Animal Spirits Podcast - Bidding Wars (EP.191)

Episode Date: February 17, 2021

On today's show, we discuss food delivery as a viable business, SPACs vs IPOs, the new benchmark for tech companies, the red hot real estate market, Bryan Cranston vs Tom Hanks, and 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. Today we're going to use some Y charts data from one of the easiest things that I like to use for their tools is just looking at the different funds. We're going to look at some fun performance for some of the new SPAC ETFs and compared to the IPOs and the market overall. We're going to look at some flow data and how much money is poured into some of these new popular funds in the past few months. So go to Y charts, tell them Animal Spirits send to you, get 20% off your initial subscription and use some of the tools we're using today on the show. Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnick and Ben Carlson as they talk about what they're reading, writing, and watching. Michael Battenick 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 Rithold's wealth management may maintain position. and the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. I want to start off with a post that was written by Dan Taran. It was a guest post on Packing McCormick's Not Boring.

It was called The Beginning of the End on Food Delivery, Strategy, and Karma. Last week, Ben, we spoke about ARC's aggressive assumptions that there is going to be like a trillion dollars in profit by the food delivery business. Are we misrepresenting that? We were a little skeptical. A few people called us dinosaurs for not getting the opportunity. here. We could have this one shoved in our faces, but we said we don't understand the whole food delivery thing, why it's going to be such a huge growth business. Do you remember the Grubhub

shareholder letter back in 2019? We spoke about that on the show. Yeah, at the time, the CEO was basically saying, this is not a good business. He's like, I don't know. Right, basically laid it out, like the economics of this business don't work. But now that they have had the pandemic pull forward so much of this stuff, I guess that gets thrown out the window. What do you mean? They have no choice but to just plow ahead with this and see what happens. Oh, understood. Okay. Dan Turan wrote,

While the pandemic has driven unprecedented demand and introduced new narratives, the facts remain largely unchanged. The third-party delivery industry is banned for independent restaurants, bad for delivery workers, and serves customers who are indifferent so long as their food arrives. The pandemic has brought these harsh truths irreversibly into the light, and it is for this reason that we will be looking back on this year, not as one of good fortune for the third-party delivery,

but as the beginning of the end. And he basically was saying that these companies take 30% and it is uneconomical for the restaurants that use their services. They cannot get out from under this weight. It's too big of a burden. It basically puts them out of business. And basically the restaurants hate these places. That was the takeaway, right?

So it's not that food delivery is going away. It's that the current model of DoorDash and Uber Eats that is going to face a reckoning pretty soon. Don't you think, though, that the way I see this playing out that they could succeed technically would be if they just pair with the big chains, Chipotle and McDonald's in some of those places, and they just do away with the small restaurants. Would that work if they had enough scale to just do that? That was brought up in the article. I can't remember exactly what it was, but I don't think Chipotle uses them for this very reason. Yeah, you can get Chipotle delivered. It's like a dollar. Oh, no, here's what it was. Okay, so he compared this to

standard oil. Chipotle and McDonald's do not pay nearly the same fees as smaller restaurants. That was the difference. Okay. To the point, a lot of people would be turned off if they're just getting those big box places like that. They would want to have the smaller options for local delivery places. They would turn a lot of people off if they didn't have those options, right? You would think. Okay. So we're maybe going to be wrong on this, but a lot of people said you guys don't understand it. And I've yet to see in a good explanation saying, okay, this is the Tam or whatever on this, and this is where you guys are wrong. I'm willing to be open-minded about this, but I don't see it as up yet.

Well, how about this? As it stands today, the business model might change, but as it stands today, this is not going to work. All right, somebody asked us, how does a stock price affect the business, given what happened with GameStop and AMC? And they sent us a post from Oswat the motor end. And there's basically three different ways

that a stock price can affect the underlying business. One is perception, two is implicit effects, three is explicit effects. On the perception side, what he means is if a company's stock If a stock rises or falls, then it can make bondholders more or less willing to lend. So that's one way that the stock can affect the business. The reason people ask this question is because this is something trading in a secondary market. So a stock price moving doesn't give the company any more money to do anything with.

Unless the stock price rises so high that it gives the financial people inside the company that say, you know what, now's a good time to issue shares. That's another way that it can do it. So let's talk about AMC for a second. And obviously there were real benefits derived from its rising price because $600 million worth of debt was converted into equity. Right there, there's like a weight lift off of its shoulders. So then what we're getting at here is why didn't GameStop issue stock?

This is a question a lot of people are asking. And the explanation that we're seeing is that there was regulatory restrictions. Basically, they couldn't get it done in time. Why don't they still do it? They're still well above. Correct. I don't know. I mean, it's not their fault that people did a pump and dump on their stock.

