone has deteriorated and engagement now often rewards hostility and dunking. Future Proof is designed to solve the boredom and stiffness of traditional investment conferences by emphasizing interaction, live content, and social experience. Simple, rule-based strategies often fail to gain adoption because they are not flashy enough to sell, despite strong historical evidence. Advisors benefit when clients can self-serve market commentary through podcasts and blogs, freeing advisor time for taxes, estate planning, and specific planning issues.

Data Points: Future Proof event dates: September 11th to 14th - The festival in Huntington Beach, California is promoted during the discussion. Ritholtz Wealth Management families: 12,000 to 13,000 families - Ben describes the firm’s client base during the update on business growth. Ritholtz Wealth Management AUM: Almost $3 billion - The guests note firm assets are near the $3 billion mark. New hires in last 12 months: 3 of the 10 team members - Ben says three of the ten current staff were added in the prior year. Podcast cadence: About 7 days a week / four podcasts weekly for Michael - They describe the frequency of their current podcast schedule. Trend following underperformance period: About a decade - They note trend can underperform for long stretches, which creates career risk. Twitter likes on Ben's top tweet: 24,000 likes - A tweet about cutting the cord and subscribing to many services was his most liked post. Twitter likes on Michael's top tweet: Not specified in transcript, but identified as less than Ben’s - Meb notes Michael’s most popular tweet was different and less popular than Ben’s. CAPE ratio long-term environment: Above the long-term average about 95% of the time - Used to argue that valuation should not be treated as a strict buy/sell trigger. Average CAPE since the 1990s: Low 20s - Meb says the post-1990 average CAPE is around the low 20s. Historical CAPE in high inflation periods: Low teens or single digits - They cite the 1970s, 1940s, and Japan as examples of lower valuation regimes. Possible CAPE in extreme bubble: 50 to 100 - Discussing how valuations can become far more extreme before reverting. 60/40 portfolio stress period: One of the worst six-month periods ever - Used to contextualize why many investors are still sticking with traditional allocations. Podcast/blog audience split: Younger audiences prefer YouTube/podcasts; boomers often print blogs - An anecdotal segmentation of content consumption preferences.

Pivotal Quotes: "People do business with people they like." — Josh Brown (as cited by Michael/Ben): Used to explain why content and personality matter in financial advisory relationships. "If this really worked, why wouldn't everybody do it? And the answer that I gave him was: it's not bullshitty enough, right?" — Ben Carlson: A defense of trend following’s simplicity and why effective strategies can be hard to market. "I think the CAPE ratio is actually meaningless. You could use any valuation metric. They'll say the same thing at extremes." — Meb Faber: Meb argues valuation matters more for extreme-risk awareness than for short-term timing.

Implications: Advisors and asset managers should prioritize authentic, repeatable content and client education. Trend and valuation remain useful, but only when framed as long-term risk tools, not timing gimmicks. Social platforms still matter, but trust and consistency win.