Animal Spirits Podcast - Ben Turns 40 (EP.218)

Episode Date: August 18, 2021

On this week's show we discuss direct-listed IPO performance, the scorching hot NFT market, Ben's milestone birthday, transitory inflation signals, shortages in the economy, the relativity of rich 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 our friends at Y Charts. Y Charts sent us a piece of research in the past week called How to Discuss Hood HOD and new IPO stocks with clients. And I wish they would have sent me this before I tried and failed to invest successfully in the Robin Hood IPO because they have some really cool charts in here and they show the direct listed IPO returns. And they show them on the first day of trading. So this is Spotify, Asana, Palantir, Roblox, Coinbase, SquareSpace, ZipRecruiter,

in Robin Hood. There's a lot of big name direct listings, but there's only been like half a dozen. Yeah, it's not that many, but I'm just saying, so they broke it up by first day of trading, and most of them did just, eh, okay, the majority of them were down, the ones that pops didn't pop that much. The only ones were the big gain were Spotify and Squarespace, and those were only up 12 and 15%. But the first five days of trading, a lot of these are up a lot. Robin Hood's up 46%. Square space was up 26%. Roblox was up double digits. Spotify was up double digits. I should have followed their lead on the direct investing and understood when an accompany IPO is through direct listing, those people are selling right away. They're not going to get

that first day pop. You should have learned a thing or two about past performance. Yeah. So in this case, indicative. So this was a good research report. They also showed like a company like Roku and Blue Apron came out about the same time as IPO. Do you realize Blue Apron is down 95% since it's IPO? That is astonishing to me. Blue Apron single-handedly got the podcast industry off the ground. Seriously. Yeah, along with ZipRecruiter. They also show the number of IPOs that are underperforming and outperforming the S&P 500. Really great research report. We're going to link to it in the show notes. And again, if you have not subscribed yet, go to whitecharts.com. Tell them Animal Spirits sent you and you get 20% off when you sign up. 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.

Michael Batnik and Ben Carlson work for Ritt Holtz 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 Ritt Holt'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. Ben, last week we spoke about how difficult it was to beat the S&P 500. So my heart was warmed when I saw a story from... Dan Rasmussen, who we've mentioned many times in the show,

read his stuff every week, read out capital. So Dan Ress Mousson raised $150 million during the crisis. Like he basically, he came, he saw he conquered. That's what he did. He raised $150 million, made 85% net of fees and set the money packing back to his investors. I think Forbes said he pocketed $25 million. Good for him.

Good for them. Next time. Nailed the timing on this. Completely nailed it. Nailed it. He wrote like a hundred, or they wrote like a hundred something page report about investing during the crisis, got the money invested. The next time there was an opportunity for him to do this again, it's going to be a $500 million

fund. And he's going to be completely oversubscribed. So that was nice to see. It's been a while since he saw a story like that. He was on a podcast with Jim O'Shaughnessy recently, and I loved one of the things he said. They're talking about, is this a bubble people think it is. And he said, I have just given up trying to define what a bubble is. is, but when I'm in a crisis, everyone knows they're in a crisis. When there is a bubble or a

bull market, no one really knows for sure if it's a bubble, but in a crisis, everyone knows you're in a crisis. He's like, I'd rather focus on those crisis periods and try to survive that rather than always trying to fare out what the next bubble is going to be. I really like that. Yeah, it sounds obvious. I wish I thought of that, but good for him. Not that I could think of racing $150,000 and I don't have the way we thought to do that, but good us to them. That's great. No, you would have set up a short selling fund in April. It's time to double down. Carnage is around the corner.

Actually, can we just stick with that for one second? Somebody sent this to us. This is from a Parma Bear newsletter. It doesn't matter who it is. At this point, you know the name, but... The author doesn't matter. They all sound the same. Yeah, but here's a quote.

I'll preface it with this. These always sound intelligent. They always sound prudent. They always sounds responsible. All right, so here's a quote. You need your portfolios to both participate and protect. Don't blindly buy index funds and assume they will recover as they did in the past. This next avalanche, it's always the next one.

This next avalanche is going to change the nature of recoveries as other market forces and new technologies change what makes an investment succeed. I cannot stress that enough, Ben. Don't get caught in a buy-in-hole traditional 60-40 portfolio. He's telling you to dump your target date funds, Ben. Don't walk away from it. Run away. Cautious optimism is always the long-term winner.

Always. But a buy-in-hole portfolio in today's world is neither cautious nor optimistic. Hope is not a strategy, Ben. That's precisely what a buy-in-hole portfolio is. This could have been copy and pasted from 2011, 2012, 2013. You could have written this every year, and someone would have been like, yeah, this person is amazing. They're so smart.

Gets it. They get it. They're not wrong, though. They're just early. I mentioned to you last week. I've heard a few. It takes chutzpah to call for the next crisis right as we're coming out of the last one. Luckily, I think a lot of people have realized these permabairs, like, oh, wait, they've been

wrong for 10 years now. We've more or less stopped listening to them, but I have noticed something in recent months, and I mentioned this to you last week. I've heard a few podcasts recently with noted perma bears, and I occasionally like to listen to them, just to hear, like, what are these people actually, what is their view of the world? Every once in a while, they still say something intelligent, even though they're betting against mankind and humanity, basically.

