Animal Spirits Podcast - Business in a Box (EP.97)

Episode Date: August 14, 2019

On this week's show we discuss what to make of negative interest rates, who is buying these bonds with negative rates, the new Apple credit card, the growth in takeout food, why fly swatters can't be disrupted, how Planet Fitness hacked human nature to build a giant gym business, why fewer people are going to the movies every year, why millennials have no friends, what asset will be the best performer over the next 10 years 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

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 Holt's Wealth Management. All opinions expressed by Michael and Ben or any podcast guests are solely their own opinions and do not reflect the opinion of 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 positions and the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. A story this week that got some play was in the negative interest rate world we're

in. A bank in Denmark will pay customers to take out mortgages by offering negative interest rates. And this is a good headline one. And everyone jumped on it, including myself. But it sounds like someone actually this on Twitter and said, the people who buy the bonds will lose money, but the actual people taking out the mortgage will not make anything because they actually have to pay like administrative fees. And so they won't really, but still, it's effectively zero, right? Yes, it's still very low. The actual loan being given out is for the negative loan, I should say, is for 10 year fixed rate mortgages. And I would imagine very few people actually take those loans out. And so yeah, the interest rate is negative 0.5%. For that. So here's, yeah. So here's

the one people keep asking me. And rates in a lot of countries are now negative, especially a lot of European countries. Who are the people buying these bonds? Okay. So that's, that is the issue. Because remember a few weeks ago, we were like Greece and the U.S. have effectively the same borrowing cause. We were saying that how this is not really an investor issue. It's just like, look at it. Just put the vacuum on for a second. But in this case, it is an investor issue because these people were on Twitter were saying that, yeah, the bank is making the loan. But then I keeping it. They're selling it. And they're selling it to people that are buying these packages as bonds. So to your point, who is buying this? I mean, I guess if there's

enough monetary policy involved here, a lot of it could be just the central banks buying these bonds themselves and effectively cornering the market. But I guess a lot of it is probably pension plans that have certain quality restrictions on this type of fixed income they can buy. The Dow is down 240 points. Who was right last week? Me or you? We were both right. I'm pretty sure you conceded halfway through the week. I did. More or less.

We're quoting each other in Dow points back and forth quite a bit. I'll do it now since someone, since we're talking about it, someone actually asked, because I said the headline risk were being way overblown and you said, no, they're not. And someone asked me, Ben, in your view, what, if ever, would headlines or news matter to a money manager? When should investors interpret headlines or current events as actual information or even take them seriously? Well, let's set the record straight. All I'm saying is that sometimes news matters. And is that so outrageous?

No, but my point is most of the time, I think by the time it hits the headlines, it's already baked in and trying to trade off that information is probably foolish because markets have already moved on and priced it all in. Well, obviously, but that doesn't mean that news doesn't matter. Right. It's just most of the time people assume, okay, I read it in the paper, now I'm going to act on it. That's probably already too late. There's, Barron's does this thing on Instagram where it's like 99% of our readers make

actionable trades after reading or something like that, which is, to your point, the exact opposite of what you should be doing. Right. Yes. The headline at that point shouldn't be moving you. So, I don't know. I continue to be fascinated by this negative rate stuff. I honestly still can't quite wrap my head around what it all means.

I wrote a couple pieces last week about it. So 10 year bonds are negative. You know, I've been sitting on a piece because I feel like, I feel like in the time that I've been thinking about writing, you've written like four pieces about this. So thank you. I just wanted to beat you to it. So Germany, Japan, France. Take it easy.

Sorry. Just put it out again. No one will notice. That came out wrong. No, no. No one's even going to read it. Let's see, the Netherlands, Switzerland. Those are the ones that I can find that have negative 10-year government bond yields.

And I compared those to the dividend yields in those countries, and a lot of them are in the two to three percent range. And obviously, you'd never compare stocks and bonds in the same breath, really, in terms of the risk profile. Isn't that eventually what should happen here that a lot of these investors will say, all right, we can't take this anymore, tap out, we have to take some risk here and going to stocks? I don't think so, no. Or is it a case of the problems that are causing these negative rates are what's also causing people to not want to invest in those stock markets? I think that there are certainly some cases where people are sold high dividend yielding

stocks as a bond proxy. I totally think that's the case. But I think for the most part, bond investors are investing in low interest rate bonds. as we're seeing. But so there was a chart showing that 55% of the S&P 500 stocks have a dividend yield greater than the U.S. Treasury than the 10 year. I think this is a dumb comparison because first and foremost, these dividends have credit risk attached to them, right? So you're comparing like what Nike is yielding versus the U.S. government. It's just, I think it's apples to like squirrels. Yeah. So here's the thing. So the guy from Pimpco had a story on this

that everyone was sharing last week, and he kind of gave some reasons why negative rates are happening. He said a lot of it is technology and demographics driven and not necessarily what the central banks are doing. But do you think that there's a lot of hindsight bias going on here where people are coming up with explanations after the fact? So not many people were predicting negative interest rates, but now that they've happened, it's easy for people to come up with reasons why it did happen. Yes, I think you're right. But yes, I also think these are reasonable explanations. Yes. Okay. So I think they're kind of reasonable, too. But you could have told me those reasons five years ago, and I would have said, you're crazy if you think rates are going negative.