They didn't ask for this. It's still way, way, way higher than it was a year ago. So they've got $216 million in debt that they could retire if they could raise some of these money. Yeah. So the market cap as of early 2020 was $300 million, call it. It's still a $3.6 billion company. So I don't know what they're waiting for. But the irony here is that everybody else is raising money and GameStop, for whatever reason, can't seem to capitalize on their own good fortune.

So GameStop needs to do a SPAC, basically. The Wall Street Journal did this insane visual showing SPACs basically coming out of nowhere. On one column, it showed SPACs compared with traditional IPOs, and it shows a bubble chart, which was super effective. This year, we're two weeks into February. SPACs have raised $38 billion compared to $20 billion for traditional IPOs. I think this is like the chart of the year so far. I know it's still early, this little guitar thing. You've shared this with me.

It's kind of funny because in years past, we argued about the fact that like, why aren't there more public companies. And now that it's happening this way, everyone's like, whoa, whoa, now like this. This isn't what we ask for, right? It's crazy that it's just Shaq has one, Colin Kaepernick is coming out with one. So here's why I think that a lot of people are going to say, this is a flash in the pan. These things are going to, a lot of them are going to be just completely detrimental to investors and they're just going to go away. I think these things are here to stay. So this is from Bern Hobart. He wrote about how COVID has pulled so many things forward. So he says, the rise of the special purpose acquisition vehicle or SPACs is a general testament to more

forward-looking market. In a conventional IPO, an operating company sells shares to the public with a empty-shelf company goes to public and then identifies a private company to merge with. Due to a quirk in securities laws, a traditional IPO prospectus only shows a company's backward-looking estimates and makes heavily qualified statements about the future. A company that goes public through SPAC is technically engaging in a merger rather than an IPO, and the rules are different. When a public company buys another company, securities laws allow it to talk about the company's anticipated growth or the likely cost-savings of the merger. Similarly, a SPAC offering can talk about a company's long-term prospects and even

make exact estimates of future revenue. This makes sense to me. If that's one of the big pluses for SPACs is that they can give investors forward-looking guidance, then why not just change the traditional IPO laws to allow for that? Doesn't this almost seem like mutual funds and ETFs? Like, why don't mutual funds have the same tax laws as ETFs? It doesn't make any sense, but that's just the way it's happened. So couldn't you see a future in which the terms for spacks just start coming in. We get like a vanguard effect. You shared a piece last week about how the fact that if you do a spack yourself and you put your name on one of these things, you make out like a bandit. You can't lose. You basically can't lose. You're making a ton of money. Can we see something where

someone says, all right, we're going to do a spack, but I'm not going to dilute you as much. I'm not going to take as much. I'm not going to charge as high of fees. And these things are coming down and just becomes more of the norm because some of these are going to work out spectacularly. Some already have draft Kings, for example, open door. Pull up on wide charts. So this is only going back to fall of 2020 when this Defiance NextGen SPAC ETF came out. So it's not like we're talking a long history here. Since then, again, this is September probably. This SPAC ETF is up 31%. The S&P is up 18. And the Renaissance IPO ETF, which is ticker IPO, is up 47%. So these things are both doing better. What about the Russell 2000 growth? Because that was one of the things

that assemble us compared it to. It's probably lagging that. Oh, that makes sense. That small That's true. So it's probably similar to that. But these things are actually doing okay so far. I think that SPACs are not going away, but I think that the way that they come to market and the specifics of how much the sponsors take and all that sort of things, I think that's probably going to change over time. I would hope so. It makes sense. I had this pull up in Whitechard. So IPO is the Renaissance IPO ETF. It's kind of crazy to me how much you're talking about fundraising. This thing had $34 million as of April 2020 in assets undermanaged them. Can I take a guess?

It's been around since like 2013. This thing's been around for a while. Yeah, what do you think it is now? $3 billion. Okay, $1 billion. It looks like a Tesla chart since the mid-2020 or early 2020. I wonder, apps and SPACs, would there actually be more money in IPO? Yeah, I mean, so the SPAC one only has $108 million so far, which again, in two or three months is still pretty good.

I think the $100 million threshold on ETFs is basically like you made it. So, but to your point, raising money is just, seems like snap of a finger these days. It's the same thing Robin Hood did these VCs found in their couch cushions and gave them $3 billion in a couple days, basically. How much money did Reddit raise the other day? I know it doubled their valuation from $3 to $6 billion. I think I don't know exactly how much money, though. Steve Hoffman said it's a good market to fundraise. Yeah, no kidding.

Valuations are very high right now. It never hurts to raise money when there's an opportunity to do so. And Reddit had a strong year. So again, there's someone else taking advantage of the GameStop stuff and not, GameStop itself. Right, exactly. So Reddit has a daily average of 52 million users, which is up 44% from the same month the year earlier. For comparison, Twitter's got 187 million. Facebook has 1.85 billion. So Reddit's still, it's not huge. Last week, Josh and I were talking about Bumble, the Bumble going public, I had a $3 billion valuation. I think the first day I closed at $8 billion.

