Animal Spirits Podcast - Did Bitcoin Kill Gold? (EP.217)

Episode Date: August 11, 2021

On today's show we discuss investors behaving better, meme stock pushback, what is wrong with gold, why crypto isn't crashing despite more regulation, canceling student loan interest, Michael's trip to the casino and more. Find complete shownotes on our blogs... Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Like us on Facebook And feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation. Learn more about your ad choices. Visit megaphone.fm/adchoices

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com. Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing, and watching. Michael Batnik and Ben Carlson work for Ritt Holtz Wealth Management. All opinions expressed by Michael and Ben or any podcast guests are solely their own opinions and do not reflect the opinion of Ritt Holt's wealth management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Ritt Holt's wealth management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben.

I went to Las Vegas of the Northeast, Mohegan Sun over the weekend. It's been a while. So Connecticut has overtaken Atlantic City as the vaguest of the Northeast? Last time I went to Atlantic City was February 2020. I went for the Super Bowl. And my friends and I were like, man, this place, it's got him beat up. And I said, like, the next recession, this place is gone, never coming back. So we had a recession.

I can't imagine Atlantic City is doing too well right now. So anyway, on the other hand, everyone turned into a degenerate gambler last year. This is true, but you don't need Atlantic City to gamble anymore. True. All right. So I went to Mohican Sun. I got there pretty early. I got there like 1230.

And when I go to a casino, Ben, you and I have been to a casino several times, I think. Yes. I almost exclusively play blackjack. Same. I love playing poker, but it's way too antisocial and boring. But since I was by myself, I actually did play poker for a few hours. Had a good time there. One guy next to me was a bit of a jerk.

He's sitting next to the dealer. I'm sitting next to him. We're heads up. I tell you what, the people you see at the real casino are much different than you see in the casino that are portrayed in movies. The real people at a casino, that's something else. That's a lot of people watching. After 10 seconds, I look at him. I said, your turn?

He goes, yeah, it goes clockwise. Like, well, do something. All right, real quick, what was the masking policy of the casino? Did you have to wear a mask on the casino floor? I wore a mask. But no, you did not. Okay, there's no policy. Most people were not.

All right, so I did that. I did that for a few hours. Then I played blackjack just for a tiny bit before my friend got there. But this was interesting. The minimums were $50, which is way higher than... Whoa, inflation. Yeah, right? No, what the reason why is because they don't want a full floor.

They don't want people hanging around the tables. Ah. So they said it's run by an algorithm. I don't know what the algorithm does, but so I was like... It's getting too packed. They increase the... It's like Uber with search pricing. Yeah, so I said this isn't even fun.

Like $50 a hand for a minimum, like if you have to split and then double down, it was just too much. I wasn't having fun. So I left that. My friend got there and we basically played craps all night. My whole adult life I've been anti-craps, too complicated. I don't get it. Let me just stick to blackjack. I'm now a full convert.

I get it. I've seen the light. I'm never going back to the project. Crapes is the defy of the casino. Why? Because I don't get it. Okay. I used to not, it's not that complicated.

Yeah, I've never taken the time to learn. If you just open your brain and it's way more fun. and you could win way more money. I can't win a lot of money in Blackjack because if I get hot, like I get scared and I'll leave the table with craps, you could spread out your bets all over the place. And before you know, you've got a thousand bucks on the table. Okay. See, I'm actually the only phase of my life where I'm a momentum person is on Blackjack.

If I start getting hot, I start doubling my bets. Yeah, good for you. I'm the opposite. I'm an idiot. When I start losing, I start pushing. Anyway, I had a great time, a great time. How much money did you lose? Notice I didn't ask how much money you won.

No, I actually did. a little bit of money. I basically, I stayed for free. Let's put it that way to do it. That's actually not a bad way to do it. At one point, that was up a lot, but who cares? I don't go to there to make money. I go out to gamble. Plus, I was up a lot of like 930. So what was I going to stop and leave? The worst trip to a casino ever is you lose all your money in the first half hour. That's the worst. If you lose all your money, but you play for five hours straight, I'm fine with that. Correct. Actually, I never told you this. On my 21st birthday, did I tell you this, what I did on my 21st birthday?

Nope. Yeah, literally on my 21st birthday. I was home alone with no friends. My friends were off in college. I was home at Queens College. And I drove to Atlantic City. I brought probably $250. I lost it in about 20 minutes.

And I said, all right, see you later. And I drove home. That's a really sad 21st birthday. Really sad 21st birthday. Wow. Okay. All right. Anyway, speaking of gambling, et cetera,

etc. All right, Balchunis was on a podcast with Nate Gracie and he said something about Ark that was so obvious. I'm mad that I never thought of it this way. A lot of people who are probably rooting for her demise have been saying that once performance wins or reverses that her investors are going to one for the exits has not been the case. So, Her assets, actually her assets are a little bit off the highs, 17% off the highs. The price is in a, all right, whatever. Her assets are moving with the price. So people are not running for the hills.

And one of the reasons why they're not, and this is Balchunas's point, was that back in the day, when people invested in actively managed mutual funds, especially aggressive ones, it was with their entire portfolio. Not that they were going all in on one active manager, but it was a big piece of the portfolio. Now, with so many people being index-oriented investors, they already know what they're signing up for with a fund like Kathy Wood. So they're putting 5% or 10% meaning it's so much easier to swallow the drawdowns and the potential underperformance when it's only a piece. And therefore, her investors are going to behave much better than somebody who had 40% of their portfolio in this fund in the 90s. And this is an ETF, so it's not in a 401K.

So like you said, you're almost guaranteed if you're a retirement saver that you're diversified already. And whatever you have an arc is outside of something else, potentially an IRA or 401K probably. Yeah, that makes – and here's the other difference. People are way more culty for lack of a better word or religious about their invent. Like, people are sticking with stuff much longer than they did in the past, I think. With stuff like this where they're just diehard fans, I think that for some people, that mindset has shifted. And I think crypto has a lot to do with that where you have people who are more than willing to sit through an 80% decline and sit on their hands and not do anything.

I do think that that has kind of battle tested some investors or traders and given them a better sense of volatility. You made the case a while ago that investors are better behaved than they used to be. And I think I scoffed at that. It's a bold statement and it's hard to measure. But maybe we are. A certain subset of investors are probably are better behaved. There's always going to be people who are maniacs and doing something they shouldn't. I mean, I guess I think with not that ARC and Bitcoin are equivalent, but with highly volatile speculative assets, I think in that sense, sure, there are people like Yolo at the top and they're irresponsible. But I think that for a lot of people, they are doing this the right way. They're putting a few percent of their allocation into Bitcoin, into ARC, into whatever, and they're sticking with it come hell or high water.

Okay, here's the opposite of that. Ethan Allen and Ethereum. Ethan Allen's ticker is ETH, which is what you call Bitcoin, BTC, Ethereum is ETH. If you track their share prices over the past year, they're basically moving in lockstep with one another. So this is from Coin Desk. They say U.S. furniture maker and retailer Ethan Allen wants you to know that its vision of American design is meant to evoke classic country and coastal modern. It does not do crypto. So they changed their ticker symbol from ETH to ETD to avoid fusion with a cryptocurrency ether. When did they do this? I think this is just, they announced it last Thursday. It's not an effect yet. I wonder if we're going to see a noticeable slowdown in volume, probably. Yeah, I mean, this. But how is that possible?

Maybe this could be a correlation causation thing, but this stuff does happen over the time. But I wonder if we'll see. So yesterday AMC announced they're going to accept Bitcoin for movies, which is AMC the thirstiest company in the world? And I get it. Like, I totally understand them leaning into this meme stock status. But do you think there's going to be any companies in the future that totally fight against the meme stock thing and say, listen, we don't want to be involved with speculation at all. We don't want, like, maybe that wouldn't make any sense because it helps their share price quo.

But do you think there will be any management that will say, you know what, we want nothing to do with this. We're washing hands of this. Leave us out of this meme stock stuff. No. You don't see any backlash to that. Why would a company try and? Ethan Allen is doing this. They don't want to be associated with crypto.

They could have played into it. They could have said, hey, push a button on this couch and you can buy Ethereum. They could have done something dumb like that. This couch helps you mine crypto while you're watching Netflix. Right. They could have made a commercial out of it. You're right. Yeah, I'm just saying that AMC is so thirsty.

I mean, granted, movie theaters are dying. So I totally get it. Who in the right mind is going to use Bitcoin to buy a movie ticket? Come on. Is that ever going to happen? Probably not. I mean, maybe you need dad joke incoming. Maybe you need Bitcoin.

to buy popcorn and candy because it's so expensive. Do you buy snacks when you go to the movies solo? It's so expensive, the concession stand. I don't. Popcorn at a movie theater has to be the highest margin product in the world. I would not have gone to the theater for the Suicide Squad, but I watched it on HBO Max. I didn't have any inclination to watch that.

Should I? Neither did I until I looked at a lot of tomatoes. I was like, wait, this is okay. It was excellent. Do you think I would like it? I don't know. I mean, but here's why it was excellent. Like, for what it was, okay?

It's a movie about superheroes, but it's fun, it's fast-paced, it's funny, and it's incredibly violent. Okay. So, checks all the boxes for me. Probably out, but, all right, so this is one of my favorite tropes from Tech Bros on Twitter. What is it? Everyone is going to be an angel investor. So this is, they had this story in New York Times on a recent Wednesday evening.

Sixty people gathered in a virtual conference room to discuss startup investments. Among them were a professional portrait. player from Arizona, an allergist from California, and a kombucha maker from Tennessee, all members of Angel Squad, a six-month, $2,500 program that aims to help people break into the clubby world of venture capital as individual investors known as Angels. So people were sharing this. The headline is, even your allergist is now a startup investor. But here's the kicker because people keep saying, well, this is everyone. This is from the article. More than 3,000 new angel investors are projected to make their first deal this year, up from 27, 25 last year,

according to research from Pitchbook. That sounds like 10x too low. doesn't it sound pretty small? Maybe it's hard to actually, because I mean, how many people are investing in stuff their friends and family are doing in businesses and they're not really known as angels? But my whole point is VCs are trying to get people that we want everyone to be an angel investor. That's never going to happen. This is such a small drop in a drop in a drop in a drop of a bucket. True. There are more people doing this and it is getting more mainstream, but it is still so, so tiny in the grand scheme of things. True. So I'm bullish on these startup platforms. You and I have invested in Packy's deals on Angel List, which I think is a really

need platform. So in the article, it mentioned this company called The Allocations, they offer group deal making so you can invest, I guess, in groups, assure another startup helps with the administrative work, party round and sign and wire help angels with money transfers or work with startups to raise money from large groups of investors. I think there's going to be a lot more companies like this, startups for startups. I would like to know how many or how many these investors are going to be shocked when one of their investments goes to zero, because it's going to happen. Multiple investments are fighting to go to zero. Here's the thing about investors being better behaved. I think don't you think that people that sign up for this know that there's a 96%

chance? I don't know what those numbers actually are of your investment going to zero. Here's the thing, though, with a venture capital fund, you know that one of these is going to be a 10 or 20x probably. And so the ones that go to zero don't matter. If you're an individual investing in startups and you have a few go to zero, you're probably still not going to get a 10 or 20x. That's still probably even the way lower probability than one of these venture capital funds. So you don't have the offset. Oh, yeah, yeah, yeah. No, I think returns on balance are going to be terrible for people on these platforms.

