Animal Spirits Podcast - Banning Buybacks (EP.67)

Episode Date: February 6, 2019

Amazon vs. Apple, banning stock buybacks to decrease inequality, how much pensions and endowments should have in alternatives, what to do with an underperforming money manager, why volatility is more important when drawing down your portfolio, the Fyre Fest pitch deck, what does Acorns do, low rate bank savings accounts and much more. Find complete shownotes on our blogs... Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Like us on Facebook And feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation. Learn more about your ad choices. Visit megaphone.fm/adchoices

Today's Animal Spirits is brought to you by Whitecharts. Welcome to Animal Spirits, the podcast that takes a completely different look at markets and investing. Hosted by Michael Battenick and Ben Carlson, two guys who study the markets as a passion and invest for all the right reasons. Michael Battenick and Ben Carlson work for Ritt Holt's wealth management. All opinions expressed by Michael and Ben or any podcast guests are solely their own opinions and do not reflect the opinion of Ritthold's wealth management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Ritthold's wealth management may maintain positions in the securities discussed in this podcast. So Amazon reported earnings last week.

And it's some of the stuff in here is kind of wild. So in 2016, Apple was more than twice the size of Amazon. Now that gap has all but disappeared. They're basically the same size in terms of market cap. And they both hit $1 trillion last year, which lasted for about three weeks, I think. So we've got a chart that we put in here from Y charts, and it shows this breakdown. And it's cool because it shows it on a relative basis. And it really is amazing.

And it's one of those other things where this is one of the reasons stock picking is so hard because we broke down the fundamentals a little bit here too. And even though these stocks are similar size and market cap, they couldn't be any more different in terms of their underlying fundamentals. So if you look at a chart of trailing. 12 months free cash flow and EBIT from Amazon, it has started to go vertical in recent years. So they're really turning on the spigots of cash flow and earnings. However, if you look at that relative to Apple, it's nothing. So Amazon did $28 billion in EBITDA over the last 12 months. Apple did three

times as much, nearly $85 billion. And so I think this gets back to the point that Scott Galloway's made a few times of the fact that Amazon's, the best thing they have going for them is that investors are just extremely patient and basically give them a low cost of capital. So it's one of those things where trying to put these two stocks in a discounted cash flow methodology on a spreadsheet and figure out exactly what they should be worth is so mind-bogglingly hard because there's no way that you could compare making, sorry for the pun, apples to apples comparison between the two? Like, I don't know, I don't know what you, how do you even, I don't know how to even begin to try to look at Amazon in a fundamental way anymore. I'm convinced. I'm covering my

short. All right. But it is kind of, this is one of like the, I think the more exciting things about the stock market is the fact that you can have these two companies that are kind of in the same field in a roundabout way, but just have completely different underlying fundamentals and and still kind of come out to the same, same ending, ending value. It's kind of crazy. I say this type of thing all the time, but even if you had all of the underlying fundamental data for both of these companies going out for the next five, ten years. Right. It wouldn't help you at all. Right. And it's kind of the same thing with like a Netflix where Netflix is spending an insane amount of money right now. And the market doesn't really seem to care that much

because they're giving them like a, you know, they don't have a short release on them. They're giving them plenty of time to see it through. And that's what's happened with Amazon for a long, long time now. So all of these charts that we've been talking about here are going to be in the show notes about Amazon and Apple. We created them through Y charts, which again, they are a sponsor of the show. We've had a lot of great feedback from people who have been called them up. So anyway, if you want to sign up for a new account with Y charts, call them up, mention animal spirits, and get 20% off of your new subscription. So you dug up this article. You sent me this. I was like, holy cow. But where did this Facebook thing come from? Someone posted it on Twitter. I guess it is from

