Animal Spirits Podcast - Dad Cat Bounce (EP.87)

Episode Date: June 12, 2019

On this week's episode we discuss our chart crime of the year candidate, the staggering amount of student loan debt, managing money for NBA players, paying for time, why the home buying decision is so personal, contradictory bubble data, does anyone need an MBA, is Chernobyl the best show ever 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. I'm a little worried about the market. Can I just share with you? Why? Can I share with you a chart I found?

Wait, which market? The market. Everything. Did you know that when there are weeks when gold and silver stocks rallied at least 5.2% and oil declined by 8.7%? We had a tech bust and a global financial crisis. And that just happened at the end of last week. Hold on. I am now putting on some hedging trades. It's one of those charts where they show the peak. and then you see like the lines that show when it happened right at the top so you know it's legit. This is definitely a, I don't know, I think this was on a market watch. Definitely a good addition for a crime of the year probably.

This is weird language. So it shows weeks when gold and silver did what they just did as you explained. And then it says, such just happened in the week ended. It does kind of sound like a bot wrote that. Such just happened? I don't know. And isn't it week ending? I mean, that's the least of the...

Yeah, the least of our worries is the grammar on there. I can't believe we're looking at we're grammar policing a chart crime. Yes, it's just a double whammy. All right, so you read this story about the money whisper to the super rich NBA elite on the New York Times, right? That was good. My biggest worry after reading this, see, sounds like a great guy. It sounds like he's doing well by these players. What are the odds that this guy is going to be involved in a potential Ponzi scheme in like five to seven years?

It's got to be 3%. 15%. I mean just with that much money, maybe not because he's, but it's interesting. So they talked about how managing basketball players' money is not the same thing as managing their wealth. And this guy is literally managing the spending for these guys. And he's checking out their budgets. He's assuring that they save at least 60% of their contracts for these people, these guys who are signing nine figure deals.

And that's kind of like a deal breaker for him. If they won't say it. So you think this is like like 60%? 50% of their paycheck goes, gets siphoned off immediately into what? It doesn't really say. I was kind of curious about what he's investing in. I'm sure like the investments are probably besides the point, but I would be curious. Right. When you have that much money, investments probably matter. Yeah, very little. You wonder if he is just trying to keep things very conservative or he's actually giving them, I don't know. If you signed like a three year, a hundred million

dollar contract, you're probably not too worried about inflation. Right. Do you think they're worried about, well, if I go with a Fidelity Index fund, I'm going to be paying three basis points. But if I go with Vanguard, I'm going to be paying four basis points. I love this line that he said with great abundance comes great discipline. Yeah. And it sounds like he's looking for buy-in from his clients, which is probably not what these

guys are used to. They're probably used to people telling them anything they want to hear and being yes men. And so it's probably good that they have someone that tells them, you know, shoot straight with them. Didn't the article say that he's fired a few clients? Yeah, because they wouldn't save enough money. My favorite part...

You know who I bet he fired? I don't know. Travelle McGee. That sounds about right. I thought it was crazy. So Aaron Gordon is a guy who plays for the magic and he must have a big home in Orlando. And he said that the first people that were trying to cut his lawn were trying to charge him four or five grand to mow the lawn and do his landscaping. And he's like, is this too much money?

Did I pay too much for this? Like, that's how much advice these guys need sometimes. He's like, no, you have a big lawn, but you should be paying. I think 500, not 5,000. Can I piggyback off that lawn? Sure. So as a new homeowner, I've never had to pay for the mong of the lawn. Much cheaper than I thought.

Okay. So what are we talking here in New York? I think it's 30 bucks a week. Okay. That's about what we pay in Michigan, too. You have a much smaller lawn than I do? I feel pretty good about that. Yeah, it's not bad.

It's totally worth it. So you're outsourcing that? Absolutely. It's worth it. Totally worth it. Yeah. I'm perfectly fine buying time, and I hate doing landscaping. Some people like that stuff.

It's not for me. When my kids get older, I'll probably make them mow the lawn, but at this point, I'm perfectly fine outsourcing that kind of work. And right now, I just got to focus on the garden, you know? Yeah, I'll bet. Are you actually planting stuff in there? I have plants, many plants, some say the best, and they're grown pretty, pretty sure they were dying when I was there. Fake news. They were not dying. They're on the road. Okay. So the Wall Street Journal had another piece on student loans. And we've, we've hit on this one. it kind of seems like ad nauseum, but they had some stats in here I've never heard before. So this piece was called The Long Road to the Student Debt Crisis. And so they said borrowers currently owe more than $1.5 trillion, which is the number we've

probably heard before. That's an average of $34,000 per person, which that number is obviously going up because I did the research on this a couple years ago and it was closer to 20. I feel like we should make mental notes or physical notes for which episodes we hit on student loans. Yes. And we should make a rule, no more than once every four episodes. Okay.

