Animal Spirits Podcast - Americans Love Borrowing Money (EP.326)

Episode Date: September 20, 2023

On episode 326 of Animal Spirits, Michael Batnick and Ben Carlson discuss: Future Proof, how markets have changed over the past 70 years, why allocations to stocks are higher than they were in the past, small caps vs. large caps, trading options vs. gambling on sports, why people spend more then they earn more, why the vibes are off in the economy, starter homes, and much more! Today's episode is sponsored by F/m Investments. Learn more about their ETF offerings at: https://fmetfs.com/ Find complete show notes on our blogs... Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation.   Check out the latest in financial blogger fashion at The Compound shop: https://www.idontshop.com   Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Ben Carlson are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ Learn more about your ad choices. Visit megaphone.fm/adchoices

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Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing, and watching. All opinions expressed by Michael and Ben are solely their own opinion and do not reflect the opinion of Riddholt's wealth management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Riddholt's wealth management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. We're working through some noise in the background, so forgive us as we get through this. Ben, what's going on in your office?

My whole office flooded like two weeks ago, and I'm like an island here, and they're fixing every office and section around me. So there's a, I feel like I'm in a construction zone, but we make do. How did you get no water in your office? Did you use, like, the Instagram sticky pad guy? I don't know if it's an Instagram thing, but. I honestly have no idea. You ever use one of those? You ever use one of those things?

Do they really work? No, I've never tried it. I mean, it's only 1999. It will give you another one for free. I was talking, I think, over Roche dinner, about how all of these things that you see on the internet, they never work as advertised. Where you see them something and you're like, oh, my God.

Like, for example, I once saw somebody in Instagram like, oh, you're eating a pineapple the wrong way. The way that you're supposed to eat is you're supposed to like pluck the pieces out. Do you know what I'm talking about? Like those little patterns, you're supposed to just pluck them out. I tried to, you can't pluck it out. Nothing works as advertised. There's a trash bag one too where you like, you do something to the trash bag and it's supposed

to go in easy. I tried it. It doesn't work. Nothing works as advertised except future proof. And you know what? I want to stick my hand up and apologize. I don't, I think we under-promoted it. And now, I know we spoke, I shouldn't say that because we did talk about it a lot.

I don't think, I think I under-hyped it. And I'm not quite sure why I wasn't absolutely pounding the table on what I knew, but what the listeners couldn't. So again, forgive me, would be the absolute best conference of all time. And it lived up to my internal expectations. We had a blast last year. I thought last year went really well. But this year was the way I analogize it is having your second child.

there's just way more, there was way less stress going into it. You just, you know, like, you know what to expect. And, but it's also like you, like, you know the good or the bad. And, and I think this one was way less stressful. And I think that actually made it better. And plus, people knew it to expect. And there was, first of all, more people. I think a thousand more people or something. There was 50% more space outside. And last year was amazing. This year was like five times better. It was, it was hard to, hard to overstate how much positive feedback we got from people on it. And it just was the best. It was so much fun.

Let's talk about the good and the bad. And not only was it fun, it was value ad. I said to a bunch of people, if you can't derive economic value, not just fun. If you can't derive economic value out of future proof, you need to change industries. So, Ben, you mentioned the good and the bad. The good, for me, seeing all the people that are fans of ours, whether it be in the new well shirt, come up to us, is really a thrill. Not something that we take for granted, seeing all those people. The Live Animal Spirits show was so much fun.

That was a blast. I said, what was the trigger to get you out here? And they looked at me. They're like, you? What do you mean? Like, we're here because you and Ben. And so that was amazing. I had a bunch of people on our team like, is this too much for you?

Like, I know you're not the most, you're not exactly a social butterfly. Like having all these people come up to you and talk to you. And I love it. We had to do a lot of small talk. I love it. But here's what I don't love. And I'm not talking about you. If you're listening, this is about somebody else.

But the universal signal for thank you, great talk with you, the conversation is over, is when somebody goes to shake your hand, right? All right. Thank you. Great meeting you. Hey, you do the nice to meet you shake hand. And then you do the, hey, great meeting. You'll see you later.

Shake hand. Yeah. No, this is the great, great to meet you see you later. When people don't respect the universal language of this conversation is over, it could be a bit frustrating. But I'll take it all this long. Another bad thing that I, that this is just, this happened to me twice. it's supremely awkward, at least to me it is.

I don't know if the other personifies it awkward. You know when you hug somebody and you touch ears? But one time, one time, my ear, we touched ears so hard that it was like a suction cup. I don't know that I've ever touched anyone's ears before in a hug. Well, not with you haven't noticed it. I don't hug them and touch the ear at the same time physically. I'm just saying ear to ear when your ears touch. Okay.

I did have a few. I mentioned. I had a few high five to fist and fist to high five. That's okay. But I mean, I had a number of people say, hey, is it weird that it feels like we know everything about you guys because you talk about yourselves on the podcast and you write about stuff. And the funny thing is that sometimes I think we forget that there's other people on the other line of this. So like seeing so many people who watch our show or listen to our show, I thought was really, really fun. I thought it was cool.

Well, I don't, that's that's not lost on me or that's the wrong way to phrase it. That's not, I'm not surprised because, and I've said this before, I grew up listening to Howard Stern, like my entire life. And one of the brilliant things about that show, and there are lots of them, is that you developed a relationship, not just with Howard and Robin, but with all the characters, whether they be whack packers or staff members, like, and even though you don't know these people, you do know them in a sense. Another thing that was great about Future Proof, breakthrough.

Now, people don't like to flirt with strangers at a conference. Oh, what do you do? I mean, some people are better than others, but what breakthrough did was it facilitated flirting, for lack of a better word, 15 minute meetings. Someone said it's finance for Tinder. It's Finder. Exactly. It's opt-in. And if you sit down and you're already, you're not vibe with somebody, guess what? It's almost over. It's only 15 minutes. So that was just universally loved. And the fact that we were able to do it economically where people got like travel vouchers in order to participate, what a win, win, win. Yeah, it was not only advisors meeting with vendors and fintech providers, but I talked to a few people who were like, I'm a college student trying to break into this business, and I took 10 meetings with people to learn about how they got into the job. And again, it's a 15-minute meeting, and they found value-ed with that. So that was, yeah, that was the one unknown. We didn't do it last year, which was really cool. The best part about it is, too, we're doing this again next year. I think they've already got the dates locked down in mid-September again. You even said this time around, it seemed too. short almost because we were having it was such a good time we're having so much fun and uh you're right

just amazing conversations great food drinks the content the speakers all this stuff uh i sat and watched bill gross in a pool towel as he went at jeff gunlock and it it's just it's such a laid-back event and and the thing is everyone is in a good mood there's no one like there's no turd in the punch bowl there there's no no no one trying to ruin it no one trying to speak bad of other people or anything. It's all just everyone was collectively in a good mood. I think that helps being on the beach. People were willing to talk and it was such a huge, diverse crowd. And yes, just, you're right, we might have under-hyped how great of an event it is. And I think it blew away expectations again. All right. On the show, on the live podcast last week, I told the story, and I'll rehash it

very quickly, for those that missed it, about an email exchange that I had. And here's how it went. I was introduced to buy an investor to a company that they're considering investing in. And I messed up, hand up. I forgot to respond. So seven or eight days later, which I didn't feel good about, I said, hey, I'm so sorry I dropped the ball. I can meet Tuesday at this time Friday at that time. The response that I got was nine days later. Hi, Michael. Now it's my turn to drop the ball. Dot, dot, dot, dot. Apologies, dot, dot, dot. And I pulled the audience. Now, maybe I'm a jerk. I'm a New Yorker, which I guess I'm repeating myself. What? I think you're a scorned lover. Like, you got burned once on a bad email or two. And now you

assume it's like you got broken. You had a terrible breakup. And now you assume that like every every relationship is going to end like that. You think all email exchanges are bad now. You're not giving people the benefit out. You're a scorned email lover. So I tried to be mature. At first, whenever the email, my blood pressure, I felt my blood, you know, warming, heating up because I got very angry.