And now we're here. And I think, well, actually does kind of make sense. Rates in the U.S. have not gone negative. At least nominal rates have not. Yeah. Other developed world. And the craziest part is is that the places that have gone negative besides Japan had much higher rates than the U.S. did, call it five or six years ago, whenever the European stuff was going on. So I just think it's such a bizarre situation.

I still can't wrap my head around what exactly. it means or where it goes from here or whatever. I guess nothing would surprise me anymore. So Michael Antonelli tweeted a chart of, from Ned Davis, the S&P 500 versus the top 20 stocks by market cap as a percent of the total. This is not abnormal, what we're seeing now. Saying that it's always a high percentage? Pretty much. So right now it looks like it's about 32 percent. So what are the top five stock, or top 20 stocks? I'm sorry. But it looks like it's always about this way. So it looks like in the 80s, it was up to almost 40 percent. In 2000, it was up close to 40. That's kind of interesting that it was really high in the early 80s when it was a good

time to buy stocks. And it was really high in 2000 when it was a bad time to buy stocks. So you can't really use it as much of a signal as you say because it kind of always happens that way. Although I do believe that the top five are a little bit above normal, but not like outrageously so. And again, that's because the biggest stocks in a market cap weighted index are going to have the most outsized impact on returns because, duh, that's how they're created. That just that makes sense. Did you know that free-riding investors set up markets for a major collapse, says Jim Rickards? I saw your headline on this. What is it? Parasites and an elephant? Yeah. So here's the, here's, I can't remember what podcast I was listening to last week that explained

this, but he made the point that, listen, index investors are literally buying what active investors hold. The prices have already been set by active investors, and they're just buying the proportion of stocks that are being held by active investors already. Don't say, Don't say buying. Say free writing. Sorry, free writing. And so how much impact can they really have if they're just doing what everyone else collectively is already doing? I don't know. Well, the site is daily reckoning. So, I mean, maybe there's a certain type of reader there. All right. So Apple introduced a new credit card last week. And I don't know. My initial thoughts were, I think it's a good thing that a company like Apple is getting into the credit card game because they don't necessarily have the same motives as a financial firm. does my application already got rejected i i think it's it's an interesting credit card for certain people because it looks like it's pretty cool way to track your spending and it puts like a because you use apple pay it puts it on a map to show where you bought something but for me being a credit card geek who looks at this stuff a lot it didn't really move the needle for me

because here's their reward there's no sign-up bonus the rewards are 3% cash back on everything you buy from Apple, 2% cashback if you use Apple Pay, which I can't imagine, is that enough places to get enough traction where it actually means anything yet? And 1% for everything else that you spend on it. And it sounds kind of cool features. To set up the card, I guess you just tap it against your phone and it automatically like gets it going when you get it. But I thought that the, I need bigger bonuses and rewards to sign up for something like this. Because I already have all the Apple stuff. I'm sure I'll buy more in the future, but it's a little too late to get my percent on that. So I think it's, this is a good one. It's almost like a mint built into it

that you can track your spending better. So people who have a hard time doing that, I think it's helpful. But the other stuff I wasn't that impressed with, Amazon gives you 5% cash back on their prime card. That's, uh, that's way better. And I spend more money of them anyway. So it sounds like an interesting potential development, but not interesting enough to get me to take a look at it yet. What did you think about this story from Bloomberg on the unit investment trust, SPY, and that funky 11 kid thing? I thought it was an interesting. kind of like, huh, story, but so for people who didn't read it, when they created the first ETF, they had to, because of the way they were setting up the legal structure, they had to somehow

require a specified termination date. And so what they did is they picked 11 of the children of people who were involved with it and said that 20 years after the death of the last survivor of those 11 people, SPY, ETF will be shut down, basically. And I mean, I'm sure this is something that they can probably get a lawyer to fix eventually. But it's, I just, it's really bizarre how they came up with this, right? Yeah. A lot of these 11 children, I think they're all millennials, didn't know that this was the case. What do you think? I thought the, there was more hype than was necessary for this piece. I thought it was just like, yeah. Yeah. And guess what? There, there's a million other S&P 500 ETFs by then, and it'll be, it'll be fine even if it does shut down.