last spring. I'd never seen it before, but it said that Facebook's median pay is $240,000 a year. So they looked at the 40 largest Bay Area companies that report median pay. And the range was $5,000 at the gap to more than $240,000 at Facebook for median pay. And this was kind of a good lead into the New York Times opinion piece this week from. By the way, hold on, before you get into that. So the median pay was $240,000. The average pay was $37 million. Okay. So that's like the joke of going into the room with Bill Gates and 10 other people and your average income is everyone is a billionaire. Yeah. Obviously. So wait, so I don't understand. You have to explain this to me. How is the median pay so high when they're not buying back stock? That's a good point. I think you've found a hole in the argument here. So Chuck Schumer,

and Bernie Sanders said that they want to limit corporate buybacks, and they want to basically put in legislation that would put some rules on buying back your own stock, which, I don't know, I just feel like this is just an asinine idea. Like, there's so many other ways of going around, they're trying to get at the inequality idea, and I totally get that. But using stock buybacks as a way to do that makes zero sense to me. So they say, quote, when corporations direct resources to buyback shares on the scale, they restrain their capacity to reinvest profits more meaningfully in the company in terms of R&D, equipment, higher wages, paid medical leave. This is just not the way the world works.

No. And it is very simple and clean to see companies like McDonald's that are reporting $80 billion in net income a year, whatever the hell it is, and two-thirds of their employees are making the minimum wage. So it's, you know, we certainly empathize with wage inequality, but the idea that companies are deciding how much stock to buy back and then deciding how much to pay their employees is literally backwards. Right. If you really did restrict how much stock companies can buy back, that money would go to dividends. It would go to acquisitions. It would go to investment that might not work very

well. And what they want to do, they said our bill would not only prohibit buying back your own stock, but it would include things like paying workers at least $15 an hour and providing more sick leave. Just raise the minimum wage. If you want to solve inequality and help people earn more money, raise minimum wage because stopping stock buybacks is not going to do that. In the article, they were basically asking the question, why do companies need to be so profitable? Right. Right.

And this is capitalism. And there are tradeoffs. And certainly a lot of the outcomes is not so positive. But I think that we would all agree that the good far outweighs the bad. So are there things that can be done that should be done? Yeah. Do I know what the solutions are? don't, but is legislating our way out of income inequality? I just don't know. How does that even

work? Like, lawmakers are going to tell us, like, what is appropriate? It's just not good. They're going about it in the wrong way. And I think that there's just a huge misunderstanding of what stock buybacks are. And it's an easy straw man argument to make these days. But if all that money is going to dividends, you wouldn't be hearing the same argument. And it's basically the same thing. And so there's another good example. So the Facebook one is a good one. And then the Wall Street Journal has had this on Google yesterday or this week. It said Google's research and development bill climbed 40% year-over-year to a record 6 billion. And another record was set by capital expenditures, which surged by 64% to 7.1 billion, which is twice in Microsoft's

outlay for the period. And there's a chart in there that shows since 2012, this thing looks like the stock market. It goes from lower left to upper right for their capital expenditures per quarter. And again, this is another firm that's not, I guess you could use them as a good, rallying cry of against stock buybacks because they're not doing it. But every company can't be Google or Facebook. It's just, that's not the way the world works. Because there's not opportunities to invest and make money. Right. And Google is the kind of company that has invested billions of dollars over the years in moonshop projects that really haven't come to fruition. The majority of their revenue still comes from search, which was their original idea. You told me a really

interesting and totally meaningless that before we started recording on the performance of a few stocks. Yes. I was looking at it. So usually the performance for like Amazon and Apple and the SP 500 are completely out of sync. This year, so last year Amazon was up 23 percent. Apple was down 5 percent and the S&P was down five. So far this year, this is through Monday close. Amazon's up 8.8 percent. The SP 500 is up 8.8 percent and Apple is up 8.8 percent in 2019. So the plunge protection team is spreading its bets equally. Yes. Are you ready to short Amazon? Amazon yet again. It is not playing favorites. So, all right, you wrote a piece that I think you probably wrote a similar version last year, but the jumping off point that you used on Simple versus