I said, how passive, aggressive, aggressive, just obnoxious. And so when I asked the audience, show my hands, how many people, you know, have my reaction, I'd say it was about, I don't know, a third. Most people thought, most people thought that, you know, she was just joking or whatever. And it's funny. This is very sort of polarizing because I told one, I told the story again at the Rocheon at dinner table. And some people recoiled like, oh, how obnoxious.

And other people are like, I don't get it. She's trying to be funny. All right. So I took the meeting and I'm about to, I'm about to reveal. But I think that dot, dot, dot, there's a lot of meaning there. It can mean all sorts of different things, but it's never, it's never unintentional. So, Brees Hall. Some people are just bad at email.

Sir? That's what it is. So, Brees Hall of the New York Jets is a great player, he's a running back, and he touched the ball. He got four carries on Sunday afternoon as he got their butts woke by the Dallas Cowboys. And so, Breece Hall after the game tweeted four footballs, dot, dot, dot, dot, which I'm told is an ellipsis. That's what the dot, dot, dot, dot, dot, dot's what the dot, dot, dot, dot, dot's what the dot, dot dot dot. She said, now it's my turn to drop the ball, dot, dot, dot, apologies, dot, dot, dot. So anyway, I have the call.

The good news is you're not, like, holding it on and you're willing to move forward. Definitely not. Well, listen, I gave the benefit of the doubt because I swallowed my anger, and I sent the email, happy to meet. And these are Jersey people. Now there's anything wrong with New Jersey. They could have been New Yorkers. Given how the conversation went, which was fine, it was intentional. positive. Final verdict. 100%. It was not a joke. It was 100%. You're going to respond late to you and use the

exact same language that you used. It was not funny. All right. It's a good thing people in the East Coast aren't petty or anything. At least we've learned that. All right. No, we definitely let things go. I've got a question for you here. This is from Montevader posted an excerpt from Felix Salmon's new book, the Phoenix economy. You've had, I think you've had Felix on Compound and Friends before. Once you're correct. I want to get your take on this because I think I could see people going either way. So he said, you might think everything is weirder and more unexpected than it used to be and you are right. Turns out with hindsight, there was this very unusual period of calm for about 70 years from 1945 to 2015, then 2016 happened with the election of Trump

I'm sorry, sorry. Can there be an unusual period for 70 years? Doesn't that just turn into usual after, I don't know, 40 years? Go ahead. True. So his whole thing, and he says for most of the 20th century, we lived in a world where someone like Warren Buff could come along and with one big idea and say, I'm going to make a big bet in America being great. And that one big bet will always be true. And it's going to make me the richest man in the world. This is not the world we live in anymore. The world living is more unpredictable, much fatter tails, much higher upsides and lower downsides. We need to be nimble to navigate it. Do you agree with this at all that that we did have this period of calm and that now things are different? Yes. Well, yes and no. I think there was

the world was always chaotic, but it was more regional. And the internet and social media especially has sped up the spread of news, of fake news, of, so things travel faster. People are quicker to react. So yeah, I mostly agree with this, even though there's always been chaos in the world. From 1945 to 2015, we had the Korean War, JFK was assassinated, Vietnam, 70s inflation, Cold War, Cuban Missile Crisis, 87 Crash, 9-11.com bubble, great financial crisis, European debt crisis. I don't know. I still tend to agree with Buffett's line of thinking that I'm going to make a big bet on whether it's America or the global economy, I'm still willing to make that long-term bet. And I don't think you're going to be, be, be, be, feel bad if you make

that bad. Well, I, but I don't think those two things are contradictory. I think both things can be true. So during those events that you had described, I remember 11 minutes to midnight. I think it was a book about the Cuban Missile Crisis. And there were some sort of event that happened three days later and the country still didn't know about it because the way that news traveled. And maybe during Vietnam and the 70s inflation, people came home and learned about what was happening on the news. And it wasn't real time. And there wasn't people shouting and screaming. But that doesn't mean that the world is necessarily more unpredictable. It just means that people know about the bad stuff more than they did in the past.

Like, people could live in a bubble in the past and go along with their day and not realize. I remember I got an email from, I wrote about the 1987 crash a long time ago. And someone wrote me saying, listen, I lived through the 87 crash. I learned about it on the radio on the way home from work. That's my point. It was much easier to tune out the noise 40 years ago because there wasn't as much noise. Here's like the positive side of this. So someone sent me this tweet, to your point about markets moving faster, there was this curl-on fisherman.

It's like these remote islands in India, or in the Indian Sea or something. Indian Ocean? One of those. Is it still an ocean? Do they still, is it like, Indian Ocean like, is it like Pluto where they decided it's not an ocean anymore? That's an ocean. Okay.

So there's this research paper done, and they show before and after mobile phones, and it shows the prices of fish. So look at this graph here. There's three different regions, like three different islands, and they show the volatility of prices before phones are added, and this is just. regular cell phones, I think, which gave them, you know, access to more information, and then the prices after the phones were added. And there's this huge decrease in price dispersion and volatility in the prices of fish. And they're saying just the introduction of information completely

made this market 10 times more efficient, which I thought was just a really interesting way of thinking about markets. If you look at the 30-day volatility of the S&P 500, over time, you would see no difference between today, 10 years ago, 20 years ago, 30 years ago. However, and I can't prove this, but maybe somebody can. If you were to look at like intraday volatility, I bet you that things move quicker today than they did 40 years ago. I would feel pretty good about that. That makes sense. I agree with that.

I just, I thought, is it like the speed of information, how it changes stuff? You're right. It probably makes things more uneven. even in the short term, because things happen immediately and they get immediately priced in. And sometimes that's good and sometimes that's bad. Well, so in this, is this Felix's quote or? Which one? So the text that you have there, is that from, is that directly from his book or is that somebody

writing about that book? Yes, that's from his book. All right. So when he says, we need to be nimbler to navigate it, the world, which is fat or tails, higher upsides and lower downsides. I don't think investors need to be nimbler. No. I think, in fact, probably the opposite view.

is right here. Just because the world is moving faster, doesn't mean you need to run to keep up with it. And there's only more competition at the short end. Like if you're, this, remember when the high frequency traders were a big story for a while,

and there was the Michael Lewis book, and people thought, this is unfair. I'm getting screwed. Like the solution there is not to try to compete with high frequency traders. It's to go the opposite way and be more long-term thinking

and get away from that as much as you can because you're not going to be able to compete with them. Josh had a great take on this. He said the way to be at a high-frequency trader is to be a low-frequency trader. Yes. Is Michael Lewis in a bare market? That book was not very good,

and it sounds like Sam Bankman-Fried. I can't fault him for that. I'm just throwing it out there. I'm not. And Michael Orr's stuff, I'm just asking. I'm asking questions. Is he in a bare market? It's a fair question.

