Animal Spirits Podcast - Housing Prices Are Still Too Low (EP.233)

Episode Date: December 1, 2021

On this week's show we discuss why the markets care about the new variant, Twitter's crappy stock performance, inflation at the Dollar Store, profit margins are too high, buying real estate in the metaverse and more. Find complete shownotes on our blogs... Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Like us on Facebook And feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation. Learn more about your ad choices. Visit megaphone.fm/adchoices

Ben, did you see the stock market of stocks on Friday through the Omicron virus was sending nasty ripples through the... I believe they call that a Black Friday sale, Michael. But, yeah, stocks were down more than 2%. You know what was sleeping cuddly in my portfolio? What's that, Michael? My paintings. My paintings did not move one iota. According to Citigroup, Ben, art has the lowest correlation to developed equities of any major asset class.

contemporary art specifically had a lower loss frequency than the S&P 500 from 1995 to 2020 and even though past performance doesn't guarantee future results history says there's a lower chance of huge losses

when you're holding for the long term Ben you have seven paintings if I'm right I do I can start my own museum do you have a digital gallery I had five now I have six I bought that Pablo Picasso painting

while We were on air with Scott Lynn from Masterworks. Check that out on Monday. So the good news about my six paintings, you don't need a million dollar, $100 million for that matter, to buy a piece of Pablo Picasso. With Masterworks, which is the first and only platform that lets regular people like you and me invest in rare art, you can do this. Masterworks is a unicorn.

They have securitized 90 paintings with the SEC. So if you want to join us on the platform, head to masterworks. dot i.o slash animal to diversify today that's masterworks.io slash animal. Of course, please see important disclosures at masterworks.com. Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing, and watching. Michael 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. Michael, I have finance brains sometimes where I feel like being involved in the markets means that my emotional triggers and things that I pay attention to are completely market-related sometimes. Your mood is correlated to the Dow? Not necessarily my mood. