Animal Spirits Podcast - Funding Secured (EP.42)

Episode Date: August 15, 2018

Elon Musk's bizarre tweets, the types of companies that typically go private, why stock buybacks aren't to blame for the wealth gap, why housing plays such a large role in the finances of the middle class, the prospects for gold going out of style for good, Amazon's private clothing brand, the usefulness of the CAPE ratio as a timing indicator 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, the podcast that takes a completely different look at markets and investing, hosted by Michael Batnick and Ben Carlson, two guys who study the markets as a passion and invest for all the right reasons. Michael Battenick and Ben Carlson work for Ritt Holt's wealth management. All opinions expressed by Michael and Ben or any podcast guests are solely their own opinions and do not reflect the opinion of Ritt Holt's wealth management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Rithold's wealth management may maintain positions in the securities

discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. So, funding secure, this continues to get uttered by the day. So this morning, Elon Musk released another statement that I don't even know what to make of it at this point, but the funny thing to me is that no matter what happens, the people who are involved in Tesla become more entrenched either way. So, if you're long Tesla, you view everything he's doing as genius. And if you're short Tesla, you view everything he does as idiotic. Don't you see both sides? Oh, of course I do.

But it's just funny to me how no matter what happens, they become more entrenched. And that's why I would just, I wouldn't want to touch this thing because there's so much, like, emotion involved. And it is kind of hard to believe because, I don't know, it seems like he's making this up as he goes, but like it almost, it's almost like he could have, he's playing poker and he does the flush and he gets, that the car turns over at the end that saves the day for him or something, right? Like if this Saudi deal comes through. Well, speaking of making it up as he goes, I don't know where he got this, but he wrote in the letter, my best estimate right now is that approximately two-thirds of shares owned by all current investors would roll over into a private Tesla. Right. That's- Where is that estimate coming from? That's good. That's a good question. Probably people he talks to

on Twitter. But so he's saying that this funding would probably come from the Saudi Arabian sovereign wealth fund. And I mean, I don't know. Maybe that happens, right? Like that, you can't rule it out, but it just, the whole thing just, it makes no sense from both sides is what I'm seeing. And I just, I don't get it. He also said that the capital required for going private would be funded by equity rather than debt. So there are some estimates that he's going to need $70 billion, which is going to cost $4.2 billion here to finance. And he's saying that's not going to happen. But even still, it's a humongous number. and I understand why people are sick of talking about this, but this is a big deal. It's a gigantic company with a CEO who is so polarizing and potentially a genius who's going to change the future. Like, how could you not be entertained by this? Yes, he's a genius slash troll. And I don't know which one he, which role he likes better, but it seems like he's liking the troll role a lot. Like, he just wants to kill the short sellers. He's an unstable genius at that. And I think he, uh,

did he actually send those short shorts to Einhorn? Because Einhorn took a picture of it and tweeted it, but I don't know if that was, if he was joking, I'm not really sure. Yes, David, David Einhorn is a short seller of Tesla and Elon Musk sent him a box of short shorts. At least that's the story. And that was what we saw on Twitter. But it last week was, I mean, when he put put this out there about the funding secured,

it was just, it was like bonkers day. And I still am kind of having a hard time wrapping my head around this. but it's never a dull moment, I guess. Oh, wait. Was that the best day on Twitter? I put that out there in a piece. And, I mean, obviously, there's different pockets of Twitter. For us in the finance realm, it had to be, I say, top five, easy.

Do you have the four remaining? Oh, man, that's a good question. I'd have to really think about that. But I think in terms of content, and it's like, it's been a buildup for this, right? Like, there was such a huge buildup of people talking about it forever. And then it finally something comes out and everyone is on the same page. The jokes were flying. I mean, the jokes got beat into the ground.

almost immediately. And I hand up, I took part in that too. The other moments that come to mind over the last few years were not necessarily entertaining or funny. Like this was, like the election was not funny. Brexit was not funny. August 24th, 2015 was not funny. True. But this was like a, what is even happening type moment that I think everybody got something out of. Yes. And people were trying to dunk on each other left and right. And it just, I mean, until this all plays out, I don't know, but I still, we'll see. Well, more to talk about this in the future, but it's, I don't know. I don't know what's going to happen. So, Oswald de Maderen, who's done a lot of valuation analysis on Tesla, which quite bluntly

probably just doesn't work for a company like this, has written about the public to private transition. And he wrote, quote, in short, it has to be a company that does not need access to large amounts of new capital to continue operating, where the market is underpriced in the company relative to its intrinsic value, and that feels the actions that needs to take in its best long-term interests will either create public backlash or adverse market reactions. And so finally, he said it should come as no surprise that most companies that have gone through the public to private transition have been aging companies, no growth, no capital needed, trading in prices that are below their peer group, and that need to shrink or slim down to keep operating.