Where is all this money coming from? It's unbelievable. Maybe I'm wrong, but it seems like anytime we're going to have a correction, there's going to be a flood of money that just comes in immediately. and snap stuff up. That's kind of the story of why we had a cyclical, not a secular bear market from the corona crisis. If you knew, it wasn't cycle, it was what, four weeks long or whatever. It just seems to me that, like, there's just so much money floating around that anything is going to be snapped up these days. All right. Let's talk about investors. This is a shocking chart. Our friend Meb Faber has an ETF. The ticker is tail. It's meant to hedge against tail risk. And credit to Meb, he's been incredibly open.

and transparent about exactly what this product is supposed to do. It is supposed to bleed. It is not designed to make money over the long term. It is designed to capitalize in periods like March 2020. And then when you get that spike, you are supposed to use that as a source of funds to rebalance into the rest of your portfolio. So kudos to Meb. He has not misrepresented it in any way. I can't remember where he said this, but I remember him saying that this was going to do really well. unfortunately in terms of assets after an event. And man, was that spot on. So this ETF went from $77 million in assets prior to the VIX blowup in March to $300 million in August. And Ben, don't you think that this is probably advisors steering the money as opposed to

individual investors looking for this product? So it was up 28% or so from that late February through late March debacle in the market? If you had that in place ahead, of time, and you use that to rebalance, then home run, right? So a lot of people probably said, this is fighting the last war as people are wanting to do. They said, okay, well, why don't I have five or ten percent on my portfolio in this all the time? And people rush out to do the thing they wish they would have done. The same thing happened after 2008, everyone wanted a black swan fund or tail risk hedging

strategy, and then the market took off from them. And yet, to Meb's credit, he basically predicted, I've heard him on his podcast talk about the fact that this is going to happen. when we have a blowup, this thing is going to do really well and then people are going to rush in and it'll be interesting to see if we don't have them for a while if money stays in there or if it tails off a little. I'd be curious to see what happens from here and out in terms of like assets versus performance. But this is the kind of thing. I mean, you're right. You have to be smart about it and use some sort of discipline process. Either it's a set percentage of your

portfolio or you have like a rebalancing where when it does shoot up, you have to take advantage of it and pare it back down because you know that eventually it's buying insurance. If you have this in your portfolio and you never rebalance and it's useless. Yes, exactly. You have to be smart about it. Michael Burry tweeted about the gamification of Robin Hood. And we were talking about this with Crosby. What would education do?

What should they do? He showed the option chain for Tesla. It looks like draft kings. It does. So I've been using Fandul in some of those places. When you go to place a bet, it looks exactly like this, where it gives you all these different options for buying puts or selling puts or whatever. and it tells you what your potential reward is going to be.

It does. It looks like you're placing a bet here on one of the online sports gambling. Man, it looks like a lot of fun. Got to be honest. Right? Honestly, I told you after I started doing some of these sports bets just to try it out, I don't like it. It doesn't give me the same thrill as it's kind of fun for the game,

but it's either you win or lose, so it's all or nothing. Whereas in the market, you make a bet, and you could get killed in a day by 20% if a company has a bad news or bad quarter or something, but you're not completely out of the game. Have you heard of options? That's the thing. Like, I'm never going to trade an option in my life. It's just not going to happen.

That gambling streak is why people do it, I guess. Did you see the video of the kid who wanted to take out $100,000 of Tesla on margin? Yes, unfortunately, I did. Kudos to Robin Hood. They didn't give him $100,000. They did give him $70. He looked like he was about 10. So Robin Hood's CEO, Vlad 10F, he's been out in the public eye more.

I think obviously someone, a communications person, they probably hired a new PR firm. They said, you need to get out there. And he was on, I didn't even realize Chmoth has his own podcast with a few other venture guys called All In. Chimoth was smoking them. So how was the conversation? Was it a surprisingly, Chimoth is a kind of guy who has a different personality on social media versus your face. Like everybody. Like, yes.

From his car, he'll flick you off, but next to you, you know. Obviously, he started a company. He went to Stanford. He's a smart guy. I still think he's in a little over his skis in terms of like understanding power that they have and how the growth they're going to have. But they asked them, what do you do for people to know? And he talked about democratizing investing.

They said, okay, one of the guys said, okay, you guys are going to go public soon. If you really want to democratize investing, put the entire amount of shares to the Robin Hood clients and don't give it to any outside Wall Street people. If you really wanted to do it, and they tried to like hold his feet to the fire to get him to say he would do that. But he said, well, so they might offer some of their IPO shares to just Robin Hood customers, which honestly, at this point, are you a buyer? If they offered IPO shares to us as Robin Hood customers, I'd be in.

What is going to stop it at this point? The train has left the station. You're betting on human nature as much as we like to talk smack about them and say they should do better. You wrote a piece a while ago about like, is Robin Hood good for investors? I'm coming around to it. You know the process guy for the 76ers at Sam Hinkie? Yes. So Ryan Rosillo has given this theory before that he thinks the process is complete bullshit.

