Animal Spirits Podcast - Economically Unattractive (EP.102)

Episode Date: September 11, 2019

On this week's show we discuss the passive bubble talk, private market bubble talk, credit cards, stocks vs the economy, people who own the market, Jeremy Renner's social media experiment, student loan forgiveness, 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 Batnik 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 position. and the securities discussed in this podcast.

Welcome to Animal Spirits with Michael and Ben. We are currently recording this in a fish bowl in Scottsdale, Arizona. So we are both here looking at each other. It's very awkward. There's 500 people eating lunch right now at the WellSat conference. Initial thoughts, one day in. Strong to quite strong. But that's not what we're here to talk about.

No. All right. So I wrote a post last week that went Uber viral, kind of? Why don't you drop some numbers? All right. Well, that was a lot. There was a lot of people that read it. but no no no we talked about this a little less there must have been over three days probably

a hundred thousand people read this one which is pretty crazy for a post on passive investment yeah i've never heard of such a thing i didn't think i was saying anything groundbreaking but this was the michael berry thing we talked about this last week a little bit and he came out with some other comments and he compared index fund investing to cdos which is pretty wild because to quote you that's like comparing apples to squirrels i thought there was only one article did he have more thoughts it was a second article for more questions and so i went through a piece and I tried to debunk this because I think it's so silly. And I think there are probably, how many good arguments do you think there are against the passive investing thing?

What do you mean? So I debunked the fact that we don't need so many active investors for price discovery. Market liquidity stuff is probably an issue that people shouldn't worry about. There was someone who sent me a paper and it was actually Michael Mobeson sent me a paper and see if you like this argument or not. So it basically, it was an academic one. And it basically said they've tracked since 1997. And this is, I think the paper, in like 2012. And they said, there's a high, strong correlation between the rise and indexing and ETFs and interstock correlation, meaning more stocks are going up and down together. And the fact that when stocks do fall, the ones in the index fall together and they fall more. Do you buy that?

Maybe a little. I would question over what period of time do they rise and fall together? That's the thing. I was also thinking over this period, there's been two huge crashes where guess what? Correlations go to one when everything falls. And here's the other thing. We've had a huge rise in indexes since 1987, but we've also had hedge funds go from 2,000 of them or so to 10,000, and they have like 120 billion in 1997 to almost 3 trillion now. We have 8,000 mutual funds. We have 5,000 ETFs. So I think there might be a correlation causation mismatch there. But that was one of the few, like academic papers that said indexing is adding systematic risks to the market. All right. Well, a few things. So then Hunt, he wrote a post on this topic. And he was

wasn't bashing index funds, but what he suggests is that what's really out of whack are people's expectations. And they have the expectation that because they have been putting money into index funds and they keep being rewarded, that they feel as if always be buying is the right strategy because that's today's common knowledge. I would ask, based on what? I mean, are there some people who expect the market to do more than it really can, obviously? But isn't that always the case? and I would say that where there really might be an expectation mismatch is not in index funds, but in active mutual funds where people expect outperformance. I mean, I think that you can make the case that there's always, I'm pulling a number out of my butt here,

10 to 15% of investors who have unrealistic expectations and thinks that they hope and pray that stocks will never go down. And that's true if you're in index funds or active funds or holding individual securities. So in my other question to the idea of, well, people are, and this was kind of the point Bury made too, the big short guy. He said people are buying regardless of market valuations. And my question is, what's the alternative? Go to all cash, put all your money in bonds, stop buying stocks all the time. I'm going to write a piece about this, another follow-up because I got to strike while the iron's high, you know? I think my thinking on this

is sort of shifted in recent years. Doesn't risk in the market depend on where you are in your investor life cycle? And it also depends on you're talking to it. You're right. He is talking out loud from his own experiences. He is ostensibly doing deep dives into these companies and analysis that we're not. And our audience and who we're trying to talk to is obviously very, very different. He's talking for himself. We're talking for people like for the everyday investor. So I don't think that we would necessarily disagree. I mean, maybe we would. But Drew Dixon had another post. And he wrote, so the overriding question we are all asking is if passive investing is at the point where there are not enough active investors to correct market prices. In other words, are we at the point where

passive free riders are actually making prices? And there was a chart from Eric Balchunas last week. He said, it's fascinating to me that there's been no net inflows into U.S. stocks via funds since the GFC. The $3 trillion in passive inflows were offset by active outflows. It all adds up to negative $350 billion, yet the stock market is up 300% during that time. So maybe not exactly what we're talking about. But it's a pretty good stat, actually. I didn't think about that. It's obviously the case that for every buyer there's a seller. But I just don't see how owning the market could move the market. Well, one of the things that I think they're talking about, it's like, it's not necessarily

stocks in the index. It's stocks outside of the index that the reason why they're not being shown love is because they're not in the index. And I don't know how we could disprove that. That might be true. But Drew also wrote, and maybe this is too efficient marketing, but he wrote, if GM has a market value of $50 billion, it is because it is worth $50 billion. dollars, and no amount of new buyers or new sellers would change that.