But I also don't really think it matters because fun and inclusion and social status is a huge component here. So Barry had this chart on his website showing global venture capital deals in billions in it. 2012, it was less than $50 billion. It's now approaching $300 billion and breaking records every single year. It's weird because you see all these stats showing that starting businesses and entrepreneurs are slowly dying in America. But then you have these things. Is it just because these companies that are getting funded are starting so much bigger and we're not getting as many tiny small ones? Is that the – well, I'm trying to figure out what the rub is here.

With all the money we have pouring into venture and angel investing in this stuff and the multiples and the money are big – is it just because it's getting so much bigger? And it's like if you don't have a really decent idea or some connections, then you're out of luck. I'm not sure. Okay. Sorry, it's incredibly lame. That's fair. Do we think that Bitcoin killed gold? I mean, this should have been the absolute perfect environment for gold.

First, you had money printing. I don't know why put that in quotes. You had the money supply expanding dramatically. Okay, so that was like, that was the first step. Okay, the money supply is increasing dramatically. gold should do well because there should be inflation. Guess what? There was inflation. Inflation did come. We are seeing the prices of goods rising. And gold has done horribly, relatively speaking. Yes. This is the environment. If you have a newsletter, you've been waiting for this

moment for years and years and years now. And you've been pounding the table on gold. And gold is in the midst of a 17% drawdown. I look this up. This is total cherry picking. But I put this on Twitter yesterday. And since August 2011, S&P 500, up 340 percent, gold down 9%. Now, you could pick other timeframes where it's opposite. I think if you went from 2000 to 2011, you probably get a reverse of that where gold is up a lot and the S&P is down a little. But yeah, you're right. If you are a macro person who's been reading the tea leaves on this stuff and predicting everything that's going to happen, the Fed is behind the eight ball, they're lowering interest rates. The government is printing money and causing inflation, all this stuff that you've been predicting,

this macro stuff and that gold should be perfectly aligned with, it's possible that Bitcoin has taken some of the shine off of that. So over the last year, gold's down 15%. The S&P's up 32%. Yeah. And I will say gold was up 20 some percent last year. So maybe it got ahead of itself. That would be the pushback, that it was up 25 percent and it predicted this and now it's a forward-looking market. You probably did not see this, but gold absolutely puked on Sunday night in the futures market. I'm not sure exactly what happened. It looked like. Probably because the Olympics were over and there was no more gold medals being handed out. It looked like to a bad execution of some sort. So, Ben, you're stepping on this guy's joke,

but this guy, Kevin Erdman tweeted, wow. With closing ceremonies at the Tokyo Olympics, gold and silver are absolutely devastated by the sudden lack of demand for medals. Rare chance to see such a pristine market reaction. Someone should do an event study. By the way, I feel like this guy was sub-tweeting me. Did you listen to our podcast last week? Yeah, we talked about this. Remember when I pitched Rio Tinto? because they were making the medals. I guess the thing is, what would surprise you more 20 years from now? Gold has 4 or 5% in returns. Gold is still where it is now.

What would be more surprising? Neither of those scenarios are surprising. Okay. Either one, you'd be fine. You'd think, yeah, that's okay. I think gold is like 5% annual returns going forward from here with crypto growing as it is and more money going to young people and less with, like, I think there's going to be a whole generation of gold investors that dies out and not

a new one coming in behind them. Those new investors that would have been gold bugs, think about how some of the crypto people talk about macro and fiat money. And they have the same kooky ideas as all the gold bugs, but their price has been going up. So they don't look as bad. Yeah, they've been validated. Don't look as bad. They look great. Yeah. All their macro predictions and all the stuff they talk about doesn't matter because crypto prices are going up. Gold bugs wouldn't look as crazy if gold continue to rise. I just think there's not going to be another generation of gold investors stepping in to take their place. I think you're probably right about that. I don't know. This is a true story. It happened right here in my town. One night, 17 kids woke up, got out of bed, walked into the dark,

and they never came back. I'm the director of Barbarian. A lot of people died in a lot of weird ways. We're not going to find it in the news because the police covered everything all up. This is where the story Really starts Weapons All right, somebody tweeted this I'm not sure if we believe this But let's just go with it anyway

Hung out yesterday with someone Who works at a car dealership Crazy Stories says there are 12 new cars in the lot They usually have 700 So there's usually 700 now they have 12 Sold a car for 35,000 in January bought it back from the person At 39,000 six months

Later, six months and 9,000 miles later, and then sold it for 43K. I mean, doesn't it seem like the car stuff with used car prices? You'd be better off waiting to do this than you would waiting to buy a house. This market seems crazier to me than the housing market. If you could drive your car longer in wait, because when the chip manufacturing stuff eventually gets sorted out, who knows how long that'll take, this stuff should abate. I don't think you can say the same thing about the housing market, where all of a sudden

housing prices are going to, like, fall back to some level they were at before. I think this is the kind of thing where if you have a car and you want one really bad that waiting for this makes way more sense than waiting to buy a house. By the way, housing-related note here, I had on HGTV in the background the other day. It came on when I turned the TV on. How are they going to do how- That was like a very, you really hedged that. You could watch HG TV. No, to be honest, I used to.

I just, I don't watch it anymore. It was on in the background because it was on when you turn the TV off. I mean, let's be honest. It's not like it magically got there. You put it on, you put the channel on HGTV. There are other TV watchers in my life. Maybe it was my wife. Who knows?