And the obvious implications of this all being that Tesla has none of these characteristics. You know, I hate to take a victory lap here, but apparently someone reminded me, I said Tesla should go private a few months ago on this show, which I totally didn't remember saying. But it is kind of, like Dell went private, and I think for like $25 billion in 2013, and you never hear about them anymore. And I feel like a company like Tesla is not the kind that would be out of the spotlight, even if it went private. You still hear a lot about them. But it just, I don't know, it seems like he's, he had to do something because it just seems like it all came to a head. And I, I don't, nothing would surprise me with this one at this point. I don't know. I don't know what to say even. All right. Well, it appears as if they're trying to do a hundred percent share buyback. Pretty much. So you had a really lengthy piece out this past week called the scapegoat. And I know you've been working on it for a couple weeks because you've been kind of bouncing some ideas off of me. And you kind of dove into a lot of different things. And And speaking of the buyback thing, something that we've been talking about a lot is the buybacks

get blamed for a lot of ills in the economy. And it just seems like the wrong avenue to go down if you're looking to solve these problems. So why don't you walk me through a little bit of where this took you and some of the other stuff you found that you didn't include in your piece? So it just seems to me that it has just become a political weapon at this point. And all the problems plaguing society would be somehow better off if share buybacks did not exist. And it's just factually inaccurate. And unfortunately, the drumbeat and the ridiculousness and the rhetoric in these articles just keeps growing louder and louder.

So just as an example, the Atlantic just wrote one, stock buybacks are eating the world. The once illegal practice of companies purchasing their own shares is pulling money away from employees' compensation, research and development, and all the corporate priorities. parties with potentially sweeping effects on business dynamic. I mean, companies generate profits, right? Like, these decisions to buyback shares are not made instead or before the decision to compensate employees. So there's just so much misinformation. And I really do understand because the deeper down this rabbit hole I went, the more confused I got. So I totally understand why there is a misunderstanding and a lot of misinformation out there. It's just, it really is

the wrong boogeyman. I thought one of the best points you provided was the fact that, a lot of these companies effectively take on debt to buy back shares. And if you're a CEO of one of these large companies, if you subscribe to the Warren Buffett rules of how to run a company, your biggest job is capital allocation. And in a lot of ways, people say, oh, they're just borrowing money to buy back their shares. That doesn't make any sense. But that's a capital allocation decision of taking on debt to fund equity. And it really just changes your capital structure. And so it's not like these CEOs are going to borrow money to pay their employees. That would not makes sense. But if you think about it in terms of capital allocation, in a lot of ways it does.

Yeah, it's a corporate restructuring issue, which again, just a lot of people don't understand and I empathize with that. And I empathize with a lot of the shit that's going on in terms of people not being able to make ends meet, but this is just not the right place to point the arrow. And one of the best retorts against the agency problem where management has a different agenda than stakeholders, or comes from John Cochrane, who writes at The Grumpy Economist. He said, what CEO wants to say, we didn't have any good ideas, so we gave the money back to shareholders? This, no, build solar-powered spaceships to the Mars colony.

This is, in fact, the classic agency problem that managers are prey to, using corporate cash in unprofitable expansions and investments that make the CEO look good, but lower the value to shareholders. And now politicians chime in and want you making even worse investments and excori any for giving shareholders back some of their money. So I think that is really a key point that never ever gets brought up. Right. Yes. Totally agree. And I mean, I think the worst part about it for most people is the fact that, and you touch on this in your piece, the majority of people who own shares in the stock market are rich people. So when buybacks happen, rich people now have

more money to do something with. And I think that's the problem that a lot of people have with it, the fact that it's just, it's so uneven in the stock market. And I think that's the biggest problem. I wish there was an easier way to get more people involved in the stock market. Like that's the way, honestly, like, if you want to think of a simple way to fix the retirement savings crisis and all these other wealth inequality things, like you can try to make all these rules you want, but the wealthy people are still the holders of financial assets. And I think we need to figure out a way to help more people be invested in financial assets. Yeah. So one of the things that companies can potentially do, and I don't think they ever would. But why not set up 401 case

for employees and give them shares in stock. Instead of a match, just do something like that. And that gets to the point of it's not gross net buybacks that matter. It's net, it's net, right? So a lot of this is used to offset the issuance of stock options that are given to executives. And that's one of the problems. It's at the compensation committee level. So there was an article by Harvard Business Review about stock buybacks that took a not-so-kind view on them.

And one of the examples that they gave was Humana. which had spent $13 million on board compensation over the previous decade. And one of the problems is that the people that serve on these boards are other CEOs. And they're not incentivized to lower compensation of their peers. If anything, they're trying to leapfrag them. So I think that that is probably, that is definitely an issue. I won't deny that the incentives there are an issue. And one of the easiest ways to do that is a lot of these bonuses that CEOs get are tied to earnings per share metrics.

why not at least account for the dilution or use something like total shareholder return or net income, but earnings-based compensation is ridiculous when you are, in fact, buying back shares that are greater than the issuance. So in a Reuters article, they said that fewer than 20 of the S&P 500 companies disclosed in their proxies, whether they exclude the impact of buybacks on per share metrics that determine executive pay. That is bullshit. Whoa. All right. Mike drop. Yes. No, I agree. It's, unfortunately, a lot of people don't take the time to studying. And I almost hate being the person or the people that defend buybacks, because obviously

in a lot of ways, they're not the greatest thing in the world, but it's, it's, you're arguing two different issues here when you're talking about wages versus capital allocation. But so like just to pound on this one more time, like if, if, if the hurdle is $4.50 a share in earnings and a company buys back $900 million net to increase the earnings per share to 450 or 451, that is nonsense. And there are easy workarounds, like I said, something like total shareholder return as a benchmark or shareholder versus their peers or versus the benchmark or whatever it is. But earnings per share as a thing just sort of sucks. Right. I totally agree. All right, let's move on. Yeah, well, kind of echoing on some of your sentiments for why the sort

of bottom half or even the bottom 80% or so is falling so far behind. So Noah Smith had a piece for Bloomberg last week and it had some really good charts in it. And it was titled many Americans still feel the sting of lost wealth. And his whole point was one of the reasons that it's becoming so unequal is because much of the bottom half of the wealth chain is just really so much so tied to their housing. So he says the, he showed this chart and it showed that the top 1% have something like 75% of their wealth in financial assets and just 9% in housing. And if you go to the next 19% it would be about 40% in financial assets and 28% in housing. But if you go to the bottom 80% of people, it's 63% in their primary residence and 12% in financial assets. And so

that's one of the reasons that the great financial recession was so hit the bottom half so hard, not that even the bottom half, the bottom 80% or so hard because all of their wealth, more or less, is tied up in their house. Yeah. So when you look at all these charts on inequality, the gap only widens after the great financial crisis. Yes, right, because the owners of the financial assets are the people at the top. And it's interesting because, I mean, in some ways, owning a house is a kind of a forced savings mechanism. And so I think in some ways it's good. But in other ways, obviously, you can't spend that wealth because you can't spend your house. I suppose you can always tap into the equity. But a lot of people have an offsetting

liability. So that's why the net worth figures for these people are so low because their biggest asset also has a big liability attached to it. And it takes them a long time to pay off. So I don't really know what that means in terms of people retiring. But I would say there's going to be a lot of people in the coming years, especially boomers who are going to be looking for ways to tap their home. So I think what I'm trying to say is invest in reverse mortgages. Is that a thing? Well. I'm just kidding. No, no, you're kidding. But I think that that's a good point that a lot of people are going to be, are going to force to rely on that, which I don't, I don't really know anything about those financial

instruments, but I don't, I think that's probably what's going to happen. And I think from what I understand, they are getting better. They used to be predatory from what I understand. Yes. And so my other investment would be, I'm going to go long, people getting taken advantage of in their, with their home equity. How's that? Yeah, I agree. So you wrote a post last night that I thought was really interesting. It's eight questions I've been pondering. So I just wanted to go over a few of these. The first one, what if gold dies out with the boomer generation? I got a lot of hate mail on this one already. You got emails?

Oh, yeah, definitely. Twitter responses, emails. Not too bad, but people just telling me, you know, gold's been around for a few thousand years what makes you think it's going to go away. And I don't, I obviously don't think gold's going to go away. This was just kind of a thought exercise, but gold is worth $7 trillion, the world's gold right now. And don't we eventually reach a point where

technology kind of makes it obsolete? Maybe. I mean, isn't that a possibility at least? Or just that it's not going to continue to grow over time? I mean, I think that honestly, I think one of the best case scenarios for like Bitcoin and cryptocurrencies would be the millennials gold where I think some people would say, that's not living up to the aspirations we have for it. But I think that's probably that could be one of the best case scenarios for it.

Well, no, it's interesting. It's really only been for the. traded for like 50 years because it was pegged to $35 until 1970. And before that, I read about this in once in Goldconda. And I feel like, was it at like, was it at like $2 for like 100 years or something like that? A long time where it didn't really move because they use it as the peg for everything. William Bernstein actually in one of his books has a good thing where he says, gold in the time of Jesus could buy a nice man's suit, and now it can do the same thing. So I guess in some ways, the fact that it's stayed sort of with inflation for that long is

kind of impressive. But you're right, gold as a free flowing price has only been around for 40 or 50 years before then they pegged it to a certain value. And so it's done a lot of catching up lately. It is the ultimate story investment. I mean, people think that it's a hedge against inflation. It's a hedge against uncertainty. Yes, central banks. I don't think it's correlated to anything, honestly. And is it, I mean, I think that you have a fair point. I mean, it's obviously not going away, but I don't think that we're going to see spectacular returns going forward. But who the hell knows? I don't really feel too strongly about this. Right, which is why you use trend filing rules for your GLD purchase

before, right? Well, okay, so that was a joke, but I thought that I'm going to pet myself on the back a little bit. I think that's a great example of how to fail in public if you're going to talk about what you're doing because I laid out why I was doing what I was doing and I gave myself an out and I took it. I lost 2% in that investment. All right. Yes, I'll give you a pass on that one. And it was big fodder for the podcast. It was great fodder. All right, next. How hard was it to invest in stocks in 2009? And an amazing post is on December 7th, 2009, John Hussman and Business Insider said that there's an 80% chance of a market crash in the next year. I had a reader send me like 50 articles from 2009 that were all like this, that double-dip recession, it's a sucker's

rally, it's short covering, all these things. And it's kind of hard to remember at the time how hard it really was to put money to work. And I think a lot of people don't appreciate that. They just look back at the prices and think, oh, that was a generational buying opportunity. But at the time, there was very few people telling you that everything's going to be all right. We got the all clear. Everything's fine. I mean, even in 2010, there was another double-digit setback in stock market where everyone thought, okay, here we go again. So it's easy to look at this in hindsight. And a lot of people I think that missed out are saying, well, I'll just invest in the next crash, but it's definitely not always that easy. I don't think it got easy until ramp capital's account

went live. Now the easy money's been made? Okay. Okay. Next. Is Amazon going to take over my closet someday? And I have something to tell you. Okay. So I have not purchased any clothes on Amazon, but, and I might regret saying this, but I bought five T-shirts. on Walmart the other, not Walmart, Target the other day. Okay. Why are you going to regret that? I don't know because I might get some shit, but. Is this a shirt you're wearing right now, Target T-shirt?

No, this is Gap. Okay. But anyway, so go ahead with your Amazon. I just, my wife shamed me because of some of my workout gear that I use was just probably getting old and ratty because I choose comfort over quality. But so I looked, I was looking around and of course, every time I search for something to go on Amazon, and they had workout shirts on there, and they were like two for $16. And so I started looking around a little bit, and they have this Amazon Essentials brand, and I've heard of it before.

And they've got a bunch of good stuff on there. And it's all really cheap. And of course, you get it in two days from Amazon. They also have this program where you can try something out for seven days for free and send it back to them if it doesn't fit or you don't like it. So it's kind of interesting to think about Amazon breaking into all these different brands and taking over in some ways a lot of stuff that they already have all the data on. And so they know what people like to buy. And I think it would be interesting to see. Amazon takeover stuff like this. And so I actually brought a couple workout shirts and a pair of swim trunks and so far so good. I'm happy with the quality. By the way, I sort of chuckled that you call swim trunks because I guess that's like a geographic thing. I call it a bathing suit. Okay.

I feel like swim trunks is like a dad way of saying it. So maybe I'm just morphing into that. I don't know. Swim suit. Yeah. Swim suit. Yeah. Trunks.

No, bathing suit. Yeah, that's true. Bathing suit. Sorry. So Morgan tweeted a chart. It is of the S&P 500 going. back to 1990, and red is when it's above its long-term average, and basically 95% of the chart is red. There's a few slivers of white. And I guess the point being, or the implications are

that the Cape ratio is not, either doesn't work, or it's not a great timing tool, whatever he was saying. But Meb Faber actually lead him with a link to a post. And the title of this post is, and I remember reading it when it went live, but I reread it for this, you would have missed 780% in gains using the CAPE ratio, and that's a good thing. Did you reread this or no? Yes, I skimmed it, and you also did a nice summary here for me. But the big thing is Morgan said since 1990, a dollar turned into $13.70 in the S&P. And if you would have just used the cape ratio being below or above average as a timing tool in that time, you would have been out of the market the entire time almost. Yeah. So maybe that was a little bit too simplistic. And mebs,

Now, granted, that is the nature of a tweet. And Meb's post has much more nuance. The only thing that I will quibble with in Meb's post, which I don't really think is a fair analogy, is he likened investing in above average caper ratio to hitting on a 19 at the blackjack table. And I think that Meb would probably agree with this. Maybe not. But in Blackjack, there are rules. In investing in the stock market, of course, there are no rules. And there is no length to or limit to how high or low the cap ratio can go. I guess there is. is a limit on the downside. Okay, quibble aside, some of the points that he made were really, really good. So he said that, yes, looking in a vacuum, it's just really not fair. So going back from 1993 to 2015, the SP 500 did 780%. And back in 1993, stock started to get expensive. But you could have invested in bonds over the same time had done quite well. So the 30-year Treasury, for instance, it's 680%. So just 60 basis points a year less. another thing that you could have done was you could have used a very simple trend following strategy on the Cape ratio, where if the Cape is above 20, you invest in stocks. If the Cape is below 20,

you invest in bonds. And doing that... Whoa, trend following on a cape? That's an odd one. Well, it worked. You could have switched to 10-year bonds or 30-year bonds, and both of them did very well. Taking this one step further to its final logical conclusion is that the stock market is much bigger than the SDP 500, and what if you did the same thing, the same timing thing, where above 20 you invest in stocks and below 20 you invest in bonds. But instead of just investing in stocks, you invest in the bottom 25% of countries based on Cape. And doing that would have tripled the return of just the S&P 500 over the same time period. So to conclude, MEP is making some really good points here. But I think that Morgan also makes a good point because most of the

arguments that we hear for and against the Cape ratio are not as nuanced. And it is very much black or white. Stocks are expensive when they're going to crash or, I mean, not or. That is probably the only thing that you hear about Cape. And the thing that we talk about a lot is the fact that going back to the 1870s for the Cape ratio, it's a moving target. And so using that as a as a place to like draw a line in the sand is never going to work because it's constantly, it's more nuanced than that and it's constantly moving. And so I think anyone trying to use valuation as a timing indicator is going to be, they're going to have a lot of hard time in the markets. That'd be my stance. Excuse me. Did you hear about Mab's timing tool?

Yeah. Well, okay, that's, I don't know. I don't, I feel like there's a lot better ways to do that and it's kind of easy to look back on that and figure it out. But I think using valuation as a timing indicator, most studies would say is not a good way to do things. Would you not agree? Well, I would. I was kind of surprised. I don't remember reading this the first time. I was surprised at how good the results were of this back test. Another thing to your point is that if you asked somebody in 1993 what the long-term cape ratio was, they would say, what's a cape ratio? Exactly. It didn't come out. Yeah. And no one really started talking about it until I think Schiller put it out in 88, 89 for the first time ever. And it didn't really, really gain any groundswell until the late 90s. So yeah, and plus the guess what the average moved over that time. So looking back, at a long-term average now, it's much different now than it was then at the time. So what information did you have at the time to go off of when you're looking at these switching indicators?

Well, one of the really interesting things about the Cape ratio is that I believe in the crash of 2000, the Cape ratio got to its long-term average. Does that sound about right? Like even during the crash? Right. It got back there barely. So that should have showed you that maybe the nature if it has been changing. But I think I see both sides. I mean, obviously, I think that my opinion for most people is that you should use valuations as something to set expectations. Not necessarily a way to adjust your portfolio. But anybody who says that valuations don't matter, I think that you could probably ignore them, right? Because of course, what you pay matters a great deal. Yes, but I think it's more about giving yourself a range of potential outcomes

and setting expectations than figuring out what's going to happen next. All right, let's move on to some listen to questions. Okay. Listening to Investment Podcasts has given me a dawning realization that my capital gains in the past decade were a result of luck and that my asset allocation today is a total mess. That's a pretty good realization. Yeah. At the same time, there's an emotional gravity to all the past bets that have resulted in gains. Can fee-based advisors help people get over behavioral inertia like this or does knowledge loan usually lead to better allocation over time? To the first part, this is a little bit self-serving, but I would say yes. And of course, there's a lot of caveats. It depends. It's probably the best answer. It depends who you're working

with. Does knowledge alone usually lead to better allocation? I would say probably not. Yeah, knowledge alone is definitely not enough to change behavior in my experience. And I think getting there to that realization is definitely a huge leap forward because a lot of people never get to that point where they know I need to have a better plan in place and my portfolio was a total mess and it's just a mutual fund salad. But I think it really depends on the person whether an advisor can help you or not. It's kind of situational. And I think part of the the reason that advisors are seeking help from anyone can add value is the fact that a lot of people just don't know where to even begin and what to turn to or in how to change their

behavior. But I think getting to that point where you admit it is a good first step. All right. What books, papers, would you recommend a new advisor to read and study in order to begin developing their own investment philosophy? Well, they'd have to listen to Animal Spirits episodes 1 through 10 at 1.5 times. No. I would say, I'm a He, I learned a ton from all the William Bernstein books. So anything he's written, he's probably written seven or eight investment books at this point. So would you say start with four pillars and what's the other one? Yeah, four pillars and the investors manifesto or the two kind of beginner ones. And then he wrote four or five other self-published ones. So I would

definitely start with those. Let's see, who else would you put in that mix? I liked Rick Ferry's all about asset allocation. And I would also recommend Nick Murray's simple wealth, inevitable wealth. Yeah, that's a very good start, I'd say. And I would recommend a wealth of common sense by my co-host, Ben Carlson. Oh, thank you. I think that's probably good. And I put a bunch of books at the end of mine in in my book that I recommend to that kind of shaped my philosophy, so you can look there too.

What did you read, watch this week? Okay. I'm kind of late to this one, but it was kind of nice to read something that gave me some hope for humanity. Mountains Beyond Mountains by Tracy Kidder. Have you read that one before? I did. It's an old one.

It took me a while to get to it, and I finally did. And it was just an amazing story about a doctor who has. helps, these people that really need help around the world, setting up hospitals elsewhere. Was he based in Haiti? That was his main spot where he went to, yeah. It was in disguise was really smart, but really compassionate and helped people who really needed it. And he kind of did it all in his own in a lot of ways. So that was a really sort of uplifting book. Yeah, that guy is a hero. Hard Knox is back on HBO. It's one of my favorite shows every year. I, well, that's one of my favorite shows every year. I love it. I think Leib Schraber could

like announce anything, like be a voiceover for anything. It would be. It would make it seem important to me. Well, you don't like it so far. My wife likes watching that show with me. Yeah, my wife watches that too. And I just, I love that show. The funny thing is when they show slow motion and they have a Liam Shriver talking over people, like they can make me buy into any team.