But, I mean, do the people that make this argument, do you think they feel eventually everyone's going to wisen up and pour all the money into these stocks that are outside of the index? I actually think during the next bear market where everyone thinks index fund investors are going to rush for the exits, I still think that money's going to flow into indexes even harder. I think there's going to be more money going to index funds and out of active during the next bare market. That's when the bubble really begins. But let's say we go a decade with flat stock prices, which is always on the table. That's probably a worst-case scenario than a bare market for index funds, don't you think? In terms of what? Flows, you mean?

Yeah, in terms of people getting antsy and anxious. Maybe, but my point is, I don't think, like, again, getting back to Ben Hunt's premise that it is conventional wisdom that stocks always go up, I just don't see it. So I don't think that we could be sitting here 10 years from now with still the Dow at 26,000, whatever it is, and be like, oh, man, index funds failed us. They were in a bubble or whatever, because if stocks are flat, it's not as if active managers are going to pick only ones that went up. So here's where we are in the hot take cycle. People want to, I'm guilty of this too.

I've squatted on a few hot takes. I think the Irishman could be overrated when it comes out. I think it could disappoint. That's a hot take I'm squatting on. No, no, no. I don't actually think you believe that. You're just saying that because you're a take machine. 45% of me believes that that movie is going to disappoint me.

After I watched the preview, I think 55% of me thinks that. You are kicked off the Irishman train. If it's great, I don't want you about it. Like on. Nobody wants you back on. I'll be the first one to admit it. Doesn't matter. No, no, no. That's not sense. You're off. Okay. Anyway, here's what I'm going with this. I think people are squatting on takes now for the time when the next crash hit so they can say, ha, told you so. And that's why people are trying to blame index funds now because they want to tell you, if they're already in your face, when stocks do crash that, I called it, nailed it. I called Amazon was overvalued in 2011. So I'm sticking with that squat. And you had skin in the game because you shorted it like 12 times. I had tons of skin in the game. Okay, so the new IPO market, which I think the biggest one we need to talk about first.

So, Uber Lyft and Slack are all down from their all-time highs anywhere from 20 to 40%. Did the bubble pop and nobody's talking about it? Here's the thing. I want to bring you back to a couple weeks ago, something you said. You said, what if we work goes public and get slaughtered? Will that have effects on the overall market? The funny thing is that they did it to themselves already. So obviously those IPOs have done really bad and haven't really impacted the market. but we work went from a $47 billion market cap private valuation and now saying that the companies actually worth $20 billion less. And I think they're trying to take back some expectations

for if they do IPO. Isn't it crazy that these companies are doing it for public investors on their own now? They know the markdown is coming. They see what's happening in these other companies and they're saying, let's get ahead of it. Wouldn't it be worse PR for them to come out at $47 billion and then lose 40% immediately in two weeks or do it on their own and come out and maybe say, flatish or don't go down as much. Here's a conspiracy theory. Do you think maybe WeWork was never worth $47 billion? I think they just kind of made that up? If WeWork is worth 47 billion, then Animal Spirits is worth $350 million. Okay, so friend of the show Morgan Housel today had a great point. He said that there's been a total of $12 billion. Wait, how is this for irony? You said friend of the show Morgan

Hazel and he's literally right there taking a picture of us. Yeah, and I was talking about him. Whoa. Okay, so he said there's been $12 billion put into WeWork from venture capital investors. Let's say we work is actually worth $12 billion. Let's say the market determines that. That would mean that all of the people who own stock in WeWork, who haven't sold like the founder, have essentially lost all their money. If you're working there, what is your incentive to continue working there and helping the company if you have lost all the money and the equity options that you have? So I think it's actually kind of a good thing that stuff going on in private markets is happening in private markets. Yeah, the bubble is popping in rich people's pockets. Yeah. So I think

it's actually a good thing that this is happening. And it's kind of of crazy that the threat of public markets doing something to these companies is actually scaring them. Is there a rich irony there? I guess a little bit. But the thing is, the venture capital investors are probably going to be okay no matter what. But it's also kind of funny that everybody knows that private markets will always outperform public markets. Yes, illiquidity premium. So, Scott Calloway wrote, Uber is crashing and will begin a decline along with Lyft. That makes the drop to this point seem quaint. The only component of the business that's scaling is the right handling firm's losses. Okay, so I was going to wait until the end for

recommendations, but I want to get into this analysis as we're talking about it. I I read the new book by Mike Isaac about Uber. Not to brag, but how long did it take you to read that? So I flew here to Scottsdale or Phoenix, and I read it on my plane trip over here. Two flights, though, I did have a connection. I'm not like you, New York elitist, who have a single flight somewhere. I had to actually get off the plane and have a connection. What percent of the book did you skim?

20 percent of the stories I skimmed over. The rest of it, I was surprised. I didn't really think I wanted to. Actually, you talked me into this kind of. The book's called Super Pump, The Battle for Uber by Mike Isaac, who's been following the company for a while. it was to use a word I don't use very often, it was riveting. I couldn't put it down. I wanted to take a nap on the flight because I got up early and I ended up reading the book, both flights. And it was really, really good. But it made me kind of, the guy who started Uber,

Travis Kalanick, or the guy who ended up running it and being thrown a CEO is the epitome of a tech bro d-bag, like the worst. No spoilers, but. Does not come off very well. I came away from this thinking this is a great story, but isn't it kind of depressing that all of these people who've created such great technology. Not all of them. Many of them turn out to be just kind of jerks. No, who cares? But the thing is, like, do we need people to be jerks to, like, create these technologies and these monster companies? So how about the story where they had that $25 million party that they threw in Las Vegas? So Beyonce performed. And he gave her $6 million in stock. I don't know what year that was, but... I think it was like 2012. They said Jay Z and Beyonce,

yeah, got paid in Uber stock. So how much is that worth now? I don't know. What if she put $10,000 in the Amazon IPO instead? She put $6 million into Uber pre-Ideal. Yeah, she made a lot. But the funny thing, I was kind of pulling up the chart on them. Some of the private valuations for Uber were like $68 billion, $70 billion. And they wanted to come out at $120 billion. And so right now, after the drop, it's actually worth $55 billion.

And that was, I think, in 2016, 2017. So that stock is basically on nowhere, even from a private perspective in three or four years. I don't know. It's just the book made me want to, I want to see Lyft succeed. So that was my main takeaway from the book. Oh, yeah? Then why'd you hail an Uber last night? Oh, got me.

There was a good article in the wirecutter, an introductory guide to credit card points, Miles, and cashback. I did not know this. There is a Fidelity Rewards Cashback card, which gives you 2% cashback of purchases. So this guy wrote, I linked my card to a Fidelity brokerage account, and my cashback is automatically deposited there once I have earned at least $50. Does that count as alpha? I mean, that's free money. Did it say what to do if you get denied by a credit card that you really want? Too soon.

We haven't heard really much about the Apple credit card. If anyone got it and wants to give us a review, I would love to hear it. I think it's going to be a flop from a business point of view. I think so? Yeah. But don't you think it makes sense that a lot of these places would want to have their own sort of payment system, credit card stuff in place, these huge companies? Why would they want to take on the credit risk?

The Amazon card that I have, you can only buy stuff at Amazon with the card. You get 5% cashback just to Amazon. So stuff like that. Isn't that done through Visa? They outsource it, but it's an Amazon credit card that you can literally only buy stuff at Amazon with. And I get 5% back on every purchase. Wait, hold on.

Is that literally true? Yes, there's two different cards. One of an actual card. This one is basically not. I don't even have a physical. card. It's basically a made-up credit card in the cloud. Oh, I don't have my Amazon card. Okay. And so I get 5% cash back on everything I buy from Amazon. Oh, congratulations. So I'm saying, doesn't it make sense for huge companies like Apple to do something like that? And theirs is like 3% cash back to Apple.

No, I don't think it does. Next. Okay. Wrong. So Urban Carmel had a post that was the opposite of the post that we spoke about last week. That was heavy on opinion light on data. This post was like literally 98% data, 2% opinion. And this is how you turn bearish. I mean, I wouldn't say that this is turning bearish, but it was just chart after chart after chart, and one of the things that was interesting... What's the takeaway? I didn't read this.

Is it that the economy is slowing? Some of the data is softening, so maybe that will be a recession next year. But there wasn't really the point. Or maybe it was the point. But here's what I want to talk about. There is a chart from the investment strategy group at Bloomberg. shows the odds of various S&P 500 one-year total returns during U.S. economic expansions.

And the likelihood of positive U.S. economic returns as high when the economy is growing is basically the just of this chart. So he wrote, the highly misleading saying that, quote, the stock market is not the economy is true on a day-to-day or even month-to-month basis, but over time, these two move together. And I feel like we have done plenty of posts on the stock market as not the economy. But is the stock market the economy, comma, stupid question mark? But don't you think that the stock market overreacts way more than the economy? Like, the economy doesn't really overreact. Like, maybe in a recession, you could say it overreacts. No, it doesn't because what does GDP decline? GDP fell like 5.3%. Right. So, and the stock market fell 55 or whatever, 56. So I think you could say that the stock market overreacts more, even if they

kind of have a long-term relationship. So maybe you could say sometimes the stock market is the economy, but not all the time? The economy is a stock market. Ah, yes. Okay. This one from courts surprised me. The headline is, Americans own more stocks than ever. How will it change the economy? And this is actually by Alison Trager, who happens to be a speaker at this conference. Shameless plug. I guess it's not a plug because the conference is already going on. But if you want to come next year, when we do this again, okay, more Americans than ever are invested in the stock market. Just 30 years ago, only about 30% of Americans own any form of stock. Now more than 50% do. The trend even holds for student debt burden millennials. In 1989, only 22% of Americans under 35 own

stock. On 2016, 41% did. This kind of blew me away. I would not have expected this because you hear about all the inequality stuff. And my usual trope about how to solve the inequality debate is to get more people invested in the stock market. Is it surprising to you that more Americans now own stocks than did in like 1990? No. Although I guess if you look at the chart here, it shows the share of Americans own stock and it went up like a rocket ship in the 90s. And it's basically... It's been flat for decades. Do some technical analysis on this chart. Well, there is strong, strong resistance at 52.5% of Americans who own stock. And if we can get above there, there's no resistance to 53%. So I guess the question is, what do we have to do to get

people to go from 50% ownership to, like, 75 and get it even higher? Yeah, 30,000. That'll do it. Okay. Okay. This is interesting. Did you know that the Jeremy Renner app is gone? I didn't know it existed until it went away. There was a bunch of stories on this. Jeremy Renner, actor in Avengers. I feel like you're a big Jeremy Runner guy. He's not bad. He was on Justin Long's podcast. And actually, I kind of like He liked him. He came off okay. But after reading the fact what he tried to do here, he's obviously a little out of touch of social media. He basically tried to make Instagram for himself. Yes, and you could like buy points to talk with Jeremy Renner. I don't know.

Why would you try and go around to Instagram? A bunch of trolls immediately jumped in and took it over. I guess someone was saying that they were Natalie Holloway. Who? Seriously? Sorry. No Natalie Holloway? Delete that part. Wait, who's Natalie Holloway? Remember, she's the one who went missing in Aruba. Are you too young to know what Natalie Holloway is? You're too old. She was a high school student

I'm missing in Aruba. It was a huge story for like a year. Anyway, people pretended to be stuff like that. It turned into an instant troll farm once people learned they could like gain the system

and he had to shut it down. And he said the app, drop the shark. Don't you think it's impossible to have an idea about what a social media platform is going to do and then actually do

exactly what it says it's going to do? Like the internet, I feel like you can't control the internet. There's too many trolls. There's too many, the internet is going to do

what it's going to do. So he tried to have this thing be this really nice place where there wouldn't be any trolls or bad comments and that's exactly what happened. Well, the whole premise is absurd. Who the fuck needs a Jeremy Renner app?

And why would you not just be on Instagram? Instagram is the greatest place on the planet. You think so? Yeah, I'll tell you why. All week long, do you know what I've been doing? I don't know. I was on vacation with Jim O'Shaugh in Africa. You like that, huh?

It's so great. You get to travel across the globe with Jimo. Okay. Yeah, Instagram is, in terms of social media, it's amazing. It's the nicest social media. We've talked about this before. And you know, it's funny.

I was thinking, like, if this was on Facebook, I'd pick up fuck this guy. But Instagram, it's just a different vibe. Yes, there's much less annoyance on Instagram, I'd say. Speaking of annoyance, personal finance experts? Okay, so MarketWatch had a story, and they looked at the average wedding costs $40,000. And the author of this story said, the title of the article is, want to retire rich, have a small wedding, and invest the rest. And it's saying, if you just took $39,000 of the average $40,000 people spent in a wedding and invested it, and it earned 10% for 40 years, you'd never have to save another dime. And this is one of the reasons people hate personal finance experts because that's so easy to say, especially someone who's already married.

My wife and I have talked about this before. Like if we did it again, we probably wouldn't have as many people there. Yes, you would. Because guess what? That one day in your life, it's all about you. And you can invite all the important people in your life there. And does it make sense to spend $30,000 or $40,000 on one day? Not financially, but personally, like the psychic income.