But a lot of them have made a subtle turn in the last, I'd say 12 months. and that turn is going from perma bear that the markets are going to fall and I hate the Fed and the Fed is manipulating everything and if it wasn't for the Fed I would have been right to I'm just going to focus on crypto now because that's a space where the people who sound like gold bugs we talked about this last week have been right and made money even though they sound a little out there with their macro takes that was like the getaway vehicle yeah so it's the get out of gel free card to go oh you know what this is a system that's trying to take on the Fed I'm going to hop on with these people because they've been making money but I almost credit

to those people. Because at least for goodness sakes, they're seeing an opportunity and sneaking out the back door as opposed to staying with the tire fed and manipulation. At least they're learning something and trying to see progress. So I have no problem with that. It allows you to finally be bullish without admitting you were wrong for a decade. Just to go see, there wasn't a system in place before. Now that this system's in place. Now this is going to overtake the current financial system. And now I'm on a gravy train here. I'm pretty okay with it. You're right. It's better than just staying perma bear. I agree with that. And while we're on the topic of this Fed stuff, I wouldn't disagree with the sentiment that lower

rates are driving people out onto the risk curve. Clearly, they are. Okay. If I could even get 2% in my Marcus account, believe you me, I would take it. I can't. So I am engaging in riskier activity. Yeah, so you can't earn 2% so you're investing in startup angel deals, right? Well, ground floor is an example. Yeah, but it's funny when people equate like venture cash. capital investing to low interest rates. Those two things have nothing in common. People aren't investing in venture because they can't earn more on bonds. I think mostly that's true, but I think that, listen, cheap money is cheap money. I do think that it's made venture investing more crazy. I mean, maybe that's like return chasing. I can see that aspect of it, but I think venture was

going to be huge either. Ben, I don't think institutions are saying, oh, we can get 1.2% in a 10 year or we could invest in venture capital. I don't think that's a conversation that's happening. But nevertheless, I think there's a huge impact. Okay. So anyhow, I agree that low rates are forcing people into otherwise into risky behavior that they might not engage in if rates were at a different place. Okay, that's what it is. However, at the same time, there is still an enormous, enormous demand for fixed income despite rates at one and a quarter, wherever they are. So State Street has this report showing ETF flows, equity, fixed income, and fixed income flow. And fixed income flow, are massive. Unit 8, $124 billion. Versus 391 billion for equities. Yeah. This is probably one of the

biggest spread between those two in a long time, too, because fixed income has seen more inflows over the past this whole bull market than stock saving. So I feel like Jake shows this chart all the time. Flows into fixed income are bigger than flows into equities. Are they not? Yes, since 2009, since the recovery. So how do we square that circle? Maybe both things can be true, is that there's still a ton of demand for bonds because of demographics and other things. And simultaneously, people are also taking more risk. Yeah, here's the problem with markets. There are tons of different people at different stages of their investing life cycle that have different opinions that have different risk profiles, all this stuff. Like, you have to take all this into account. And there could be a lot more

people speculating, but also a lot of people in the market who are taking less risk because they're getting older and retiring. They don't have the human capital to make up for a bare market or whatever it is. They want to keep their money more stable. And speaking of life cycles, Ben, I would not know by looking at you that you turn 40 tomorrow by the time this podcast comes out, you'll be 40 because your shirt, you're wearing like a bright red Hawaiian shirt. You look like Dyson. Remember in Jurassic Park? We got Dyson here. Someone on YouTube commented, I wore a t-shirt a couple weeks ago and they said, hey, I only tune into YouTube to see Ben's threads. Step up your game. So I figured birthday week, I had to step it up a little bit with a new tropical bros. Before we get to the 40 stuff, because I

am curious what you're doing and some reflections, if you have any, are Hawaiian shirts like a thing now because I was with a friend this weekend and he told me that he loves Hawaiian shirts that they're very comfortable. Is that a thing or is that just a coincidence that he wears him and you wear them? No, they've been a thing for a few years now. They've made it come back for sure. A few years. See, you're a little behind on fashion. No offense. You're a little behind on fashion. The shorts thing you didn't know about, how people wearing short shorts now, Hawaiian shirts but now, I can't stop noticing short shorts everywhere I go in that. Hawaiian shirts have been back in style for a few years. At first, people wore them ironically. And it's another one of those

things like Guy Fieri. You start off liking something ironically. And then you go, wait, I actually kind of like this. They actually are not that. I like that shirt. I like that shirt. Yeah. So I had a little family get together yesterday. We were talking. I remember when my dad turned 40 and his work gave him like a black cake with black. How old were when your dad turned 40? Probably six or seven. He was in his early 30s when they had us had me. But they gave him black candles and black cake and but back then my dad looked like he was 40. People now like people look younger. I'm of the thought process that after 21st birthday birthdays are like irrelevant they don't matter anymore like i think here's a hot take for you adults should no longer get presents or give presents to each other like when you become an adult

i think everyone's on board with that who gives or gets presents anymore okay i feel like i still see adults that try it's probably mostly like my wife and her friends that like still try to keep that things stuff going out i feel it's probably more on the women's side i think because they're more thoughtful than men but i think like the whole present thing when you're an adult if you can just anything in present range, you can just buy yourself. Why would you need to get or give it to someone else anyway? So I think after 21, the birthday thing is over. It's more just milestones. So I don't really mind that much. But I'd tell you what, if you would have told me when I was in my 20s, like, are you going to feel terrible about yourself at age 40 or not? I would have said like,

oh, that's going to be awful. And now it's like, eh, I don't really care. It doesn't like move the needle at all for me. Would you say you feel old or you feel young? Like, man, I'm 40, but I still feel so young? Or are you like, definitely young? The only thing that makes me feel older is watching my kids grow up. Like seeing my kids get older, I feel like I am aging through them. But the only way I feel my age is through hangovers. If I get a hangover anymore, like a really bad one, stay out late. It takes two or three days of recover from them. That's like the only way I feel my age. Yeah. I was listening to the radio the other day in the car with Bob and we were listening to the 90s station. Was it just on when you turned

it on? No, no. Like HD TV? Okay. Nope. I know where you're going with it. I actually like the 90s channel. But actually, it was the 2000s channel, which I don't care for. I don't care for 2000s music. I prefer the 90s. It was the 2000s. That's because the 90s is to us as the 60s were to our parents. The 90s is our 60s for music. I mean, when I hear music, sometimes that makes me full of the spin doctors. That was in 93. It's like 35 years ago. Yeah. Wait, more than that. 36 years ago. Wait, my math can't be right. Do your math. Hang on. Wait, this, hold on. You manage money for a living? Do the math. No, I know this doesn't make sense, but I'm just saying. I'm going to let you get to it. Please. In 93,

