Investors Now Too 'Overconfident' & 'Giddy' | Michael Lebowitz & Adam Taggart

**Michael Lebowitz** (0:00)
We're coming off to two years in a row of 20% gains. People are starting to get overconfident that this is what markets do. They just go up. They don't, a lot of people don't understand why. They don't understand that the prices of the stocks are going up more than the earnings, more than the sales. You know, the raise, the increasing valuations. They just know it goes up. And this isn't just retail investors. Institutional investors are kind of giddy as well. And we see it in all of Wall Street's outlooks. And, you know, you watch CNBC for an hour, and you'll see plenty of bullish forecasts, despite lots of things we should be worried about.

**Adam Taggart** (0:47)
Welcome to Thoughtful Money. I'm Thoughtful Money Founder and your host, Adam Taggart, welcoming you back here at the end of another week for another weekly market recap. This time, featuring my good friend, the unsinkable Michael Lebowitz. Michael, how you doing?

**Michael Lebowitz** (1:01)
I'm doing great. Thanks for having me on, Adam.

**Adam Taggart** (1:03)
It's nice to meet you.
Yeah, folks have been asking me when I was gonna kick Lance out of the chair and bring you in, and serendipity inserted itself. Lance had to be somewhere else today, and you were kind enough to step up. I'm not too much noticed, so thank you for doing that.

**Michael Lebowitz** (1:19)
Always.

**Adam Taggart** (1:20)
I'd like to say this is the smarter, better-looking side of the portfolio management team there at RIA.

**Michael Lebowitz** (1:26)
And younger.

**Adam Taggart** (1:27)
And younger. Okay, good. Good. Lance is, I'm sure, grinding his teeth to a fine powder at the moment. Well, look, I started this with the term unsinkable for you, because I wrote that before we got on here, Michael, before the jobs report came out today, which is markets have sold off a little bit based on that. But really, I think the term still stands. The market buoyancy has been pretty impressive when you consider that over the past couple of weeks, it's had a couple like near black swans come out of the woodworks. I mean, certainly DeepSeek was pretty close to a black swan. Maybe not so much the tariffs and the trade wars, because that was something Trump had talked about that he might do. But it definitely caught people by surprise last weekend when they announced the 25 percent tariffs on Canada and Mexico and the 10 percent tariffs on China.
And what's been amazing is how quickly the market sort of shrugged both of those things off.
Now, we've also had the most of the earnings for the Magnificent 7, which I would kind of call mixed. It wasn't the usual blowout earnings session across the board for all of them that folks are used to. Again, market doesn't really seem to care. In fact, I'll pull up a chart of this in a second here. But retail sentiment is at an all-time high. In fact, there's a quote here from JP Morgan. According to JP Morgan, sentiment is even higher than it was at the peak of the meme mania in 2021 So let me just show this chart here, so folks can see what I'm talking about. But basically, the market right now is sort of a Teflon market. No bad news seems to stick to it. Nothing is ruining the party vibe. So why don't we start here? Does this make you confident that, hey, this is a party that no one's going to stop, so everybody jump on board the party train? Or does this make you think that, hey, you know what, folks are maybe excessively optimistic here, and one of these curveballs that comes is finally going to catch the market by surprise?

**Michael Lebowitz** (3:51)
Yeah. So first of all, you can never be confident about anything in the markets.
But from that, I'm confident that that's a driver, a big important driver of why the stock market has been so unsinkable. We know that sentiment is extreme. We know that there's a lot of optimism. We know that retail investors are pouring money into the market at the fastest pace ever. So while that's nice, that's good for today, it's keeping at a minimum a floor on the market, not letting it go down too far when we have these sort of black swan events, bad events, or even like today. The reason we're down today is because Trump is talking about retaliatory tariffs. But the S&P is down 30, 40 points. And it's not, which in a grand scheme of things is half a percent, it's nothing. So this sentiment is really providing a nice Florida to market. Now we're coming out of earnings, so buybacks can start back up again. So there's optimism, and optimism and positive sentiment can win the day for a long time until of course it doesn't. And through my career and even going back before my career, this happens plenty of times. And we just, you know, the market will figure out whether it's appropriately optimistic, whether it overbought into some of the optimism, and it'll play out as it will. And inevitably, it's likely there'll be an event, whether it's a black swan event or just a, you know, something that's somewhat predictable, but not necessarily like tariffs that may shake the market down and get us off these extreme valuations.