That's fair. But so this one said, two million of them have defaulted under loans in the past six years, and it number grows by 1,400 a day. Here's the surprising one to me. The government runs this program, and they say taxpayers stand to lose almost $32 billion over the next decade and losses are growing rapidly. So it's still kind of mind-boggling that the government is trying to make money on this in the first place, but if they're going to lose money, they might as well overhaul the system, because obviously it's not working for anyone if they're not even making money on it. So why don't they, I don't know, lower the rates to short-term interest rates or something to make it easier for people, and then maybe they won't get so many people defaulting and they'll actually make a little money. I thought you couldn't default. So what does that mean default? Because the loans are never forgiven. Does this mean like you miss a few payments? What does it exactly mean to default on your student loans? Yeah, I'm guessing at some point people to stop paying. That's a good question because it is one of those things that even if you go bankrupt,

it doesn't really go off of your books. I'm sure there are people who literally just stop paying. I guess I don't know. I'm surprised they haven't had more. It does sound crazy. I know this is like a denominator blend this thing. But you know what? I feel like this is an example where the denominator doesn't matter because the number is

two million people. So who cares if that's only 1%. Two million people. And that number is growing by 1,400 a day. Yeah, that's pretty wild. Staggering. So there was a lot of actuallying going on in response to a chart that Market Watch tweeted. I forget where the source was.

But it basically showed that value stocks are trading at the steepest discount in history. And we'll link to this in the show notes. Jake chimed it with an actually, Corey Hofstein. So it's great to have these people to set the record straight. But whether or not it's the cheapest. ever been, I think everyone can agree that value has sucked for a long time, regardless of how you measure it. But the conclusion, I take umbrage with. This person wrote, for value to make a sustained comeback, the following developments are likely needed. And Ben, I want to get your thoughts

on this. Regulations at foster competition? Okay. Maybe. I don't know how regulating Facebook and Google is going to help value stocks. So they're blaming the fact that these companies are monopolies for the reason what value is not working anymore? I guess. But how do growth companies like Amazon and Facebook and Google, how does that affect companies that are classified as value? Like aren't value traditionally dominated by banks and energy. I guess it depends how you calculate value. But let's keep going.

A stabilization of active managers assets under management relative to passive investing. Ooh. Right? Yeah, that's not a great take. And guess what? That's not going to happen either. Well, how about this? Good luck with that.

That's not even the worst take. Next, less policy uncertainty. Oh. Ouch. That's going to help value stocks more than growth stocks. Yeah, exactly. Next and last, either a reaccelerating of global growth, I don't know how that's going to help value, or a full-blown recession that forces a repricing of growth stocks, that I can get behind. That's possible. Yeah. Spiva did a study a few years ago where they looked at any type of actively managed mutual funds that perform. well during the last couple of bear markets. Value is actually one of the few that were the active managers outperformed. But in this day and age, a lot of what people do as value is more passively done in terms of quantitative funds. So it maybe that won't matter as much anyway. And how many of those tried and true value investors do you think have really

stuck to their knitting and not gone and tried to talk themselves into Amazon being a value stock or Google being a value stock or even Apple? Certainly not Warren Buffett. Yes. Yeah, closet indexer. But yeah, so anytime, I mean, right away when I saw that tweet, I was like, well, what about the dot-com bubble? Surely, that was more extreme than this. But any other than mean reversion, I mean, there really won't be a catalyst, I don't think. I don't think there really will be a reason for this to happen. It's not like it's all going to happen overnight or in a month or in a few months. It's going to take time and it's just going to slowly chip away. If ever. If value investing is not dead for good.

So somebody tweeted, I rented all my life. I was 34 when I bought my house, my first house. After running some real basic math over the past couple of months, it's starting to look like I was duped by society's propaganda about the benefits of owning a home. So we did a video with Rameet a couple weeks ago when I was in New York. And we talked about this sort of victimhood culture that people like to get into. And blaming society's propaganda for your decision and your decision and your, The money you're spending on your home is kind of falls right in the line of that, right? It does. Although I do love his dunking on a dunker. Somebody said, why wouldn't you run some, quote, real basic math, all caps before buying the home? That he replied, because I am not as enlightened as you, sir. Wow.