Like the Sixers for years tanked games and just accumulate draft picks. You get a losing culture and then it's hard to shake that. and I'm starting to think that is probably true with some of the young people on the Robin Hood app. There are people who can separate those and have, I have Robin Hood here, my 401K here, but I think for a lot of young people, this is the process for them. They're learning these losing habits that are going to be really hard to shake in the years ahead. Yeah, I hear that, and I don't disagree. I just think whenever we talk about this, it's really hard to generalize

because there's going to be people that escape and grow up. If you're 21 years old, you're going to be a different person at 25 and 35. It's going to be all over the place. So Patrick O'Shaughnessy this morning on Twitter put out, hey, I wrote a book in 2014 about automating the investment process and basically getting out of your own way. He's like, I see now that's not going to happen. So how do we better educate people who are using these trading tools? And I don't think there is a better way. We talked about this with Daniel Crosby. I honestly think it's just you have to have the right technology guardrails in place.

Otherwise, for most people, the education piece is never going to work. That's my generalization is for the majority of people, education is not going to help until they're willing and ready to use it. People are not opening up in a Robbenet account because I want to learn about business. They're opening up an account because I want a gambling get rich. I saw this on Twitter. This shocked me. They don't allow beneficiaries. What is that about? Here's right from Robbenhood. We don't currently allow users to name a beneficiary and we don't offer automatic transfer on death registration in the event of a death. We'll work with the executor of the estate to collect proper documentation and dissolve the account appropriately. What's that about? Why aren't the regulations against

this? They have to have. I don't know. That's a good question. And I guess the hope then is that, okay, people forget about it and they just hold on to the money? I don't know. I just want to talk about Bitcoin for a second. We don't need to spend too much time here. But Phil Perlman showed these amazing charts from his blog on Osprey, which we'll link to. Two charts. One is the Bitcoin addresses holding more than $100 worth of Bitcoin. And this looks like it's about almost double what it was at the peak of 2017. And a lot of this is probably not just because people are buying larger dollar amounts, but because the price has gone up so much. So that one's a cool looking chart, not necessarily surprising and revealing.

So, but even in 2017, this was like $2 million. Now it's $14 million. Right. So that chart, that blow off top was actually in 2018. Interesting. Yeah, it kept going up. I thought that was 2017. Okay, anyhow, the next chart.

So the velocity of Bitcoin has crashed, meaning people are buying and holding. So this is the turnover of it. And it was actually the highest in 2013, it looks like. And then 2017. So people were trading their asses off. And it looks like now people are buying and they're sitting on it. 2017, it was 60%, now it's 10%, 15%, maybe? Do you think this is mostly just because it's held in the hands of so few people, whatever, 5% of the people own 95% of it, and they're just sitting on it forever?

I think it's a combination of that, and people just buying and not looking for the crypto pop, I really don't know. But maybe this is the asset, though, where I don't think people look at it like it's a stock, like they're buying Apple or Amazon, and they're going to trim it at a certain point. I feel like people are betting on this is an all or nothing. a lot of people going to that mindset of I'm just going to hold this and see what happens and it's not worth it for me to get out at certain points and I'm just going to see if this thing takes off like it could. I think that's the way people approach this. You and I were talking about how we view our portion of it and this is the type of thing where if we're wrong and this goes to zero, so be it. But this is the type of thing that I don't want to sell early. I don't want

to regret selling this at 50,000 and in 10 years it's at 600,000. And if we're completely wrong and it goes to 5,000 or zero, I'm fine with that. This is basically a buy and hold forever for me, more or less, however you want to define forever, or until it hits a million. How's that? Million or zero, I don't know. All right. You pulled up some neat data on what's going on in the stock market from Bespoke. All right, just real quick. So this one kind of blew my mind a little. I got shamed for saying bonkers too often in early podcast, and someone said time for

Ben to bring that back. So this is bonkers. This is from bespoke. One third of Russell 2000 stocks are up 20% year to date. There are actually more Russell 2000 stocks up 20% this year than they were all of last year. Small caps are going crazy. You don't want to like jinx these things. Diversification is finally working for people who have. So small caps are working. Emerging markets are working. International stocks are doing better. The S&P, of course, is still doing well. Everything is kind of firing all cylinders now. We went through this period where the S&P was the only game in town. And that seems to have shifted. I don't know if that'll last, but it seems like we may have hit that tipping point and the pandemic may have brought

it on. The Russell is outperforming the S&P over the last one and three years. which I'm sure a lot of people don't realize. And again, that's typically a sign of risk appetite that people are going into small caps, but it's also just cyclical. Sometimes small caps outperforming. Pachy McCormick did an amazing piece. Hang on. Packing McCormick is to you as Derek Thompson is to me. Yeah. That's my boy. Fair. Love that guy. So he did a piece where he made an analogy comparing the $1 trillion market cap valuation versus the four minute mile. Once that barrier was broken, there was a flood of people that were able to do the four-minute mile. Same thing with the $1 trillion valuation.