But bizarre story. Okay. Eric Thompson at the Atlantic had a piece on meal delivery companies and showed that in 2015, for the first time on record, Americans spent more money at restaurants than grocery stores, and they're making a prediction that in 2020, off-premises spending, meaning eating outside of the home wealth, account for as much as 80 percent of food industry's growth over the next five years. Do you cook a lot at home? No, not nearly as much as we used to.

And I never really did much of the cooking. My wife was always the one who cooked. but we don't do I mean with kids it's just hard so I can see why this is the case and they're showing that all these places like Uber Eats and Postmates and DoorDash in all these places that will deliver

to Grub will deliver to you that's what's driving this I feel like you could eat or you could order in and depending on what you're getting obviously and where you shop and things like that it's maybe a 20% premium to what you can get at the grocery store but then if you factor in the fact

that you have to go to the grocery store you have to come home after a long day of work and cook and takes time I can totally understand why this is the case. This is a great time hack, right, to just have something like to do for you? I would say my cooking at home is probably 10 to 15% of my meals. Okay. I mean, we cook for the kids and stuff, but those are easy meals, but not for, not for ourselves quite as much.

So I totally get this and I understand why people would do this to, it'll just be interesting to see how what this does to the restaurant industry and what the unintended consequences are for people with smaller restaurants or chains or I don't know. So they got a cool monthly sales of this going back to 2016, and it's just kind of going off the charts. So we'll put that in the show notes. But it's a, yeah, I totally get why it's happening. So last week I was on a 636 train home, which is a little bit later that I normally take. Oh, not to brag, but I was working late. So busy. And I thought, I made a, it was not a very observant in the conversation,

which was very obvious that there was a lot of people drinking beer. And I just, I don't know if it It's a summer thing or... Sorry, I'm a new... I'm a new blow here, but there's a, like, a drink car on the trains? There's, like, no policy for... You're allowed to drink beer. And, like, a... People bring their own beer on the train?

Like, you can't buy it. You have to bring it? No, no, no. You buy it from Penn Station. Oh, okay. And so I actually noticed in Penn Station that those places were, like, rocking. And, uh, I don't really know where I'm going with this, but just a lot of beer because I went to feel...

Did you partake? Would you ever have a beer on the train? I have. But probably, like, hand... dozen times at most. I just don't see that being like, all right, I need to unwind a little bit and have a beer on the train. Is it just a New York thing? I don't know, I guess. People do it. Okay. So we spoke briefly last week about Kara Swisher with Bill Simmons. So I listened to it, and I thought it was pretty good. And she had a funny comment to him. She said, like, wait,

do you do intermittent fasting? And he was Simmons was kind of like, what? No. And she said, sorry, I sit down with a lot of stupid internet people. Something they do. I feel like a lot of these people, they just want to punish themselves, right? Because of all the unintended consequences of technology you're reeking these days. So they don't need all weekend. So one of the interesting points that she made was they were talking about how Twitter is not a place for conversation and I generally agree with that. I would say like 90% of my tweets are just tweets and like maybe even less than 10% is like actual discourse with people because what are you going to like change somebody's mind or argue? It's impossible. Yeah. So there's a lot of times

there's no reason to go back and forth of a person unless they're actually offering you some substantial evidence to the contrary, which is rare. But so she said that they're at the lowest point in startup creation in a long time, which I thought was kind of interesting, and maybe obvious, but something that I hadn't thought about that Amazon and Facebook and companies like that are just destroying all startups. So the kind of contention here that I had with this is, okay, startup creation is as low to spend a long time, but there's more money than ever in venture capital. So that just means that they're putting more money into more mature companies, and venture capital is becoming more like private equity? Is that the takeaway here? Or these companies are just getting taken out earlier and earlier by these big behemoth companies? You know one area that is disrupt proof? What's that? And I noticed this in once upon a time in Hollywood. I don't know why I thought of this, but there was a fly swatter. And I bought a fly swatter. You can't do better than a fly swatter. That's true. We had a flyer. We had a flyer. We had a flyer.

problem a few weeks ago, too. That's a fair point. How about bug spray? I don't know if it actually, does bugs spray really work? I guess it keeps them away from you. It doesn't kill them. Good point. Check your Instagram ads after this and you're going to see some fly stuff pop up there. Just wait. Here's another test to see if that actually works. I was in the elevator last week and somebody, it was very hot. Somebody was fanning themselves. And you know the myth, like I with their hand or with a paper? No, no, no. An actual, like a, you know, what are these? Oh, okay. They had a fan. What are those, a handheld fan?