Okay. All right. Didn't do my homework. It's, I mean, there's a lot of nuance involved in the housing discussion and whether it makes sense to buy a rent. or, and unfortunately, like, you can do all the math you want on a spreadsheet and it could just be bad luck that you buy a home in the wrong area or you buy just a lemon of a house that needs a lot of work. So there, it's just, it's such a personal thing to go into. This is so situationally dependent. Yes. That there is no right answer. And unfortunately, oftentimes you find out the wrong answer

after the fact, whether you decided, you know, renting could be wrong, buying could be wrong. but I think we can all agree, I think, that generally speaking, a home is not an investment. A home is... It's a form of consumption. Right. And for some people, it's a great form of consumption. And for some people, it ruins their lives. Matter of fact, Robin was my wife showed me a house in my town that she always loved.

And I remember this house when it went up, beautiful house, probably like 4,000 square feet. they had one of those big yellow hummers in the driveway, like the Hummer 2.0 when they came out, I don't know, 15 years ago. And the house is now under foreclosure. Oh, yeah. And it's sad because obviously this destroys marriages and families and people get, you know, overextend themselves. So a house could be either the best, you know, one of the best things that you've ever done or could be one of the worst. We got an email the other day from someone who said personal real estate cost me a marriage, a career, and relationships after my marriage. and I don't know what the story is there, but there's just, there's a lot of risk involved

in that one asset and in your one area that you live in. So it's never easy. And especially when you're trying to give advice to people in different areas or different cities or different zip codes, it's just never easy. And unfortunately, there's never going to be good advice that you can give to a broad swath of people on this. You know how there's studies that show that budgets always go beyond the time and above in terms of dollars spent?

I feel like a house is always more expensive than you think it's going to be. It's true. Yes. I've done many renovation projects. I've never had them come in under what I thought it was going to cost. There's always at least like a 25 to 30% premium. And for some people, it's probably more than that depending on what the job is going to be. So, yeah.

So if you're really squeezing on paper to get by with the home, don't do it. Absolutely do not do it. Right. It's, yeah, it's hard to get out of that. Okay. So last week, Bluegrass. Capital tweeted a chart via Urban Carmel showing money market fund flows over the last four weeks into actually this is kind of weird it's showing for every May is this weird maybe that

means people finally sold in May I mean is that what this is showing it's showing money market funds every year in May I think they're just trying to show that this year for whatever it's a year over year yeah it was it was huge there was a huge inflow into money market funds So make of that what you will. I don't know. Isn't it interesting how like both sides of the aisle for a bubble are kind of contradictory because we have all this money flowing into bonds and cash. But then we have this Beyond Meat company that is going public and we have all these unicorns going public. And it seems like there's there's a yin and a yang for every story these days.

Like Uber went public and then they immediately dropped. But Beyond Meat went public and it immediately went up. And it's like people use both of those scenarios to push their agenda on what. what's happening with the stock market. And stocks have been rising forever, it seems like, but all these flows are going into money market funds. And it seems like there's just, there isn't much rhyme or reason in the data these days. And you can, it's always been like this, I guess, but it's so crazy how contradictory these, these sort of signals are that people are trying to use. Good point. Plenty of stories to support whichever sod you're on or whichever

camp you're in. Yeah. You shared with me a story in fortune about electric scooters. Yes, which we've used. So, bird and lime, which are two of the scooter companies, have raised $882 million, which is a stunning amount of money. So we've used them, let's see, in L.A. and Austin over the last couple of months, they're very handy. I just, you made a point in one of your pieces that eventually there's going to be some lawsuits of these things. They just have to be, right? They're very helpful and useful if you need them in a pinch. especially it's like the problem is like they're they're going to be used when people are drinking

I mean in just I mean even when you're sober they're dangerous but certainly there's be a lot of drunk drunk scootering yeah well if you're in the road someone's going to get hit or hurt I think that the lawsuits of these companies are just seemingly the liability is got to be massive there I'm sure they try to take care of it with all the fine print they put out but they're very helpful thank God for the limited liability company yes I mean they're everywhere but I just don't know, it seems like one company has to just sort of take the ball and run of it here because it seems like there's four or five different ones in all the cities we've been to with these. So these two alone that have raised $880 million are valued currently at $3.1 billion.

Wow. Which, again, it's just, you know, we've spoken before by the dangers of judging something just based on its market cap. And I guess I'm very guilty of this. But I don't know. That sounds like a lot of money. Yeah, for a scooter. I'd say, I don't know how many markets they're in or whatever, and obviously they're being used because you see them everywhere in the towns that they're in. I just, it seems like there has to be some downside into this as they continue their growth.

