Animal Spirits Podcast - Finally, a Slowdown (EP.333)

Episode Date: November 8, 2023

On episode 333 of Animal Spirits, Michael Batnick and Ben Carlson discuss: the cooling labor market, why the 60/40 portfolio looks more attractive now, why the Fed is in a tough spot, why everyone hates this economy, how to become a millionaire, realtor commissions, reclining your seat on a plane, and much more! Thanks to YCharts for sponsoring this episode. Register for Michael and Ben's year-end wrap up at: https://ycharts.zoom.us/webinar/register/1316977225613/WN_ZwvEURfASPK06-zAxVKEWA  Find complete show notes on our blogs... Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation.   Check out the latest in financial blogger fashion at The Compound shop: https://www.idontshop.com   Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Ben Carlson are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ Learn more about your ad choices. Visit megaphone.fm/adchoices

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It'll basically be like a live animal spirits webinar, right? I feel like the chart that's defined the year, it's pretty obvious. It's magnificent 7 versus everything else. Is that the biggest thing of the year? I feel like you could have like 12 charts of the year. Economic market. Yeah, of course. There will be a link to register for this webinar in our show notes.

Check them out, wealth of common sense.com or relevant investor.com. We'll mention this a few more times before it happens to, but December 6th, be there. Also, 20% off your initial subscription if you tell them Animal Spirits, not you for White Charts. Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnik and Ben Carlson as they think. talk about what they're reading, writing, and watching. All opinions expressed by Michael and Ben are solely their own opinion and do not reflect the opinion of Ridholt's wealth management. This podcast is for informational purposes only and should not be relied upon for any

investment decisions. Clients of Ridholt's wealth management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. Ben, should we tell the audience that the old email is now being forwarded to the new one? Or should we just make them email animal spirits at the compound news.com? Okay. We'll keep it a secret. Don't tell anyone. Just between us.

So a few people told us this, which we obviously didn't realize and makes a lot more sense. Yeah. Well, thank you to the email. That was like a, oh, yeah, that was. It's like forwarding your mail when you move. So I am about to, well, not about to. we're recording this, we're recording this early. Normally our schedule for recording is Tuesday. That's Tuesday before Wednesday, but we're going to be in Charlotte. I'm going to be

flying. I'm going to be in Cincinnati. Ben's going to be in Cincinnati. Are you going to put the seat back? Are you going to recline? No, I never do it. So we had, we had a lot of people email us the video of a woman getting very upset. It looked like she was getting very upset that somebody was, like, not allowing her to lean back? What was the person kicking her chair? They were pushing her chair because she leaned back. Here's the thing, though. I think if you're going to do it, you have to move back slowly. I feel like there's a lot of people who just push the button and just go like this. Yes, of course. And jack it back. So I feel like if they do that, you can give them a forearm shiver to the back of the chair once, just once. You know what the

other bad etiquette is on planes for people? If you're getting out of your seat to go to the bathroom, get your bag or something, and you grab the seat in front of you to pull yourself up. Oh, does somebody email us to that? I don't know. That's, that to me, that, that's the worst. So when you're sitting in your chair and if you're watching this on YouTube, you can see me, but when it goes like this, it's like, whoa, whoa, whoa. Yeah, take it easy.

You can't, yeah, it's not a poll. It's not a, for bracing yourself. Well, let me, let me ask you this. Somebody emailed us. I just got off a flight in which I had an aisle seat. I was dead asleep when the attendant was coming down the aisle with the beverage cart. the woman in the middle seat next to me literally elbowed me in the arm

and woke me up to make sure I do the cart was there okay that is that is egregious that's a lot just assume hey I'm sleeping I'm not thirsty leave me alone yes that's from thirsty all that's a flight attendant that's an unspoken code

yeah okay so we're recording on Friday which was a job's day today and the market seems to like it bond yields down stock prices up I send you this before we the market seems to like it the well the stock market was in a correction this year for five minutes. It was down 11% from the highs or 10%

from the highs on Friday, now up this week from the jobs report. And the thing people seem to like about it is that, yes, we still added jobs, but it wasn't like a hot jobs report. So people are saying, like, this is, the labor market is cooling off a little bit. This is a good thing. It makes the Fed's job easier. I guess you could say this is Goldilocks a little bit, but of course there are going to be people who say, okay, this is the beginning of the slowdown as well. And no way to tell either way. What happens when the market goes from correction to pullback territory? Does it uncorrect? Dead cat bounce, right?

Nah, it's not dead cat bounce. You can't say that until you're in a bare market. So Heather Long tweeted, we're finally seeing a real slowdown in the job market. 150,000 jobs added. The government made up one third of that. What was the expected? Was it 180, I think? I don't know. Doesn't matter. Yeah, it does. Okay. So it's lower than expected. The thing is it had to slow eventually because, like, even the prime age labor force participation, this is people, 25 to 54, is almost as high as has ever been. Like, it's higher than it was pre-pandemic.

So more people are in the labor force and the prime age. Now, the whole labor force is going down because boomers are retiring. That makes sense. But the prime age, 25 to 54, is within spitting distance of the highest it's ever been, which was in 2000. So the labor market had to slow eventually. It couldn't keep growing. Labor force went down, 201,000. 3.9% unemployment, highest since early

2022. August and September revised down sharply. Nothing to panic about, but it points to slower growth. The average unemployment rate from 2017 through 2019, basically pre-pandemic, was just, I think, 4%. And now we're at 3.9%. So certainly nothing to be necessarily alarmed about. Nevertheless, growth is slowing.

Here's Bill McBride. leisure and hospitality gained 19,000 jobs in October. At the beginning of the pandemic, leisure and hospitality lost 8.2 million jobs and are now down 223,000 jobs since February 2020. So leisure and hospitality has added back 97% of all jobs lost in March and April 2020, which is pretty remarkable. That's pretty impressive. Pretty remarkable.