And he made a really interesting observation. He said the market caps of the FAM companies are the most important numbers on the market because consciously or not, investors are pegging their private and public tech company investments against them. So to piggyback off what he wrote, these big giant tech stocks are sort of like the 10-year treasury rate or the overnight rate or whatever rate you want to use, but for public markets. thoughts. That's pretty good. People benchmark to them. Again, this is the Amazon broke fundamental analysis thing. And I was thinking about this, about how Amazon broke fundamental analysis, again, using a sports analogy, Tom Brady and LeBron James have completely broken father

time, right? Father time is undefeated. If you said that Tom Brady is going to win a Super Bowl at 42 years old, you could have had people scoffing, oh, so I guess it's different this time. Yeah, sometimes things really do change. We've been talking about the valuation stuff a lot. But what if the historical comparisons just don't work anymore? And a counterpoint to my point that I just made is, is Amazon and whatever the next Amazon is, are all these companies really that innovative compared with, say, the radio or the television or the semiconductor or any of the innovations that we had in the past? Why is it so, so different this time? It's just bigger now.

It's so much more pervasive than it was that these companies control everything. And I agree, like... But again, and I agree with you. I'm just giving a little bit of pushback. It's like, there went from zero TVs in the house in 1930 to a 9 out of 10 households had a TV in the early 1950s. I don't know what the dates are. But that wasn't bigger. That wasn't...

Well, that's the same thing as like the car companies. There's hundreds of car companies in the 20s. And by the 50s, there's three. So that's probably the same way this is. So to Paki's point, like the benchmark, some of these companies are going to be pulled up by that. But some of them are just going to fall by the wayside. That's the hard part about it, sifting through. these dozens and dozens or hundreds of companies.

I love how he compared, like, he said if Shopify is a whatever billion dollar valuation, then it has a one, one hundred 50th chance of becoming the next Amazon. Like, that's how he was comparing it. I thought that was a really good take. Right. So Ben Inker from GMO was on Barry's podcast last week talking about their valuation models. And he talked about how they're using mean reversion. They're using this 16 times PE as their mean reversion.

We haven't mean reverted in a decade more. profit margins haven't been reverted. And that was like the biggest driver, no, of their model? there's probably an 80% chance that their models are almost useless at this point. If that's what they're using is these historical numbers that they plucked out of an average, not to denigrate them. I'm sure they have other stuff they're looking at, but I think that's kind of what you have to think about. So there's another piece about the rise of intangibles and the demise of accounting we've talked about before. It's actually a few weeks old. They look back at intangible versus tangible assets going back to 1975. It looks at every 10 years. And it's looking back at 75.

The biggest companies were IBM and Exxon and Procter & Gamble and GE and 3M and all these huge companies. It is kind of crazy that GE was up there every decade, 75, 85, 95, 2005, GE was in the top five, and it's since fallen. Is it even in the top 30? Probably not. I think it's in the top 30 or 40. I wrote a piece called, is Exxon the next GE? And I think it talked, I bottom ticked it. Credit to me. Yes, you bought. I'm long Exxon. You're being paid to wait. So the intangible assets were in 1975, 122 billion versus 594 billion. And so intangible is things like patents and brand and research and development and goodwill, et cetera. Yeah, Goodwill. Now it's 21 trillion for intangibles and four trillion for intangibles. This is

2018. How much? It was 21 trillion for intangibles, four trillion for tangibles. This research is probably a few weeks old. So if you include memes, it's probably 23, 24 trillion. Yeah. That's the ultimate intangible. Price to meme ratio. Is that a thing? I just don't see how this doesn't change. It's weird because the internet has been around for a long time now, obviously. Does it feel like the pandemic made us all realize like, oh, wait, the internet is still this huge thing. It's weird that like the 90s in that dot-com bubble were a huge shift in internet usage and then the 2010s happened, but it almost feels like there's another fork in the road from the pandemic. Was Crosby talking about that with us about the internet is underrated

still? Yes. I think people kind of woke up to that from the pandemic that, oh, wow, this thing is just of massive importance to all of our lives. And it's only going to pull forward so much of that for better or worse, basically. You know what data point I like for why fundamental or why it's to rely on historical ratios at this point. In 2009, during the crash, the Cape ratio for a second, after a 55% crash, for a second, it was below its long-term historical average. Right. It got down to 13, I think. So this is from that piece that I talked about the rise of intangible. So it's this guy, Tanya Jaipuria. And he wrote, earnings can basically become meaningless when companies are investing in growth. Companies are being penalized and that their