Okay, so Bloomberg had a story last week about Amazon is putting out a satellite project that's going to cost them billions, and it's called Project Kuiper, and they want to put satellites in orbit to give broadband internet access to people, especially in rural areas that don't. have good internet. And it sounds to me like Bezos is trying to make internet available to everyone. And don't you think in, I don't know, call it seven to ten years, it will seem kind of weird that we ever paid for internet? Like, won't free Wi-Fi just be everywhere? Who's going to pay for it? Well, Jeff Bezos, it sounds like, don't you think that they're going to roll into Amazon Prime free internet access? Wouldn't that, couldn't that be an end game? And if he knows you have access to internet, then he knows that you have access to order stuff Amazon. Doesn't it make sense for Amazon or Google or Facebook to make sure that more people

have access to the internet? And so I think maybe 10 years is a bit ambitious. But at some point in the future, we're going to look back and say, like, we really ever had to pay Comcast and AT&T and all these companies for internet? Dumb question. Do you know how much you pay? In internet? Yeah. Yeah. I mean, it's probably, it's like 50 bucks a month, probably. You don't know? Uh-uh. Okay. Only because it's, it's, it's, it's, it's, it's, it's, it's, just rolled up in my Verizon contract. Yeah, well, that was the biggest hangup I had when I actually did the numbers on cutting the cord.

And the problem with cutting the cord is the cable companies still have you because you have to pay for internet at some point. You can't just completely cut it because you have to still have internet access. And guess what? They're the ones who provide internet access for you. So you have to pay for something from the cable companies, regardless of you have the cord going or not. I took the Long Island Railroad home the other night.

And my friend turned on his hotspot, opened up his laptop. and some kid comes up next to him, he's like, hey, bro, you mind if I use your hotspot? And my phone was like, okay. That's a personal question. So the problem is he was standing like on top of him for the rest of the train ride.

Oh, to use it? He needed to be within like two feet of him. Ten bucks. No, I don't know. That's where there should be free Wi-Fi on freaking public transportation. Yes, that sort of stuff. Plains.

I went, when I was flying from L.A., home last week. It was like $25 for Wi-Fi on a plane. I don't think I ever pay for Wi-Fi on a plane. No, you get it free from JetBlue? No, I just, well, either that or if I'm not on JetBlue, I don't pay for it, which is, sounds pretty cheap. I'm not sure why I, like, take a stand, but I guess I either just read or watch movies. That's kind of my deal, usually. It was a long flight, so I was going to try, but usually I don't want to use Wi-Fi because, first of all, it never works until you just get mad at it. And second of all, it's kind of nice to shut off for a while. I watched a lot of movies.

to and from Los Angeles. Some really bad, some really good. I watched Glass, which is the third of M. Night Shyamalan's movie, and why does this got, who is funding these movies? I don't know. They're all pretty bad. Did you see it? Glass?

It was so bad. Yeah, it's amazing how bad his movies have gotten. Like, it's just gone downhill, and he's still making movies. Someone's watching them. I watched Free Solo. Finally. Pretty great, right? Yes.

He's going to die, right? Yeah, it's kind of inevitable. But his, yeah, that's an amazing story, and he's just, seems like he's from a different planet. I watched a bad time at the El Royale. It was okay. Not bad, right? I feel like if Tarantino directed it, it could have been really good. Yeah, it felt like a Tarantino movie.

But, yeah, I don't know if I would have watched it if I wasn't on an airplane. A great movie was Green Book. I like that too. That was very well done, right? Vigo Mordinson was so, so good. And I did not know that that was a true story until the end of the movie. Yes, it was very good. It sounds like they took some liberties in some areas in terms of the relationship,

but it was a true story. I like that one. Okay. So we've got a few millennial surveys sent to us. And one of them is, so the Deloitte Global Millennial Survey. So maybe this is one that is actually, maybe they've been listening to us complain about the surveys because this one actually looks like they went over and above. So they said that they interviewed over 13,000 millennials across 42 countries and territories

and over 3,000 Gen Z people from 10 different countries. So are we good? Are we good with this? It depends on what the questions are. Yeah, that's true. Give me some examples. So it says millennials, young adults in their 20s and 30s earn less money without a college degree and are more likely to die prematurely from suicide or drug overdose than previous

generations. But college-educated millennials when they entered the labor force earned just as much as baby boomers or gen Xers when they were their age. And so it's basically only millennials with only a high school diploma or less that are earning much less than their previous generations. So it sounds like those who aren't going to college are being left behind, but people who are going to college are doing just as well as those from previous generations, which seems to make sense. Yeah, nothing surprising there. So sticking with the education theme, the Wall Street Journal had a piece on MBAs. And this was, I guess, kind of surprising, maybe not. I think what you had was a lot of people following the crisis who went back to school because the job market was so

tough. And now we're seeing the other side of that where it's easier to find a job. And they said between 2014 and 2018, the number of accredited full-time MBA programs in the U.S. shrank by 9%. And there are 119 fewer two-year degrees in the most recent survey by some college business school. That sounds like a number, my neetric reactions, that sounds like a number not worth reported. 10%. That's a pretty big drop, don't you think? So they're finding places like Wake Forest, Virginia, tech, and other places are just

completely cutting out their traditional MBA programs. These are like relatively large universities that are completely getting rid of them. And they say, they interviewed a guy who is the dean of a business school at the University of Illinois says if you were to get every dean in the U.S. under lie detector outside of maybe the top 20 MBA program. every one of them would admit they were struggling to maintain enrollment and losing money on the program. The question is, if you're not going to go to a top 20 MBA program in either an Ivy League one or one of the Ivy Ives of the West Coast, I guess, does it make sense to get an MBA?