I was eight years old, okay? Now I'm 36, so actually it's 28 years old. There you go. Now we got it. There are certain things like that. But again, I feel like I'm going back to my dad being turning 40. I feel like back then, 40 seemed like a big, huge thing. These days, I feel like 40 doesn't mean nearly as much anymore. I don't think people... Forty's the new 30. Yeah. It's bizarre to me because I am happier now in my 40s having settled down and having a family and being a much more boring person, like going out wise than I was in my 20s or 30s. 30s, and I'm completely fine with that. That's something when I was younger, I wouldn't have

believed that, like, you're just this boring person who is very routine oriented and you stay home a lot more, that you would still be way happier in life than you are when you used to do all that other stuff all the time. Would you say that there are different types of stress as you progress? In your 20s, there's dating and career. In your 30s, maybe there's the stress of trying to have children, figure out the financial aspects of having children. And then I don't know the stress is going to be in your 40s, but I guess you'll find out. Well, I feel like all that stress has been moved from me, and it's almost like a positive and a negative to my children.

Like, I just want them to be happy and healthy and successful in all these things. And I worry more about, like, them finding it than myself at this point. Don't you feel that something? Like, in the back of your head, there's always that nagging feeling of like, what if something really bad happens to one of them? That's like the different stress these days. I try not to have those hard thoughts on a daily basis, but I guess they come and they go. You don't really trying to have this, but...

No, no, yeah. It just happens. But, yeah, I don't know. All right. We finally took a few days off. My parents are watching the kids. This is the only work I'm doing for a few days is this podcast and sitting on the beach. And I have a six-pack of Modelo on my fridge for to read a book by the beach for the first time in a long time. There you are. Well, happy right there to you. What are you reading? I started reading recursion, which was the next suggestion from Andy Weir after the Project Hill Mary one. It hurts your head because it's all about... It's actually a good thing

about being 40 because it's all about memories. And there's a lot of neuroscience stuff in there about like what memories really are and how time exists on this weird plane and hurts your head. But I think it would be a good Christopher Nolan one. All right. Let's get to some speculation that went on this past week. So all of the sudden, NFT sales, and Ben, you're definitely too old for this, but I'll tell you what's going on anyway. NFT sales are scorching hot. Top 15 projects reached $100 million in sales. Daily sales. Last week, we spoke about the board Apes, now it's the Pudgy Penguins. Fintech Frank tweeted OpenC volumes and OpenC is, I think, the first NFT platform volumes on June 1st, 3.6 million volume on August 8th, $71 million.

Here's my take on NFTs. And obviously, people were quick to spike the football on their grave and they thought they were dead after the first little run. I like it. Like, I think it's, this is not something that like gets me upset for people speculating on like some other things that kind of irk me. I think it's kind of, for lack of a better word, cute that these people are like These people are all sort of seemingly happy. They're not like the hardcore crypto maximalists that say you have to like this or else. It's kind of like, yeah, this is kind of this thing. We know it's not like really serious, but we still like it and this is our own little community. I also think this just shows there is so much money in crypto. There are so many rich people in crypto that they are just doing this to keep themselves content until something else comes along. Like eventually that consumer app or whatever. that allows them to unlock their crypto into something else is going to come along beyond NFTs. And I don't know what that could be. But eventually that's going to come along and it's going to just catch fire. Because this thing is obviously this, whatever, people call them JPEGs and

it's seemingly ridiculous. But I think when that really strong use case comes along, that just shows there's so much money that wants to do something in this space. So I think that NFTs are actually a really big positive for crypto. What if this is all they want? Justin Paterno wrote a blog post He said, maybe we're all stupid to be using this magic internet money to buy JPEGs, or maybe it's what the money was actually for all along. I think it's going to keep morphing. Yeah, it's possible, but. You know what's interesting? So NFTs, Paci wrote about this. NFTs are getting obviously a ton of attention. Kevin Roos wrote an article in the New York Times about buying the Pudgy Penguin, but barely anybody actually is partying. Packy wrote, even in the midst of NFT mania, only 109,000 people have bought an NFT on OpenC. So there are other places to buy NFTs, but that's like basically zero people.

Are you starting to get the itch to go back into the NBA top shot? Oh, top shot, no. But I DM Justin Paterna. I was like, dude, you should have let me in before these things went up 300 X. So next time something goes up 1,000 X, I want in. All right. Good luck with that. Just let me know.

Oh, oh wait. If Instagram T-shirts take off, you are going to be the richest man in podcasting. That's true. So speaking of that, Packy did. this thing where he's like pooling money to buy a crypto punk. And so I tried to, I was like, you know what? I want a support package. It looks like fun. You're going to do fractional shares to buy a crypto punk? I like fun. Yeah, damn right. It is on this app on this platform called party Dow. I think that's what it's called. Party Dow. Yeah, party Dow. So I said, all right, let me get it on the

action. I went to Coinbase to log in and damn it, I got a new phone. Remember, I told you a few weeks I got a new phone. So my Google Authenticator is specifically programmed for my old phone. I can't get in. I can't get into Coinbase. You're such a boomer. You're like my parents with this stuff. I can't get into Alto IRA. Dude, come on, you didn't know about this. You did not know about this. Of course I didn't, but you sound like my parents right now asking me to help with their Wi-Fi printer. So I opened an account on Gemini. First of all, this is weird. You can only deposit $500, I think, unless you wire money. So I deposited a $500, then I wanted to transfer my ETH. I bought some Ethereum.

I wanted to transfer it over to party doubt to connect my Metamask wallet. But it takes like three or four days to like transfer the funds or whatever. So now my money is stuck at Gemini. Packy's probably going to have this thing funded before I can get in. But I found a workaround. Went on Coinbase, took a picture of me, my ID, my whatever. This sounds so exhausting. You know what this sounds like?