Yeah, you can look back on that day forever. And so it's easy to tell other people like, you shouldn't spend $40,000. your wedding, but guess who spends 40 grand on their wedding? Just about everyone, right? It's so annoying. People that give advice on, oh, people that are ahead of you in life, either in age or relationships or children, like, well, wait till this happens, wait until that happens. You're not going to want to do this. It's like, dude, shut up with your garbage advice. Yeah, and it's really hard to tell someone that's young that hasn't experienced this stuff before. Because guess what, your priorities change, your life position changes. And if you want to save for retirement,

figure out a different way than canceling your own wedding. This is just one of the reason. why I think people just don't pay attention to this stuff a lot. I have somebody in my life like that, and I basically muted them. Who's that? Exactly. Okay. What's this about student loan forgiveness? All right, so CNBC had a story about student loan forgiveness, and this is a story that I kind of know about because I used to work for a nonprofit. And the idea was, I think it was during the Obama administration, they authorized a $700 million fund that helped people who work for nonprofits, because typically, if you go to work for a nonprofit, you're not getting paid as much as you are in the private sector. And the idea was, if you work in the nonprofit sector for 10

years and you were paying off your student loans from college, then after 10 years, the remaining debt on your student loans would be forgiven, which is kind of a great thing to get people to work in a space that maybe doesn't pay them as much. This is kind of an incentive. They actually found it's called the Public Service Loan Forgiveness Program. Out of 54,000 applicants, just 661 have been approved for this. Well, Ron Lieber wrote about this over the New York Times because the process is garbage. It kind of said the process is too complicated. It's really hard for people to understand. why are they so bad at student loan stuff? Why is the government so awful at this? Why don't they just take all 54,000 of them and say, all right, gone? I don't get why they're so

inept at the student loan stuff. Nonsense. Okay, the economist had a story about real estate commissions, and this is something near and dear to your heart, because you, was it on one of the, what are your thoughts, episodes where you just went off on realtor commissions? Well, as you know, I sold my apartment on my own. And with the money that I saved on the realtor fee, I put it into Bitcoin. Nice. So they're comparing fees in the United States, which average 5 to 6 percent. Usually the typical fee is 3% for the buyer's agent, 3% for the seller's agent. And the question is why, even with sites like Zillow and Redfin that have come in to try to lower this, why are the average is still so high? Why isn't technology stepped in and decreased this as it

has in other places? Here's why. It's labor intensive. No, but in other countries, it has. So Australia, Hong Kong, Finland, in Britain, it's like less than 2%. Singapore's less than 2%. A lot of these places besides the United States aren't as high. They were saying technology has decreased the fees. How come software hasn't figured this out? They're saying $1.5 trillion worth of homes change hands as every year. I'm making this up.

So feel free to correct me if somebody has some information on this. But I'm guessing that if realtor fees went from 6% down to 2%, it would put like 80% of the industry out of business. Do you think the incentives to sell houses for a higher price would change if those fees changed? Would the real estate market adjust to those fees? No, no, no. Or has it adjusted? I think there was a part of Freakonomics where realtors actually don't get the highest price

because they're incentivized to just sell. That's what I mean. So let's say if they lowered their fees, would they be more incentivized to sell at a higher price? And so would the price point adjust enough to where it kind of balances out anyway? Would the market step in and who would get that gain? They're saying it costs consumers as much as 70 billion a year, 0.25% of GDP for these fees. I just want to be able to pay for my cable, my cell phone, and my realtor fees all in one space. Could we just bundle it up?

Yes, on the blockchain. Okay. So the NBA analysis is a story in Bloomberg that they want to potentially have vehicles where you could purchase a passive minority ownership interest across multiple NBA team. How do I short the Knicks? Well, first of all, you don't buy season tickets. Half season. Sorry, half season tickets. So I'm guessing this is just a way to get more rich people involved in bigger names,

so a rap artist or an actor could be involved in this. Rap artist? I believe they're called rappers, sir. Oh, sorry. Rap artist doesn't count? No. Okay. That's like Winnie the Pooh, verbal meme.

Rapper, and then the other one is rap artist, right? Never mind. But the idea was, and Todd has wrote about this at Abnormal Returns, are we heading to a place where we're going to do fractional interests and everything and you can bid on and buy lots of different assets in the future and maybe sports ownership teams is is one of those how about cars like that rally road company yes so what do you think about that idea is it just like something for people to talk about could that be like the new form of bragging about stocks at a cocktail party that no one has anymore but let me ask you a question

why would teams do this why do they need the money i don't think it's even about needing the money it's more about diversifying their ownership base and that doesn't make sense they're owned by billionaires okay so they're saying you could purchase a passive minority ownership do you think a price discovery would be a problem if there's index funds of NBA teams a bubble would develop real quickly okay we had a lot of people send us this by the way our branding is on point because we are for sure known as a survey brand as an anti-survey podcast because people send us surveys all the time it's great we don't have to find them anymore before we get to the survey of the week and keep them coming I want to plug sticking with the NBA, the Donald Sterling 30 for 30 was incredible. Absolutely riveting. He was not

in the vein of the Uber guy. Donald's not a great guy. Not a nice person. Right. Okay. That's worth watching. Is it a new one? No, it's a podcast. It's a listen. Oh, really? Yeah. Okay. I feel you can give me a lot of podcasts on work lately. All right, survey, why are marriage rates down? Marriage rates have steadily declined over the past few decades and now researchers from Cornell University are offering up a possible explanation. There just aren't as many economically attractive men for unmarried women to meet as they're used to be. Wow. What? Economically attractive. I guess you'd call them economically unattractive. That's a tough one to swallow. This take is lava hot. They found that they asked women what your like potential

dream husband is in terms of an average income. And the average income is about 58% higher than actual unmarried men currently available to unmarried women. That's tough. This is in the Hall of Fame of shitty surveys. Why? So I think the point is, well, are you saying like unrealistic expectations or just people? People don't understand how incomes work or what? All of it. I reject this. Totally reject it.

Totally rejected. You're not going to blame the Fed for manipulating incomes lower for millennial men, and that's why they can't get married. This is great. These synthetic husbands were also 30% more likely to be employed than real single men. This is where there's an expectations mismatch, obviously. Yes, but the funny thing is, to your point about bad surveys, I wonder if this is always the case, where your expectations are higher than reality.

But doesn't that go for both sexes? That's what I'm saying. Like, maybe this isn't a new thing. It's always been the case. can't really blame declining marriage rates on this because people have always had unrealistic money expectations when it comes to a spouse. I don't know. All right. So we talked about the deep fake thing a few weeks ago. Oh, the Bill Hater thing? Bill Hater. So Facebook put out, I saw a tweet about this. Facebook is partnering with industry leaders and academic researchers

to create the deep fake detective challenge, a collaborative effort to build new tools to detect videos that have been manipulated with AI. Called it. Did I not say, like, isn't this going to be the Wikipedia where they find stuff to figure it out? You were worried that this. This is going to lead to basically zombie states and the world is coming to an end because of deep-pane. All right. I come on it. More or less. Is this going to replace all the lost manufacturing jobs?

I think so. But don't you think that's hopeful that they're trying to get ahead of this and figure out like, okay, yeah, this will be fun to play with and have an app? Yeah, but the crooks are always ahead of the government. So they're not going to be able to catch up. What if the true deep fake is manipulating the stock market to show a reverse 1987 when it's not true? The Dow went to 40,000 today. What do you think?

That'd be the kind of deep think you would like, right? Come on, a man can dream. So I wrote a piece about this. Did you read this Brad Pitt piece in the New York Times? No. So Ad Astra is his new movie coming out. I think it looks really good where he plays an astronaut that it goes to space to find his father who played the Vitami Jones. Does it look so good that you're going to wait for it to come out on DVD?

Yes. Obviously, we'll stream it. I will not go to the theater. What's the last time you went to the movie theater? Wow. I would bet I haven't been to one in 2019. I probably went to one in 2018. I have three young kids.

and I don't go to the movies by myself on Friday night like a serial killer. Oh, I have two young kids, and on Friday night, I saw It Chapter 2. And? Two hours and 49 minutes. Oh, that's a long movie. There was a lot of fat. The first one was absolutely terrifying, but the second one was so long, and there was too much of the clown that it sort of lost its shock factor. I don't think any movie ever deserves to be over two hours.

How's that? Yeah, I can get with that. I mean, if you want to have the director's cut, be four hours, fine, but... But here's the thing that really shocked me. It was me and my friend and 12-year-olds. It was all 12-year-olds. Like, not high school kids, but, like, literal 12-year-olds. Is that a good thing or bad thing?

And then there was, like, adults and the adults telling the kids to shush, and the kids being on the phone. Like, it was just sort of a weird vibe. But anyhow, itch after two. Yeah. Just okay. I mean, there was parts I liked. It was literally an hour too long.

If there's a horror movie, you are going to see it. I'm in. All right. So, anyway, Brad Pitt is not happy. Wah! Next topic. Seriously? That's what you're going to say?

All right. Here's what surprised me. There's definitely a WAF factor here, but I can't tell if this is good news or bad news for schmucks like us. Brad Pitt is arguably the most attractive man on the planet. I'm willing to say that. I'm more of a Gerard Butler guy myself. Gerard Butler, really? Have you seen him in Phantom of the Opera?