It's a correction, at least. I love Michael Lewis. He's in a correction. He was overbought. All right. This Golden Sex. chart here. Hey, can you tell them to drill a little bit louder?

They literally started as I was about to start this podcast. Hey, we work through the elements here. It sounds like this is, but this is what it sounds like outside my hotel room every time I come to New York City. It's like a jackhammer outside of the window. Play the field as it lies. Yes. How did you go, so you see this.

Wait, did you, what did you? What did you want to do? Which Adam Sandler movie did you say was no good last week? Just Billy Madison. You didn't make any happy Gilmore slander, did you? No, I don't know. Okay, just making sure. So, Golden Sacks has this chart.

I think I found this from the chart book, which you recommended to me. It has like 30 charts every day. Daily chart book is gold. So this is from Golden Sacks and its household allocations to stocks, bonds, and cash. And you can see the equity one in the late 60s, early 70s, and 80s just completely drop. There was a higher allocation to cash for basically the entire 1980s. and all the way through 1991. So there was a higher allocation to cash from 1970 to 1991,

20 years or something, more cash. Now, a lot of people would say, well, of course, CD rates were higher, money market rates were higher, inflation was higher, stocks went to nowhere. I also think there's something to the fact that, and people look at these numbers as a valuation tool sometimes. Jesse Livermore had the piece, like the greatest single predictor of U.S. outcomes

was like these allocations, like if the allocation to equities is higher, future returns are going to be lower. I think that relationship is broken. That's my whole point here. So I said, I think in the past people just, A, didn't know as much about long-term stock investing. And B, you didn't have things like 401Ks and IRAs and zero commission brokerage accounts. So some people look at this and say, hey, wait a minute, what about the 50s and 60s when

allocations to equities are higher? Yeah, what about the 50s and 60s? I mean, come on. So here's my trivia question for you. In 1953, what percentage of the country owned stocks in some form? 12. 4%. It wasn't really until the 60s it took off a little bit for mutual funds and the nifty 50 stocks. But it really wasn't until the early 80s when we had 401ks and IRAs and a lot of it as baby boomer demographics kind of lined up with that perfectly.

people just didn't, the stock market was this thing that was kind of over to the side, especially for like the middle class. It just wasn't something that most people had their money in or spent as much time thinking about as we do today. I think that this equity allocation should probably stay higher for a lot longer. I think it just will. Yeah, I don't see famous last words. I don't see any scenario where equity allocation just plummets. Like, are people really going to be like, you know what? I'm swinging my 4-1K to cash. Yes, yes, exactly.

You know what? I'm sorry. We had the, I would say, I would say immediate would have to strike Earth. Guess what? It did. We had COVID. Yes. Now, I know it was short-lived.

And more money went into the stock market in that period, which- Yeah, people learned. Now, well, that drove valuations higher. Probably future returns will be lower. But I don't really find much signal here. Yes. I don't think so anymore. So this chart was making the rounds a little bit from John Arthur at

Bloomberg, and it shows that U.S. small caps have had a 22-year low relative to large caps, and it's saying small caps have kind of taken under the chin. For some reason, this goes back to 9-11, which I don't know, I guess there must have been something to happen then in terms of the market, obviously. I think that's what, I mean, small caps, anyway, small caps took off from there, I think, in the value. But I looked at this, so this is Ruther 1,000 and Russell 2000, going back to 2009-11 of 2001. annual returns in that time. By the pet, I think this is a inception of the IWM ETF, maybe.

Oh, that could be it. That makes sense. Oh, wait, but it's not on 9-11. That's odd. Okay, so annual returns since 2001 for Russell 1,000, which is large caps, 8.9%. For Russell, 2,000, 8.2%. That's actually way closer than I would have assumed. If you think about what's happened in last.

Wait, I'm sorry, said one more time. So 8.9% to 8.2%. annual return since 2001. If you think about how dominant the large cap stocks have been, and especially the tech space, the fact that over the last 20 plus years, small caps have more or less kept up is kind of a surprising. Because large caps have dominated for 15 years now. How do we square that circle of your chart versus... That's what I was trying to figure out, because what this is showing is relative value, and it shows that small caps for the 2000s outperformed pretty heavily, and then now they've underperformed.

So if you match those two together, outperformance and underperformance, you get basically this similar return. Oh, I'm sorry. Yeah. All right. So, yeah, you're right. So what this is showing is that all of the relative outperformance from 2000 to the relative outperformance peaked in 2011.

So small caps beat the crap out of large stocks from 2001 in the decade to 2011. And then the next decade, large caps beat the crap out of small stocks. But over the entire period of time, they're not so far apart. And I actually think it's impressive to me. I would have thought small caps got beat by a much wider margin than this because large caps have done so well in recent years. So this actually kind of surprised me. But that's what I was trying to do to square this other chart.

Okay, Ray Dalio at some Milken Institute summit said he doesn't like bonds. I don't want to own debt, you know, bonds and those kinds of things. Temporally right now, I think cash is good. And I think this is the problem with listening to hedge fund managers for investment advice, he's making like a short-term call. And I think this is the edge you have as a long-term investor, getting back to our first point here. You can have the ability to invest in bonds that have 5% rates, and maybe rates go a little higher here, and you can sit on those short-term losses and be fine with the knowledge that you're locking in higher long-term

rates. But a hedge fund manager might not be able to sit through that. And, well, for three to six months, maybe that's can underperform. So I think that's like the edge you have as a smaller investor is the ability to not have to think like a hedge fund manager. Totally agree. All right. So this seems to me to be rational behavior. Chart from Bank of America, money market funds on course for a record $1.5 trillion inflow in 2023. So it shows inflows, outflows from 2007 to today. And then it recreated the same chart with treasuries. And 2020. and 2023 for treasuries, people are rightfully piling into those higher yields, even as the principle, at least from 2022, is probably still under water.

It is kind of wild, though, how big the inflows of treasuries were in 2022, right? Treasuries got crushed last year, and there was a ton of money that went into them. I guess people trying to catch a bottom there. Good color coding on this chart, too. A lot of color here. Yeah, it looks good. All right, Franklin, one of our advisors do this on our channel, had a great chart. So a lot of people are rushing into money market funds as, I don't know, as they should

is the right way to phrase it. It's rational, right? It's rational. The SCP 500 is up what year to date? 15, 16%. Something like that. As money piled into money market funds. So Franklin is making the case that whether it's money market funds,

are CDs. They're using CDs. So the peak CD rate where people have the mentality of why would I take risk, I'm just going to buy, I'm just going to lock it up, lock up this guaranteed return. They show in 1984, 1989, 95, 2006, and 2019. And then they show one year forward return after the CD rate peaked. They show the following returns of short-term bonds, municipal bonds, core bonds, and investment-grade corporate bonds. And this shouldn't be surprising. This should be surprising. I mean, it's almost by definition. Once rates peak, they do what? They either go sideways or come down.