Sure. From like the 1800s. Yeah. And wasn't there like a myth that adults would always say to kids like, oh, that only makes you hotter, like increases your body temperature from burning energy or whatever the hell? I felt the fan. It was terrific. You're going to get one of those now? I mean, you can't really walk around with one of those, can you?

Well, it's got to be foldable, I'd think. But it was quite effective. Of course it is. It's one of these. Yeah. Well, you should probably use one in the winter, though, because you're a winter sweater, remember? You sweat in the winter, more than in the stuff. true okay so i guess a handful of shows ago we talked about planet fitness and there's a lot of stuff

about the business that i didn't understand because i'm a member there so spencer jacob at the wall street journal did a piece on this and he talked about planet fitness and one of the things that i didn't realize i couldn't figure out how my planet fitness just installed all new equipment in the gym that is not that old and i thought that the capital expenditures for that like How could they ever make money? And what he put in here was that Planet Fitness franchises these places out. And every five to seven years, they make the franchisees buy new equipment from them because it's like colored purple and black like the Planet Fitness colors.

So that's how they make some of their money. Did they say that's where half their revenue comes from? Or did I misread that? It's a big percentage. But it was also they talked about how they make it much harder for people to quit the gym. You can't just like email them. You have to actually go in or write like a certified letter. So they said something like, something ridiculous, like 50% of the people that go work out of

a planet fitness have never had a gym membership somewhere else. So they are totally going for the crowd that will sign up for a gym membership, not go again. And he was kind of making the point that I guess the stock is really highly priced and it's done well. And I guess it plunged last week because the results missed analysts forecast or the analyst forecast missed the results. Wink, wink. but it's yeah so that's kind they've they've kind of hacked into the human psyche here to make a successful business it seems like and just get people to never quit you're right at $10 a month

anybody could justify oh I'll just I'll go next month I'll go next month so they don't reveal how many what their churn is but people in the know say it's 25% cancellation in the first five months but to your point about leasing equipment they only take 7% of membership fees so if a membership is $120 a year, that's what? $9. Yeah, it's not much. So what's the attrition rate at a Peloton? I don't know. But wait, so there's a chart here showing that the stock has got a lot more expensive

based on enterprise value to forward EBITDA. And I think investors are probably paying up for like predictable revenue. And this is almost like a, not almost, this is a subscription company. Well, and this gets down to back to the negative rate stuff. This is why growth stocks have been doing so well because investors will pay for growth almost at any price these days because they want to see some sort of, they just, that's all they care about these days is just stuff that's growing. And this, they've been growing because they've been adding gyms and that's added to their top line. I thought this was interesting that

on the one end of the spectrum, you have Planet Fitness. And then on the complete other, you have companies like Equinox and Orange Crush and these like super high end. And everything in the middle is sort of in no man's land. And this reminds me of a book I read recently called Trade Off. And I think I spoke about us on the show, but like the idea of there's either got to be really high quality or really high convenience level. And everything in the middle, which he called the Fidelity Belly, is sort of dead meat. It makes sense. Like everything is in a barbell these days.

And that's kind of the way you look at like the wealth management industry too, right? We're going for these companies are getting bigger and like these aggregator roll-ups. Certainly asset management. Yes. I think that's, and that's kind of the way it is with index funds and then these small. niche funds and everyone else who's stuck in the middle is kind of treading water or losing ground at this point. So there was an article, I forget where this was, but it was it doesn't matter. But they were talking about like business in a box and how bird,

the bird, the scooter company is partnering up with entrepreneurs to like build like micro communities. And so they did a, it was basically like a review of MLM and the gig economy and business in the box and sort of how we got to now. And I was shocked by some of these numbers. Even like everyone knows about the scammy nature of the MLM business or multi-level marketing, there's 1,400 of these companies with nearly 20 million salespeople that do this stuff. Isn't that a ton? Yeah, that's, I mean, yeah, but there's always so, I mean, how many of those makeup parties does your wife get invited to? Yeah. I mean, my wife has invited those constantly. if you make a certain amount of sales, you get for some free stuff, and then you talk about,

well, if you make your sales and I get mine and it pushes up. But I think it's kind of a good way for people to think that they're going to do a business on the side and become wealthy. So then on the other hand, or franchises, which employ 8 million people, so not quite as much as Eminem, which is also just shocking. Did you know that Marriott was a franchise? I don't get what you're saying. How so? What do you mean how so? Marriott is a franchise. Marriott is a franchise like McDonald's. is. Sure. What do you mean you didn't know that? I didn't. I did not know that. You mean the hotels, people buy them to them as franchises? Yes. Okay. I never thought