Construction employment increased 23,000, and is now 425,000 above the pre-pandemic levels. manufacturing employment decreased, but is now 175,000 above the pre-pendemic levels. So slower, nothing to be alarmed about. So two economic people that I follow and had different messages this week, which is interesting. So Colin Roche asked that the Fed's going to fumble the football. He said this last week. If I was Fed chief, I'd be communicating an end to hikes and halt in the balance sheet runoff. This would send a strong signal to the bond market that's time to stop letting rates climb,

which is pretty much what happened this week. The Fed didn't raise. The bond market yields have fallen big time. They went from 5% in the 10 year to 4.5% or something. So he says, like, time to chill. And then Matthew Klein at the overshoot says, basically, spending is still going up at a blistering rate. He said, U.S. made goods and services rose at a blistering 9% yearly rate in Q3, 2022, 2023. The exact implications for all of this are that the Fed are not entirely obvious, but it does suggest that the underlying growth momentum, both nominal and real, is strong enough that officials should keep their focus on preventing any unwanted loosening of financial conditions, which could upend an otherwise

healthy economy. So he's saying, like, we still risk being a little too hot here. I think that's maybe why people thought this job support was so good, that it's good that things slowed a little bit. But it is kind of funny that we're, I feel the Fed is at a very tough juncture right now in figuring out what to do. So I think, like, just chilling out for a while and seeing what happens is probably a good place to be. But you have people who are worried about higher for longer on one end and people who are worried about like a recession in rates tumbling on the other end. It's a weird place to be. What would you be more worried about? A recession and growth slows and rates slow or a boom and inflation continues a little higher than we thought

and growth continues a little higher than you thought. It's a different worry for the economy and the markets, I think. Because don't you think that the economy is slowing right now is probably a good thing for the markets. If the economy slowed and rates fell and inflation fell, I think that's good for the markets. It's weird as it sounds. No, it's incredible for the markets. Look what happened to the stock market this week when rates started to come down. So the 10-year went from 4.9% at the beginning of the week to 4.55% today. Market is screaming. And if you look at the interest rate-sensitive stocks, look at utilities, look at home builders. you hold on to your utilities position?

I did. Ready to sell? No. Look at consumer staples. Look at regional banks. Oh my God. The stocks that are that have been hit hardest by rising interest rates are ripping this week.

Zero coupon bonds are up seven and a half percent this week. So speaking about like the Fed and what they might or might not do, I thought this is interesting. Gumlock said if the economy rolls over, he was on CNBC, with Scott Wapner. He said, if the economy rolls over, as I expect, the Fed is not going to cut rates 50 basis points. They're going to cut rates 200 basis points. So he's in the recession camp. If the economy rules over into a recession and this were to happen, the Fed does a cut of 200 basis points, do people panic and sell because, oh, my God, things are really bad?

Or do risk assets absolutely sore? It depends. I mean, right? Yeah. That's why it's so, because, like, the higher for longer, I feel like everyone latched down to the higher for longer thing. The whole interest rate thing is all screwed up. And this is why, like, I've been a little hard on the Fed the last 18 months or so, but they're in a really difficult position here because they've already pushed so hard.

But, I mean, are we going to look back and say 5% treasury bond yields for, like, a week? That was it. Like, I hope you got it while I was here. Or is there going to be another boom in a quarter and we're going to forget about this? That's why we're in such a precarious position. I can see it going either way.

Well, so can I. But one of the things that I've been, that I'm going to double down and I think we said that last week, I know I've been speaking with Josh about it, I can't keep track of all these damn podcasts. But a trillion dollars went into money market funds, that move happened gradually, then suddenly.

I think the reverse will be true, but even more. How many rate cuts would it take do you think for people to start getting worried about having their money in T bills and money markets? So if rates go down to 4%, the money's going to stay there. If rates go down to 3% the money's going to stay there.

If rates go down to 2%, at some point people will stay in money markets and rates go from 5%. Shit, I have all this money and cash just sitting there. I think it was very... I think at that point, people start getting a little worried

and move it out and look for other avenues. But my point is, it was very easy and comfortable and probably the right decision to get your money out of a checking account and into money market funds. Oh, definitely.

For cash management purposes. For sure. But long term, I feel like that will not, people are not going to leave the money market funds. If you're timing the stock market into money market funds and T-bills, that's a much harder move the other way. It was probably an easy thing to do at the moment, and I'm just going to clip these 5%.

Going back into stocks or whatever you're going to put your money into is a much harder decision. We've spoken a lot about attention on the 6040 portfolio. So there was an article in the Wall Street Journal. You're set it and forget it 401K made you rich. No more. Stock and bond portfolios that worked for the past 40 years aren't ready for what's coming.

Now, Spencer Jacob wrote the article. I'm a fan of Spencer's. There's no way that he wrote that headline. We all understand that the people that write the article don't control the headline. Not a great article. Not a great article. And it was basically like correlation. and where the reality should be, the reality should be the 60-40 portfolio had an incredible run,

a remarkable run that, frankly, very few professional investors beat, even the 40 part, like the 60-40 portfolio, had an incredible sharp ratio, incredible returns, and yeah, it had a really rough 22, right? Obviously, had a very, very rough 22. But the reporting should be the good news is that you no longer have to lean so heavily on the 60 part of the portfolio to carry the load. that should be the reporting. And honestly, it was a bad thing that happened so quickly for bond investors that you got just savaged.

But rates went up so fast that, like, you got the, you ripped the band-aid off and got the pain. And the other thing is, I hate when people say that, like, the only reason that returns have been high in financial markets is because the last 40 years rates have been falling. Listen, that's helped. But I just looked this up. 1926 to 1980, the S&P 500 did 9.4% per year. That is lower than the 11.2% it did from 1981 to now, but I don't know, 9.4% still sounds pretty good to me. Bonds did like 3% as opposed to like 6%. So it's not like, yes, returns have been better since 1980 when rates fell, but that's also because the yields were so much higher to start off. Right? So I just hate the idea that like the last 40 years everything is because of falling inflation and falling rates. Yes, that helped. It provided a tailwind, but it's not like returns before. then were awful, right? And that period from 1926 to 1980 includes an 85% correction, crash in the Great Depression. Correction. Sorry, correct. Yeah. Minor pullback. Healthy

correction. Morningstar had a piece that's showing the valuations of a 6040 portfolio over the long term. And guess what? It's starting to look a lot. Looking attractive. Looking attractive. So all we see are like Cape ratio charts and how expensive the U.S. stock. First of all, We're trading at 17 times forward earnings. Now, is that where rates should be given the interest in an environment? I don't know. That's what the market says. I'll take the market's word for it.

But if you look at, and the way that they calculate this is not important. We'll link to them in the show notes if you're really curious. But the bottom line is, if you look at a valuation of a 60, 40 portfolio today versus certainly two, three years ago, it's reasonable. And to my point from the last episode, if you want cheaper stocks, they're out there, value stocks, small cap stocks, international stocks. Mid-cap. If you're worried about valuations in the U.S.,

If people have been for a while, you know, granted, and it hasn't mattered yet on a relative basis, other stocks are still relatively cheap. And I also think the Senate and forget the thing, like, I still think that's the best bet for the vast majority of investors, and it always will be. This was an interesting one. I like these stock picking things. So Clementown Investing Substack had this. The distribution of U.S. stocks, and it's a new research piece that I guess just came out

that I'd not seen before. and they looked at the U.S. stocks and the crisp database going back to 1926. And this is like the coup de grace here for you. In every sector you look at, and they look at returns over one month, one year, five years, and 10 years. So look at how the graphs change. It's a really cool chart. And it goes from like a normal distribution and then keeps moving over and moving over. In every sector you look, more than half of all companies have a negative return over 10 years. Let me repeat that. If you randomly pick stocks in any given sector, your most likely outcome is that you have lost money after 10 years. This gets back to the Besson Binder study that we always talk about. But I thought

this was interesting to look at it across sectors. Basically, the longer you hold your stocks, the more returns in the stock market of any sector come from a handful of names. My takeaway from this is just pick the winners. Yes, it's easy. But that's the thing. It's almost like you have a better chance of picking the winners over the short term, which should be the reverse. If you just, if you're just the monkey throwing down, Darts at the newspaper, if that's still a thing, is like, you're actually a better chance of picking a winner over a month or a year than you do over 10 years, which is hard to believe. Yeah.

So you read this piece from The Atlantic on private equity devouring the smaller companies. I didn't, but I'm glad that you did. Okay. My dad actually sent me this one. And the secret of industry devouring the U.S. economy. Wait, wait, wait, hold on. You know what my dad does? He brings over articles, not even articles.

He brings over pages from Newsday, which is the local newspaper, individual pages. And he folds up into thirds. And he just, he'll, like, hand me like two of them. You know what he had? My dad mails me them in the mail. Wow. He'll send me a newspaper clipping that's folded, yeah, in the mail. Yeah, I just had flashbacks.

Yeah, my dad used to mail me stuff at camp, like physical newspaper about, like, I just got super, like, old feeling. that's how I used to find out about Nix trades was freaking letters from my dad cut out New York Post articles. But anyway, so the two things that he brought me recently from Newsday. One was an interview with John Carpenter and the other was like the 100 scariest movies you haven't seen. So at least he noticed his son. So you went through and said I already watched all these dad. Okay. So we've talked about this for in 1996 or 8,000 firms listed in the U.S. stock market since then. The national economy has grown by nearly 20 trillion. The

population is increased by 70 million. That's kind of crazy. 70 million more people now than in 1996. All right. Eight thousand firms were listed. The national economy is going by nearly 20 trillion. Okay, that's a lot of money. Today, the number of American public companies stands at fewer than 4,000. How can that be? Now, we've talked about this before that. A lot of it was microcaps and companies that probably shouldn't have been around back then. You also have these big conglomerates. Google and Apple and Amazon are just swelling up competitors. But this is interesting. This is the part that I haven't read before. In 2000, private equity firms managed about 4% of total corporate equity in the U.S.

By 2021, that number was closer to 20%. In other words, private equity has been growing nearly five times faster than the U.S. economy at the whole. This should alarm you, even if you've never bought a stock in your life. One fifth of the market has been made effectively invisible to investors, the media, and regulators. Is that so bad?

Go finish. The point of the article was, listen, this happened a lot in the 20s where it was these secretive private companies. He didn't have any financials on them, and these were zombie companies walking around. and we need more oversight. And I kind of see that, but the other side is, like, I don't, these private equity firms are trying to wring out returns,

and it's in their financial best interest to make these firms grow. Now, some people might not like the way that they do that by, you know, firing people and selling off business lines and closing things up. But it is a shockingly high number. So is the gist that private equity is bad for the, economy? Is it bad for the people that are employed by private equity? I think it's probably more of the stakeholders. And there's just, there's not as much oversight here. So bad things can happen potentially. And there needs to be more oversight for these

companies that kind of do whatever they want in the, because no one's really watching over them as much. Which I, I'm not sure. I totally agree with. Yeah, I don't think so either. Now, there are definitely thousands of examples. And there's been articles written over the years about some private equity companies behaving in a way that is not so beneficial to the people that are not, that are labor and not capital. But as a whole, is this something that I'm alarmed about? I'm sorry, I'm not. And I think the point is, if it gets to the point where private equity firm is buying you and trying to turn you around, it was probably not a great company to begin with. I think that's the thing is a lot of those companies that were public in the 90s, like probably shouldn't have been public in the first place. They did it because there was an IPO boom.

There's that. And then, like, yeah, I mean, Apple's a ridiculous example because it's the biggest company in the world, but a company of the quality of Apple is not being, again, size aside, those quality companies aren't being bought by private equity companies. Right. Okay, let's stick with small stocks for a second. This is a sentiment trader special. I love, so the reason why I love data points like this one is not because I think they're

going to come true all of the time. but these patterns are human behavior patterns. They're not like some seasonality that is no, that is just sort of random. Now, there's seasonality that's seasonal because there are structural reasons. So I'm not dismissing all seasonality. But this is human behavior.

It's what happens after a washout. So the stat is this. This is the 24th time the Russell 2000 closed at a 52 week low. Okay. And then search to its best four-day rally in at least three months. Okay. So we had the washout and then...

So you had the rush out and then furious buying. People stepped in. Massively. Over three-day period. One year later, the small cap index was higher 100% of the time with a median return of 25.6%. Now, do you go all in? Because of this stat?

No, of course not. Nothing is guaranteed forever. But I am a fan of these types of data points because these patterns are repeat. because they're driven by human behavior. Wash out, no sellers left, oh shit, stocks rip for whatever the reason. Usually that's a good time to buy. In last week's episode, I looked at how cheap small caps are, and I did a little more work on this.

And I know people think it's all U.S. all the time. And if there's an AI bubble, the big tech stocks are probably going to be the ones that benefit. And everyone is just like the S&P 500 is the only game in town. Like I looked at this from 2000 to 2013. This was almost a decade and a half period. Small caps were up 8% per year in the S&P was up 3.6.

Small caps annihilated large cap stocks. And that's not that long ago. Wait, that can happen? That can happen? I think there's a lot of people who think like it's impossible for another segment of the market to outperform because of where we are with interest rates and the S&P and big tech stocks.