So it's not totally surprising that bonds would outperform. But I think more people are inclined at this point to buy CDs or money market funds over bonds because there's no volatility in the former. However, the Fed is probably done. It depends. Maybe. Here's my take with this chart, though. I would say if you're going to, every allocation decision is timing the market. So the whole like never time the market thing is a little too much here.

But if you're going to time the market based on rates, obviously you don't know when the rates are going to peak. So good luck trying to figure out when that happens. But it's better to time the market within an asset class than between asset classes. So if you're trying to time the market by taking all your money out of stocks and then putting it into CDs or treasuries or T-bills, that could be a risky proposition because then you're trying to catch a bottom in stocks. You're trying to catch a correction. And if rates have peaked and they fall and then the stock market takes off, you're screwed. But if you're trying to time within fixed income, it's not going to be as much of a problem for you, I don't think, because you can, you understand the yield better and the dynamics there. And if you miss out on some gains in fixed income because yields fall,

I don't think that's as big as a deal as missing out in a massive stock market rally. Yeah, I agree with that. All right. So on the one hand, you've got money market funds taking in seven trillion dollars here to date. This is ETFs on mutual funds. Bonds have taken a $9 trillion. U.S. equity outflows of $14 trillion. Hey, wait a minute, Ben. I thought that, hey, wait, actually, I'm confused here. It says mutual fund and ETF inflows and outflows.

Oh, no, I'm sorry. This is the size of the market. I apologize, right? So the U.S. equity market is $14 trillion? No, it's bigger than that. Oh, maybe the U.S. fund and ETF market is $14 trillion. Okay, that makes sense. And there's been $17 billion of outflows.

excuse me. That's the right way to read this. There's been, there's been $17 billion worth of VATFLUS. So the S&P is up, yeah, 17% this year. All right. So money's been coming out. So money's been coming out and piling into the safety. So you've got that dynamic playing out, rational behavior. And then on the other side of the spectrum, you've got gambling. I don't know what else to call it. The Wall Street Journal wrote a piece. I continue to believe that the flow situation is going to be screwed up if we're talking especially individual retail investors by the boomers because they have so much of the money that it makes so much more sense for them to put money, take money out of stocks and

put it and have that glide path and go more into money markets and bonds and CDs and those sorts of things as they're retiring. I agree with you. I think if you broke this down by each cohort, it would tell its story. So that's a good point. All right. Amateurs pile into 24-hour options. It's just gambling. Ben and I spoke about the zero-day stack. expiration phenomenon. Last week on the show and the fact that it's actually... Amateur just sounds mean, doesn't it? When you call someone an amateur?

Yeah. I prefer civilians. Okay. Individual investors made up 27% of all activity and options as of June, up from 23% at the start of 2020. I wonder what this was a decade ago. I'm going to guess it was under 10%. So average daily volume of options is through the roof. And the share of all options volume that expires in five or fewer days, also, it's almost 50% of all options, which is wild.

What do you think has a bigger loss rate? Trading short-term options or parleyes for Fanduel? Because I had on Ask the Compound last week, someone asked us, should I take money out of my retirement account and put it into my sports book in? Because I think I can beat the system. I have to imagine it's, you're probably better off on options than you were in parley's. Well, I bet my butt off. I bet my butt off. By the way, can I just give a shout for a Sunday ticket on YouTube?

It is overstimulation at its finest. Between that and betting, that's my idea of fun. So you know what I got for the first time? I'm way, way past the fact that the expiration did it in us that I haven't done this before. I'm probably the last person on earth, but AT&T, my cable provider, which I negotiate with every year and get a lower deal. You know what they said? You know what they said to me this year? I think they're trying to keep people around for some reason. Hey, listen, just because you're a valued customer, here's NFL Red Zone for free this year. We didn't have the NFL Red Zone. So I had it for the first time. It's amazing because there are so many damn commercials when you watch a football game.

I feel it's getting worse. Scott Hansen is a national treasure. Anyway, getting back to the point of parley's versus options. I bet they have a similar loss rate, although not to brag. I hit a few over the weekend, no big deal. Oh, I did take it on the chin week one. Freaking Vikings. Unbelievable. Okay. A study by finance experts at the London Business School estimated that most individual

traders options, excuse me, most individual options trade or lose money. Yeah, no shit. Between November 2019 and June 2021, such investors notched losses of some $2.1 billion with the hits concentrated in shorter dated trades. All right, they got quotes from this guy, an Oregon entrepreneur. He said, quote, I've been addicted to this option stuff for quite some time. You get hooked. But however, he does most of his options trading on Robin Hood in what he considers his, quote, gambling account.

You now have the power to gamble in your pocket. But he said his long-term investments are with another brokerage. Sorry, I'm okay with this. Yeah. As long as you look at it as a form of entertainment and gambling, then sure, you've got your head on the right path there. Yeah, I think that's absolutely fine. If you want to have fun and gamble and, you know, spend the wheel and lose some money and it's entertaining. Hopefully that's most people. I really think it is. I think most people are not yoloing their life savings. I've never traded an option in my life.

You haven't lived. Are there people that are trying to get rich and be irresponsible? Yeah, of course there are. But is that the majority of these like drunken, Fools, I just don't think that's case. And guess what? The drunken fools lose their money pretty quickly and they're gone. Yeah. Right. Yeah. All right.

Defiance ETFs is launching a fund on Thursday that sells ultra short-dated options on the NASDAQ 100. How about that? The product will be the first in the market to utilize zero days to expiration contracts. The fund will write puts to generate income. The ticker is QQQY. What's the point here? Will they get a decent? amount of income because there's so much volatility? I think, I think, uh, they're trying to generate more

income because they're selling more contracts. I don't know. Okay. But the income has to be lower on these, though, than longer dated options, because of volatility, right? Hand up options new here, but that, that, that makes sense intuitively, right? The income would have to be a little lower. There's, there's more juice. This is like the T bill of, you know, I mean, when did we take the CFA exam? It's been a while. Give us a break. But this is the T bill of call option selling, if that's a thing. Sure. Someone can explain this to us. Okay.

The three-month 10-year treasury curve has been inverted for a record, 212 days. That was in Bloomberg. There's charts from Cali at E. Toro. Who we saw at Future Proof? Callie Cox. Cali Bost. Callie Cox. That's her handle.

No, her, although I'm confusing it. Her name says Callie Cox, but her at. No, her ad is Callie Cox, but her name is Callie Bost. She got married, and now it's Cox. We crack the code. All right. Well, she puts out great stuff regardless of what her actual name is. The spread between the two-year and 10-year yield, the classic recession indicator, has

been negative for 313 straight training days. All right, here's what I want to see. I'd like to see credit spreads mixed with inverted yield curves. I don't know if I, I'm sure someone has done this because credit spreads are still very tight, right? They haven't, they've not blown out. I want to see, because people always say, well, this stuff acts with the lag because it's when a yield curve inverts 15 months later, that's when the recession is. And that is like the average, like 15 to 18 months.

But I want to see when does the credit spread stuff start blowing out. I feel like that's your key here, right? You know what? This is the opposite of transitory, right? Inflation was transitory. Well, no, it wasn't. Well, now this is the opposite. It's like, well, this acts on a lag.