about it. I never, I don't know. I never thought about it. People say they don't learn anything from our podcast. Nonsense. So I don't get, what is Byrd trying to do here? They're saying you can ride their scooters to get together to start a business. I don't get it. No, I think, honestly, I'm not really sure. But I think, I don't know what it is. That's what I think. I just don't know. Moving along. So let's talk about this millennial poll. They have no friends. So this was in the New York Daily News. More than 20 millennials claim they have no friends. And this kind of ties into something we talked about last week. So I got a few listener emails who were concerned about the state of my mental health. Why? And because I said last week, I think I was only half

serious, half joking that I've been actively trying to decrease the number of friends in my life over the years, which I actually think is a good thing, especially people that aren't true friends. So someone said, in the latest edition of Animal Spirits, you mentioned you're reducing the number of friends you have, the reasons that you give are common among men your age, but there's a big downside, loneliness as you age. It is good to have friends. And obviously I have a lot of friends, but I think as you age, especially when you have young kids and you realize that your time is valuable and you can't just go out all the time and do stuff. Like, I used to have a lot of acquaintances, especially in college, that were people I partied with. But,

then you grow up a little bit and you realize like, oh, yeah, if we don't have that in common anymore, or what does our friendship really built on? I think those are the people that I've been systematically getting rid of my life. I do have friends. And actually one of the, I love the fact that you have to defend that you're friends with such a weird. What's going on? I got like a handful of email with people saying like, what's wrong with you? You don't have many. Yeah, I have friends. For the record, I am Ben's friend. That's actually one of the strangest things that's come out of blogging for me. If you'd have told me whatever five or six years ago when I started that I would make a number of friendships across the internet. I would have

told you you're crazy. And that's kind of the way my wife looked at me when I started. She's like, what do you mean you're talking to your friends on the internet? That's so weird. And now it's just kind of something that came out of it. So anyway, 20% of millennials claim to have no friends. And that said not a single friend. Is that even possible? Nope. I don't buy it. Okay. 30% of millennials reported feeling lonely always or often in the UGov data, what 20% of Gen X's and 15% of boomers said the same. All right. Is this one of those things where you're more connected than ever on the internet,

but you still feel lonely because you're just talking to people at your house? I don't know. Is that it? This seems like a slow news day. Okay. So I came across this site that I thought was really an interesting idea. What I wish I knew at age, whatever it is. So it's Hey From the Future.com.

And it's age 27, 28, 29, etc. and it's people that are that are just saying, like, what I wish I knew at that age. So I'm reading this, hey, 34-year-old, decide now on kids. I didn't, I missed out on that because my partner didn't want them. Of course, we divorced at my age of 44 way too late to have them big regret that I didn't go into that seriously. And then there's like one more, and I'm reading them. And then the third comment, hey, 34-year-old, do not become bald.

Let's face it. Bald people aren't happy. Did you write that one? I feel like somebody put that there. troll me. And then the next comment is, hey, 34-year-old, and it's, I don't know if there's Chinese letters or what, but it's not English. So what started out as I thought a cool little idea turned to shit real quick. All right. In the alternative universe where we have more time, hey, from the future, financial advice would be a great idea. Say, hey, 20-year-old me,

here's what I should have known at that time. And so you get advice for people that are 10 or 15 years old and you about what they wish they would have done with their finances. If I can go back in time, I would say to shave my head earlier, get ahead of it. How much longer did you go when you should have done it? Like 18 months too long? No, I don't know. I was way behind the curve. Really?

Probably four years. Okay. When my hair starts completely falling out, what you tell me to? Like, Ben, you have to shave? You got it. All right. I will totally let you tell me. I won't have any shame.

So there's another survey in Market Watch? Single best idea for the next decade. Bank rate survey. You can invest in one thing over the next 10 years. stocks, bonds, real estate, cash, gold, or Bitcoin. Which one do you think people chose? I already looked. I would have said cryptocurrency. Real estate was the winner by a large margin. And so for every two respondents who answered stocks, there was more than three who said real estate is a way to go.

I think generally speaking, people have wild expectations for what owning a home could do. I think the other side of this is that a house is just most people's biggest asset. And so they're probably looking at their personal balance sheet and realizing, like, it's more of a hopeful thing than anything. Like, I hope real estate it does the best because that's what I have the majority of my money in. Oh, okay. Because I think for a lot of the middle class, that is their portfolio or their financial asset. Ah, so it's like sort of like confirmation bias a little bit?