Not only can he act, he can also sing. He's got to be one of the biggest movie stars on the planet for the past 20 years in terms of like being a huge star. And he was saying in the 90s, he basically was totally unhappy with himself. He became an alcoholic, kind of got clean now. it just, it's kind of crazy to me that you could have that sort of life that he's obviously had and still not be happy. So I can't tell if that's a good thing or bad thing for normal people. Well, I was only kidding with the Wad thing because I totally empathize. I actually don't like the Wad crowd because like these people are human just like everybody else

and money is not the answer to everything. And if you don't have money, it's easy to look at them and be like, I don't understand. He's beautiful. He's in movies. He has beautiful women and he's acting and he has all his money. But there's more to life than that. Maybe that's a good thing is saying, like, guess what, all these things are never going to solve your problems. So you have to work on other stuff. Maybe that was the point. But my takeaway was, yeah, everyone struggles, even Brad Pitt, which is kind of something you wouldn't even expect.

So there was some fantastic chart work done by Len Kiefer, who does a lot of stuff with mortgage rates. Did you see these? Hit me with it. So one of them is the U.S. weekly average 30-year fixed mortgage rate by year. Obviously, we've been trending down as the Fed does what it does. The ones from the 80s are just almost 20% mortgage rates in 1982. Let's scroll down to the next chart.

The next chart shows the mortgage rates by decade. The weekly average 30-year fixed-rate mortgage by decade. Good chart, right? Not bad. By the end of the 80s, it was 17%. And it started the decade at 10. So this is the one good thing about the manipulated Fed interest rate market. This decade, so far, we've had basically 4% average mortgage rates.

But in the 80s, you're getting 15% on cash, so. Right, with 15% inflation. So be careful what you wish for sometimes in terms of higher rates. So Derek Thompson, your boy, had an article about how and why, people are leaving New York, Chicago, and Los Angeles, and what the potential political ramifications may be of voter bases and stuff like that. He said that the most popular destinations for movers, this is interesting. Phoenix, Dallas, and Las Vegas, which welcomed more than 100,000 new people a year. And we're in a hot area right now. Could you live where we are

right now? We're in Scottsdale, Arizona. I will never complain about the heat because I don't like the cold very much, which doesn't make sense because I live in Michigan. So what are the reasons people are leaving New York, Chicago and L.A., though, just because it's getting so overcrowded and expensive. Immigration is not what it used to be. I mean, a lot of it has to do with obviously monetary stuff. So check out this chart. Domestic immigration into Chicago, Los Angeles, and New York, people have basically been leaving for the last 20 years, it looks like. Since 2000. So pretty each year, it's a negative. Yeah. That is pretty surprising. 200,000 people in New York. Actually, I believe real estate in Manhattan has been going down,

like, for quite a while, meaning like the last few months, not the last few decades, obviously. Did you see this tweet from Business Insider, a fridge that comes to you on command? No. I mean, how fat are we? So it's like a robot fridge. Literally. A fridge on wheels. Wow.

Is that really necessary? So there was an article on Vox about how people are boycunning SoulCycle, and it made me think that maybe SoulCycle is the loser in this Peloton war. Ah. But I think that that was more of like a political statement than people leaving SoulCycle and doing Peloton. By the way, you are a big time Peloton brand guy now. People were dragging you big time on Twitter about Peloton today. Yeah, I saw that.

dragging you. It was kind of funny, though. One more Peloton. So Tren Griffin sent us a link to somebody who did an analysis on Peloton, and for now, it appears as if the churn rate is very low. Meaning what? People are sticking with it? Meaning that you, a snooty workout guy, was saying that it was going to be a fad. It's still a new company. It's not that that new. Okay. If people would like to ride with you, what's your username so they get an animal spears ride? Nobody's riding with me. But my username is balding alpha. Have you still using it?

Well, not right now. We're in a podcast booth. Yes. You've been using it. You're still sweating more than you've ever had in your life. Yes. I am a recent college graduate looking to pursue a career in finance as a financial advisor. Unsure of the where to start.

Some big banks offer advisor development programs, which seems like an easy way for people to get started in financial advice. But it also seems like an easy way for big banks to take advantage of younger advisors. Any idea about how recent graduates can think about getting interested in the field of financial advice? We get a similar question like this a lot. Yeah, I wish I had a better answer because I, I don't know because I didn't take a traditional path. I did too.

The funny thing is, how many people do you know that did take a traditional path? Not many, right? I know quite a few. What would you consider a traditional path? Start at a wirehouse and then go independent. I think that's probably not. If you want to just go start working for an independent financial advisory firm, I think it's going to be really tough because when you come out of college,

you don't have a book of business. You don't have many skills to sell. And RAs don't have money lying around to just pay for somebody that's not revenue producing, which sounds unfortunate and it is, but that's the reality. And the places that do have money to pay you are the big banks. Yeah. So honestly, it's Chris Venn, who works with us, started out at a big bank and went through their training program, and it helped him out a lot.