The traditional finance system. It's so annoying. No, but this is, well, whatever. But anyhow, if you have a Google authenticator... Think about all the hoops you had to jump through for this for $500. If you have any authenticator and you're getting a new phone, make sure that you back it up somehow, or you have your secret, your seed code, which I obviously did not have.

What's the solution? So my Coinbase, I got re-verified. I had to send them my license. Honestly, that process was not too difficult. See, crypto is totally disrupting the traditional finance system. Think about how easy that was. Oh, Coinbase is triadfy. Come on.

But it definitely was a nuisance. So are you a partial owner of this thing now? Not yet, but let's see what's going on. So you own like 17 pixels? That's funny. Right? They're looking to raise, I don't know, 35 Ethereum, and they're at 25. So I don't know if I'm going to make it in time, but I'm trying.

Paki, I'm trying. All right. Mario Gabriel, I don't know if that's how you pronounce his last name, but he did a three-part profile. If you pronounce someone's name wrong, we're going to get an email about it because people love telling you you pronounce a name wrong. Well, apparently, I keep pronouncing. So now I have his first name right. It's Deney, but his last name is not filled in Nueva.

It's Villeneuve, or I don't know. No, no, whatever. Every week we get a new rush of emails of people saying you can't pronounce this director's name. All right. So he did a three-part profile on Sam Bankman-Fried and FTX. And there's some amazing things going on with this company. I just want to shout out a few data points of Ben interrupt me. Their market cap. So the company is 26 months old. This company completely came out of nowhere. I remember the first podcast I heard him do. I had never heard of FTX before. That was odd thoughts two months ago? This is probably like six or eight months ago. But still, that was the first time I ever heard of them.

And their name is on the new Miami Heat Stadium in South Florida. They signed a 19-year lease for $135 million. They also, if you're a baseball fan, you're probably not. But if you are, they are on the back of the umpire jerseys now. So his story was he was working for a traditional hedge fund trading shop and decided I want to give away a ton of money. So to do that, I have to get really rich. And he figured crypto was the space to make that happen. And it sounds like they have one of the best trading platforms of any of them.

And they are doing some really innovative stuff too. All right. So their valuation went from zero to $18 billion in under three years. For comparison, Slack was $3.8 at that time in three years. Square was $1 billion. Stripe was $500 million. Coinbase was $400 million. Obviously, Coinbase was earlier.

But still, all right, they have six engineers. I forget how many employees they have. But I did the math. Their market cap and whatever, this might be screwy, but their market cap is $219 million per person. $219 million per person. Facebook, which is a trillion dollars and operates lien, not like they used to, but Facebook is $17 million per person. Wasn't it you who wrote the piece a few years ago and said, like, when U.S. Steel was the biggest company in 1900, it was like $3,000 per employee or something ridiculous? I wrote it a long time ago. Yeah. So, okay, so $219 million per person versus Facebook is $17 million per person. So they also, they bought like, who did they buy? They bought some, I think it's a virtual gaming, like a sports gaming company, like e-gaming.

So in the third piece, this is what he wrote. FTX is perhaps the only exchange that might be willing to experiment with tokenized contracts and could do them justice. By the way, on FTCS, you could buy like the tokenized stocks. You can't buy it in the U.S., but they trade 24-7, right? Yes. What it would look like for thousands of fans to have invested in Luca Donchich's supermax extension, perhaps fronting the money in exchange for upside, how much status,

perhaps the NFTs could be granted to these investors. And once a sufficient market was established, could such positions be traded like any other asset? Can you imagine that? You buy a piece of an athlete's contract, give him the money up front, and then that contract becomes tradable for the next contract. That's where this is going. Okay. So I would short like half the guys on the pistons probably because I know they're terrible. Like the lions, Jared Goff, I'd short him immediately.

Yeah, but the market is smart. The market is smart. You probably get shit outs for that because Jared Goff sucks. Short Kate Cunningham. No. He had like eight threes in his first summer. league game. I'm all on board. So anyway, three-part explanation or piece, prime or whatever, I thought I was really good willing to that. Do you think that the whole 20, we've talked about this before,

the 24-7 stock trading will, like the SEC ever allow that here? I feel like that's a non-starter for a long time. I feel like you're going to have to go trade through Singapore or Hong Kong for that. I don't think they're going to let it happen here. I think eventually they'll cave. All right. But it could be like 10 years from there. I mean, can you imagine being the intern at a Wall street firm that has to watch this stuff 24-7 and being the person who gets like the 6 p.m. to 6 a.m. shift or something because you're watching these marks 24-7? You know what's come full circle? The U.S. Google searches for inflation. Huge spike, huge crash.

Already? Yep. Look at this chart. Oh, wow. So it's already over. See, I keep seeing it. Which one does your wife watch? Good Morning America? Yeah. My wife watch is Today Show. So same thing, right? Every day, besides for today's obviously the awful news out of Afghanistan. every day it's a Delta variant. It's the same thing every day. I'm like, I've seen, I don't need to get my Delta variant news from Michael Strahan. Sorry. The other one, so they start

with that. They hit you with the bad news with the Delta stuff. And then they have a story about someone dying. And then I've seen a few inflation pieces. And then they do an awkward transition to the weather person who's really happy, right? It's like death, dying, wildfires, climate change. And bad joke to the weather person. All right. James Montier had a long piece on GM that frankly I didn't read the whole thing. It was really long. He was basically saying, this is kind of summing it up. He was saying like inflation is this cumulative process that involves a feedback loop between prices and costs. He's saying labor costs are particularly important in the production process and thus a sustained inflation requires wages to rise