Yeah, or availability. Don't you think that's part of it? Yeah, that makes sense. I hadn't considered that. So, yeah, I mean, that answer will probably change. The funny thing is, if you would ask this 10 years ago, real estate probably would have come in last because it was doing so badly. Now that it's done well, it goes the other way. So one more survey. This comes from a company called Clear with a K.

Is this a new record for us for surveys in a show? This is four surveys, I think. Maybe. All right. Remember we're anti-survey, though. Of course. All right. It was talking about like influencer trends and stuff. Did you know that in general, the average woman earns 77 cents to every dollar man earns of influencers, but men make up just 23% of the influencer industry. So it's dominated by women, but men tend to make more on average. Okay, so 77% of influencers are women and 23% are men. I would not have guessed that. How do you think they define influencer here? Do you have to have thought leader in your profile to be known as an influencer? Do you have to have like one of the

of those little airplane things that says you live in New York, L.A. and Paris? Well, it spoke a lot about like lifestyle influencers. What a job, right? Not bad. Yeah. I guess. It's, but do you think these influencers are the millennials who don't have any friends to? Probably. The most lonely influencer. Yes. Did you see the story about Bobby Wagner negotiating his own contract? No, like without an agent. Yeah. So I think we might have spoken about this recently, that for NBA players, maybe I can understand, like, because if you're a superstar, you know you're getting the max deal, and that's just it, right? Like, there was really no negotiation. You're getting three years, $140 million or whatever it is. But with football,

I feel like the contracts, and when I say, I feel like I'm totally speculating, are just, like, more complicated based on injuries. And I feel like there's probably a million more clauses in an NFL a contract. Because it's not a guaranteed contract. So it says agents typically earn about 2% of a player's contract. So he did his own negotiating. You'd think with the like uptick in the amount of quantitative data that's used in sports these days that you could take an agent out of the deal unless you really wanted to play hardball where it, you would almost know based on what you've done in the past and where you fit in a team what your value should be. Shouldn't they be able to pinpoint that a little better with all the quantitative data and tools we have now? For superstars like Bobby

Wagner, yes. But for players lower on the rung that actually do have to negotiate and fight for their worth, probably still worth it. Okay. So a few weeks ago, we talked about the NBA wealth manager and they had a follow-up story on him. He was in the New York Times. And they talked about Clay Thompson. And they didn't give the specifics in the first time we read it. But so he actually saves 85% of his money. So I'm nominating him for an honorary member of the Fire Squad. What do you think? Yeah, that's good. 85%. Wow. Not bad. Yeah. So Joe McLean is the guy. And he's actually going to be at our Wellstack conference. I think he's not part of it. He's just going to be there to check out the show. But

anyway, he's his financial manager. And I thought that was a pretty cool story. I mean, whatever. The guy signed a $190 million deal. So it's not like he's hurting at all. But still, that's the temptation to spend the majority of that money has to be there. So the fact that he's doing this, kudos to him, right? So, yes, there was a post called Franchise Fatigue that did some serious, serious myth-busting of what's going on at movie theaters. You read this? I read it was a really long piece. So Matthew Ball is the guy's name.

He's a big movie guy. Didn't you think some of this was a straw man argument, though? Who's arguing that there's franchise fatigue? Because that's all there is anymore is franchises and movies. That's kind of been my point. Okay. So he does make the point that some of them did bad, like there was the men and black. Black remake did really bad. Dumbo did bad. But I mean, the majority of the movies these days are

all Disney remakes and superhero remakes that have been done before, right? Yeah. So a few things that stood out to me. One, in 2002, roughly 27% of Americans were frequent moviegoers going to one film per month or more. Today, it's only 10 to 12%. I totally, when I was in high school and college, every single Sunday, we would go play basketball with the old men of the pickup hoops and then we'd go to a movie every single Sunday. It didn't matter what was playing. We would find something. I must go to the movies maybe once a year at this point. You are a more frequent moviegoer than me.

I'm a frequent moviegoer. Twice a month, maybe? That's a bit much. Okay, once a month. Here's the other thing. For decades, the box office was dominated by blockbusters that cost at most $50 million to make. Top Gun, Beverly Hills Cop, Rain Man, etc.