And I think it helped him all. And he came in and brought those skills that he learned in that trading program to our company. And so I think that worked out for him. Some people will just not be able to do it, but I don't know what the alternative is if you don't have some sort of connection to the industry at an independent place where you can get an in somehow, because there aren't many opportunities, even though the independent space is seeing growth.

But you don't necessarily need to go to a big bank. You could go to, like, companies like AmeriPrize. Like, there's something in between big banks and independent companies. Recommendations. Anything else? Okay, so we spoke about 30 for 30. Oh, I have a D recommendation. Let's hear it.

Terrible. What? The shop? I think that's like LeBron's show. They sit in a barbershop and talk. Terrible. Really? So the episode that I watched, it was Kevin Hart, Gronk, Mafert Carter,

C.J. McCollum, Lil Nas. So I watched probably 10 minutes. And it was just like, it just sucked. The format sucked. It didn't work. I don't know if it was that specific episode. But it was like talking about life and what you got to do to like make it and just. The problem is I think sometimes when you try to be authentic. Yeah, exactly. You're doing someone a fake way and it comes off that way. It was just weird. And I like Kevin Hart. I like all those people individually. But in a group setting, it felt very, very force. How many PR people do you think were in the room? Yeah, it felt so manufactured. Yeah, I heard similar things. I wouldn't say that this was like, how do I describe this? So I was Hitler's chauffeur. Like, I don't know why I bought it.

I think maybe I saw it on Amazon. It was interesting. When was this book written? 1950-something. And it was a lot about Hitler's last days, like in the bunker with his wife and definitely an interesting read. That's all I got. Worth reading?

Okay. Yeah, it's worth reading. It was short. Good movie wreck. I haven't seen a good comedy in a while. I probably had four or five good hard laughs. A movie called Book Smart. Don't know it.

Jonah Hill's sister, younger sister, Beanie Feldstein, is in it. She was in, yeah, did you know that Jonah Hill is not his real name? Hill is his middle name? I did know that. Okay. So anyway, she's in it. She was in the movie Lady Bird. Did you ever see Lady Bird?

No. She's pretty funny. When she starts talking, she kind of looks like Jonah Hill. And I would compare it to like a super bad, but where the two main characters are girls. Really? Yeah, and not that funny, but that was like the premise. And honestly, I don't know if it's nostalgia or what, but if there's a movie plot that is, It's high school graduation and we're having our one last party before everyone was to college.

That gets me every single time. I don't know why. If it's like half decent, caught me in. So I love that. A Dangerous Man by Robert Creus is my recent crime book. This is one of, I've been reading this guys. He's probably his first novel came out in 1992, probably. He's probably written 25 books.

Somebody came up to us at the conference. This was great. We had a listener come up with two book recommendations for me that I've never heard of. And in the second book recommendation, it was a detective book. And he literally wrote, Reacher Like. is Ben likes Jack Reacher. Yeah, and I'm going to remember that recommendation now. So, a dangerous man, let me go in a little diatribe about detective novels real quick before we go.

So the greatest detective series of all time is Spencer by Robert Parker. Have you ever mentioned this on the show before? Probably not this. So how is that possible? You have four favorite detective series. Yeah, I do. This is the best one ever, because the guy died a few years ago. So they don't really, they have a new author that writes it, but it's not as good.

So anyway, here's how you create one of these series if I did it. If you're going to be detective, you have to be big, you have to work out a lot. You have to drink. You'd be good with the ladies. but you also have to have a sensitive side, and you can be able to kick someone's ass. It sounds a lot like George Butler. Yes.

But you also have to have a sidekick who is a little mysterious, doesn't talk as much, you don't know much about him. So anyway, he started, this Robert Kraus guy started that similar profile. And the first few books were a lot like the Spencer books. And I liked them, but I was kind of like, that's kind of the same thing. But now he's morphed where he will change in every other book will be about the sidekick.

And you learn more about the mysterious sidekick. It'll be from his point of view. And this one was, and it was one of the better ones I've read in a while about someone getting kidnapped. Joe Pike is the name. Actually, Mark Andreessen, I think, has mentioned in a few podcasts. So anyway, Robert Krayis,

great series, detective series, and I like how the fact that the author has sort of morphed a little bit and how he does it and changed it up a little bit. And if anyone has any ideas about a finance detective novel, count me in.

I can write it, right? That'd be riveting. All right, animal spiritspot at gmail.com. Subscribe, rate, review. Talk to you next week. Thank you.