It's coming. It's coming. Oh, yeah, when? Maybe it is. Maybe it's here, but it's been a while. This is the biggest goalpost move that the Dumers have made in recent years is, listen, we're already in a recession. This is like, 2022.

We're already in a recession. People just don't know it yet. In 2020, it's like, listen, the recession is coming any day now. Now it's like, of course we don't have a recession. Monetary policy acts on a lag. That's the goalpost move, right? Duh. Yes.

I just got an email, Ben, with the subject. Everyone has a plan until they're punched in the face. Quote, Mike Tyson. Wow. That just blew my mind. It's been a while, right? Yeah, I thought people, I thought we gave up on that. All right, this is, so first of all, I put the U.S. personal savings rate in here.

It averages since, like, the 1940s, almost 9%. It's now 4.5%. Obviously, that average was skewed because people used to save way more. But this is via, this is Neil Duda via Sam Rowe and his, is another person we saw at FutureProve. You know what I asked Sam? I said, Sam, how's the flooding in your apartment? Because he shares, he had videos of flooding in his apartment, so I could, I could relate to that because I have a flooding my office. He said it wasn't fun.

From the 1980s of the 2000s, there was a pretty neat and clean relationship as net worth rose relative to income, household savings rate declined. This made sense as households saw rising asset values as a low risk form of wealth creation. When you were loaded, you have less reason to save. And he's got this pretty chart here that kind of shows it. If my stock portfolio is rising and home prices are climbing, I don't feel like I need to save as much. He's saying that that relationship broke down a little bit in 2008, where people kind of started saving a little more. But this is, unfortunately, this is like the, it should be countercyclical where you should keep, I think you should keep saving the same percentage of your income regardless. I don't think you should save less just because you're doing better.

Percentage-wise? That's the way you defeat lifestyle creep is you keep the similar percentage. So if you make more money, great, you're spending more, but you're also saving that same percentage, which is a higher actual nominal amount. That's how you defeat lifestyle creep. If you save 15% of your income and your income doubles because you got a sweet new job, keep saving 15% of your income. Do you think more or less than 50% of people spend more money as they make more money

as a percentage of their overall income? Oh, definitely more. People spend more money as they make more. Oh, yes, for sure. But percentage, not just dollars. right your savings your your percentage savings rate i would guess goes down as you make more money yes i guess that i agree with because and that's the same that's kind of the same thing he's showing here just for economic cycles all right i kind of missed this one quantian on twitter we've talked

a lot about why the vibes are so often why people are miserable and inflation and all these other things so he did this regression model which looks at consumer sentiment with inflation and interest rates. And his takeaway was like, listen, this model I built, which I don't know if I could poke a hole in or not because I'm not smart enough, he did the R squared here, right? The answer is that the three major things change. Consumers care a lot less about unemployment than they did, which was a big thing in, you know, following the great financial crisis. They prefer housing prices to fall rather than rise, and more than anything, they hate higher interest rates. This may surprise you, but it really shouldn't. Americans love borrowing money and hate being told

they can't. So his whole thing off the Senate is, if you look at these things, I kind of like it, that if you're raising interest rates and not long me to borrow to finance my lifestyle or whatever, that's the thing that's making people so angry these days, which I could get. I can see how that could be a thing. Here's another one from Matt Darling on Twitter. And someone tweeted, you used to be able to rely on you pull off on any highway in America and get yourself a hotel room at 2 a.m. Now with no one working, I have to stop long drives by 9 p.m. at the latest to make sure someone is at the desk. Little things like this keep adding up and getting worse. So this person is complaining. And Matt Darling says, again, one reason the vibes are off is that a lot of people

prefer a world where people are desperate enough for jobs and willing to take anything they can get. And he's saying, listen, the unemployment rate being lower, most people prefer jobs that they don't have to work a hotel desk at 2 a.m. And they don't have to take a job just because it's the only thing available to them. You know the Frederick Lewis Allen guy? He's like one of my favorite financial stories. He wrote that book called The Big Change, and it was everything that happened from 1900 to 1950, which is probably for consumers, the most innovation consumers have ever experienced in their lives. Washing machines and refrigerators and new financial products and radios and tell all these things. Like the consumer had like probably the biggest lead before they've ever

gotten. And he was doing a consumer sentiment thing about people looking back from 1950 to 1900. And they were all complaining because they said, in 1900, we could afford to have a huge house and have a bunch of servants. And now no one wants to be a servant anymore. And so it was like people got so happy, but then they had this, like they looked back fondly on this period where they could have servants because they couldn't have them anymore,

even though they had all this leap forward. I think people are going to look back at this time, especially our lifetime of going for having, you know, no internet, no nothing, and then the smartphone comes along. People are going to look back at this time and go, that 40-year period or whatever, those people had some of the greatest technological change in history.

And look at all these A-holes. They're still all just, they hated themselves. Why? That's what's going to happen to the future. They're going to look back and go, look at the leaps forward these people experienced. And they all were still miserable. Fair?

Is this just the human condition? No, yeah. It's deep, it's deep, Ben. I don't know. I pause. I'm not going to, I'm not because of this interest. I'm not sure I'm processing. I think it's part of the human condition.

And maybe that's why we, this is. why I'm continuing to make the bet on Warren Buffett going forward, that Warren Buffett long-term bet, because no one is ever happy. So people are constantly striving to get better and do more stuff because no one is ever happy. That's like my bullish. I don't buy that. I don't buy that. That's my bullish catalyst for the future. No one's ever happy. How's that? Content. That's the right word. That's the right word. Nobody's ever satisfied. That's my, that's different than nobody's ever happy. That's my biggest reason for having long-term opportunities. I wrote about this once. I said it's sort of tragic for all of us

tragic is too strong of a word. But it's that people don't find comfort even as they're not comfort. People aren't satisfied even as they progress through life. But it's great for everyone because that's what drives. That's what makes things better. People's obsession of improving their circumstances, even if they've already have $10 million. People want more.

Yes. All right. So on layoffs, Salesforce and meta. well, I wasn't, so sales force is bringing people back, but I don't think that is bringing people back as much as they are. They're bringing back like, I saw some headline. They're bringing back like LaCroix and maybe ironing. I don't know why I thought of ironing. They don't provide ironing services. But speaking of ironing services, it's on my mind. I have to hand up, Ben, you were right. I was wrong. Steamers? Is there we going here? Steamer suck. Yep. I was steaming one of my

button ups. And it was just too much work. My arm was getting tired. I said to Robin, I'm buying, I can't take this anymore. I'm buying an iron. I bought an iron. You don't have an iron? I don't have an iron. No dresser and no iron.

You're living in the 19, you're living in the 1920s still. Mind you. I am not, I don't wear things that require an iron very often. But when you, when you, exactly. But when you want an iron, when you need an iron, you're going to want an iron. Speaking of that, what Ben's referring to dressers, I gave a take in front of the audience. and listen, I was fairly sure how that was going to go. I was trying to entertain and mission accomplished.