Well, didn't you do that? I did. And looking back on it now, it didn't make sense. I had my company paid me to do it or they paid for it. And they kind of pushed. Wait, why did they do that? They had an education reimbursement, so they paid for it. They kind of pushed me, wanted me to do it.

But, I mean, looking back, does anyone really need an MBA if it's not from a top-tier school? I guess it's more about people who are maybe stuck in their job and want to network a little bit more and get to know people. I also think that this sort of topic falls into the category of we're going to get emails from people that will use their own experience. Yes. To make a strong argument. I don't know. So during my MBA in one of my courses, that's kind of the genesis of my blog. So I think if I wouldn't have done an MBA, I don't know if I ever would have started a blog.

And that means no podcast with Michael and Ben. So was the NBA worth it? And that means traditional sense, but. You would have never got to experience me cutting you off. Yes, multiple times a week. It's totally worth it. So I don't know. It's for some people it will be.

I think for most people it probably won't, especially if they're paying for it. And if you're paying top dollar, and I know some of them, even the state schools in Michigan, it's like $60,000 to go to get an MBA. So, I mean, you really have to make sure it's worth it if it's not from like a top tier school or if you know that they're not going to help you maybe find a new or better job. Okay, so is there a worst term in financial planning than glide path? Maybe you could come up with a few. What's your beef?

If you're a young person and you hear the term glide path, is that really going to make you want to save retirement more? So they had a piece in Market Watch and it said, it's titled, Is Your Retirement Portfolio too heavily invested in equities? And they looked at a piece from Ben Inker at GMO. And he was saying that workers as young as 35 should have no more than 70% of their portfolio in equities. And he did this glide path thing. And he was kind of comparing it to target date funds from like Fidelity or Vanguard that have say 90% or more in someone that age. He's saying it's simply too much risk to ever have that much money in your retirement portfolio in What? Wait, what? He's saying 70% is the upper level. I don't understand. I mean, I didn't read the piece, but risky in the sense of what? Like, risky how?

If you're a 35-year-old, then you have 100% of your money in equities. All right. So he's looking at retirement who needs to have 10 times their final pre-retirement salary saved, and then assuming that the worker invests 10% of their money, they grow their salary at 1% inflation. He's doing like the glide path simulation based on what happens in the stock market. And he's saying for a lot of investors having any more than that is too risky because if you have that much in stocks at a young age, you could lose a lot of it. It didn't really make sense to me. That's why I'm saying this glide path thing. He's saying you start it there and then you slowly

ratchet down. Wait, did you say assuming you have 10 times your salary saved? That's the goal is to get 10 times the salary saved. So he's, he's working out in kind of backing into the 70% number. Okay. It seemed a little low to me for young people. That's all, that's what I was saying. Yeah. Okay. Chernobyl, according to IMDB. And I don't know. So does Amazon own IMDB? I believe they do. That's a good question. Probably when I'm watching TV, that's probably my go-to app is IMD. Okay. I go to, I'm a Rotten Tomatoes guy. Okay. So I go to IMDB for, looking up, you know, when you do the thing, you're watching a show or a movie, and you go,

where is that person from? Yeah, okay. Agreed. I go to IMDB. All right. If you scroll to the bottom, it says an Amazon company. So I don't know exactly where the ratings come from. People, yeah, people go on the app and then they can rate them on the app.

So they're saying that Chernobyl is the highest rated show on IMDB ever. I think that's preposterous. Well, this gets back to my theory that nothing is properly rated anymore. I hate that theory. Really? Why? In the internet age, nothing is properly rated. Name me something that's properly rated.

No. The proof is on you. Name me something that's not properly rated. Everything. Think about it. After every NBA game you watch, Kevin Durant is the best player alive. Wait, Kauai is the best player alive.