significantly faster than productivity. Without a radical shift in labor's bargaining power for which we see no sign, it is unlikely that inflation will be able to embed itself in the system. I feel like you are seeing signs of this, though. I slightly tend to disagree. By the way, James Montier, click on this piece. What's he wearing? What kind of shirt is he wearing? He looks just like you, actually. Or you look just like him, an orange red Hawaiian shirt. I guess maybe is the thought that if it's just happening on the lower end of the income scale, it's not going to manifest as much? Because I feel like we are seeing some signs of labor having some power. Or do you think that that power is just, this is a one-time shot in the arm kind of

deal? We're bumping it up in certain areas, and then that growth is going to slow. Is that kind of the idea? I think the wage pressures that we're seeing are very targeted in COVID-related areas. True. Hospitality. Leisure, hospitality, fast food, things like that. Maybe that's it. I mean, maybe it's just because we pay so much attention to this anecdote stuff, but it does seem like that has shifted somewhat. So he's basically saying, like, listen, until I actually see something, like, I'm not going to overreact about this inflation stuff until we actually see some of that. He was also saying to all the people who say, well, all this money flooded in, of course it has to lead to inflation. And he's saying, listen, if the economy,

If the economy falls off a cliff and then all this money comes in, that can basically just keep you stable. It doesn't have to mean inflation has to take off. It could just mean we've stabilized things and prices aren't going to rise as much. Inflation is very weird. We don't know what causes it. We don't know how to measure it. We don't necessarily know what... Wait, I thought we determined how to measure it. That one index that says it's 12% in here. Yeah, it's Chapwood. It is a tricky thing. Yes, for sure. I mean, yeah, think about it. The Fed was trying to get inflation higher for 11 years. and couldn't do it. And then we have a pandemic and the government sends money and then it all of a sudden ticks up. It is funny, though, because money printer go bur? Was that like inflation related? But the money printer was going burn. They still weren't getting elevated inflation. If I would have had a blog in 2008, I would have sounded like a moron probably predicting inflation because of the Fed printing so much money and been totally wrong years later. Because at that time, that was like what you learned in economic

textbooks. If interest rates go lower and the Fed starts stimulating, you're going to get inflation. I don't fault anybody, by the way, for playing that card pre all the QEs and the twists and all those sort of things. I definitely would have thought that inflation was coming. Yeah, but I fault them for sticking with it for so long and then trying to say people aren't measuring it right and moving the goalpost. Those are the ones I fault. At one point in time, do you think you would have been like, all right, I was wrong?

I want to say like 2014, 2015. I was going to say 2013-ish. I started reading Joe Wisenthal and Colin Roche, and they were like schooling me on, no, no, no, no, this QE stuff is not what you think at all. It's like an asset and a liability matching off, and it's not actually going into the economy. If you were saying that monetary supply was going to create inflation, you clearly would have taken issue with Joe and call it another's for at least 12 months. You would have said those people are idiots before you came around.

Oh, if you were one of those people? Yeah. The thing is I didn't know enough either way, so I feel like I was learning with them. But here's the other inflation one that I don't know if we should be shocked or not that this happened so fast, but lumber is down, what, 70, 75 percent? Bloomberg had this piece. Almost half of lumber dealers and manufacturers reported excess inventories last month. A sharp turnaround from a few months ago when suppliers ran so low, they sparked price surges. So what happened? Supply caught up, obviously, because it's not the demand didn't cool off.

It all of a sudden just happened and they probably started pushing through it. But it seemed like at the time the prices were high and everyone said, okay, these bottlenecks are here for a long, long time. And it didn't. But these are the kind of things that will seem so obvious in hindsight with things like used cars. And if you're not paying a 10, this is when it really makes sense to understand this stuff and understand the underlying impacts of these numbers, right? The context is so required to understand these things. So now it says there was an article in Bloomberg. Almost half of U.S. dealers and manufacturers have had access supply inventory. Unbelievable. Yeah. If you rewind this podcast three minutes, I said that same thing. By the way, usually I'm the one who does that,

so kudos to you. Well, listen, it happens to the best of us. I apologize. When we were in New York, I'm a bigger man. I don't like when you do it to me, and I assume you don't like when I do it to you. apologize. I don't care. I think it's funny because when I did that to you when we were taping in New York, you had the biggest smile in your face because you couldn't wait to dunk on me for doing it. Well, in person, listen, in person, that's impressive. Yeah, you were sitting across on the table for me and I completely ignored you. I was looking at you head to the next thing. This is an interesting chart. It's not really a crime per se, but it's a chart of U.S. college tuition and fees with a year over year price change. And this chart has been going down

only because it is from such a high level. You know what I mean? So it's one of those weird things So this is like a disinflation area. It's still going up, but at a lower rate. Right. So price of college last year rose only 0.2%, which is basically the lowest ever. And so on the one hand, you have prices going up and up and up but up, but the pace at which the prices are increasing are going down. Okay. So maybe a good thing. Okay. So I have a labor. slash material supply story that shows this stuff is still going on. So our dryer crapped out on us last week. I think... Rough. I've made the dad joke that we probably have put easy 200,000 miles in our dryer. There is not a day that goes by with three kids that we don't have at least one

load of wash going. And once I reach Michael Batnik status, I'm going to have someone come folded for me and put it away. Sorry, last one of those, I swear. But, so it crapped out my wife is like, we need a new dryer. There's a place that we got it from right by my office. And so I go there, I take a look. I go, here, this is this ElectroLux white. This is the one we need right here. And the guy's like, all right, let me take a look. And he goes, those are like three months back order. You're going to wait a minimum three months for it. And I'm like, what are you supposed to do? Put the clothes in the microwave? So he's like, we could try to send a service team member out there. But last week, two of our technicians quit. And you basically won't even be able to get our service people on the phone.