And I just want to remind people that like it can't happen. These things are cyclical. I don't know when. I don't know why it's going to happen eventually. Here's a good chart. remember in 20, in 2020 and 21, the percentage of companies in the Russell 2000 that were unprofitable. Now, these are, there's always much more unprofitable companies in the Russell than the S&P, right? Because these are, these are smaller stocks. But the percentage of unprofitable

companies in the Russell 2000 has gone down fairly dramatically. It was at a high of almost 55%. Now it's down to 45%. Still, you might say, holy shit, one out of two, almost are unprofitable, but it's heading in the right direction. Okay, I never know what to do with this data. Yeah, no, I don't think it's actionable. I just think it's sort of like, huh, that's interesting. That's all. So you and I both talked about Aswatha Motor and was on Patrick Groshana's

invests like the best. And we both said listen to it and we both put the same piece in the dock. Literally. So the best part I thought was him talking about his valuation framework and trying to take the macro out of it. And he kind of thinks there's checks and balances. He talked about how when interest rates were low and inflation was low, that was fine because it was kind of balanced out by the fact that they didn't have to pay as much and growth was going to be lower.

Okay. Those interest rates also told me, those low interest rates told me that there was going to be low inflation and lower real growth in the future. So I projected that growth through these companies for the long term. I also pushed the growth rate down to reflect those same views. So the same low inflation that pushed down interest rates and also when my growth rates were low, my pricing power is lower. The effects, in a sense, offset. that. That's why my valuations don't change dramatically. And that's why I'm not surprised the market hasn't imploded because if you left everything as is and kept the cash flows you had two years

ago and you raise the discount rate by two or three or four percent, which is what we have. Stocks should be down 40 or 50 percent and they're not. And that's what a lot of people said. Like, if you just take interest rates in a vacuum, the stock market should be crashing, right? But he said the reason for this is that companies are flexible. They're adaptable as inflation comes through. Guess what they do? They pass that inflation onto U.S. customers, and the companies that are better suited to do that are more protected against inflation. And that's the thing people don't realize. It's like, yes, in a vacuum, if rates rise, discounted cash flows and all this stuff, but they don't take into account the fact that companies can actually raise rates.

And I think that's the biggest, like, when companies in the 80s got to like seven or eight times PE, like the whole stock market as a whole and companies were trading for two times earnings or something, that was really before that they were very good at capital allocation and they could buy back their stocks. If something like that happened now where inflation got to 10, 12, 15%, companies would be like buying back stocks and like hand over fist, right? Their capital allocation decisions, I think companies are so much better than they were. So he's saying that, like, listen, if inflation is in growth are low, I'm going to make, you know, pricing power for companies is lower. But if inflation and growth is higher, then the pricing power is going to go up. And it

sort of offsets one of another. I think that's what people don't realize is that these companies can adapt to the marketplace as it is. I was thinking about the why you guys always bullish comment, which again, I've repeatedly said is not true. But companies are like, not manipulating as a wrong word, but they are aggressively working to send the stock higher, right, like to make the business more productive, to send the stock higher. So there was a bias for companies to push their own stock up. It doesn't even make sense. Here's what I'm going with this.

A lot of people that are listening to the show make quite a bit of money, more money than they ever thought possible. And yet, they might not be satisfied because of the very simple reason that we all move the goalposts. If I make $100,000, I'd be so happy. you get to 100,000. If I make too much, I'd be so happy. And there's almost not a number. Now, for most people, right, like for people that aren't making millions of dollars, there's almost not a number where you're content because you always want more. And that is what drives

the stock market higher. It's people's insatiable appetite for more, not just for the sake of consuming more, but I want more, I want more, I want more. And that is a permanent. permanent fixture in our society today. More, more, more, more. Where, like, it's a little bit sad for the individual, but for everyone, it's fantastic. I would also argue that the stock market and corporation, like corporate America, is still one of the most sane institutions that we have. Like, in terms of, like, they, like, the blinders are on. They don't let other outside stuff and political forces, like corporations, that's their sole goal. Their eyes on the ball. So when I said that they're working to manipulate their stock price higher,

obviously, I don't mean literally manipulate, but they, they let people go. All they care about. They cut costs. They raise prices, whatever. They do what they have to do to protect their margins. And American companies in the aggregate are really, really good at that. So it's not blindingly bearish or saying that we can't have bear markets or you can't have even a lost decade. But give it enough time and the trend is up until the right. Zoom out enough and it's up until the right. And if you think that's not the case, good luck to you.

So a bunch of people sent us this Wall Street Journal article. The economy is great. Why are Americans in such a rotten mood? Animal Spirits was obviously on this one. A little early, Greg I wrote this. He had a few things that touched on that we haven't touched on yet. So I just wanted to get them real quick. We promise we won't talk about this every episode.

He said some 69% of respondents to Wall Street Journal survey in August and the country's headed in the wrong direction. Ooh, not nice. He said one of the things that we haven't mentioned that a few people said to us was political polarization, right? saying that, like, and I think a lot of people said it wasn't the pandemic, it was 2016 got this going, and I think that

that's probably true. More than half of Republicans and Democrats rated their personal situation as excellent or good in August, but only 5% of Republicans said the economy as a whole was good compared to 58% of Democrats. So that's another thing like, I'm doing great. Everyone else, they're

terrible. But he said the other thing is, I suspect a lot of pessimism about the economy's referred pain, just as one part of your body can hurt because of an injury to another, pessimism about the economy may reflect dissatisfaction with the country as a whole. Lately, there's been a lot to be dissatisfied, political and cultural conflict, intolerance, pandemic, border, mass shootings, crime, all that stuff. And that's the social media aspect.

You made some good points about, like, the net worth and stuff not impacting you. Someone said on YouTube, most people don't calculate their net worth ever and don't know it. So, like, you were talking about, like, the not moving the needle when your net worth goes up. Most people probably didn't know what it was before and don't know what it is now. So people who saw an improvement, they probably have no idea. I'm a finance guy, right? This is what we do for a living. I have no idea what my net worth is.

Okay. Really and truly, honestly. I actually have an spreadsheet. I have a spreadsheet. I have it. I know my. Yeah, okay. Of course you do.

All right. Sort of survey of the week. This is interesting. That'd be a, Duncan, put that in the YouTube survey. Do you know what your net worth is right now? Yeah. I'd be a good one. All right.