Wait, Janice is a blessed player. Okay, so those are properly rated. They're each top three, so whatever. But then those rankings shift all the time, so there's nothing that's ever properly rated because everything's constantly being re-rated and re-rated. That's what I'm saying. I think there's some truth to that. I think you're being a little bit harsh on the rating system. So the economist has, they show Chernobyl, Breaking Bad,

the Crown, and American Crime Story, and Chernobyl's ahead of them. Can we consider a mini-series a TV show? Don't you think a miniseries is kind of in between? So let's say we have stocks on one end and bonds on the other. We'll call bonds movies stocks. That's like preferred stock. Yeah. A miniseries is like a preferred stock. It's in between stocks and bonds. But honestly, after watching that and some of the other mini-series, wouldn't you love it if more TV studios just started doing miniseries? Love it. We spoke about this last week. If I can get into a one-season show and I know there's going to be six episodes, I'm in. What I love about these charts, so it shows Chernobyl Breaking Bad American Crime Story in The Crown, and it shows the rating per, like by episode,

episode by episode. What is American Crime Story? Not familiar with that. I've never seen that one neither, to tell you the truth. It is, I mean, Chernobyl was amazing. It was so well done. It was smart. It was good acting. It was kind of sad at times, but. I don't know how you could say it's the best show ever, though. I mean, that's just. No, I wouldn't go that far either. It's very, it was very good and entertaining. It was one of the best shows of 2019. I would be willing to say that best shows ever. That's a huge stretch. And it's a miniseries, so it's not a show. I'm sticking with that. Okay, fair enough. So Peloton is going public? Have you ever used a palaton or do you spin? You don't strike me as a spinner. No, I don't think I could pull off the spandex. And, I mean, people are trying to say this is the Netflix of working out. Has there ever been a workout fad like this that has lasted? That's my only question.

I know people swear by these things. But every single workout or diet plan ends up being a fad. There's nothing that people stick with forever. So I don't see how this thing that costs a lot of money can stick around forever. It's different this time. I'd be willing to be proven wrong. I just, it's such a fad-based industry. No, but I think maybe that's why it works is because how much, how much do these things cost? It's like, oh, it's over two grand, and then you pay a subscription to be part of these classes. And I know people swear by it. Don't you think that if you pay $2,000 for this machine,

you're going to get your money's worth? Sunk costs. I think these things are going to end up in people's garages, and I would be shocked if in 10 years, Peloton is still as big as it is today. I think I think I disagree. Okay. I think that they are rolling out a treadmill. Okay. It's so much money. I might get one.

You're going to get a Peloton treadmill. No, I don't know. I'm not a runner. I might get a Peloton bicycle. Okay. Ride your bike in the street. Remember the dad advice we got to? I don't want to.

I actually, can I tell you something? Sure. So I stopped using my fitness pal, surprise, surprise. However, my good eating, I don't want to call the diet. It's a way of life, Ben. Okay. My good eating has persisted. And I got Bowflex dumbbells.

How do you like that? Really? Yes. Okay. Impressive. And I've been using them. So you can use them when you're on your Peloton bike. So I might get one.

I'd be interested to hear some feedback. So are you in better shape now than you were two months ago when you're You said you're going to... My gut is absolutely deflating. The bubble is bursting. I will say this. There's going to be a dead cap balance eventually. Well, no doubt.

No doubt about that. Okay. So there was a lot of dunking on this Aaron Rogers launching a $50 million venture capital fund. And of course, Steve Young has been very successful. And these athlete memes are hilarious. But Joe Thysman was on... Or was it Joe name? I think it was Joe Thosman, was on CNBC in 2013 picking stock.

So these things, obviously, I mean, maybe we'll look back on this and say it was ridiculous. Maybe not. Obviously, the Milakunis one is well known. But Aaron Rogers earned $90 million over the last 12 months. So this is not his $50 million. I don't know what he's investing in this, but even if it goes to zero, so what? Doesn't this kind of prove, like all the athletes that are getting into venture investing over the past, call it five to seven years? Doesn't this prove how much of a relationship business this really is?

this venture really is a sort of who you know kind of business and can you get the right contacts to get in front of the right people who are starting companies they like to position themselves as being oh we're contrarians like every how many tech founder VC people on a podcast have you heard say no one wanted to invest in Uber and Airbnb except for us like except for all the other 10,000 people who got that deal it's just it's about getting relationships and these venture people now want to hang out with athletes so they're bringing them into the fold. So this fund, RX3 Ventures, they provide value through influencers and strategic partners. And if you go to the website, it says RX3 Ventures is a consumer-focused investment fund based

in Orange County, is committed to partnering with brands to maximize growth by leveraging its unique network of partners and influencers. So I listened to your boy, Derek Thompson, had a podcast where, you know, he spoke with somebody about, he called it SponCon, which is, oh, fake SponCon, I'm sorry. Yeah, it was very bizarre. Which is sponsored content. And I feel like we covered the story a little while ago. Yeah, they interviewed a, it was so crazy genius is his podcast.