expenses are not being matched to the revenue as well. But they continue to earn revenue from a software, a customer in the future, the expense the cost to build it or acquire it, that customer immediately is artificially deflates earnings. So it's basically saying, again, this is growth mattering more than earnings right now. I guess the one pushback here is that interest rates rise and this all goes away and everything goes back down in terms of valuations. I think that there's a little bit of truth there for sure. I think if interest rates go to three or four percent, things will look different. I'm not saying it's game over, but things will look drastically different. That could bring down some of the valuation. Does that change

this huge sea change of internet companies taking over. No way, right? No, it probably doesn't slow that down, but I think certainly valuations would get, would get kicked. All right, survey of the week, every single American bought GameStop. This is pretty, so this is Yahoo Finance Harris Bowl. 28% of Americans bought GameStop or other viral stocks in January. No way did that happen. If they did, GameStop may have hit $1,000 a share. If one third of all Americans bought meme stocks, those stocks would have gone to the moon. Unfortunately, there's no way that is true. I mean, come on. Come on. What do they ask, 10 people? It was a good try. Okay, here's another one that

probably reflects some reality, but there's no way this is true. This is from Redfin. 63% of 2020 homebuyers made an offer site unseen. There's no way that's possible, right? People were still looking at houses in person. 63%. That's a huge number. The real estate market is just like everything else, red hot right now. So this says one in 10 home tour, request to Redfin for a remote video tour. People are just more comfortable doing that. You've done the housing search before. You can make a house look way nicer. Oh, yes. Bigger by the angles you take the picture. I kind of get why this is. And so CNBC says there's this record bidding war. So according to the National Association of Home Builders, 40% of potential buyers cited getting outbid for the reason

that they have not bought a house. And well over half of all buyers, 52% are facing bitter wars in their offer. This is according to Redfin again, up from 52% in December. I can definitely see that. You hear this anecdotally about we put up our house for the weekend, had a showing or an open house, and four offers above asking. This is happening all over the country. The corner house in my block, two showings, and they got above ask. And I thought the ask was absurd. Yes, house kitty cornered ours, same thing, well above what we paid for ours. And you start to do it in your head. My wife is like, well, what could we sell ours for? It's always interesting to open that up and you're like, oh, man, that'd be great. But then what?

you have to live somewhere. If you already own a home, you're very rarely in a position to make out on both ends of the deal. Unless you're leaving the estate. You leave the state or you rent somewhere and bank it. I don't know. Otherwise, you're just going to pay up another place. I made this point in a piece. The only way this works is this is what I think you're at a huge advantage versus people who are first-time homebuyers. That equity you have from housing prices rising, we're going to get into that in a sec. That can be used as a bigger down payment and make your down payment for a more expensive place a little easier. Because if rates have fallen, even though prices have risen, the monthly payment is not the big thing that's a problem. It's a

down payment. So having equity in your home can help there. This seriously hurts new home buyers, first-time home buyers. Yes, big time. Who were in a position, who are saving, and now it's like, oh, yeah, you're going to need two more years worth of savings to get in. Yes, if you have to get that down payment, however big it is. You can get into a house for a low down. Some banks will let you. I think our first down payment, because we couldn't afford it, was like 5%. I don't know what banks are placing these days, but you don't have to have 20%. Not everyone does 20%, but here's some more numbers. Asking prices of newly listed homes hit a new record high of $330,000 up 10% from the same

time a year ago. The median home sales price was up 15% year over year. Active listings fell. Hold on. That's too much. What? That's not good. The median home prices up 15% year over year.

When you tack leverage onto that, that's a huge return on your capital if you're talking about your down payment. 48% of all homes that went under contract had an accepted offer within the first two weeks on the market. Jeez. Active listings fell 36%. So there's fewer homes on the market. People are getting bid up.

Prices are rising. This is a good thing if you are a homeowner and you have something to do with your equity. But first time homebuyers, that's tough. The consolation is interest rates are extremely low. And that helps offset some of the price rise. This active listings chart is wild. Obviously, the pandemic getting back to normal, that slows us down. think rising rates are the only thing that impacts this too, just like the tech market? I don't see

what else could stop this with supply being so low. The people who are going to move have already moved in some cases, but there's obviously people waiting in the wing still, right? I don't know. I mean, any parts of the finance industry that aren't just like red hot right now? It seems like everything. Doja coin has cooled off. Okay. All right. Here's something that's not red hot. Okay. This is Powell said last week, the Fed Chairman Powell, he's not worried about inflation. at all. Even though people, our listeners, some of them aren't worried about 10% inflation from the Chapwood Index. Paul says, we've seen three decades of lower and more stable inflation. As the economy reopens, we may see a burst of spending. Again, though, my expectation