complexity was the cod fishing thing that we spoke about with Munger last week. You said the same analogy may apply to institutional investors who overfished the illiquid alternative investment universe by following David Swenson's lead at Yale. And probably not surprisingly, were you surprised at the pushback? Not really. I think I've done this. update two or three times, where I look at the Nacubo numbers, and they take all the college endowments, and it's like 800 college endowments. And for years, those were seen as the top echelon of institutional money managers. And they probably still are. And a lot of them follow Yale's lead. But the problem is that Swenson wrote his book. I think the original copy came out

in 2000 or 2002, and he wrote another updated version in 2008. And it's one of those things where once the secret is out, the first mover advantage is gone. And all these companies try to all these firms try to copy each other and it doesn't work. And I wrote this piece and I just compared it to some simple vanguard portfolios. And there was a lot of hurt feelings on Twitter and in my emails from people who saying, who trying to move the goalposts and make changes. And my whole point was just to show that it's insane to me that these college endowments, that the, the margin of victory is so much narrower than it was before in the past, the huge endowments made way more money than everyone else. And they weren't comparing themselves a 6040 portfolios. They were

comparing themselves to the S&P 500, and they were crushing the S&P for a long time. And it's just insane to me that the numbers have come down so far, where now even the smaller endowments are having similar performance numbers as the larger ones. And so that my point was just, I can't believe that it's happened so quickly. Maybe I shouldn't be shocked anymore because that seems to be how things work these days. So that was my whole point where people tried to nitpick the way that I was doing it in my methodology. But the point was that there's no more huge advantage for these enormous funds anymore. I was just looking at Chris showed me the UJA endowment, which is, I think, about half a billion dollars, and 45% of their assets are

invested in alternatives, whether it's, I think it's something, I mean, I don't have the paper with me, but it's like, I think it's like 12% private equity, 20% long short, another 10% market neutral, stuff like that. So what would you, that's the biggest thing that surprises me. So they had the asset allocations for these colleges, too. And I think that's probably the biggest thing. So people, when I compare these returns to Vanguard, people said, oh, so you think these firms should just all invest in index funds and leave it alone? It's like, of course not.

But the over a billion-dollar cohort has almost 60% in alternatives. The group that's 500 million to a billion has 40%. And 250 to 500 million has 38% in alternatives. My whole point is, don't you think you went a little overboard on the alternatives? And the craziest thing was when I was working in this world. world, the illiquidity of these investment structures really bit everyone in the ass in 2008 and 2009. And yet, instead of like, take pausing a little bit and taking a step back and rethinking that strategy, they double down and continue to go into them. And the fact that

they're in these, a lot of it is private equity and hedge funds, of course, but I think that just the risk profile is just so heightened in these strategies because the different risks that you've taken these fund structures and a lot of these places just don't really understand. what they're doing. Yeah. All right, fair enough. So let's stick with this theme for a minute. So there was an article in Bloomberg talking about how one county is pulling out of not all of Bridgewater, but of their pure alpha. I think they're staying in all weather. So this pension fund covers more than 13,000 current and retired county employees. And this really put into perspective how freaking big pure alpha is. So they're taking out $81 million.

which represents less than one-tenth of 1% of what Bridgewater manages in its hedge fund strategy. Yeah, this one, this is a tough one. It's kind of funny because they say that this is a tiny county fund, but it's got $3 billion in assets, which is kind of funny that in the world of pensions, that is kind of small. Obviously, that's a lot of money anywhere else in the world. But I don't know what to make of this one,

because over the last five years, Pure Alpha has done pretty terribly and relative to the market, even though they had a great 2018. So they're saying that they paid a fixed fee of 3.7% and ended up with 3.1% over the last five years or so in returns. So obviously more than half of their return was eaten up by fees. But over the last 10 years, they've earned 10% of the fund. So it's one of those things like this is what makes these investments so hard to make because it's one of those things where do we go to, do we point to the long-term track

record and stick with that? Or do we say that there's this like paradigm shift and things are now different, which no one can answer that? Yeah, very good point. So over the last five years, this is rough. Well, first of all, a 3.7% flat fee, that is a huge hurdle to overcome, right? Yes. That is enormous. But to the other point, they've done 10.4% after fees since the pension first invested in 2006. That's freaking incredible. Yeah. Right? Given what they were invest in it. And I am, you know, I would, I would bet that they did it with significantly lower, lower fall. Yeah, probably. And honestly, if you're in one of these funds and you have someone that's underperforming, I think the two choices, like a lot of these places will put them on like a list.