It's really good about the technology world. He does it in seasons. I think this is the third one. And they interviewed a woman who considers herself an influencer. And she, I think she even flew a plane somewhere to go do an advertisement for this product that was not paying her. So she was trying to show people that she should be of the echelon of influencers who advertise products and get paid for it, but she wasn't actually getting paid. So I love how he, so he just spoke about like social media and influencers that people like I paid for it.

And he ended the episode with online. We all advertise the people we want to be. The only difference is that some of us are getting a check. Yeah. Yeah, it's true. It's kind of how you present yourself. But how weird would you feel going back to like your friends in high school and college and telling them, yeah, I just did an ad. on my Instagram feed. I'm not getting paid for it, but I am an influencer. It just, it's, it's, it's, it's, it's, I don't see how

that translates into anything meaningful. I don't know. Okay, before we get into questions, there was a, a cool tweet that was flying around and this guy, Nick Barr said my dad used to write for a financial research company and here are some cheat sheets he made for himself. So we saved these, looks like they're from a long time ago because it looks like they're printed on like an old printer paper that would remember the printer paper where you had to like rip the stuff off the sides? my gosh. That's what it looks like I was printed on. But he put these words to use. So he wrote words for continue, like hold, keep, flat, level, stable, steady, decrease, deteriorate, sap, sag, cut. It's kind of because every once in a while I run into this stuff where I feel like

I'm using the same word over and over again. And so we'll put these in the show notes, but this was kind of a good one. I feel like those printers with a perforated paper. The way that you rip that says a lot about you. If you can actually do it, slowly. are really fast. Yes. Like, that should be like the marshmallow test. Just watch somebody rip that paper. Yeah, that's true.

Okay. Listener questions. When is the correct time to buy a house as a young adult? Say 20s, I know this case is dependent, blah, blah, blah. How far should you stretch financially if planning on staying a home for seven to even 15 years? You want to take this? I don't know. I think this is, I think defining that time horizon is a good place to start because a lot of people probably don't.

When we talked to Unison a couple weeks ago, they said the average homeowner state, seven to ten years. But if you're the kind of person who's going to stay less than five, I think that can probably color your answer a little bit better. And we talked about not stretching for a house that you really can't afford because it could really set you back financially. I think if you are a financial adult and understands this stuff, I think actually stretching, again, if you understand how this stuff works, it's not a bad idea if you're going to stay in there for double-digit years. Because I think a mortgage is the kind of thing that you can grow into because it stays the same. Well, why is the starter house a bad idea? Because

you've said that before and I think I agree with you. Well, I think a starter home is a bad idea because first of all, you pay a lot of your interests up front. So the first five years or so, pretty much all of your mortgage is an interest payment. You also have closing costs. You have, you have all these fees that you pay when you turn the house over. You have to pay fees to a realtor. So there's just a ton of money that you're spending in that first five years. And if you turn around and do that again, there's just so many frictional costs there that it doesn't seem to make a lot of sense unless you're getting a really big bang for your buck in appreciation. And in that case, you're just kind of hoping and guessing that the house is going to appreciate.

So I would rather someone waited a few years and saved and then stretched a little for a house that they know they're going to save, stay in for a while, then go for a starter home and try to trade up immediately. I guess you're assuming that the person is in a career trajectory where they know they're going to be making more money every year. That'd be the hope. Yeah. All right.

Next. All right. I have been making minimum payments my student loans so far, $20,000 total in debt, but I feel like I'm going about it incorrectly. So I've got an emergency fund, 401K, and I've been dollar cost averaging into a brokerage account. My student loan rate is only 4.15%. Should I just stop funding my brokerage account and aggressively pay off my loans or continue to save? So this is kind of like the balance between paying off student loans and saving in the stock market. Again, I think that this falls in the category of do whatever you think is best for you. I don't know that this is necessarily a black and white mathematical investing question so much as it is like a personal finance. Yeah, that is always an emotional one. I mean, some people are totally fine with carrying

a balance. Like my wife, I mean, we had, I guess we had like $2,000 worth of student loans left and she was like, why wouldn't you just pay it off? I'm like, I don't know, because it's like, doesn't cost us a lot of money. We're not paying a lot of interest at this point. She was like, yeah but I don't you know I want to pay it off so I'll pay it off yeah and that's what it is a lot of ways for people it's not spreadsheet based but I think if you already have good saving habits and you really want to continue to save a little bit in the other places and then pay off your loans and then guess what once those loans are paid off you can supercharge your saving from the money you have set aside so I think as long as you're I think if you're doing a little both then you're already sort of