would be it will be neither large nor sustained. I think like a head fake inflation is probably the baseline assumption here from the reopening of everything. Yes. Who wrote that article that you sent me, by the way? That was excellent. How did you find this? So this is from Employ America. Yeah. So this was on Twitter. It's called inflation, the good, the bad, and the transitory. It's a little won't want to understand this stuff. In terms of your like a one-time spike, so they showed an illustration of the one-off inflation and new unused cars following the great financial crisis, the cash for clunkers program incentivized the purchase of new cars, while the precipitous fall in interest rates incentivized

the purchase of new and used cars alike. After about a year of inflation, prices leveled off as capacity adjusted to a new level of purchasing. Yeah. So they talked about how as social life is turning to normal, you could have these like shifts between the entire economy. be lag. So right now, you can't get a Peloton or you can't get weight still. Isn't it kind of crazy that if Peloton doubled the price of their bike, a lot of people would still buy it probably, right? That would shorten the wait time. So instead, your inflation is not rising prices. Inflation is time. They could do that. They're saying like these bottlenecks could lead to just supply chain problems instead of higher prices and like just longer delivery times,

which is a different way of inflation. But eventually that sorts itself out, right, unless these companies decide to start increasing their prices. Right. We're probably going to see inflation in certain areas, retail, hospitality, you would think, things like that. If you go on a vacation, I bet those prices are going to be insanely high to make up for lost income, law for revenue. So, but then they say at the end of the day, it's really all about wages. Quote, without an attendant increase in wages, all of this inflation represents a transitory form of price rationing as capacity expands to meet current demand rather than a persistent, reflexive pattern of price acceleration. Without wages accelerating

proportionally, real income actually declines throughout that period of inflation. curtailing purchasing power and slowing real demand for consumer goods and services. If you're worried about money printing, causing a sustained rise in prices, look at wages. Yeah, that's a good reason for inflation, right? If wages are rising, if you want to see sustained. That's the thing that people don't get is that in the 70s, wages were rising insanely. Prices were rising, yes, but people's money that they were making. I remember my dad told me stories about him getting like two raises in the same year in the 70s because people were making more money. So yeah, if you want to know that inflation is happening. Look at the actual wage growth. Someone sent me this paper. I want to run

this by you. I feel like this is the way economists think and not real people. So they look at the optimal retirement saving for young adults in a life cycle model. They said, we find that for liquidity-constrained young adults who anticipate significant earnings growth, optimal retirement savings is zero. What? They're basically saying that the defaults that automatically default people into retirement programs do not take into account life cycles where people will make more money as they age. So they're saying in your 20s and 30s and stuff, most people don't or shouldn't save until their late 30s or early 40s for retirement. Excuse me. I have one thing to say. Compound interest is the ninth one over the world. Have they not heard of this? The earlier you start,

hello. I understand. But come on. Yeah. It's from the National Bureau of Economic Research. And it's basically saying, well, if you look at the way people actually do it, my problem with this advice is maybe that does work like if someone's going to make more money. But if you don't start saving and building those habits, this is like the process thing. You're not going to do it later because people say that all the time like, oh, I can't save in this economy. I'll just do it later when I'm ready. And guess what? The older you get, the more responsibilities you get, even if you do make more money. I like being open-minded, but I feel like we can dismiss it out of hand. Yes. Okay. All right. You know what? Why don't we skip listener questions?

Because we're doing a whole episode on Friday dedicated strictly to listen to questions. Ben, what do you think about that? Okay, yeah. All right, so we're going to have some help for advice in two because we've got these things sectioned off. We get a ton of great questions for people and we can't always get to all of them. So we're going to dedicate an entire episode to it on Friday,

a listener mailbag. All right, what do you got? Recommendations for the week. All right, we need to talk about Your Honor, which we finished last night. I don't think we'll give too many spoilers here, but if you haven't seen it yet, spoiler alert, put it all out there.

Before we get into the show, I want to put this out there. In terms of acting chops, could you say Brian Cranston is in the same league as Tom Hanks? Yes, 100%. He arguably has the greatest television show of all time. He was amazing in this show. He was so good.

Did you, by any chance, watch that movie that I recommended a few weeks ago with Lawrence Fishburn and Steve Carell? No, no, I didn't watch it yet. He carries that movie. Anyway, finish what you were saying. He was on two podcasts recently. He was on SmartList with Jason Bateman and Warnett and Sean Hayes, and he was on Conan's podcast.

And he's excellent in that. I mean, he's got really kind of a difficult story growing up. His family life wasn't the greatest. And he just seems like a great everyday guy. I actually think him and Tom Hanks, like, it's not that different. Take him out of that show and replace him with somebody else, a lesser actor. The show completely falls apart. Yes.

If you're one of those people that loves to poke holes and plot lines, you could do that for this show easily. Nipick, you could do that. But I refuse to do that with a show like this. I didn't love the ending. I really did it. I don't hate it. I'm not mad. I just, I didn't love it.