I made a joke about houses getting bigger over time. And when I was watching an old episode of Curb Your Enthusiasm, they had a dresser. Now, I don't have a dresser. Now, my kids have dressers, obviously. But I don't have a dresser in my bedroom because I have a big closet. So I said, show of hands. How many of you have a dresser? And I thought that probably like two-thirds of hands would go every single hand.

and the audience went up. Credit to me. Good joke. Pretty great. But I saw a tweet over the weekend, never seen a piece of furniture more obsolete than the Wood Entertainment Center. Can we all agree?

Can we all agree that maybe dresses aren't obsolete, but the Wood Entertainment Center is? Yes. Remember they would come with a built-in, like, CD rack? You'd put your CDs on it, and you'd be able to spin it and, oh, yeah. You know what I collected back today? They were huge.

This might have a surprise. I actually think I still have it. I had a gigantic dresser, not dresser, shelf, full of DVDs. I probably had like 500. And then one day, I transferred all of my DVDs to a gigantic CD book. I haven't watched a DVD in 15 years, but I can't get rid of them. It's like a family heirloom.

I bet out of your 500 DVDs, I would have liked 15% of them. I've got all the classics. Okay. Listen, people say I have bad takes and movies. I happen to enjoy bad movies, but it's not as if I'm delusional and say, like, I was watching Deep Blue Sea the other day. I know it's not a great movie, but I like it. So leave me alone.

Yeah, it's like food. Some people like food that I don't like. I also like good movies. I didn't like Once Upon Time in Hollywood, but I like good movies. That's fair. You like the whale. Love the whale. Great film.

Boy, did we get sidetracked. All right. So Reg Finn has these charts that show the mortgage payment, um, on average, uh, for the median. asking price. And they show it by year from 2020. One. I love the weekly redfin updates. They have great charts. So, 2003, home buyer payments are up 14% year over a year. It's just wild. $2,600. The median payment, the median mortgage payment on a median asking

price. In 2020, it was $1,500. It just doesn't compute. Doesn't this matter? So I was thinking about this. So there's a little bungalow house right down the, like a block or two over from my house. It's a tiny house and it's set for sale. So I looked it up. It's 1100 square feet. It's got three bedrooms, one bath. It looks like they did some nice work to it. They like totally refinish the kitchen. It looks nice. And it's going for $270,000, which is pretty rare. It's like you can't find anything for less than $300,000 anywhere. And so I looked at it, assuming 10% down, 7.25% percent. mortgage, that's $1,660, right? With 3% mortgage rates, this $270,000 payment would have got you a $440,000 house a couple years ago. Wow. So if you were buying right now, would you go upstream to that $440,000 house and just pray to God that mortgage rates fall and you can refinance? Or would you settle for the smaller starter house and just try to go cheaper? That's like the calculus you have to play now. And sometimes you don't have either option. I guess. But like, what would you do in that situation? Would you lock in the cheaper one now

and just hope that the housing market supply gets better in a few years? Or would you just move up and? It's just a matter of numbers. Can you afford or can't you? If you can afford it, I would, you know, I would buy a bigger. I think starter houses are very expensive. I do too. I have, my whole thesis for a while has been, don't get a starter house, move up and get in a house. You're going to stay in for 10 years as opposed to trading up in three or four years. but I don't know if the numbers make sense anymore for that. I saw a house in my neighborhood that sold for $500,000 in 2013. So 10 years ago, sold for $500,000.

And it's sort of like the house that I grew up in that I described. A standard like, I guess, split level or high rent. I don't know what it is. Probably 22, 2,000, 300 square feet, maybe 2400. All right. So sold for 500 grand a year. a decade ago. They listed it for sale for $8.69. Not nice. Way too high. Three weeks later, do you think this is like no work to it either since then? Oh, no, the house needs work.

Okay. The house needs a lot of work. So they listed it for $8.69. Three weeks later, they cut it to $8.29. Three weeks after that, they cut it to $7.99. And it'll probably sell for around that, I'm guessing. But it's just wild. It's wild. $800,000 a house at 7.5.5%. What does that cost you? It's a lot of money. And the house needs a lot of work. You're still a fraction guy for mortgage rates. What did I say? 7.5.5. You're all the time to die hard.

All right. Barry sent me this one from the Atlantic about my whole thesis last week. Wait, hang on. Hang on. Sorry, before you go, there's one more chart. This is also from Redfern. 60,000 home purchase agreements were canceled in August. that's the highest percentage since October 2022. Almost 16% of homes that went under contract. I get it. I can see having cold feet and being like, you know what, screw this. Or if you, like, mistime the mortgage rate market and you thought you're getting 675,

or wait, six and three quarters and you got seven and a half, I can see backing out. All right, so Barry sent me this. This is from the Atlantic. Beaches did not always hold the allure they do today. Two centuries ago, they could be used as sites of trade, leisure and were clogged by vendors, shoppers, and fishermen. Real estate agents saw little value in them. Until 1898 in Connecticut, they're included for free with the purchase of any property nearby. Then all of a sudden, they sort of took off. So getting back to my point of people in the

past did not think of real estate the same way as we do today. It's a good background noise. We play through. Do you want to do this loan assumption thing or is it not worth talking about? No. Okay. Yeah, I don't think it's going to happen. skip go to private markets all right so instacart their IPO is today there's a great chart from the information showing various stages of their life cycle at the seed then there's series a uh b started to really take off in c d they were founded in 2012 by the way and then they had their series i which was effectively which who was participating in that fidelity tero A16 Z, Sequoia.

And I guess that was just like a, I don't know if that was looked at as a bridge, just, you know, get in before the IPO pop. I mean, a series I had a hundred. Go ahead. There's now been enough time where the anchoring feelings have been reduced a little bit, where people were looking at those 2021 early days of these valuations are nuts. Look what we could have gotten. Has enough time passed where they're like, you know what, just rip the band it up, do the IPO for whatever we can get and get out of here. Well, yes and no. I mean, the IPO market is coming, is opening up.

Because they're back below their series F valuation. What's the tick? I'm trying to see if it's trading it. Cart. I mean, the Armholdings ETF, the Armholdings IPO went decent. I mean, it's actually at the lowest since the IPO, but not certainly not a disaster by any stretch. Let's see if cart is trading. C-A-R-T.

Why is this taking me? It's not working. Either way. I wonder if like these, I mean, a lot of these were crossover investors. A lot of this, not Instagram specifically, but in 21 and 22, a lot of it was hedge funds coming into, coming into venture, the crossover funds. And if you're a crossover fund, your public equities got killed too. So you could kind of say, listen, the private stuff got killed long with the public stuff, especially if you're in the tech space. So it made sense.

What's the IPO ETF doing year to day? Let's take a look. It is 30%. Now, still very depressed, obviously, but the F-T had a very interesting article about private equity. It doesn't sound great. Private equity firms have started to borrow against their funds. Whoa, look at how, I know the F-T is in, look at how they spell maneuvers. I know, that threw me for a loop.

Hold, it's every vowel like six times. Manello reviewers. It's very British. It's M-A-N-O-E-V-R-E-S. It's like hors d'oeuvres, but maneuvers. So private equity funds have started to borrow against their funds to backstop overly indebted portfolio companies, a new financial engineering tactic meant to cope with higher interest rates and a slowdown in dealmaking.