well on your way and whatever you do from there is probably just icing on the cake okay here's a good one. How much do you think people should spend on an engagement ring? I gave my wife a small ring when we got engaged. It was a family heirloom, but thinking about upgrading once my career takes off. Is this silly? I gave my wife my mother's wedding ring, so I didn't have to, or engage ring. I'm sorry. So I didn't really have to think about that. I guess I splurged a little bit on the wedding ring. I think a family heirloom is the perfect out for a guy having to buy an expensive ring. Like that, that's priceless, right? Yes. I wish I had a family heirloom to give my life because it would have saved me money. No, it's again, another one of those psychic income

things. Like, why would a woman pay thousands of dollars to wear a wedding dress on her wedding day? Well, because it makes her happy and she's going to do it one time. And I think the wedding ring is probably the same. It seems like one of those things where if you've been married for 10 or 15 years, you go, why did we spend that much on a diamond? Was it really worth it? But at the time it is. So trying to tell someone they're not going to spend a lot on a wedding ring at the time, like after the fact, it's kind of hard to give some of that advice. But honestly, I think if you got the family heirloom thing going for you, do you need to upgrade? Depends how, it depends on the wife there.

That's totally dependent on her. I wouldn't be able to tell you one way or another. Okay. Any recommendations besides the movies you watched on the plane? Well, those are not recommendations. Those are just food for thought, just fodder. Just some podcast banter. You don't want those on your record?

I will recommend free solo, which everyone has already seen in. I will recommend hard green book. Excellent. And I will also recommend Ron Artesse had a movie documentary on Showtime. I forget what it's called. I saw the preview. It looked pretty good. I forgot that he was on the Knicks. That didn't even come up in the documentary. But what he did say was, like, he elbowed Richard Hamilton in the back of the head. He said that he forgot that they were four minutes away from going to the finals. I still remember I was at the bar in college when the malice of the palace happened. Can you imagine that happened today? I mean, the internet would break. Yes. I remember that vividly. I still remember that night. So that was very, very good. I definitely recommend that.

And I also just wanted to make the point. We were in Los Angeles briefly, and we went to the comedy store. Yes. And actually, I went the night before when you weren't there. I saw Neil Brennan, and he was great, and a few other professional comedians, and they were very good. And then the next night, they had like an open mic where it was basically all the people that were at the door, all the people that are trying to be comedians. And I don't know that we got very many laughs. And it is probably one of the hardest places to me.

make it, a stand-up comedy. Like, hard to think of a more difficult job, a more difficult career. It made you realize how good the people who can do it really are. Yeah. Because there's a lot of the people who want to do it and who just don't have the chops or aren't as good. And, yeah, that's a tough, tough job. Like after, I don't know, we probably saw like a dozen and you were like, all right,

you want to get out of here? Yeah. That was, yeah, there was some brutal ones. There was some funny stuff. But, okay, so we started, there were the first three episodes of Handmaid's Tale on Hulu this week, so we knocked out all those. I think if that show was on Netflix or HBO, it would be way more popular. I think it already is, it won the best drama for the Emmy, the last year or two years ago.

It's one of the best shows on TV and the third season started out great again. I think it's... Give me a quick, quick block, because I'm not familiar with it. It's impossible to explain. You just have to watch it. First episode, it's on Hulu. It's one of my favorite shows. We plowed through the first season of Fleabag this past weekend on Amazon.

I watched two episodes. What did you think? I really like it. that we finished the first season last night, and it gets better as it goes on. I was laughing a lot more than my wife was. I think she is hilarious that whoever the woman plays the lead is is really funny. I liked it. We're excited for season two.

It's already on there. Well, I was so excited for it because it's like 25-minute episodes. Yes, six, the Brits have it figured out. Six episodes for half hour a season or whatever. And we flew through it. And finally, reading another one of my detective series, the 29th edition of the Prey series for Lucas Davenport by John Sanford. It was called Neon Prey. Another good one where they're chasing down Cannibal, actually. All right. It's enough of your detective books. Oh, I have something

for you, actually. I did not know that Band of Brothers was your favorite book ever. Is that true? Yes, I love it. All time favorite book. Really? By Stephen Ambrose. If somebody said, what's your favorite book ever, that's your answer? Yes, bar none. I was asked that in an interview once, and that was the first one that came to mind. I mean, it's an amazing book. I think the book might be better than the series, which is hard to imagine. You know, I never really thought about what's my favorite book ever. When I visited Europe, I got really into the World War II stuff, and so I've read a lot of his books, but Panda Brothers is my favorite.

All right. We'll have another talk to your book Monday, talking about Michael's trading escapades a little bit. So tune in for that, and we'll talk to you next week.