How are they going to do house hunters now? Here's 12 houses that we bid on and didn't get. You know, I know that that show is rigged, like it's not real. But isn't that, can't they do a show like that? Like, here's this couple who bid on 19 houses. And every time they got outbid by $30,000 by all cash buyer. So you wrote a post. Zillow's getting crushed.

They just reported earnings. They've been getting cream prior to that. They're down 50%. The stock was at 208 in February. Ooh, JC was right. That was the top. And the stock is now at 100 bucks. Now, there was a huge run-up to that, of course. But what's going on here? What was some of the feedback that you got? I put down, Zillow is down 50% from all-time highs and the midst of the biggest housing boom of my lifetime. Can someone who's smarter at stocks and me explain this one? And obviously, I had some ideas and I was just kind of throwing it out there just because I thought it was an interesting data point. And I got so many replies to this.

And the funny thing to me is how certain some people are. Some people said, well, this is just the market showing you that the housing bubble is going to burst and is crashing, which that doesn't make any sense because all the other housing stocks are doing great this year. Invitation homes and NVR and Lenar and Pulte and Toll Brothers, they're all up like over 30% this year. So that's not it. Then people said, well, people aren't searching as much on Zillow because houses sell so fast

and inventory is so low. There's not much traffic. But then if you look at Zillow's results, they're growing like gangbusters still. They're still in growth mode. I pulled their PDF from the quarter app and looked at their latest results. So let's just let me just put some meat on those bones for a second. So no, it's cool. Now in the quarter app, Q-U-A-R-T-R.

Ben and I, see, we're angel investors, right? We invested in this thing. Everyone's an angel, even your favorite podcast hosts. So on the quarter app, now you can click on like the PDF so you get the conference call. you could also click on transcript. Did you see that? There's multiple things to click on it. Yeah, it's the transcript or you get their report, right? All right. So anyhow, so these are some of the numbers. So Zillow has several different pieces of business that they're in. So they've got what they call the IMT segment, which is their internet media technology. I guess that's like a lot of the

advertising. I think that was basically what they started as, right? That would be the website, right? Yeah. That was their core operations. So revenue increased 70% year over year, up 47% compared to 2019. So obviously that's pretty good. Premier agent, where they pair you with agents and they bring agents buyers accelerated 82% year-over-year, 50% with 2019. Other revenue, rentals, new construction, increased 44% year-over-year. Zillow offers, and this is like the I-buyer stuff that they're really going for, I don't know how much that increased, but a lot. So I don't know for those numbers. And then lastly, they're even getting the mortgage origination business. That increased 68% year-over-year. So now obviously there are comps, right? People, if they're growing so fast, people have high expectations.

But it looks like the business is doing okay based on what I can see. That's the thing. It's not the business. So I guess the biggest thing you could say would be a couple of people said maybe this was an Arkego stock. Because it had a huge run-up. It was on S&L and then it was up 30% the week later. Well, was it. That was public. Here, keep going. I'll Google it. So I don't know if that was one of their stocks. And I'm sure someone has a list. But their valuations went crazy. They went to like 13 times sales in their average over the past. five years is like 6.8. So I think part of it was just they were up 540% from the lows. And now they're down 50%. They're still up 200 some percent. So it's probably just a case where too far too fast, but it's so funny how that's so unfulfilling though. It is. But that's the funny thing is that when you look for explanations for these things, you'd much rather have it be the numbers in the

business or the industry or something macro when most of the time it's probably just this stock was way up and now it's it went too far. That's it. Investors got ahead of themselves as hardly as satisfactory or satisfying explanation for why stock is cut in half. It does seem funny that this like well-known real estate brand is getting crushed during a huge housing run up. And by the way, you're right. If you zoom out, right? I mean, over the last three years, this thing's still up 100%. That's the point. It had a pretty good run. Okay. So you and I talked last week a little bit about tips and we were trying to wrap our heads around this. So Neil Irwin wrote a post about how it's a terrible time for savers. And I don't want to actually him,

but if you've been a saver who's actually put your money to work in the markets, you've done just fine. But for cash and all this other stuff. So he's saying a five-year yield on tips is negative 1.83 percent. That means if inflation were 3 percent annually or holding return would only be 3 percent minus 1.83 or 1.17, which actually makes sense because that's right around where the 10-year treasury is yielding. So that's kind of what I think about it. Here's what I want an explanation for someone who understands this stuff better than I do. If inflation stays at 5%, when do tips investors start getting that 5% bump? Is it at the end of the year? Oh, so when does the adjustment happen? Yeah. This is something that I honestly don't know. I probably should know,

but I don't. I know that there is, so there is an adjustment. So when the tip matures, you get the higher of either par or plus whatever inflation accumulated over the way. I don't know if the inflation, if the adjustments happen on a monthly basis. That's what you're asking, right? Yeah. Like when do you get that 5% bump because a negative 1.83% is not as bad if you have a 5% inflation rate. Correct. So the principle adjust and then therefore... Right. Yeah, the principle will be higher by 5%. Anyway. That's a good question. He's basically saying this is tough because investors are now accepting this negative yield to protect against inflation, which is kind of, guess what? That's the world we're living in. And I just, I don't know. I don't see what finally changes. Is it just the

Fed stops buying? Is that the simplest answer? I think it's twice a year, but I'm not positive. Okay. All right, there was a really neat chart from Bloomberg showing where the hiring is coming from. We had the job support last month. By the way, you noticed what I put in the dock here, right? I did not.

I put a labor market. Oh, there we go. You should have put this under the labor market. It's right above it. Totally missed. You asked for this, and I did. I did. I delivered.