Consumers, this is from Daily Chartbook. Consumer sentiment is lagging both consumer confidence and fin tuit sentiment. This is from Goldman Sachs. I didn't know they had a fin-twit sentiment. Yeah, but this just goes to our whole point. Surveys are bullshit. Yeah. These are three, these are three sentiment indicators that ostensibly should say the same thing.

Yes. True. What was the, what was the book? Our favorite anti-survey book, Everybody Lies. Oh, that's great. That book really nailed. And why is consumer sentiment rolling over? Especially, well, you saw gas prices are down like 35 days in a row?

Yes. So I saw that the, I put this in here under inflation. This is from Gas Buddy. $2.99 a gallon is the most commonly seen gas price in the United States today. The first time we hit $2.99 a gallon was in 2006. 2006, gas prices have gone nowhere. But just that for inflation and gas prices are probably down 40% in an inflation-adjusted basis. No one talks about it when they're low.

All right, CNBC, the average credit score in the U.S. just hit an all-time high of 718 in October. 7-18 falls under the good category. This may come as a surprise, given high prices, rising rates, and U.S. credit card debt topping $1 trillion. FICO said the report that strong job market slowing inflation and are, removal of medical debt have helped boost scores. I guess that, that, the medical debt thing, probably. The average credit scores at an all-time high and nobody's happy. Shocker. Hold on. I mean, I'm kidding, not kidding, but average credit score, these are quantitative measures, right? We're not moving the goalposts. Right. And they, again, they, they have changed

the way that they reflect it. Some, some people might quibble with that. But yes, this is, this is not someone, like, looking at it and deciding you have a good score or a bad score. Is there like a shadow credit score agency? Oh, like shadow stats? You know, there's like a group that says like, well, CPI, the way it was calculated was changed in the 1980s. That's true. Good, good point.

Tyler Cohen, a study from University of Minnesota and Brookings suggests that income volatility has been mostly declining for the last seven decades and especially the last four, whatever volatility risk remains, they used to be much worse. Basically saying that, like, since the 50s for women and 80s for men, and this holds across demographic groups, gender, age, earnings, and cohort, income volatility, the change in your income has slowed. And I think this is another point to white people unhappy is like just the change in the economy has screwed with people, things happening faster. People would rather probably get a slow stair step up rather than a huge

increase if it comes with lower prices, that sort of thing. There's a book that I read. oh man I'll find it I'll bring it up next week but it's basically about like how relatively good we have it and it's not to say that people aren't suffering

because that's always the case but how relatively good society has that we've almost ran out of things to really complain about yes in terms of like infant mortality like that's gone for the most part

and so now we just complain about everything Yes. I think it's actually a sign of progress. If you have more time to complain about like... Yes. That was the gist of the book. I think it's a sign of... Like, that's the other one is people always say like every generation before them is like is snowflakes or whims or whatever. Like that's the way it should be. That's a sign of progress. If the each generation is getting softer and softer because you're progressing. So let's talk about the soft generation. Did you see the viral TikTok video of the girl who was crying about her commute and everything like that? Yes, it had the internet life cycle pretty quickly of people hating on her at first, and then the backlash came in and said, no, no, no, she makes some good points. So I don't know where we are now in the discourse. But the only thing I really agree with her on is the commute thing. My first job, we had an office that was an hour and 15 minutes from my apartment. And the reason that I had an apartment that far away is because the office was going to be moving by the time I got to work there, my first job. And the office, new office wasn't done yet. So I for like the first four months of the job had to drive an hour and 15 minutes there and an hour 15 minute back in heavy heavy suburban Detroit traffic and I wanted to like rip my steering

wheel off and beat myself in the face with it at least once a week so so this is what social media has done to our society because unfortunately social media the followers that's like the scorecard right so the the absolute quickest way to gain a following it's not it's not to share your ideas, right? Like, look how smart. Follow me. It's to shit on a group of people. Yes, it's dunking on others' ideas. That's the whole game. And it's, it's really pretty awful, but it is what it is. And my thought, first reaction to this person was, well, of course, people are going to do what they do, was, yeah, it's life is hard. And the transition from young adulthood to adult her to college, it's fucking hard. It's really, really hard.

And I don't think, like, her complaining is, yeah, it went vial for, for whatever obvious reasons. But I don't know, I felt a little bit of compassion. It's hard. I don't think people realize in the older generation that, like, the fact that we didn't have social media and camera phones and stuff, if you had these same feelings as her, you would go, like, like, cry in the shoulder of your friend, your roommate, or your parents in the past. But she happened to do it to the whole internet. Yeah. Right? Because that's the way that these kids, these.

days express themselves. You know what else? I would be okay with going from nine to four. Does anything really happen in the last hour of the day for the average worker? I know people think like young people are screwed because they're not going to be going to the office anymore and they're not going to be able to move up. I think the fact that the pandemic happened for young people and you have the potential opportunity to work remotely, I think that their life satisfaction is going to be so much greater if they have that opportunity to do that. I think they're going to be so much happier in the end because of the pandemic and the fact that they could work remotely.

I certainly am. Yeah, a lot of people are. Okay. And I think what I just said is definitely what's causing a lot of the bifurcated feelings, right? It's like people that are lucky enough like us to be able to work remotely. Yes. And a lot of the world just isn't. And that's, you know, that's unfortunate, but that's, that's, that's a reality of the situation. Okay. Yeah, we already mentioned gas prices for 35 straight days, 43 to the past 45 days. Not so bad. Oh, so just things normalizing, right? Are we firmly, are we, we're, we're post-COVID, right? That's in the

rear of your mirror? Yes. Okay. Remember a lot of the inflation was due to supply chain issues? Remember how often we used to pay attention to the shipping containers and stuff? Supply chain was a topic in the dock, was it not? Oh, yeah, that's right. We deleted it, finally. We deleted it. So here's a great chart from Bloomberg. fewer than 10% of firms report slowing delivery times. So went all the way up and not only did it, I mean, it went all the way back down. Like all the way back down. We are back to pre-pandemic numbers in terms of delivery times.