I'll be like, oh, man, maybe the Browns are going to be good this year. Every year, it's just a crap team that doesn't do anything. So I thought the first episode was kind of boring, to be honest. I mean, I'm definitely going to watch it and I enjoyed it, but just like relatively speaking, it was sort of, eh. Okay. See, it got me excited about football again. And then speaking of football.

all, the Jim Miller, Alabama and Nick Saban podcast is unbelievably good. I'm two episodes in, and I'm not a fan of Alabama or Sabin at all. I think the guy's kind of pompous, and I hate Alabama because they just win it every year, kind of like the Warriors, but you have to respect what they've done. I think he's got six national titles at this point, and like his process is just like, it's all about psychology and motivation and behavior and like staying consistent even when you win and not getting complacent. There's so many like business in investing in behavioral psychology tradeoffs and it's so good so far. It's still still getting started, I think. So you put me on to this guy and actually Josh asked us about this also this origins thing. So I started listening

to the one that he did on ESPN. Yeah. It was very good. And I'm listening to the, I just listened to the social media episode. Really, really good. Yeah. He wrote a whole book on ESPN. So he's like really plugged into that place. Yeah. These guys have all the fun. I love. I love that book. Yeah. I never read it. Yeah. Okay. So I read Bethany McLean's new book. It's not out yet, but I know people that know people. It's called Saudi America. That's pretty, oh, you're in the know here, huh? Yeah. It was so good for many reasons. I mean, obviously, Bethany's amazing. But it was only 130 pages, which I think should be the future of books. Oh, that's great. It was a great read. It was quick. It was powerful. And because it wasn't the 700-word tome, she was able to write about stuff that happened probably just a few months ago. So it was so up to date. It was awesome. Did she have a section in there about how they're going to buy Tesla? Not yet. No. But so the book, the first three quarters of the book was about Aubrey McClendon and what he did with Chesapeake Energy.

Ah, okay. Which I only knew peripherally just from the headlines and stuff. But it was really great. Okay. So Bill Simmons had a podcast a few weeks ago talking about like the 100 best TV episodes. But I think it was mostly like I don't know if they got into the episode. so much as the blog post, but they spoke about the show newlyweds with Nick Lechay and Jessica Simpson, which I think was like responsible for setting off this wave of reality TV. Yeah, it really was. Did you watch it at the time? I did not. Did you? Yeah, I'm not going to lie, I watched it. It was like reality TV before people were self-aware of what reality TV could do for them. So they actually were kind of acting like real people. And oh, it was great. Yes. And now is she a billionaire? She's got a pretty big business line of some sort, I think.

All right. So last week, Seth Rogen was tweeting about some of the experiences he had in Pineapple Express. Did you see that? Yeah, that was pretty great. So then Judd Apatow tweeted, I've got one. Brian Cranston auditioned. He may have been, he may have even read it at a table. And I said, I don't think he seems scary enough to seem like a real drug dealer. That was pretty good. So that was pre-breaking bad, obviously. Yeah. And he didn't make it into Pineapple Express. But isn't that funny? Like, it's just another example of how whatever you're doing, the future is always unclear. Right. Yeah. It's predicting the future is very difficult. We'll say that. I kind of get that from a lot of the Mark Merrin podcast, too, when he talks about actors. And they say, you know, a lot of times you do the best you can with a movie. And then it goes into editing and production

and it's out of your hands and you have no idea whether it's going to be a good movie or not even after going through all the scenes. You just have no clue what the finished product is going to be. That's like when we're recording this podcast, we just don't know. That's so true, man. I don't know, I don't know if I spoke about this last week on the show, but the Jay Leno, Mark Marin podcast was freaking awesome. I'm not necessarily a J guy because I'm a Howard Stern fan. Yeah, I loved it. But it was really good. Yeah. What does Howard Stern have to do with Jay Leno? Don't get me started. Okay. All right. We can go down that rabbit hole another time. All right. So check out next week. We actually taped a show last week with Morgan Housel.

We wanted to thank him for coming on because Michael's going to be on vacation. So we delve into the Tesla stuff a little more and talk a little bit more about the private markets and venture capital. And we had a good time of the three of us. All right. Email us at Animal Spiritspot.com and we will see you next week. Thank you for listening.