You're right. Okay. So the motion picture and sound recording industry. This is cool. It's up 6%, which is nice. But you see there, they gain 17,000 jobs. It shows you the current average wage, which is $33,000. I wonder how many of those are Netflix jobs, 90% of them to make one of their crappy movies? Netflix is in the doldrums right now. Once the last time they produced something of note. People still watch. But if you zoom out and you look at the motion picture and sound recording industry, boy, it's bad. So they were right around 450,000 jobs prior to... So this is a base rate thing again, where it's off the low base. prior to the recession and now they are, what is that number? Is that 300K? So they're still, they were normally 450 now that 300. Not good. Okay. So maybe this is one of those things where I wonder if because they've been so stringent on movie sets, if this is something that people want. So Sam Rowe had this one about the share of departing workers to quit. We've talked about this.

It's the highest it's ever been. And he put quits as a percentage of total job separations is up like 70% almost. If you're leaving a job, it's not because you're fired. seven out of ten times, it's because you're quitting and because you have better options out there. That's unbelievable. I wonder if this is the kind of thing that this is not just some cyclical thing. This is like a secular long term like three, five, seven year thing where the job market is going to be completely changed. Because we had all these people retire. I think they had the Dallas Fed guy on Adlots this week and he said three million people retired last year. So he was saying he thinks this is maybe more of a long-term labor market issue than a short-term thing, like from the pandemic.

But the pandemic, again, just pushed it forward a little bit. These labor shortages could be here with us for a long time. And companies are going to have to figure out other ways to deal with them, whether that's the QR met ordering at a restaurant or investing in some other sort of technology. It's going to have to happen. All the fast food places are going to be just drive-through only now. I don't know. That kind of stuff is probably going to happen. that reminds me the dealers at the table sucked know why at the craps table they were all new employees

every table we went to somebody was being trained by the way that makes your experience at the casino so much better if you have a dealer who kind of messes with you a little bit and jokes are on and gives it back to you a little or they play the villain but they do it with a smirk on their face like that makes gambling at black tech table so much more fun yeah when the person knows what they're doing this was not but you know what else What I forgot to mention about craps, why I prefer it to blackjack. Did I mention this? I did mention this.

When you lose in blackjack, it feels horrible. Okay. Like when you get a bad beat in blackjack, if the dealer is showing a six, flips a four, gets an ace, you want to punch somebody in the head. That's not fun. For some reason, losing in craps, this thing is way less intense. Why, because more people lose with you? I don't really know exactly why, but the beats feel way less severe. Okay, but the highs and the low is because when you have a 16, you have a lot, you

pull a five in Blackjack, that's the greatest feeling in the world. No, but it's that disposition effect. It doesn't feel as good. Okay. You hitting a 5 on a 16 feels good, but losing when they have a 6 and they get a 5, it feels it's devastating. Also, the best part of Blackjack is you could have five people sitting at a table and one person takes all the losses while the other four people win, and you just have to sit there and eat those. There's nothing you can do about it. Sometimes you have to be the person that sucks up the bad cards, and it's just, that's your role for the day. Yeah. All right,

President Biden says on my first day on office, I directed the Department of Education to pause federal student loan repayments for millions of Americans until September. The pause has been a critical lifeline. That's why today my administration is extending the pause until January 31st, 2022. So people can still put off those student loan things. Here's how about a step in the right direction. So people want all student loans to be canceled. I don't know if that's ever going to happen. Why can't the government say, you know what? Here's the lifeline. We're going to cancel all interest payments. No more interest. Like, why does the government need to be making money on student loans. I love it. This is an investment in people's education. Let's say, all right, guess what? No more interest. You're not going to earn interest if you take your loans out and you put it in forbearance or whatever. Just pay the principal back and we'll call it even. Why does the government need to make money on people? I don't understand. Oh, speaking of love it, listen to sent us this as an idea. Gentlemen, a firm, meaning buy now, pay later, but for travel. I think there's a huge potential if you can book a flight hotel and pay for it, with zero interest in installments.

I think that's called a credit card, but... True. No. I'm just saying that's how most people use credit cards. JetBlue will get into Buy Now Pay Later. I'm calling it now. Okay. How about this?

Chase Sapphire Preferred. They'll do their own travel buy now pay later through the credit card. So they'll say, if you book travel through us, you're not going to pay interest for the four months you paid off. This is why you need the Buy Now Pay Later stuff. They don't need it. But I use Buy Now Pay Later for the Peloton. So if you have a big purchase, then it makes sense to break into smaller monthly installments.

I agree. But it does sting to let go of those credit card points, those rewards, even though it's true. Whatever, it might not amount too much. During the crisis, the COVID crisis, whatever we're calling it, I call it. I prefer the Corona Crash. Okay. I'm more referring to the economy, so whatever.

What are we calling this recession? Is there a name for it? The COVID pandemic recession? The Corona crash. Oh, that's the stock. Rolls right off the time. Yeah, but the economy crash, too. Okay.

Rolls right off the tongue. Pandemic plunge. The banks weren't lending, right? I forget what I asked for. Cash, a refi. He like, I forget what I was looking for, but they said no. Wells Fogger said we're not doing it. And Beaspoke has this great chart showing tightening standards.