They're so backed up. So what are you doing? So I'm like, okay, I guess I get another model. like, well, we have the same brand of dryer looking for in a different color. The one you have is white. Here's this one in titanium. It's $100 more. I'm like, okay, we need a dryer. I'm like, I don't care if they don't match. So I ended up getting it. And I was talking to him as he's feeling on my order. I'm like, what are you doing for people who, like, let's say you're building a new house because I've heard some horror stories. What do you tell people? Oh, channel trucks. Yeah, I'm doing my own channel. The funny thing is, I'm doing this all the time now. I did it at, I got a used car last week, too, because my car is getting fixed. And I did the same thing. They were

low on their inventory. But the guy said, we're telling people, you have to come in a minimum of six months early before your house is going to be done to order appliances just to make sure they're going to be there when your house is done. And that's just for normal appliances, a GE or a KitchenAid or something. If you're getting one of these crazy subzero built in things, he's like, it could be 12 to 18 months until you get it still. He's like, obviously the supply issue is a problem, but he's like, we're also seeing just insane demand still. So what are you supposed to do it if your dryer craps out? Like, seriously. I don't know. Luckily, we bought one and they were able to, I got it on Friday. It's going to be

there by Tuesday because they had it in stock. But it was basically like, here's the things we have in stock. And the guy wasn't even trying to sell me. He was actually being straight with me. He's like, just pick something we have in stock. That's honestly your best bet. No, it's interesting. I'm pivoting, by the way. Bring it. We have about six million fewer jobs than we did pre-pandemic. But the level of economic output is the same. or higher. All right. I have a productivity thing for you. I listen to your compound. Who did you have on last Friday? Alison Trager. Allison Trager. And you guys are talking about productivity. And you said how the remote work stuff, like there's so many people that still need to go into the office.

And I agree with that. Here's the counter argument of that. How many people hate their coworkers or are annoyed by them? That's got to be a large, like when you talk to friends about work, they're not talking about how lovely their work environment is. They're talking about the people that annoy them. So the work-from-home thing is got to be wonderful for those people because they don't have to be annoyed all the time. It's amazing, but your friends are 40. I'm talking about the younger people that are not settled in their career that need to advance. True, but this is me being elitist, maybe. The people who are already in their late 30s and early 40s or 50s and are maybe more established in their jobs, they have more responsibility can probably push through more

productivity than the young people. Is that fair? Oh, did you see that email about that guy calling us elitist? Yes, yes. I did. So here's my take. Basically, the TLDR is this guy thinks we're entertaining, but our blind spots are massive. And we talk in basis of fact about social safety net issues. And he was giving us anecdotes about how completely uninformed we are. And my first thought was like, what a dick. It was just not a nice email.

They could have been like, hey, like your stuff. But it was just the tone was not nice, which I didn't really care for. But it was like seven paragraph bullet points. Yeah. I thought a lot of his points were fair. Like, he gave us a lot of examples of how certain families are subsidized, but once you cross a certain threshold and the games that people play, yeah, I don't have a ton of poor families in my life. I don't know where all the money is going. But I think what annoyed me was, again, the tone.

But I don't, do we speak in basis of fact? I'm not making policy. I'm making a podcast. Like, I'm not pounding the table. We're just talking. Yeah. Yeah. You're going to get that every once in a while.

I moved on pretty quickly. Same, as you can tell. So going from Porta Rich, so there was this piece in the Vanity Fair talking about rich people of the Hamptons have a new headache, even richer people. And it talked about how people who have lived there are now not very happy because there's even richer people living in there. It was like totally complaining about how, so this one person said, I'm a one percenter, but I bear no resemblance to these people. And they're talking about how these hedge fund people are having all this work done and they're trying to figure how much it costs. This gets back to

that thing we talked about a few weeks ago where I made that point. It's just all relative. The point that I made was there's a bigger gap between the half a million and 50,000, there was between the half a million and a billion. But clearly, there is a big gap between rich and rich, rich, rich, rich, rich. Yes. So 1% or versus a 0.01% or whatever. I mean, yeah, there's a big gap. That's a Chris Rock thing. The difference between like Shaq versus the guy that signs his checks. Yes. But it's just funny to me that we talked about where Meets, I will teach you to be rich podcast a few weeks ago. I think before we'd even listen to it because he was on Tim Ferriss. Best new podcast, by the way. It's really good. I've listened

to probably four or five episodes. How many other have ever been? But he's giving money stories with couples that these people make two, three, four hundred thousand dollars a year. Like these people make really good livings, no matter where you are. They make a lot of money. And they still have all these money issues. Some of them are cheap. Some of them spend too much. And it's all psychological. And this is the same thing if you're in the Hamptons. And this person has been in the Hampton since 1991. Like they probably have a beautiful place on the water. And they're still not happy because they see someone a little richer than them coming in and doing things a little differently. It's just that mindset, it's so hard to get that psychology right of no matter what place

you are in life. You know what really nailed the rich people suck? Or that's too broad. Nailed the sucky rich people. Not all rich people suck. But certainly there are sucky rich people. White Lotus. Oh man. How great was that the end? No spoilers. So that is a new genre. And I talk to you and Josh about this on Slack. So think about it. Rich white people are secretly unhappy and terrible human beings in some case. So Succession, White Lotus, Big Little Eyes. I'm sure there's another one I'm missing. I never saw that one. Why is that type of genre so satisfying? It's so satisfying because nobody feels sympathy towards those characters. And speaking of White Lotus, the music was sensational. I think Armand is one of my favorite characters of the past few years. That guy just cracked me up everything he did.