And it's funny because they have these coded, these color coatings, like one will be green, like everything is good. The other one will be yellow, meaning like, okay, they're on the watch list. And red will be like, all right, we're getting out of there. And I actually think it makes sense if you have an underperforming fund like this, either double down and rebalance into the pain or get rid of it. So I think making a choice like this, whether it turns out to be a good decision or not, depending on the performance going forward, I think it makes sense to pull the rip cord one way or the other. But I think a lot of places, what they do is they have underperformance and then they bail and they go into a better performing fund, which then underperforms. And it's just this,

that's just the cycle. So one of the things that they spoke about was who is advising this pension fund? And it's pension consulting alliance, which currently advises clients that collectively oversee more than $1.4 trillion. Yes, there's your Charlie Munger analogy again, where everyone kind of does the same thing. So the pension, the consulting firms that oversee these companies, I ran the numbers for my organizational alpha book. I can't remember them exactly offhand, but the top 10 consulting firms oversee something like 80 to 90 percent of the assets.

And so, of course, they're all doing the same exact thing. I don't even have a swim to wear the fish joke. It's just too much. All right. So here's the flip side. Here's the actually from none other than economic. So we speak a lot about, well, that's great that your risk-adjusted returns or that your sharp ratio was through the roof, but if the returns are 2%, who really cares? But the flip side is that, so if you are taking distributions, which these endowments are, then risk-adjusted returns are everything.

So Jake showed over 20 years, he showed the comparison of a 6040 portfolio, the S&P 500 versus a constant return. So in other words, let's say that 60, 40, 6% a year. Obviously, that's not steady versus 6% a year every single year. And if you were taking money out, if you were taking out 5% a year, using the constant return, you took way more money out, even though it was the same compound annual growth rate. Now, the pushback against that would be, well, yeah, that's terrific, but who the hell can give you that constant return? Bernie Madoff.

Right. But that gets to the point of why you diversify, because even if you're in the manager that hits home runs and strikes out on occasion in overlapping years, it doesn't matter. So that's why, yeah, I agree that the volatility is a big thing. The problem that I have with a lot of these illiquid fund structures is you can't take advantage of that volatility or that lack of volatility sometimes to take the money out. So a lot of them have lockups. Obviously, over a 20-year period, that's not going to be as big of a deal. But, yeah, this is a good chart. And it makes sense.

I mean, I think that's why, especially for retirees, have to consider this, too, the consistency of return. So even if you made all your money betting 100% in stocks or 90% in stocks, when you start taking that money out, that's a whole different ballgame. So what would you say is an appropriate level of alternatives in an institutional portfolio? I would say 60% is bananas. I think that makes zero sense unless you are literally David Swenson. I think anything over, I don't know, I'd say 30 percent, anything more than that, I think is far too much. And a lot of it is dependent on the resources and the staffing at these places. But I worked at one of these

places. We had a small investment office and overseeing this stuff is hard, monitoring private equity commitments and distributions and capital calls. It's difficult. And looking at all these different funds and not only the new funds that you have, but modern and the old funds you have and then potentially new ones are going to come in there. So it's just, it's a lot of work. And I think if you don't have the staffing and the resources to do it, you shouldn't even try. And even if you do have the staffing and resources, it's still hard as these numbers show. All right. Let's talk about the fleecing of millennials. So was that the name of this article? Yes, the fleeting of millennials. It's basically, you know, I feel like a lot of these, like people complain about,