Don't you think that normalization is part of the reason for the economic boom we had as well? Like a lot of this stuff just, it, it smoothed out and there was so much pent up demand. That's why we had this weird burp. It's like an economic burp, right? That like it finally got released. Speaking of economic burp Somebody said like Never mind

I don't want to butcher the quote I don't want to butcher the quote Well fine I'll say It could have been I feel like Charlie Munger said this It might have been Elon Musk Oh no no no no no no no It was from I think it was from the House of Usher

Ideas are like farts I didn't hear this one Does that ring a bell? No I've watched an episode of it I'm intrigued Okay My wife gave up after night It was too scary for her

She would never be able to watch any of your horror movies. No. My horror movies go hard. That's what I'm saying. She would never be able to do it. She gets too scared from those movies. All right. So Jeff Wenninger tweeted,

Bye, by Tina. Hello, Tammy. What's the story here? There are money market yields. That's a stretch. There are money market yields? So Eric Palchuna said, I can't overstate how much 5% plus yields in money markets have changed behavior

flows this year. They act like a job. giant vacuum cleaner, one trillion dollars in counting. I'd make sense. Like, this is one of those things that, like, I totally get it. It does make sense. So Bank of America, allocations to cash and T-bails is the highest since February 2010. And again, it makes sense. But my point is, and I feel fairly strongly about this, that this money will not be well-served over the long-term. The money will be, the money's not coming out. I could be wrong. I don't, no, I don't. I don't. don't buy that. I think like if we get a new bull market, this is going to be cash in the

sidelines. People are going to chase out of money markets into stocks. Okay. So you disagree with me that the money is going to stay in money markets, but you agree with me that it's going to do so in a way that is not suboptimal. It's going to come in late. Right. Exactly. That's suboptimal. People are going to become addicted to the cash. And by the time it's too late, then they're going to move out. And yes. There was a great chart, a great article by Robin Wigglesworth, I believe, in the financial times. And they were looking at just the rise of specialized ETFs. And if you, there's a chart showing months relative to ETF launch date, cumulative alpha. And the more specialized the ETF, the wider the distribution of returns and the worst the performance relative to

the market. And I think part of the reason why is, is just timing that these specialized ETFs tend to happen after the boom, right? So let's just say that weed stocks in an incredible run. Then you would see weed stock ETFs at the market. So it's just, it's more of a, it's more of a timing thing. You do like the good back test. You set it out there. Yeah, it's, it is, it is also a timing-based thing. Speaking of specialized ETFs, covered call ETFs, that's from Bank of America, $55 billion of flows in the past five years. And I think that this is, I think that this will continue. How much of this do you think is advisor-driven chase?

Because I feel like, I don't mean to like throw shade other advisors, but I feel like advisors are really, really bad at this stuff in terms of like, we're going to go all and on commodities in after the 2000s happened and then they crash. And we're going to go on on Black Swan funds. And we're going to go all in all liquid adults. And we're going to all on uncovered calls. Don't you think that that advisors as a group are always a little behind on this stuff? Yeah, but I don't, I don't think that.

that's the case with covered call strategies. But if they, if we do get like a, whatever, bull market in the next few years and covered calls are going to, they're going to lag. That's the nature of these strategies. Our advisors are going to sit around and wait in them. This is wishful thinking. I think that the people that are buying these strategies are doing so appropriately

and understand the tradeoffs that they're making that they will not capture as much as the upside and they will not capture as much as the downside. That's pretty straightforward how these. things work. I think you give people way too much credit, but it's possible. I am optimistic that advisors that are allocating to these strategies, because I think this is 90% advisor-driven, right? With most retail, with most ETF flows. I think that I'm going to take the optimistic view that people are buying this and understand exactly what they're doing it for. Okay. So here's a good tweak from, so SBF, guilty on all

counts. Seven counts, 115 years maximum sentence. I don't know anything about trials or anything about anything. Doesn't it seem like it happened really fast? Really fast. Really fast. I thought this would be like a, I don't know. I just assumed wrongly that it was going to take a few months. It was fast that he got convicted on all accounts. Justice was served here, I think. Right? Justice was served. Did you hear my joke? I'm sorry. Or like effective ultra prison. Oh, that was a good one. That was a good one. So Joe Wysenthal tweeted. Actually, so you tweeted, you tweeted a gif of Chris Farley and Adam Sandler, right? Yes.

Eh, eh? Did you know that Jim Farley's cousin? Scroll down, scroll all the way down. I put this in random. Jim Farley's cousin is the CEO of Ford. Oh, I did hear that. Yeah, Chris Farley's cousin. Look at this picture of him.

Yeah. Wow. It looks just like him. Holy shit. That looks, that's a Farley. that is a Farley. So, all right, so Joe Wisethal tweeted all the people. Sorry, before we get into this, Jay Moore was on the David Spade Flying the Wall podcast recently. I haven't heard that name in a while. What happened to him?

He kind of went off the deep end and he got clean, but he's married, he's married to Jeannie Bus, the owner of the Lakers. Oh, I think somebody told me, maybe you told me about that. But he was telling old Farley stories from SNL days, and it was just, I can't even repeat him here. They're amazing, so worth a listen. So Weisthel tweeted, all the people who said Sandbankman Free would never be. charged because of his political donations, probably one of the clearest examples of what is a very common phenomenon, where the savvy people who want, quote, the real story tend to be the biggest dupes who fall for the dumbest ideas.

Well said. Way to go, Joe. Well said. So, anyway, crypto's alive, I guess. $300 million went into crypto funds last week. Biggest inflow in almost 18 months. Hope they didn't steal it from the Bitcoin ETF. What did you say it's going to get?

$100 billion? That was a bit rich, huh? Okay. Put that on your 10 surprises for 2024. I'd like to dial that down. Okay. All right. As of end of August, when the latest data was released, Case Schiller National Home Price Index hit another new all-time high, which is just crazy with rates at 8%. Here's the thing. Everyone is looking for an exotic way to hedge inflation, right?

Well, it's going to be Bitcoin or it's going to be tips or it's going to be some of their weird alt, right? It was just buying a house. the best hedge all along for inflation, right? And I think it always, that's the way it was in the 70s, too. You could try to, like, figure out like a second derivative of inflation. If this works, then this, where the simple, it's the simplest thing. It was not, it's not a good way to hedge your portfolio. But it is definitely a way to hedge your actual life. Yeah, like if you, if you, if you, yeah, for no doubt about it. That's a great point. So, yeah, so, so, so unbelievable, an all-time high. If rates come down even a little bit, watch out.

Not only your home price is not going to fall, they're going to skyrocket again. It's going to get worse. Well, mortgage rates went from 8 to 7 and a half, and a blink of an eye when bond rates fell. So what sort of activity pick up are we going to see this week? Probably a lot. I mean, if you, let's say you locked in an 8% rate last week. Would you just say, throw my paperwork out, I'm not taking it? You'd threaten to walk, wouldn't you?