Oh, this is credit card. Let's assume that the housing market, that the banks followed the same thing. Way tight in the crash. They tightened up, obvious, for obvious reasons. And now, boom, Lucy Goosey. it looks like they're as low as they've ever been. They'll lend money to anyone. I don't know how they calculate this, but it's interesting that credit standards got tighter now than they were in 2008, which probably has a lot to do with the regulation. But that's pretty interesting

to be how quickly they tightened and now loosened up again. Maybe that, I don't know, maybe that's a good thing that the banks are more flexible than they were in the past. So it looks like lending standards are as loose as they've been going back to 1996. Let's start spending. Mark Twain allegedly said A banker is a fellow who lends you his umbrella When the Sun is shining But wants it back the minute it begins to rain How many Mark Twain quotes do you think there are

That he actually didn't say I kind of feel like this one is real Okay You're the Twain expert, you wrote about him All right so according to Who is this from Bloomberg 190 days The SEP 500 has avoided a 5% drawdown

I think it was down to 4% or something In that time the index has risen at an annual pace of 46% a feat never seen before. Again, that's annualized. You know what the S&P is doing right as we speak? What's that? Hitting all-time highs, no big deal. Okay. We really haven't spoken much about the stock market this year. I was thinking the S&P 500 has to be the hardest benchmark to beat. Unless you just were full tech and you went all NASDAQ 100, then good for you. But if that's your bogey, think about it. The growth stocks did amazing. The big tech stocks really helped keep the S&P up.

during the crash. And then we shifted to value. And when those growth stocks crashed, the value stocks lifted it up. And now it's back. And now it's back where the growth stocks are doing well again. How wouldn't you even beat the S&P? Like, even if with perfect foresight. I mean, especially over the last 18 months, this has got to be one of the craziest periods, because you could have gone all in on value and looked like a genius for six months and then look to Canadian again. Or you went all in on growth after it had that huge run up and then growth crashed. And I just think, yeah, the S&P, here's the other. thing. So this is another one from Samarrow. He showed the earnings estimates for 2021 earnings over time.

And it was close to $200 a share in July 2019. Then it crashed to 160 by this past summer. And that was in 2020. Now back to 200 again. Again, the stock market looked, this looks just like a valley. The stock market completely looked over it and said, we're not going to worry about that because we know it's coming back. The stock market was right. I can't believe it. It's not always going to be the stock market was right. I can't believe this happened. I really can't. I can't either. I was definitely bearish. Like in, I don't remember, call it July when we were like approaching break-even. I said, this makes no sense. This makes no sense. I said, you're telling me business is better now than it was back then when we got above. And it turns out the answer was yes.

Or the answer was better. It's going to be better. And it's coming true. Like the whole stock market is forward-looking thing. It never sounds right, but it was true. happened. It was right. You know what else is right, Ben? Kudos to you. Your Coinbase call about it reports earnings tonight. I'm curious to see what they come out with. Why, this might be a dumb question. Why is Coinbase moving with Bitcoin? Oh, so it's up again now that Bitcoin's up? Yeah, it's been doing very well the past two days. I don't think this is a fundamental thing. Are people trading Bitcoin? I guess people are trading Bitcoin more when the price is going up. But I don't think this is a fundamental thing. I think this is an investor thing. I think investors get more

excited about Coinbase when Bitcoin is rising, which doesn't seem to make sense. I think it's that simple that people just get more excited about it when crypto is doing well. And it's probably, I don't know, the same set of investors in a lot of ways. Okay, here's a crazy one I saw from Bespoke and I put these into Y charts. Pfizer, the high price in 1999, $47.40. The price right now, $46.16. So Pfizer's price is just now about to reach the 1999 levels. This is a company that basically saved hundreds of millions of lives, possibly billions when you add it all up. Obviously, there's other vaccines as well. I don't know what the full Pfizer count is. And you look at this stock chart and say this company is what, they went nowhere for 22 years or whatever it is. How could you consider that

success? It's, I will say, dividends. So on a price basis, they're down. And dividends are up over 100%, but that's kind of crazy to me, correct? So this is one of those companies that obviously got caught up in the gross stock rage of the, because I remember Coca-Cola was trading for 40 to 50 times BE back then, too. Pfizer was obviously one of them too. This one surprised me. Huh, I would not have guessed this. So if I'm a technical analyst, this is 22 years of resistance or what do you say? Support. Price has memory, Ben. Okay. So all those traders from 1999, they're finally whole again if they weren't reinvesting their dividends. Oh, talk about your fake Instagram account. What's going on? Why are you spamming people? I must get two DMs a day from

someone being like, hey, a lot of them are people who should know better saying, hey, thanks for DMing me on Twitter or on Instagram. I don't really do Instagram. I have an account. I haven't posted anything on in probably two years. I don't really ever check Instagram. I post stuff to our, we have an animal spirit's Instagram. That's a little plug there. I post stuff there. I just, Instagram never did it for me for whatever reason. I'm a Twitter person. That's it. I don't do Instagram and I don't do Facebook. Twitter is my only thing. and someone credit to this person, they created a Ben Carlson Instagram account

and got like 70,000 followers. And I've had so many people say, hey. 70,000? I'm sure they bought them. But it's like, hey, you DM'd me about an options trading strategy. Is this you? And it's like, you buy Target Date funds.

How? Is that me? How do people not know? This is like clicking on the link saying, hey, your password at Amazon is defunct. Click on this and put all your information in. Come on, people. How are these people getting done?

Is the fake Ben recommend the option strategies on target date funds? Instagram made me, people kept saying, I'm reporting this for you, I'm reporting this for you, Instagram made me post a picture of myself holding my license to try to have this reported, and they still didn't take it down. Does that fake Ben Carlson have good content? It looks like it actually is posting my content. So it's basically a Ben Carlson bot, but then who's using my cachet to try to get people to buy options strategies.

And you know what? I can't knock the hustle. I got to give them credit. I'm going to hire them as my social media intern, maybe. Speaking of Hustle, my wife got delivery last night, and she told me the delivery driver gave her a business card. He also does power washing on the side. I like the entrepreneurial spirit. Oh, wow.

So we heard about some kids in the neighborhood who are charging $10 to go through and pick all your weeds out of your mulch and stuff. That would be money well spent. I would pay triple that. Yeah. Is that not the worst thing about being a homeowner is pulling weeds? That's awful. I have a gardener. Of course you eat, well, does your gardener also fold your laundry? Of course you do.