the millennials being coddled all the time. I feel like a lot of these articles don't help, even though maybe the data and the numbers are true, but they just show the inflation-adjusted income for each age group since 1974. And it shows that the 24, 25 to 34 age group after inflation is basically flat since the 70s. The 65 and over-age group is almost 80%. Hold on. I'm confused. Is this showing people that were 25 to 34 starting in 1975? This is just that age group continuously over this time. So it's showing that the young people are not making any more money after inflation than they were in the 70s. And old people are making more money. And so each age group, it gets breathfully higher. We'll put this in the show notes for the,

but it's just kind of saying that there's a lot of stuff going on for millennials where they haven't kept up with the older age groups in terms of. Okay. Okay. But how about this? The older age groups don't have the fire festival. That's true, which the dock was going around this week, the Firefest slide deck, and it was glorious. Honestly, I could see some of these slides being in some investment presentations I've seen in my life. I wouldn't put it past some places, but my favorite one was they talked about their sponsorship as being a key revenue, and they show these, they have these little, like, arrows, and it says their sponsorship, first they want to understand brand goals, then they want to ideate. what the freak idea eight conceptualize and execute and it's just a bunch of lines and arrows and the more I think about this this stuff I just I can't believe that this thing ever happened

it this like this story is every time I hear something more about it it's more and more shocking and I think going through the slide deck is it's helpful but our 360 methodology allows us to capture brand revenue in a unique manner who would have thought jaw rule couldn't pull off one of the biggest musical fests ever created in three months. I just, yeah, this is definitely worth going through. It's, ugh, that's a good one. So Jason Zweigwood an article about raising your own interest rates, even if the Fed doesn't move. So he said that there is nearly $8 trillion of cash in savings deposits at commercial banks

earning an average interest rate of 0.09%. I would have taken the under on this one. I would never would have guessed it was that high still. Eight trillion? That's a little bit. This is cash on the sidelines, remember. So, as if for example, you could do a lot better. You don't have to look very hard. Marcus, which Ben and I use, is now earning 2.25%. Yes. If you Googled online savings account, and I sell this kind of stuff to people all the time, I guess maybe not as many people know about it. So the simple idea is online savings accounts can offer higher rates because they don't have brick and mortar buildings, they don't have as much overhead cost. But frankly, the reason they can offer these higher rates is because short-term rates are higher now. And the banks have decided to not pass along those rates to their customers in terms of a saving. Like 0.09% that's unbelievable that they haven't, hasn't budged off of that. It's almost like the two things that haven't moved in terms of interest rates over the past. I don't know, call it 10 years, are credit card rates and savings account rates at banks. Like those things, you'd think those things should fluctuate with the interest rate market,

correct? They're on a 17-year lag. And they just don't move. And so banks are earning huge spreads on these, obviously. So they're giving you a mortgage at 5% and they're giving you 0.1% in your savings account and earning a difference. So Jason said one of the reasons why is really inertia, which I think makes a lot of sense. And this is pretty wild from his article.

Quote, one study of roughly 850,000 participants in a retirement plan found that 72% had never changed how much they invested in which fund. At a major discount brokerage, more than one-fifth of customers making nearly 460,000 trades all told, never sold a single stock whose price had fallen. At various companies, 50 to 80% of workers who were automatically enrolled in a retirement account left their contribution rate untouched, although they were free to change it at any time. Inertia is a very powerful force. So I had a friend who called me last year from college and said, hey, I have my money with an insurance company as my financial advisor, quote unquote, and they're not really doing much for me. Every time I talk to them, they try to sell me an insurance product, and I can kind of tell this isn't what I need. I need some actual financial advice. I want to try something else,

and I gave them a few options. And he said, all right, great, I'm going to do it. And so I called and check in a month later. All right, I haven't done it yet, but I'm going to. And then find this is like nine months later he he texts me and he says hey I still haven't taken the plunge yet with all the options you gave me but I really want to let's think and so I think it's it's like trying to change your dentist or something like it's such I think it's such a pain for people that they just they just stay put and stick with what what's worked before for them yeah I mean I think I think we're all guilty of this in one way or another like when Kobe was born I probably waited not that long but I probably waited like three or four months to