Yeah. I don't know what else you would do. Redfin. Almost a third of homes for sale or new construction. The highest you have any third court on record. Kind of wild, huh? It makes sense. And you think that's going to,

it has to slow on some point, too, doesn't it? I don't know. Do you see this Realtor Commission thing? I did. A federal jury in Missouri found the NAR National Association of Realtors and Large Brokers has conspired to keep costs artificially high in and awarded $1.8 billion in damages. Basically, they said, like, forcing the seller to pay the buyer's realtor commissions is illegal. Right?

So a report released ahead of the verdict, the real estate industry, analyst, predicted that lawsuits could lead to a 30% reduction in $100 billion that Americans pay in real estate commissions each year and push well over half of the almost 1.6 million agents out of the industry. If sellers are banned from paying buyers' agents, then buyers could be forced to come up with additional cash or go without an agent. I imagine this is the kind of thing that could be negotiated. I don't know how long it'll take for this to make an impact, but Bloomberg had a story saying, Zillow and Redfin tanked. Zillow fell like 7% when this happened. And my initial thing was, why wouldn't this be good for Zillow? if people are, like, not using a realtor anymore.

And so I listened to the call on quarter, and Rich Barton said, like, of course he's going to say, what else is he going to say? But he was saying that apparently international markets, it's more like a classified thing. And he's saying, in this scenario, Zillow would be the odds on favor to come to the leading digital listings marketplace given our brand, traffic, engagement, and our unique focus on solving movers for real pains, blah, blah, blah. This makes sense to me. Like, if realtors aren't as big of a deal and they can't have as much.

sway in the industry, doesn't that make Zillow, like, the leading player here? Because you're going to go through, everything's going to go through that. As shareholders, we sure hope so, eh? I don't know. It makes, but I... Do you still own Zillow? I do. And this is the thing about, like, I've been bullish on the real estate industry for, like,

last three years, and I have bought Zillow and have done nothing but lost money. This is why owning a house is the best thing. I can't believe $100 billion go to real estate commissions every year. But that almost seems like a fake number. A hundred billion? What? But do you really think this is going to change things? Doesn't this just get negotiated behind the scenes somewhere or something?

I just don't know. I'll be, this is like I'll believe it when I see it kind of thing. All right, let's do some quarter stuff. So Sam Rowe tweeted from Tom Lee, of the 399 companies that have reported so far, which is 80% of the S&P, 82% are beating estimates, and those that beat are beating by a median of 7%. I feel like this is every quarter, though. Is it not? No, that's high.

That's really high. Okay. The beats are usually not that high. Not just percentage. I think the percentage is normally like in the low 70s. One of the areas that, because we've been talking a lot about people say, adjust it for inflation. I feel like earnings are the one place where they never adjust for inflation. And don't you think that falling inflation is actually going to make things look worse because they always look at earnings on a nominal basis?

And obviously it depends on the margins. But don't you think that rising inflation has actually helped because these comes. companies have pricing power to pass things through? Or do you think that falling inflation is going to help even more because they're not going to lower their prices? Yeah, I think the prices are staying. So they fall in inflation is going to help, help their margins. So you know what doesn't matter in the short-term valuations? You know what does matter? Expectations. Yes. Right? Like there could be, there could be, the SEP could be traded at 13 times earnings. And if if earnings are below estimates, stocks can get killed. Conversely, SACB could be

trading at 28 times earnings, and if you beat expectations, that the stocks are going to go up. Better or worse, not good or bad. That's exactly right. So Bank of America, remember waiting for a better entry point. S&P 500 consensus long-term growth expectations are near all-time lows, excluding the magnificent seven. The probability of a positive surprise in higher beta stocks is high in our view. That's Savita.

So this is a chart showing bullish versus bearish and expectations. That's it. Yep. Expectations. All right. There's a great chart from quarter. Not that this would be on my radar at all, but they're showing the beauty war,

comparing the last five quarters growth rates of L'Oreal versus Estée Lauder. And S.A. Lauder, again, for reasons that are beyond me, is just, it's negative. There's a lot of apostrophies and lines and stuff on these companies. Yeah, I don't, not a, not a specialist in the beauty industry. But Charlie Buffett was on. Hey, yo. Charlie Munger was on the Acquire podcast.

What a get, huh? I listened to that. That was in my recommendations. It was great. So Charlie was saying, they were asking why he could never convince Warren to buy Costco and what about Nike? And, and Charlie said, Buffett just doesn't like, just doesn't really like retail. Like it's just people's taste and, you know, and I just thought seeing this, I was just reminded of the two things. All right.

So there's a definite. theme emerging from earning season. And I think this speaks to a lot of, you know, people are happy. No, they're not. Yes, they are. There's winners and losers. There's winners and losers always, but in the economy and certainly in corporate America. So, Caesars, which is a stock that I own, demand trends remain healthy during the third quarter with occupancy. Did you buy this because you're going to Vegas this weekend? There we go. With occupancy increasing to 96.6% versus 93% in the prior year. But then you have Canada Goose, which is a luxury brand. This is from transcript. Our outlook for the second half has come under pressure. As a result, we saw early momentum

gathered in Q4, begin to slow noticeably in September. So again, as to your letter, another one. Organic net sale declined 11 percent, primarily driven by expected pressures in the company's Asia travel retail business. Apple, terrible in China. What's Apple doing today? I know the stock market's strong, but Apple, big miss in China. Oh, well, Apple, fourth consecutive quarter of year-over-year revenue declines. How about that? Your paper bearish trade worked out. Even paper bear on Apple for a while.