No, but everybody here has a gardener. Nobody mows our lawn here. Okay, I don't mow my lawn, but I don't have. Also, they don't pull my weeds for me. I have nowhere to put, even, so do you have? By the way, I feel like that's a New York thing calling in a gardener, not a landscaper. Same thing, whatever. Do you? I'm saying it's a coastal elitist thing calling it a gardener. Fair enough. Do you mow your own lawn? No, I pay someone to do it. Okay, so what are we talking about here? You do the same thing. They don't weed for me. What's the difference? Of course they do.

They don't pull weeds for you. That's because you don't have a yard because in New York you don't have yards. We don't have yards, yeah. I have all this mulch, and then there gets weeds in it, and it takes me an hour to pull them all out. It's a pain. Put your kids to work. I might as well. Okay, so we got a lot of feedback on a car wash thing. And there was a surprising amount of people who said, no, no, no, Ben is wrong. But every one of them said, I know that the undercarriage stuff works. I just don't know how.

Like, there's different soaps. But have you ever looked at someone's car? And someone e-mails and said, hey, this whack stuff works. And people say, like, their cars never looked as good. Have you ever looked at a car and goes, oh, they must have gotten the deluxe car wash? Like, no one ever looks at that. Oh, this is funny. This is funny.

Somebody did email us. wash will make your car like shiny or cleaner. I know it sounds crazy, but it does. It's a different soap and rinse process. I know people won't believe it, but somehow it does. I can't explain how it does, but it does. Exactly. That's a mental accounting thing where you're in your head, it looks better. Oh, wait, but there's no way it looks better. Hold on. Hold on. Here's another email. Regarding the super plus wash and it's all the same brushes. He said I worked in a car for six years. Yes, the brushes are the same, but there will be different chemicals and foam sprayed on your car that would not come out in the regular wash. So I think what we learned here is that after I

winter, maybe if you want to spend to really get the stuff off from your undercarriage, go for it. But other times, wait for the rain. Just wait for the rain. Yeah, that's a free car wash. I always say that, free car wash. Yeah. In the rain. Yep, that's fine. All right. One quick listener question. Recently, a lot of house, while we have enough, we're very close to enough in cash and investments to cover the cost of the house. We got a great rate. And it's only put 20% down to maximize our investments. Wow. Looks like two and five eighths. Two point six to five. that's pretty good. However, the mortgage plus property taxes plus expenses, including mostly child care, pushes our monthly cash flow budget to the limit. I'm currently maxing our retirement

accounts, have a decent emergency fund and think we have enough for kids college in 529. In order to ease our monthly budget and cash flow, is it better to put less in our retirement accounts for a few years while child care costs are high? Or is it best to continue to max tax deferred accounts and use a little of our post-tax investment savings for that cushion? So this is basically, I mean, this is a good problem to have, obviously. So you had this money set aside that it's going to be for a house. You decided instead of putting it into the house, because rates were so low, you're going to keep aside and keep it invested. And they're having trouble, should I save less or should I just take money out? But hold on. They also gave us a little nugget. That's very important.

He said that he's pretty sure the raw numbers are better if we max tax deferred accounts. I would agree with that. That's where I was going. But he said he's worried about the emotional impact of constantly pulling a bit out, especially if the markets go down. So if you already know that you might react poorly to a decision that you make, then go the other way. Here's the thing. It's basically dollar cost averaging in or out one way or another. So in one way, your dollar cost averaging out of your taxable investments or your dollar cost averaging into your tax deferred investments. It depends. You could do both. Yeah, you could split the difference if you wanted.

Cut back on your tax deferred a little bit and take half from your taxable accounts or something. But I guess the tax, either way, you're in a good situation here. So another idea, pull weeds on the side for some extra passive income one of these times i'm going to count up how much money we've spent on daycare because that's why just because it's paying for college without ever saving for it in advance people save for college for 18 years sometimes that's a good observation daycare is all the sudden in a couple of years paying enough for college over the course of a few years how much do you pay a month in daycare well our kids are part time now so they only go three days a week but when when they were full time at the worst of it we had three kids in daycare for

two years, and we were paying $2,500 a month, $3,000 a month probably. And that's in Michigan. That's a lot. That's a lot, a lot. I, this is not popular with some listeners. I think daycare should be subsidized by the government. Damn straight, it should. Like, for a lot of people, it's truly backbreaking.

Yes. I don't know how some people handle, and that's why you have grandparents help or I don't know, it's a lot. And the argument is, hold on, why is K through 12 free? I know we pay taxes for it, but somehow people. people have to come out of pocket in a ridiculous way in potentially the hardest years. That's what I'm saying is that it should just be, if we already are paying for public schools out of our taxes, like, fine, let's do it for daycare too.

And we're going to get some hate mail on that, and I don't care. I totally agree, comrade. All right. Let's do some recommendations. I finally saw a good movie. Okay. Higg with Nicholas Cage. Oh, that was good?

I wanted to see that. Okay. I was waiting for reviews. I don't want to oversell it because I went into it with very low expectations. So I don't want to oversell it. No, dude, say no more. I'm all in. Okay, here's the thing.

So I'm not going to give anything away. It's a guy who owns a pig in the woods and someone steals his pig. But it's way, way more than that. And I looked on his IMDB. Nicholas Cage has not had a good movie in probably a decade and a half. I mean, if you look at some of the ratings on some of his films, I've seen some of them. I mean, it's just, it's all like fours and fives on IMDB. He has some, I mean, most of these you've never even heard of.

My kids would probably say, hey, damn. Dad. Crudes was good, but, I mean, that's a kid's movie. That doesn't count. It's been a long time. There's so many. Yes. You've never heard of any of these. And he was really good in this. I mean, this is a... Yeah, he's got some really big stinkers.