set up as 529 just because like I don't know I just I mean there's no there's no reason It's hard to do box spreads in a 529. You have to take some time to get those set up. That's true. All right, sticking with the cash angle. So Acorns just raised $105 million and they're now valued at $860 million, which is ahead of betterment. That really surprised me. Explain to me what exactly Acorns does because I'm not sure. The only thing I know about them is that it's some sort of savings account where it'll sweep the pennies from what you spend into a say. Is that what it is? I don't know. I don't really know the details. I think that's sort of the gist of it. So there's four million people on the platform. There's $1.2 billion in assets, and to your point, I think what they try and do is algorithmically sweep money out of your account in a way that you won't notice it, which I think is terrific. I think people sort of on the internet get up in arms that they're charging, you know, $3 a month for somebody with a $75 balance, and, you know, that's 13%. I think that's probably the wrong way to look at it. I think they're providing a pretty good service.

In terms of comparing them to betterment, their average account, did I say this already? There's 4 million people on the platform. Yes, you did. I might have said that already. It's what I was saying again. The average account size is about $500. Customers are mostly 18 to 34 years old. Betterment, on the other hand, their average client is 37, and the average account balance

is $40,000. So it does say on here, you set aside spare change or extra cash as you go about your day with roundups and recurring investments. But honestly, there was that Fed study a few years ago that said, what is it, 60% of people couldn't come up with $400 for a rainy day emergency. So this does that for you? Yeah, if this works for that, then I'm all for it. If it's doing it and you're not even paying attention and it's just there,

then especially for the people who don't save and can't save, then that's probably not a bad thing. If they are charging accounts under $200, 8%, well, whatever. That percentage will decrease significantly over time. And to your point, this is money that people are spending anyway. So now the biggest shareholder is NBC Universal and I guess their CNBC is going to be doing some work with acorns. So that should be interesting to watch. Kevin Durant invested in Acorns in 2016. Did you know that? Oh, really? No, I did not know that. Okay. And he also invested in Players Tribune. Okay, which is, I really like that thing, the way that they do that and they just let the players talk in their own words. And in 2020, he will be hitting the New York startup soon. Sources tell me. I'm going to take the under on that one, but. By the way, speaking of that, yes, I will, well, it's possible. Yes, anything is possible. You and I, Ben and I are going to Milwaukee.

on March 19th to see the Lakers play the Bucks and as it turns out both of these teams are potentially involved in the Anthony Davis sweepstakes I mean Milwaukee has no chance

but that's sort of like just to cover his ass that he's not only thinking about big market teams but the Lakers how fun would that be if we see Anthony Davis and LeBron yes and Giannis right

did I say that I believe I believe the G is silent okay it could be so skipping ahead to like why something like this acorn thing is interesting. So our survey for the week said that one in three Americans believe they have a better chance of seeing Bigfoot than saving for retirement. All right. Stop. Just stop it right there. I know. So it says that fewer than half

of working Americans in their 40s and 50s with household incomes of $40,000 to $100,000 said retirement is one of their top three savings priorities for 2019 according to a new AARP ad council service survey. And so I think there is really a segment of the population. This kind of gets back to the inequality debate from the beginning that either can't or won't ever be able to save. And I don't know what that segment of the population is. I don't know how you segmented. Obviously, it depends on standard of living and where you live and all that stuff. Wait, can you repeat the Bigfoot stat? One in three Americans believe they have a better chance of learning that Bigfoot is real than