I mean, stock's doing fine, right? It's down 1% for it. Stock's doing fine. Pool, the pool CEO, new pool construction is likely to finish down with units down 30% in 2023, suggesting consumer hesitation on these more discussionary items. Yeah, pockets, right? pockets like of course pools are down look there was the bit was was was 2021 not 2020 not the biggest boom in pool construction like ever in the country's history my brother my brother and his

family put a pool in they there's so much pulled forward and there was waiting lists and i'm sure they've worked a lot of that out so a mixed economy is my takeaway all right we talked about a lot about the net worth stuff from before but the wall street journal had a piece on this that was interesting and they they said never mind the 1% uh the many millionaires are where the wealth is growing the fastest. What's a mini-millionaire? They generally earn between 150 and 250,000 a year. They wouldn't typically be considered rich, but upper-middle class. Obviously, that depends where they live, they say. They've seen bigger wealth gains with the past three years in the top 10% of families. Indeed, the biggest wealth gains. Remember people got mad at me for saying that

$200,000 a year and income is not rich? Yes. That was a lot of inflation points ago. I wonder what people would say today. Mini-millionaire. And just to reiterate, I think it's a good living, but sorry, not rich. Depending on where you live. How much? about that. Depending on where you live. The biggest wealth gains between 2019 and 2020 are among the approximately 13 million families in the 80th to 90th percentile. Their median wealth jumped 69 percent, just for inflation is $747,000. Over 90 percent of these families reported owning stocks, 80 per 7 percent own their home. They benefited from low rates, obviously. This is interesting, though. It's like how did these people become many

millionaires? Many people got there by pursuing college degrees, steadily building retirement accounts and purchasing homes. For the most part, they became wealthy slowly and were well-positioned when the pandemic-era stimulus programs boosted asset values. 16 million Americans now, just over 12% have wealth exceeding a million dollars, up from 9.8%. So I love how they say that these... Say that one more time? There's now 16 million American families over 12% that have wealth exceeding a million dollars.

That includes your home. Up from 9.8 million. 8 million are multimillionaires over 2 million. But I love how they say that these people, how do they become wealthy? They slowly saved in their retirement plans. They bought a house and they got a college degree. Like, remember the whole thing about your, the dream scenario of one job and owning one car and buying a house? Like, it's still there, right?

Remember I spoke about earlier in the show moving, moving your own goalposts? Yes. I saw a clip. I'll try and find this for the doc. I saw a clip of Sky Galloway and another entrepreneur talking about their money and security. Did you see this? Yes. I don't know if there's a producer.

somebody came on the podcast, it was like, are you just like fucking with us and basically like pretending that you have money and security issues so that you're like, yo, he's one of us. He gets us. Or is it reality? And I think it's earnest. I think that Galloway in particular definitely has a lot of neuroses, as he called it. And I believe it's genuine. But the other guy sold his company in his young 30s, early 30s for 20 million. He walked away with 20 million And he said he still has a number and he's not there yet. And I think for every one of us that is so unfathomable, so beyond unfathomable. But this is a constant recurring story.

Do you think that the people that get rich are insane people? No, they're human beings. And it happens so much more frequently than feels comfortable to admit. Right. Like, I'm pretty sure that if that was me, I would feel very, I'm pretty sure that I would be like, no, I'm good. But I don't know. I don't think the people that are saying that are crazy. Right.

It's, and again, it's like bad individually and good for the society. Yes. Right. It's sad that we can't feel comfortable that we're always, that we're never satisfied. But that's what drives the economy. Yes. Right or wrong, good or bad. That's why Apple's going to $3 trillion.

Or was it $3 trillion or whatever it is. Somebody emailed us, like, we spoke about, like, we talked about the average American. I don't think we talked about the average American that much. But Ben, you had a comment last week, like, who's the median American? And I think you, did you mention Kansas or what did you say? Yeah, I just like, I guessed. Yes. Well, actually, if the United States map was a scale and every person had equal weight,

the center of the population is a place where the scale would balance. Based on data from the 2020 census, the current center of the population is near Hartville, Missouri. So not too far off. All right. I'll take it. The more you know. All right. So I spoke last week.

It seems like everybody who has a substack is turning on a paid option, which I'm trying to support. I love the idea that people are able to make money this way. But it's gone too far. Tramoth is launching a page substack. Now, you know, if you're good at something, why give it away free? But come on. Is this guy a billionaire? he's doing paid newsletter? Am I going crazy? Jamath tweeted, learn with me. I'm often asked

how I quickly synthesize information and form opinions. The value to me of doing this can be summarized as follows. Be more informed about technology, markets, and the economy, improve my situational awareness about trends and competitors. Have a clearer picture of how a company or sector is doing over another. Make better decisions. And then, whatever, it's like a 4,000 word tweet. And then he's, you know, subscribe to my paid newsletter. I hope he gives the proceeds to people bought his specs. How's that? I hate dunkling on people and especially like, you know, I don't begrudge anybody making money, but that's a bit much. That's a bit much. I don't have much as far as recommendations go. I was

going to, I was going to recommend Munger on Acquired is why I listened to it last night. You told me it's worth listening to. He's going to be 100 in January. I thought the best, the best parts of it were he repeatedly said, what we did is very hard. It's not easy. He's like, and that he's He's like, that's the thing that pisses me off about people today that try to say that, like, I made a bunch of money and it's easy, and here's how you can do it too. He said repeatedly, it is not easy what we did. And then they asked him, let's say you and Warren Buffett

were 30 years old again today. And I've heard people go over this. Like, if Buffett and Munger were 30 today and they were just starting out, could they do it again? And a lot of people said, of course they could. Those guys are so smart. And Munger said, no, we couldn't. That shocked me.

Didn't it shock you? Yeah. Like, could you do that again? And he said, no. He's like, listen, we're smart, but we timed it perfectly. We got lucky. Things were never, he said things were never like super easy back them, but they were way easier than they are now. And I just love the fact that he kept saying over and over again, this is hard. What we did is hard. And it is, so I just appreciate it. I hate

the people who hit it big and either win the lottery somehow or just through hard work, make a bunch of money, and they try to make it sound like it's easy. And I totally agree that. It's just, it's not. And luck is involved. And yes, it was, he's still pretty darn whip smart for being that old. Is he not? There's some parts where you couldn't tell what he was saying, but it was highly recommended. Super impressive. Yes. Anything else?

No horror movies for you this week? I saw a VHS one that was bad. I've been watching it. I think I've seen most of those VHS movies, which are crazy frightening. I found a bad one. I think it was 99. Not good.

What have I been watching? You know, I've been, I don't know, I feel like I've been out a lot. I haven't, what did I do this week? I don't know, man. Where the hell is time going? It's November. It's snowing in the Midwest?

Middle-aged thing to say. Where's the time gone? Email us. How is it November already? Passage of time. The older you get, the passage, like, the passage of time freaks people out more than anything as they get older. Like, can you believe that we're closer now to this date than people who are at this date to that date?

No, I can't. That always gets people. Like, we're closer to, yeah. The passage of time is undefeated. I can't. I can't. It's going too fast. Animal spirits at the compound news.com.

Don't go.