I thought it was a stomach punch. And I was like, oh, I did not expect that. Well, it came full circle, right? The last scene was a mirror to the first scene. So I thought it was a show that took a first scene. few episodes to hit its stride. I thought this show could have been eight episodes. Should have been. I'm thrilled. There's no season two. Me too. I'm really happy. Ten minutes left, I said to my wife, oh my gosh, it's going to be him. It was. It wasn't what I expected, and that's why I liked it.

And I'm sure there are going to be some people who don't like it. I thought it was because I didn't see it coming. That's why I liked it. And I love these shows that are one season. Mini series, like you said, like you know it's going to end. Like, I checked that before the last episode. The undoing? Like, that show was good, but like the fact that it ended makes it a lot better. Going into the last episode of Your Honor, after the first nine episodes, you go, oh my gosh, they have a million loose ends to tie up here. And I think they kind of did it. I liked it. I think he's great. Okay, Beginners is when I watched HBO Max that Christopher Plumber guy died recently. He was the old man in Knives Out that gets killed. And so we watched Beginners. I'd seen it before. I never heard of it. It's on HBO Max. It's with you and McGregor, who I really like. I think he's great. It's, you probably wouldn't like it. I'll say that way. God, I love you. Another coming of age thing. You probably wouldn't like it. It's kind of a love story, father's son thing. The dad at age 78 after his wife passes away comes out as gay. But it's a really well done movie. I like that one. Finally, I think I'm probably never going to go back to the gym after this. So I've been slowly but surely outfitting my home gym. I got one of these big boxes from Amazon to do box jumps on. It's like this big foam thing. I really don't like to talk about like working out and dieting and stuff because I feel like that's like giving someone individual stock advice. But It's like a pliometric workout. I really like it.

And here's the unintended consequence. It's like a big foam box. It's my kid's favorite thing I've gotten. Somebody reached out to me, see if I wanted to take them up on personal training advice, to hire them as personal trainer. Oh, really? What did you say? Pelotin is your personal trainer?

No, I might do it. I've never lifted a weight in my life. I got the Bowflex dumbbells and I just, I feel like I'm going to hurt myself. I can't motivate myself to get on them. So I might hire somebody. Without sound like a gym bro, I honestly think lifting weights is someone that you need to have, I had someone in high school, like a fellow football player who's like mom was a personal trainer, show me the right and wrong way to lift so you don't like hurt

yourself. I think you do need someone to help you with that. All right. What are you doing tomorrow at 7.30? Oh, I'm going to be a personal trainer. I don't work out in the morning. Okay, that's all I got. My kids treat it like a playground now. So this big box I got for polyometric box jumps or whatever. It's a great workout. My kids use it as a playground. So two for one. I watched prisoners. I don't know how I missed this. I think I sort of all this on Hulu. This movie is from 2013. You've seen this. It's a long movie and I remember the ending was really good. That's my only recollection of it. Excellent. It's with Jake Gyllenhaal and Hugh Jackman. Is that right? And more. Viola Davis, Maria Bello, Terrence Howard, Jake

Jillenhall. Sort of a dark thriller abduction. And if this came out today, 100% eight episodes. Ah, it would be a movie. Yeah, you're right. 100% eight episodes. Sideways. First time. Thoughts? Excellent. I love that movie. Hilarious, just top shelf. I love that movie. I've seen it multiple times, yeah. All right.

Lastly, Judas and the Black Messiah came out on HBO Max over the weekend. And to me, this is film of the year, similar thematically to Chicago 7, but about, I don't know, 10 times better. Okay, it's getting really good reviews. I haven't watched it yet. Daniel Collier is amazing, amazing. He should win best actor. And Lakeith Stanfield is great. I mean, this movie, true story.

Fred Hampton from the Black Panthers and Lakeith Stanfield plays like an undercover a rat sort of like The Departed. It was awesome. Highly, highly recommend it. And it's true story. That gives it a 10% premium in my book. True story. I don't understand.

So it's February, right? And this is going to be up for Best Picture for 2020? Maybe it's like your taxes. How you can still do your retirement contributions up through April? Yeah, it's like a fiscal year for the Oscars, I guess. Anyway, that movie would have been great in the theaters, but it was great at the home box office. So I cannot recommend that highly enough.

Is that going to be the first thing you do after getting vaccinated is go to a movie? I'm getting vaccinated next week. Oh, next week is your first one? Oh, that's right. It's February. Okay. There we go. I have moderate to severe asthma, so.

Congratulations. Thank you. I'm just happy that anyone is getting vaccinated. My parents both got both their second doses. That's like a huge weight lifted off your shoulders. My wife got vaccinated because she is a teacher, well, guidance cancer specifically, but she works in the schools. Once I get vaccinated, we could like go somewhere.

We haven't gone anywhere. Yeah, that's awesome. Anyway, yeah, I'm excited about that. All right. Animal Spiritspot at gmail.com. We're back on Friday for a full episode of listener questions. Thank you for listening. Stay safe.

And we'll see you next time.