The maneuvers, which lenders have dubbed, quote, defending the portfolio, have cropped up as many older private equity funds run law on cash, just as the companies they own struggle debt loads. Hey, what happened to all the dry powder? Well, doesn't it make sense that they would invest in their old companies instead of taking on new debt to invest in new companies? It does. It does. Buyout firm, but there's a catch. Buyout firms have turned to so-called net asset value loans, which use of funds, investments, as collateral. They are deploying the proceeds to help pay down the debts of individual

companies held by the fund. But they carry rates of five to seven percentage points over short-term rates, so like 10 to 12.5 percent, which is, that's a lot. All right, here's a quote. Everyone is talking about it. Instead of senior banker who advises large U.S. private equity firms, it is easier to borrow at the fund level with all the NAV financing available than it is at the portfolio company level for certain companies facing distress. Now, that makes sense, a lot of sense,

but I don't know, probably, I don't know if alarm bells should go off, but, you know, Spidey census should tingle a little bit here. Private equity funds should not be outraising new funds right now, probably. That's going to be a hard to sell in the current environment. I mean, private equity funds, if you think about it, they started in the 80s basically with the LBOs. they've never been in a rising rate environment like this before.

Well, that's the point. They rely on cheap debt, and when debt's not cheap, things become difficult. Kelly Evans had a good piece. She wrote, the characteristics of many private equity portfolios are similar to owning small-cap U.S. stocks. The average deal size for a target company last year was $964 million, according to Bain, almost identical to the median market cap of a company in the Russell 2000 of $922 million. So, you know, you should probably ask yourself, private equity is a very much.

very popular category of investing what you're getting yourself into. And is it worth, you know, is the illiquidity worth it? Right. Okay, new one for me. Have you heard of this Hauser's Law before? Did you say new one from me? This is a new one for me. I've never heard of you. Okay. So Howser's Law is this idea that since World War II tax revenues have been roughly equal to like 19% in change of GDP, regardless of the marginal tax rate. So this person tweeted, I think about this trial at least every few weeks, which is, I guess, like the Roman Empire or something, which I've literally never thought up for. What's happening with the Roman Empire? I don't get. My wife asked me, I've never thought about the Roman Empire. I don't care about it.

But why is it bubbling up? I see people tweeting about what's going on? It just became a meme and it took on a life of its own. I honestly don't get it. All right, since 1946, even though the top individual income tax rate has been anywhere from 28% to 92%. total tax collections have averaged 16.8% of GDP with a standard deviation of 1.2%. So look at the bottom there. Tax collections as a percentage of it. So basically the government's going to get their money one way or another. So the tax rates change all the time.

One way or another as a percentage of GDP, the government is going to get its money. Which is kind of fascinating. They can pull these levers and change these dials for certain individuals or groups, but somehow some way they're getting their money. That's a really good chart. That's, that's how's it's law, folks. Ben,

what would you do if you won $997 million? T-bills, probably, money market funds, maybe? I don't know. So Edwin Cash

with the guy who won the Powerball. So that was $2 billion. He took a lump sum of $997 million. So he got a billion. So, but he had to pay taxes on that.

I mean, it's not even worth at that point. I mean, what are you going to do with $400 million? So he's having a good, time. He bought, so, all right, from the New York Post. A lucky lot of player has already purchased at least two other California mansions

since coming into the money last year. And now he has splurge yet again, this time on a $47 million compound in Bel Air. The first purchase, the first property he purchased was $25 million. My thought process from seeing these, like I can understand why people, people buy luxury real estate. Buying a cool house is, like, even if it's not a good investment as, like, putting the money in an index fund or whatever. Like, it's just, like, the psychic income is so big. But can you imagine the upkeep on a $30 million house? How much you'd have to spend every year?

They also said he's, he paid for 24-7 security to follow him around. Imagine being his neighbor. Like, these are all, you know, probably leader of the cap here that lives next door. A new neighbor coming in. Who is it? Is that Eva Longoria? No, it's the guy that won the Powerball. So my favorite stat on this, and this is written a few years ago, so I'm still true.

I'm guessing it is. Every year, Americans spend more money on the lottery than they do on movie tickets, music, professional sporting events, video games, and books combined. Wow. If that says anything about our mentality. All right. This is a good one. But I can understand buying luxury real estate. I totally get it.

Like, if you had that much money, he's probably going to blow through it all. Let's be honest, but I get it. Where would you buy? I guess I don't know. Not on the coast, because it's going to fall into the ocean. I think I would buy, you got to go to the Midwest, right? No, I mean, you could buy a place on the coast and afford it, I suppose. Between 1975 and 2022, the number of products in the average U.S. supermarket has increased

more than threefold from 8,900 to a whopping 31,500, much of it due to globalization. We have so much choice in our lives, right? I love going to the grocery store and seeing every couple of months there's a new flavor of Oreos. I feel like Oreos just there's just a whole shelf of them. Cookie dough and pistachio and pumpkin

and whatever. Tapioca just doesn't end. I love it. Big Oreo guy. Love Oreos. I'm not eating Oreos these days. I don't know if you can tell, but I'm trying to lose some LB's. All right. But I'm going out. I have dinner plans once a Thursday and Friday.

So you can go out to dinner and still eat healthy, you know. Oh, I plan on that. It's very hard to do. Well, you can't eat health. No, no, it's not possible. You cannot eat healthy, but you can avoid, I don't need to eat bread. I'm not going to eat the rolls. I'm not going to eat carbs.

Protein and veggies. I get a, you know, exactly. Get a steak and some butter, but. All right. So we had our first broken bone in the Carlson household for one of my kids. My daughter Libby, a freak accident. She was running to a car during my other daughter's soccer game. didn't see a step on the curb, tripped, fell, came back, holding her arm all weird,

she goes, I broke something, and she's crying, and I broke to me. But your immediate reaction as a parent is always to think, like, it's not that kids are liars, but kids exaggerate about everything. If they get hurt, you know, like, sometimes it's very hard to tell. Kids are the big, like you mentioned that, I think, was it you or Robin didn't believe Kobe when he broke his leg? Robin didn't. I feel like I've heard that story from so many parents.

Like, yeah, they said they broke their bone. I didn't believe them because kids exaggerate. It's the boy that cried wolf all the time. And I heard that story from so many people. And she was insistent like, no, I broke something. I can tell. She broke her wrist. She's got a little cast on.

Did you believe it? I kept telling her, well, it wasn't swollen or anything. It was just weird. And so I said, just move it. Let me see a move around and she couldn't. And she was in pain for like 20 minutes. I'm like, right, something's wrong, obviously. So took her and she's.

Anyway, but kids are, kids are liars for lack of a better word. When Kobe broke his leg, He had probably just turned fives. He was like really little. And he said, I broke my leg. I'm like, how do you even know what that means? Like he was screaming crying, I broke my leg. And sure enough, that sucks.

Yeah, four weeks in a castle, not too bad. It could have been worse. So she was bummed for a day and now we're moving on. But I saw something this week that you don't see every day. In fact, I don't know the last time I saw this. Rob and I were at Trader Joe's and I'm in the car with the boys in the back, which is a detail you didn't need. And I see two 70-year-old, 75-year-old identical twins walked by.