And he said, today, the box office champ will typically spend more than twice as much just on marketing. So this goes to that blockbusters that I read, where it's really like these all or nothing projects that are that are taking everything. But so I was looking at the box office for 2019 and thinking about the Oscars. What is it going to look like? Because these are the top movies. Avengers, Lion King, Captain Marvel, Toy Story 4, Spider-Man, Aladdin, us, John Wick,

How to Train Your Dragon. So, like, is the crocodile from the crawl going to win an award for Best Supporting Actor? It's, I mean, it's just going to be really obscure movies that, yeah, you're right. I mean, there's, there's been nothing this year that. you could be like, oh, that was an amazing movie. Is Jason Statham going to win best actor for Hobbs and Shaw? I mean, this is going to be a very, very unusual year for the Academy Awards. I'm kind of hoping in the future they give most steroids taken for a superhero movie.

Who wins that? The Rock or Chris Evans? Chris Evans takes Roids? You don't think those guys take Roids before they bulk up and add 40 pounds of muscle before they're in the... Wouldn't you do that? You're crushing my dreams. I thought The Rock was all natural. That's why I got my palaton.

Yeah. By the way, if you check on Instagram, I scroll through what's happening today. Oh, look, The Rock worked out again. What do you know? John Wick 3 is going to win Best Movie of the Year. I agree with you. Like, if you look at the last 10 years' worth of Oscar winners, it's, it's not good. Is it the worst ever?

I mean... That's not good. By the way, did you see us? That was like the only movie in the top 10 that's like... No, I didn't. I think you gave me the review on that. I just, we never go to movies anymore. And honestly, I can't see a reason to go to many from here.

It's just, it's a better experience to sit at home and watch it on your couch, isn't it? It is. You know what I watched this weekend? What's that? Annihilation. That's a weird one, right? I wanted to like it a lot. Like, I went into it.

I was like, all right, this would be a good movie. But I sort of, at the end, I was like, you know the WTF GIF? Right. That's how I felt. I was like, I don't understand anything. And maybe that's sort of the point. I actually went on YouTube and like watch somebody explain and playing in English sort of what happened.

It was a movie with really good buildup that you're just hoping for like, okay, if they stick the landing, it's probably going to be okay. but the ending was not much of a payoff yes one last one so during our

rekindled episode of super forecasting we said like do open letters ever aged well and then there was one last week from I think it was Bernanke Volker

and Janet Yellen an open letter to the Fed oh yeah actually someone did send anyone that said Albert Einstein wrote an open letter that led to the Manhattan Project so I guess that

is an example of Einstein wrote it. So that's a good open letter. The Dow is down 220. It's been remarkably stable since we pressed record. Okay. Do I get credit for that? Stabilizing here. What do we got? Listen to questions, Ben. All right. In terms of portfolio allocations, what are your thoughts on treating a pension as similar to cash? My conservative estimate based on my lifespan puts the total payment value of my pension at around $1.1 million of 2019 money. Should this influence the allocation of my retirement account more heavily towards equities, then bonds. I think that it definitely makes sense to consider if you're lucky enough to have a pension like this. That's bonds. Yeah, but it's also figure out what your income needs are

first and then you create your portfolio with whatever is left over. So you can almost think of it as bucketing where you have this pension that throws off cash flow and then the rest of your portfolio has to cover a smaller amount of cash that's already taken care of. So do you agree that you could be more aggressive with your other money because the pension is predictable? Yeah, I think that makes sense, assuming that that's what you need. But I think the way that you start is you figure out, here's my spending in one column and here's what I need from my investments and pension and other income in the other column. And if your pension cuts off part of that income, then you can figure out what to do the rest with. And maybe actually the pension allows you to take

less risk than you wanted to because your income is more stable. So maybe it gives you the ability to take more risk, but maybe you don't need to take more risk. So I think it kind of goes both ways, but yeah, it makes sense that you'd think of that as an income producing asset, which at this point bonds around the globe don't really produce much income. So maybe a pension is unique in that way. All right, unlike many who anchored to the last financial crisis, I admit I am anchored to Bernie. If Madoff had access to and learned from and learned to master Twitter and podcasting as well as you, how much greater do you think is victim pool? Where is this going? Is this accusatory? Ben, you are the Bernie Madoff podcast. I've been saying that for years.

Thank you. He says he never misses an animal spirit's podcast. My brain always goes back to Madoff. Thus, I leave my investments at Vanguard knowing I'm probably leaving some money on the table rather than allowing myself to have a professional manage my money. Is that irrational? No. He's basically saying, I don't want to give my money up for fear that someone's going to take advantage of me. If you have enough wherewithal to manage your money on your own and you don't want to trust other people, then sure, manage it on your own. I mean, I think that having that paranoia is sort of irrational, but I also think it's really hard to, like, cure. If you're always looking over somebody's shoulder and thinking that they might be the next mid-up, then probably you should just do it yourself.