retiring comfortably. Okay. What did they pull? 11 people? Probably. I know it's, I mean, didn't, didn't you see the show, the Bigfoot show that the hunt for Bigfoot, it was a show on Discovery Channel or something a long time ago. It was actually a show where these three guys would go out and hunt for Bigfoot every night. And I'm sure. No spoilers. I haven't seen it. Okay. I won't tell you what happens at the end. So, but I think there is this cohort of people that are just honestly never going to be able to save. And I think that there has to be some sort of way of if you're not going to force people to save retirement, then nudging them in the the right direction. And maybe that's what something like this acorn thing can do for people or hopefully maybe someone will come up with a better way. But I don't know if there's any other way to do it. So acorns is for millennials. They need one for senior citizens. Yeah, pretty much. I think it's called Social Security. Nice. All right. Let's move on some listener questions. Okay. Here's an inside baseball one. Who is the man's voice for the Welcome to Animal Spirits portion of your intro? I heard his voice again on the resolve 12 days podcast recently and the deja vu was strong. All right. So,

person get to participate in two of the most informative investment-related podcasts and recent memory. Seems like a good gig. So it's not James Earl Jones. We'll tell you that right now. His name is Matthew Passy and he's fantastic. We got him through Patrick O'Shaughnessy and we can't say enough good things about him. He's got a growing podcast producing Empire and honestly without him we never would have got this off the ground. We were going to try to edit the podcast ourselves and I think we tried to do it. We recorded a few of them on our own and it would have just been a debacle if we would have tried to do this ourselves. Yeah, we tried to edit it in excel and that just failed miserably. Yes. This is when it pays to outsource and go to an expert who

knows exactly what they're doing and how to fix things. And he's done so much work for us and help for us. And I mean, it's pretty fair to say that once every time we go to record this podcast, we have a technical issue because we are idiots. And he fixes all these problems for us. He does. All right. So let's move on some recommendations. Also a Patrick O'Shaughnessy special. I heard him talk about this on one of his podcasts. This book called Amusing Ourselves to Death, Public Discourse in the Age of Show Business. So this was written in 1985 by a man named Neil Postman. And it is written very similarly to The Money Game, just in terms of like style.

It is hilarious and insightful. And I cannot recommend it enough. I mean, I don't know that I've taken my pen out as much in any book in recent memory. I just want to read you one part. So he's talking about the television commercial. The television commercial is not at all about the character of products to be consumed. It is about the character of the consumer of products. Images of movie stars and famous athletes, of serene lakes and macho fishing trips,

of elegant dinners and romantic interludes of happy families packing their station wagons for picnic in the country. These tell nothing about the products being sold, but they tell everything about the fears, fancies, and dreams of those who might buy them. What the advertiser needs to know is not what is right about the product, but what is wrong about the body. Oh, good one. I like that. So this is from 1985, and this will be relevant in 2085. It is really terrific.

Okay. So, on Friday night, or maybe it was Saturday night, I saw Bohemian Rhapsody. Thoughts? I very much enjoyed it. I've heard it's got some pushback because it's not, they didn't really stick to true to life on it. Oh, who cares? It's a movie. Okay.

I don't care. See, my favorite part about true stories is when they stick to the story in truth of strangers and fiction. Okay. But I haven't seen this one yet, so I'll save my grade. It was definitely a big theater movie. However, here's the flip side to the food and drinks being served in the theater. So I went by myself.

The people in front of me turned around. They're like, are you by yourself? So I said, yeah, thanks for embarrassing me. I am by myself. I said, would you mind moving over? So I thought they were with like another couple. So it's just the two of them. So I moved over.

The girl next to me is like, wait, how does this work? Because I wrote something down and I stuck it in for the waitress to come get it. So I said, you write down what you want. or they come get in. And she goes to me, but they haven't come by yet. So I said, what do you want me to tell you? I don't work here. So anyway, I ordered an old-fashioned.

I heard her boyfriend order a ngroni. I got his ngroni. Oh, okay. So he's sitting on the other side of me. I can't tap him on the shoulder. So I heard her say to him, how's your drink? And he said, oh, it's great. He was drinking my old-fashioned.