Now, that is true. You don't see that a lot. You don't, right? And, I mean, they looked exactly like it was really, it was really, it caught my attention in a meaningful way. And when Robin came to car, she said, did you see those two guys? I said, yeah, that was, that was really something. My wife has uncles who are identical twins. Oh, so you see it, so you do see it every day, or not every, not literally every day.

I've got a $10 billion idea. Okay, I'd like to hear you came out's estimate for the TAM, but let's hear it. I want to, you know what? That sounds light. This is, the TAM is way bigger than 10 billion. Let's be conservative here because the IPO market while open is a little shaky. You ever going to, you ever open, and I know the answer is yes. You know when you open your refrigerator door and you smell something?

You never know what it is. There should be some sort of a, I don't know if it's a wand or some way to identify. Maybe AI could solve this. Boom. It's the cucumber that's in the bottom drawer that's rotting. I mean, fridges aren't that big. So finding what the source of the smell is is typically not that hard. So, still that out there.

Is that a no from you? If we're on Shark Tank, I'm going to say that's a no for me. but I appreciate it. All right, let me try it over time. I'm looking to sell you 20% of the company for $50. Okay. Sold. Thank you.

All right, recommendations. I broke my bear market. I don't know if this is a bottom. Well, it's a bottom. I don't know if it's the bottom in my reading. I read this book on the airplane number go up by Zeke Fox. Now, I knew a lot of this story. It's a crypto history or what?

We followed the crypto stuff pretty closely. It was just all about, like, Tether was the main character, and then it was all about, like, the shady characters in crypto. And it was a fun to read. Zieg's a great writer. I'm not going to lie. I still don't know what Tether is. No clue.

It's a stable coin. It's the biggest stable coin in the world. Did you listen to Peter Brown was in on an interview with the Goldman Sachs podcast? I didn't know Goldman had a podcast. Now you know. He said, I'd like the vampire squid. Take this from the source, but he said I'd like to see that Peter, Brown is the CEO of Renaissance Technologies.

He said, I'd like to see round the clock trading in all types of instruments. I'd like to see more securitization, tokenization, more digital contracts. Although I think FTX set that back a while. I'm still bullish on digitalization, token, rail, is like, I am. Yeah. Sorry, I'm out. I was never in. You wrote here your favorite TC movie ever.

Take a guess. Jerry McGuire. Nailed it. Did we talk about this? No, I saw this in here and I just, I came up with the list of my head and I said, it's got to be Jeremy Goyer. It's on Peacock right now. I rewatched it like two weeks ago.

So I haven't seen Jeremy. Maybe his best performance ever. Better than a few good men? Probably. Ah, that's true. It's his most Tom Cruise performance ever. I rewatched it on the airplane. And what can I say?

Just what a, what an incredible movie. You know my problem with that movie is? I said it to my wife. I didn't buy him and Renee Zell-Wigger together. I just didn't buy it. Never did it for me. You know, I called somebody this week to explain something and he said, Michael, you have me at hello.

It's an iconic line and iconic scene. I didn't buy those two together. I'm looking for my wife. Didn't do it for me. If you're, fine. If you're a young person and Jay McGuire is before your time, make time for it. It's an amazing movie. An incredible movie.

All right, I just want to say, Aquaman, too. might be the worst trailer I've literally ever seen. Did you see it on Thursday Night Football? They put a trailer out? Is CGI getting worse? Like, it was better for the James Cameron stuff, Avatar, but it's getting worse for everything else, I swear. It looks, my kids were watching Little Mermaid,

and I couldn't believe how bad the CGI was. It was awful. I still liked it. I agree with you. It's funny you mentioned that. I was singing the same thing, but I still liked it. Great soundtrack. Not bad.

All right. I saw, I saw an incredible movie. Now, here, this is a recommendation. It's not just a bad movie that Michael likes. This is a recommendation. It's a genre movie that not everybody enjoys the genre. The genre's horror, kind of. It's not a slasher movie.

But it's called Talk to Me. 824 distributed it. It was such, it was so good and so original and pretty frightening and just great. So the gist of the movie, it's sort of like Monkey's Paw type of deal, where These kids find like a plastic hand or a ceramic hand or whatever it is. They shake the hand. They say, talk to me and they see a spirit. Now, the problem is that if you go over 90 seconds, you know, shit goes off the rails.

Then the spirit, the demon stays with you. This sounds like a movie idea you come up with at 3 in the morning or high. Fine. Be that as a May. It was an incredible movie. And so it was scary. And I turned the movie off. Pretty frightened.

And at about 3 a.m., Robin said Kobe's awake. Go see what's happening. He's sitting up in his bed. So I go into Kobe's room, and he's like shaking. And he says, I see something. I see something. And he's like, it's right there. It's right there.

And I was like, ah! So I just, I grabbed him and ran into my bedroom. And I couldn't sleep. I was terrified. From a movie. From a movie. Okay, so I Listen, I watched a ghost movie

And then Kobe saw ghosts in my house All right This is why these movies work on you I watched the movie Us, the Jordan Peel one This is, remember I was complaining about Switching Back and Forward between Peacock And I was watching football and Peacock And I'm like, you know, I don't feel like switching back

So I just went from Peacock And Us was a new movie that was on there Very curious of your take It's not a new movie Well, no, it's, no, it's new to Peacot It's new to Peacock and I'd never seen it And I wasn't going to buy it until it was on somewhere for free. It hasn't been on any of the streaming platforms. So I watched it. And

it's, there's three Jordan Field movies. It's definitely third for me. I didn't like it at all. Didn't do it for me. It just, I thought the ending was kind of, yeah, not bad, but it just, it didn't do anything for me. I didn't, I didn't feel anything. You know, it's so funny you mentioned that. I felt the exact same way. So I saw it in the theaters, and I very vividly remember being confused after I left as to how I felt about the movie. And I kind of had your reaction. I was like, I'm not, did I like it? Did I hate it? I don't, I don't really feel much of anything.

I thought it was okay. I was like, I was like entertained enough, but I just, I oddly had no, I oddly had like very little reaction. And for all of my detective novel people, I know you're out there.

People, the last kiss, the last good kiss by James Crumley, this was a Andy Greenwald recommendation on what's their podcast called? The Watch. Oh, the watch. Yeah.

It's a good, it's about, It's almost like a Raymond Chandler one, but it was written by someone in the 2010s. And it's like about these two drunks that go on an expedition to find a lost girl. And it's just great, great dialogue, great story. Here's my thought, though. They should have an IMDB trivia section for books and authors. Like on movies, they always have the IMDB trivia I always go to, like for ideas and how they came up with stuff and how they should have that for books too. Like, I don't know how this guy came up with a story about a 1960s veteran who was a drunk who was also a detective.

I'd like to learn more about that. That's what I'm saying. Why do you need trivia associated with that? Am I missing something? I just want to hear about how they came up with the characters and stuff. Like, how do you just, the whole fiction genre kind of boggles my mind that people can just creatively come up with characters and such. Agreed. I always wondered, like, how the hell of George Lucas come up with the whole story of Star Wars?

Exactly. All right. Animal Spiritspod at gmail.com. Thanks again to everyone who showed up at FutureProof. We love meeting everyone. We loved all the Tropical Brothers shirts. And we'll see you next time.