His last good movie, and this was ahead of its time. I love this movie. It was kickass in 2010. Yeah, I never saw that, and that's kind of a... It was not a kind of a kid's movie, too, so... No, no, no, it's a violent superhero movie. Okay. Ahead of its time. So I'm saying his last, like, decent movie for me was probably, I don't know,

National Treasure 2, which wasn't even that good. It's been a long time. Yeah, it's been a long time. He's going to get Oscar buzz for this, and he probably should. I think only him and maybe like Russell Crow or a few of the people could have done this part. I don't want to oversell it because it was, and here's the thing. Stop saying you don't want to oversell it. Just if you like it, you like it.

But this could have been a two-hour movie, but they chose to make it 90 minutes and add a little more mystery to it, which I loved. Like, I would much prefer the shorter movie. It was one of the better movies I've seen in a while. I'm watching it tomorrow night. You had me at Nick Hage. You have to rent it on Amazon. I think it was seven bucks. Ooh, seven bucks.

Yeah. I'll swallow it. Big spender. Project Hail Mary finally finished. Now, the first half of the movie I thought, okay, hands down. By the way, it's a book, not a movie. Oh, sorry. It reads like a movie.

I'm thinking of it in terms of a movie because they already sold it. So the first half of it, I'm thinking, oh my gosh, hands down, this is going to be. No spoilers. No, yeah. I'm just thinking, hands down, this is going to be better than the Martian, like as a movie. Because I thought the Martian did an unbelievable job of being, because I read the book first. Great book, great movie. then the second half happened and I thought

okay they could mess this up there's potential for messing up this movie like they did with Ready Player 1 where when you get into the more futuristic stuff like that was a great book in a horrible movie like I think it's got to be in good hands otherwise they're going to mess this movie up but I really enjoyed it it was so good

you like the ending no spoilers yes I like the ending I kind of thought something if that was going to happen but I liked it and someone said if you guys liked Project Hail Mary the author of that Andy Weir said his favorite book of the past few years is called Recur Recursion by Blake Crouch. And so I immediately went from that because I'm just, I cannot read nonfiction right now.

My brain just, it won't allow me, so I'm just on a fiction kick. And this recursion about Blake Browd, I'm already probably a quarter of the way through it. The only thing I will say is it deals with memory and memory replacement. So it's almost like eternal sunshine for the spotless mind crossed with Inception. Would also make a good movie. Yeah, I like it. All right. One more thing.

I watched the newest, latest Dave episode last night. It was finally kind of a stinker. is there a worse storytelling device in all of television show than a dream sequence? When has a dream sequence ever led to someone going, it was useful for the plot? That's true. It only pisses off the viewer. I always end up fast-forwarding through it because I don't care what this person is. Just like, if you told me, hey, Ben, I had the craziest dream last night. I go, oh, great, I don't care.

No one cares about your dreams. Yeah. It's useless. Harsh but fair. Okay. I will tell you that Chris said it was his favorite episode of Dave Yet. I get what he's doing. Listen, Dave is an artist, like he's doing his thing, and it's just, I prefer comedian.

I prefer the comedian, Dave. That's just my personal taste. Fair. I get what he's going for, but Chuck, I don't like it. All right. I already spoke about Suicide Squad. For what it was, I mean, I can't imagine it being better. It was just fun, fast-paced, nonsense, violence, the whole, it was great.

How long? Like two and a half hours, too? I don't think so. I mean, it didn't feel long. I can't handle those two-and-half-hour superhero movies. No, dude, this was a goof. Like, it was, two hours, 13 minutes. It was just pure fun.

There was nothing serious about it. It was a goof, and it was great. All right. The reason why, so I've been talking a lot about Dennis Villanueva. Wait, do you figure out how to pronounce his name yet? I did. By the way, again, this is probably like the fifth week in a row, so you're probably familiar. But just listen to this catalog.

Blade Runner, which I never saw, the new one, arrival, Sicario, prisoners. He's doing Dune, which is coming out. This could be the biggest blockbuster of the year. I'm going to watch it on HBO Max, by the way. Come on, you got to go to the theater for that one. Nope, HBO Max. All right. He did incendies, which I should not have hedged.

Go see that. That's a full wreck. I upgraded it, full rack. And the reason why, okay, the reason why somebody emailed us and saying, I love how you say his name. I don't think I'm mispronouncing his last name, but it's not Dennis. It's like Denise or Denise or something. Oh, okay. All right.

You thought it was last name. Okay. I thought it was Dennis. All right. So anyway, this week, I watched a movie called Enemy with Jake Gyllenha. Have you ever heard of it or seen it? I don't think so. How old?

2013. Jake Gyllenhaal plays two characters. It's one of those movies where he plays himself and another where he plays two different people. Oh, I did see this. Okay. Oh, you did? Yeah. It's about a professor who finds somebody who looks just like him and they both sort of bug out.

Yeah. It's totally a mind-fitting. It's very tricky. Yes, I think like some people hate this type of movie. Others, it's their cup of tea. This is my cup of tea. I'm not necessarily recommending it, but what did you think of this? I totally forgot about it,

but yeah, I'm into these kind of weird Makes Your Head Hurt movies. Do you remember how it ended with the spider? I don't remember it at all. Okay. I have to rewatch it, I guess. It's been a while. I don't know if it's worth the rewatch,

but I very much enjoyed it. All right, check us out Spaces on Wednesday, 4 p.m. If you keep running it, it's going to... If I keep running, what? If you keep running spaces, because it doesn't work for me for some reason. And Monday, we'll be talking to Zach Prince of Blackfly. Animal SpiresPy at Gmail.com.

Thank you.