Anyway, the next time I got a drink, I did get my old-fashioned. That's a pretty high-end movie theater for drinking cocktails like that, huh? Yes. No, it's a great time. That's so Brooklyn. So, anyway. the next night, or two nights later, was the Super Bowl. And I had a great tweet, but I botched it because it was the beer talking.

Okay. I wrote, I wrote, Eddie Mercury. And somebody goes, Eddie Mercury. And I totally didn't even realize. Freddie? Yeah. So I wrote Eddie Mercury as to Adam Levine as Warren Buffett is to Dennis Gartman. Nice.

Eddie Mercury. That's pretty good. You got them mixed up with Eddie Money, maybe. Yeah. All right. Last one. So somebody told us to watch the five on Netflix, which was perfect timing because literally when that tweet came in, we had just put Kobe down and we had nothing to do. So we watched like five episodes. So it's a 10 episode season. We're almost done with it. Highly recommend. However, I think that true detective sort of ripped them off. Oh, really? Because it is similar. It is very similar where a kid went missing. And then 20 years later, his DNA is at the crime scene. Ah, okay. So I continued with True Detective, and it is about as exhilarating as the Super Bowl game the other night.

I mean, it's just, but I'm ignoring the whole idea of the sunk cost fallacy, and I put too much time in, and now I have to know what happens. So I'm going to stick with it, even though it's mind-numbingly slow. Oh, so you're sticking with the sunk-fallacy? Yes. It's taken over me. I think that my costs are also sunk because I'm sticking with it. However, I did enjoy episode four a little bit.

I haven't seen episode five yet. Yeah, I mean, you're the same thing. Okay. Are you done with your recommendations? I got one more minor thing. This is not really a recommendation, just a question. Okay. Do you eat trail mix?

Sure. On occasion. I've had it before. Do you agree that the proper ratio is two peanuts, one M&M and one reason? I probably more would be like a permanent portfolio guy where I'd like to see an equal-weighted portfolio on that one. What? Okay. So.

One, one, one, one. All right. One peanut, one, one raisin. How's that sound? Okay. All right. Fair enough. What do you got?

That was just a random thought for the day? Well, just, yeah, I was just curious. Okay, we watched the show you on Netflix. Oh, Robin watched that. Yeah, I, I liked it. It was the kind of show where 10 years ago it probably would have been on the WB network. And so there was probably 20% of the show that was a little. Do you remember the WB?

No. Maybe it's called the CW now. Yeah, yeah, yeah, yeah, I do. I do. So, so there's probably 20% of the show. of it that was a little bit like that, that I was like, I could have done about that. But it was 50% romantic comedy and 50% serial killer. And it was one of those shows that the more you watch, the more you get into it. And I really liked the ending. And they left a good

cliffhanger season, too. So I liked it more than I thought I would. We watched some of the Ted Bundy doc on Netflix. Oh, so did I. Oh, God. That guy was, I've heard of him before, but I'd never realized like the extent to what he did. It, my wife basically stopped watching. Yes. that was crazy a couple other random recommendations we had a couple snow days last week because it was so cold in michigan and had to try to keep the kids entertained and someone gave us a christmas present it's this stuff called hey clay and it's one of the coolest interactions between technology and real life toys that i've seen so they give you this clay that's kind of like silly putty but it hardens over time and you follow the directions about how to build

animals and aliens and those kind of things on your iPad so it's an app that comes with it and it takes you step by step along the way and shows you how to do it. So it was one of the better like technology interfaces I've seen. And finally, I'm working my way through the Amazon Essentials clothing line to try them out. I feel like I'm just experimenting with it. So I bought a, I bought a pair of jeans and a pair of khaki pants from Amazon Essentials. I'm like, I'm just going to try these out because it's like 20 bucks. And I got to say they're not bad. Like $20 for a pair of jeans, $20 for a pair of slacks. Okay, I'm in.

They're not bad. I feel like it's an experiment. They're definitely not the best things in the world, but for 20 bucks, they're not bad. So that's what I got. Okay. Send us an email, Animal Spiritspot at gmail.com. Thanks for listening.