We won't spoil the ending, but what did you think of the way it wrapped? I thought I... It was fantastic. You weren't going to be – I can't believe – that's not the kind of show you're going to be blown away by, but I thought it was – I thought they landed the plane perfectly. They tied every knot. They closed every loop. It was – they nailed it. It was fantastic. And season two is coming with a different cast and a different place. Yeah, I can't wait. All right. Sticking with this, Jake had Economic tweeted, you are 25-year-old, interested in a career and investment management. The genie appears offering you one of the following. Which do you think best improves your career prospects? CFA designation, L.O.L. MBA from top to your school. grade first job rich parent and I voted rich parent and I don't even think it was really

close I did too but great first job won yeah and honestly maybe MBA from a top tier school kind of meshes together with rich parent because a lot of times it's really rich people get into the best schools Harvard and Yale and such yeah I personally know people from college and it was kind like how did they get that job that was so competitive oh their dad knew someone like it's the rich parent thing that's everything yeah that's everything I don't even think we need to go much into this. I feel like that's everything. And getting a great first job is very hard as a 25-year-old. I agree. Rich parent hands down, unfortunately. That's kind of the way the world works.

He was a delightful email, in contrast to the lousy one. And again, listen, I get what you're saying, but geez, be nice. Be a little nice. Don't be a jerk. All right. Somebody emailed us. Blockchain and title insurance. I am in commercial real estate and can see this so clearly. I feel as though blockchain was invented for title insurance. That's what I've been saying. Blockchain equals public ledger equals title insurance equals a ledger of property's title history. Blockchain is coming for title companies. I feel like you have to find a company that's doing this and invest in them. Even if it goes to zero, like this is your crusade to fix title insurance.

You know what the irony has been that I've been on a crusade against title insurance? I've paid it three times in the last two and a half years. In New York, you're paying your $12 bud light for that because it's... What a racket. Unbelievable. By the way, I think we can talk about this later for another date because I got a few questions on it, but I followed you and I'm going from a 15 year to a 30 year. So let's talk about that another time. I'm starting the refinance process. Okay. By this time next week, I will have

a blog post outlining it. So, yeah, we could talk about this. And if I'm like you, I'm going to close on that refinancing in 12 to 15 months. If you just, yeah, you'll be by the time March rolls around, you should be done. All right, MBA purchase applications. Now, oh man, I should have known this. Does this include refies? I don't think so. I'm not sure. Okay. Well, this is damn bigly. So I don't know exactly what this says about the housing market, but... I guess rates went up for a little bit. Maybe that has something to do with it. According to this chart, it's cooling off a little bit. Okay. Here's a good one from Madaglacius. Housing supply fact. In June, builders finished more new units than we saw in any month between February 2008 and February 2019.

So it's finally happening a little bit. Yeah. which we need more of, obviously. Okay, this is from Marker Watch. Three largest cities in the U.S., New York, L.A., and Chicago, all had population decreases from 2019 to 2020. They were basically, they're not huge. We're talking half a percent to one percent, but in a city's that big, that's a decent amount of people.

If you had to leave Grand Rapids and go anywhere right now, where would you go? Probably somewhere nice, warm. Like people leaving California and stuff, now I'd probably go there. I don't know. Yeah, I don't know. I feel like in 50 years. Ever the contrarian, Ben. In 50 years when our shores, when California is underwater, New York City is a big tidal wave coming, like day after tomorrow, everyone's going to want to come to the Great Lakes.

So maybe I should just buy a bunch of houses here because everyone's going to come to the Great Lakes if and when we get a climate change thing. But don't you think before, I mean, again, these declines in these big cities aren't enormous. But isn't there on the margin? Some people lived in big cities just because they had no other options. And now there are options available. Yes. This sort of trickle of people away from these cities. cities will continue? Yes. State Street just pulled out of New York City. Oh, really? Yes.

Okay. Where'd they go? Austin? No, they just closed it. I think they have offices in New Jersey and Connecticut, I think, but their downtown presence, or they're not even downtown, their New York presence is being vacated. Okay. Here's a survey. The IRS began sending out monthly child tax credit payments of $250 to $300 to $300 to $35 million eligible families on July 15th. I think that's $250 to $300 per child. Payments are continued through December. They did a survey before and after the credit it was sent out. In a span of just six weeks, it showed that credit coincided with a quick drop in food insufficiency and a drop in those who say they have difficulty paying weekly expenses. Basically, what happened is people found it easier to eat and make their expenses by sending

out money. I think this is probably the problem with a lot of policy in the government is that it sounds good on the surface but doesn't really get down to trickle down to help the right people. Money can actually solve a lot of problems for a lot of people. I think that's what we're learning here in the last 12, 15, 18 months. if the people who complain that it goes in the wrong hands and there's certain people who deserve it more, certain people who deserve it less, money can fix a lot of problems for people. The stuff like the gains we've seen in terms of people in poverty, having a little more breathing room, I think is pretty good.

All right, Ben, last week we spoke about Zillow stock and why is it getting killed. Zillow is down 55%. The stock looks like crap. That's not the only stock, Ben, that looks like crap in a good market. Spotify, for example, is down. 48% from its high. Preach you to the choir here. I'm a shareholder of Spotify.

So, yeah, I mean, the stock looks like junk. We hopped on to the quarter app. Again, that's Q-U-A-R-T-R to listen to the quarterly report. And a few things I want to highlight. All right. Revenue is up 23% year over year, 9% quarter over quarter. So fast-growing businesses, as we've been saying forever, not like, I'm not saying we nailed it, but of course, stocks can get killed even if the underlying business is still very strong.

So why is Spotify, why did they sell off after earnings, even after being down, call it 40% going into earnings or maybe more? Well, because they missed guidance. Their multi-active users came in light. It was up 22% year over year to 365 million, but it was below guidance. And the big takeaway for me, listening to Daniel Lack, and I forget who else. I think was the CFO on the call. They said that Spotify is shifting from a premium subscription service to an audio platform. They're going to try to take over podcasting. That's essentially

what it sounded like, right? And all audio. So live audio, the green room. Yeah. I'm still a believer because I'm a believer in the space. You know what I think they need to do to write the ship is they need to make another big splash purchase of a podcast. Daniel Eck, come on, make it happen. Michael and I will sell for 26 times EBITDA. or the trailing three months. So the stock did remarkably well last year when they announced the Joe Rogan signing and I think Obama has a podcast and I forget how well. But to your point, it's-stock was on fire last year.