And guess what? If you look hard enough, I research this for my book. Every couple days, I feel like I come across another article about someone who's got to take advantage of in a Ponzi scheme. Yeah. So, I mean, they happen a lot. So do you think, so Ponzi scheme is named after Charles Ponzi. Let's say he never existed. Would we call it a Madoff scheme if Ponzi never existed or would we have come up with someone else's name?

Very good question. In the meantime, right? Can you change something like that? Can Madoff Trump Ponzi in some way? Too late. To find out, read my book coming out in 2020. All right. Recommendations.

You already said annihilation. Anything else? Yes. Under Armour socks. Tremendous. They're just very, very high quality socks. I've been wearing them for years. Tube socks? Ankle socks?

Tube socks. No. Ankle socks. Although I do have like once I go midway up your calf for the winter. They're just very comfortable and they stay soft for like multiple washings. That was such a dad recommendation. You just recommended socks on the podcast. They're high quality. What is wrong with you? They're high quality. All right. What else? Oh, I listened to Russell Crow was on Howard Stern a few weeks ago.

and I finally listened to it and he told some interesting stories so apparently Marlon Brando like was a huge fan of which movie of his I can't remember and when he died Jack Nicholson took notes in a book

and gave it to Marlon Brando and Marlon Brando told his friend to give it to Russell Crowe when he died and he said like why don't you just give it to him like you're live and he said something along the lines of like I don't want to disappoint him wow only one of the greatest actors ever

but I just thought that was that was pretty interesting. He told the story about how Michael Jackson used to prank him, but only at hotels, like not his cell phone. He used to prank Russell Crow? Yes. Pretty wild. And then two more things. He was offered the role of Vigo Mordinson and Lord of the Rings and was offered 10% of the gross. Oh, my lord. Did he talk about, did he cut you how much money that was that he missed out on? I think they said like 100 million or something. Okay. Wow. And did you start, wait, did you start watching the Montreal show yet? No, it's still on my list. Okay. So we plowed through season two of the center this week.

It's on Netflix. Bill Poulman's in it. We watched the first one. Jessica Biel was in it. Wait, Bill Pullman, the president, and Independence Day? Yes. He's making a comeback.

How great was that speech? Still get chills. Yes. He's the cop in the first season. And then the second season is kind of a similar setup, but it's just he's the cop. And that's the only thing that everything else is different. It's a new murder.

And both seasons start out with, you see the murder right away and you know who did it. But then you have to back out the motive going through the whole show. And the second season, I thought, was way better than the first season. You don't have to watch the first season to get the second one. I thought it was one of the better ones I've seen in a while, actually. And it got way better as it went on. On the interview stuff, I'm kind of enjoying more celebrities getting into podcasting

because I feel like the other celebrities they have on open up a little bit more. So I've been listening to Justin Longs lately. You know him? I don't. He's been in a few like Vince Vaughn movies, younger guy, younger actor. And I feel like the actor's open. So he's had some people on that I'd never heard before. So he had Sam Rockwell on.

He had Jeremy, Jeremy Renner. Yeah, the dodgeball guy. He's pretty funny. He's friends with all these people. So he sat on Jesse Eisenberg and he had on Jeremy Renner and a bunch of all these celebrities. And I feel like they're just kind of buddy, buddy since they're all friends with each other. And I feel like the celebrities are a little more comfortable talking to someone

that they work with as opposed to just an interviewer. And so I've been kind of enjoying his podcast. Succession starts the first season, I thought was one of the better shows. I've seen in the last couple of years. So are you in for Succession Season 2? Absolutely. All in. All in.

All in. All right. And so finally, we watched the movie sliding doors recently with Gwyneth Paltrow. It's like a 97-98 movie. Older. You ever seen that one? I know the name of that prime. No.

I mean, decent movie, but it was made in like 1997, 98. It is amazing how much stuff has changed since then. People were smoking in bars. They were using landline phones. And they were like having a hard time getting in touch with each other. So, like, it's a romantic comedy where, oh, the white, we just missed each other. Oh, you know what? You don't be interesting for a tweet?

Things that didn't exist in 1997. Yes. No one's ever done that before. Yeah, very original. Was that before the iPhone? Yeah. It's just kind of bizarre to watch. Companies that haven't been invented when sliding doors came out in 1997.

It's just kind of bizarre to watch, like, a whole different life back then because of this stuff. Yeah. Anyway, and I think honestly, smoking in bars is one of the biggest changes that no one ever talks about. I think they should bring it back. Oh, you remember going into bowling alleys where smoking was allowed? Yeah, that's gross. I guess it still is. But anyway, okay, that's all I got. Animal Spiritspot at gmail.com, and we'll talk to you next week.