It's getting ahead of themselves and the growth not being able to, and almost wouldn't have mattered what the numbers were. It would have had to have been astronomical growth for it to continue to rise that much. So not all stocks are doing well. Airbnb is getting killed. Another business that I'm quite bullish on, Zillow, we mentioned last week. So maybe we'll start doing more of these little segments of stocks that are getting killed in a decent market. Yes. And again, my favorite part of the quarter app is skipping over all the jargon number stuff right to the Q&A.

Hit the Q&A button. I don't even understand why they still have to do. That just must be a formality because they're just reading. Yes. I think animal spirits should have a recommendations button. Anytime someone wants to hear our recommendations, boom, right to the wrecks. Should we do that now? That would be nice. You like that transition? Not going to do it. Listen to the whole thing. Oh, should we do recommendations? Sure, go ahead. All right. I have two weeks in a row of a good movie recommendation. So Pig, last week with Nicholas Cage. Did you watch it yet? Yeah, I did. And I'm not going to say that it was a bad movie, but it was not my cup of tea. Let's put it that way. I'm actually surprised that you liked it as much as you did.

Okay. That's the kind of movie I could see. Like, my wife didn't like it nearly as much as I did. But I liked the subtleties of the movie that it kept it mysterious, but it still gave you enough to chew on. Put it this way. You're right. It was a good watch. I wasn't like bored or anything. It just didn't rest. with me the way that actor by the way that young kid is spectacular i was looking him up he's very good okay so my second one he's gonna be a star i'm gonna say this is probably not a michael batnik selection because it's a little sentimental so i'm saying this is probably a no free what's called coda on apple tv plus coda is stands for so c oda child of a deaf adult and so i guess it was a big sundance one and apple paid a record amount for this movie there's literally no actors in this movie no one you know except marley matlin who is a well-known deaf

actress. She was in Law and Order, I think, on a Seinfeld episode back of the day. She's the only, like, there's no one else you even have heard of, and the girl who stars in is this high school girl who sings and also does sign language. I guess she learned for the movie. It was phenomenal. She's like, I think she's going to be huge. So anyway, it's a family of four, and the son, and the mom and the dad are all

death, and then the daughter is not death. And she has to act like a translator for them. But it's actually really funny. It's kind of a funny, heartwarming, slash sentimental movie. They have some great jokes using sign language. You're just reading the subtitles that it's really funny to watch them sign the jokes. Really good movie. You said you think this actress is going to be huge. Would it be nice to wager on that? Ah, yes. What if you want to buy

stock in young actors? So she's like a young Zoe Day Chanel. I would buy stock in this actress. I can't remember her name. Okay. And another one, we just finished season two of trying on Apple TV. Never heard of it. It's about a couple who is going through the adoption process. It's a short, it kind of reminds me of, what was there other British one we liked on Amazon Prime? Bodyguard? Oh, catastrophe? Kind of catastrophe-ish. It feels like that.

It's a movie that probably would have been an hour and a half rom-com movie 15 years ago, and now it's a show. So they stretched out a little bit. They have some pretty funny stuff from there. It's a good easy watch, half hour long. Not great, but good. All right, we already spoke about White Lotus. I loved the day finale. I wasn't like a giant fan of the season towards the end, how it got more serious, dramatic.

I thought the ending, they nailed it. The surprise at the end, I was like, okay, okay. Oh, yes, he nailed it. I would buy stocking gaita, terrific actor. I like that guy. All right, I watched Val on Amazon Prime. This is not a recommendation. I'm just saying that I watched it.

It was... Okay, I was going to say, I don't know if I want to watch it. No, no, no, no, you probably don't. I enjoyed it. But as a movie person, would I like it or not? Yes, enjoy is the wrong word because it was very... He got throat cancer, and he talks with a voice box. and it's sad. It's very sad. Oh, I did not know that. What happened to him.

Was there any top gun footage? Yes. He goes around, you know, he's part of the circuit, signing stuff. He's got to, like, pay his bills and stuff. Did he blow through all his money? I think so. Okay. Oh, geez. His son narrates it. And it was kind of beautiful, but also very sad. So it's not a recommendation. I'm just saying that I watched it. All right, last thing. I'm coming in with a huge recommendation. Josh got me a Lego set. of Seinfeld's apartment. And I guess he said, like, Kobe and I could put it together and have some fun with it. It says 18 plus.

There's 1,300 pieces. So it's a little complicated for Kobe, but he was sitting with me and we were playing with it. So anyway, I got, like, super into it. And Robin's getting extremely frustrated because for whatever reason, like, I don't have OCD with nearly everything in my life. But with this, it, like, kicked in. I, like, had to finish because there's, like, eight individual. packs. And every time I open, when I had to finish it, I wouldn't do anything else. And I think I might become a Lego person now. I had... Really intricate. Yeah, it is. And it's so satisfying.

I think particularly because you can't do anything else while you're putting the Lego set together. So you're not on your phone. You're not watching TV. It's just you're doing something. I've done a few Disney sets with my daughter. And I was a big Lego guy as a kid. My mom saved these bins and bins of my old I go still. Yeah, I enjoy it. It's kind of cathartic. I can't tell you how much fun I had doing it. We got Kobe an Avenger set because that's more of speed. He's big on the movie characters. Anyway, tons of fun. I had no idea. Thank you, Josh. Okay. If you missed it on Monday, check out our interview with Zach Prince from BlockFi. Oh, next week. Next Monday, we have an incredibly fun interview. Henry Yoshida from Rocket Dollar, who we thought, they are an Alto IRA competitor, but they

do certain things very differently. And I am super bullish on that platform. And I'm excited for you to listen. It was different than we ever thought. We got out of it way more than we thought going into it. It kind of blew our mind. So this is a really good one. All right, Animal Spiritspot at gmail.com. We will see you next time. Thank you.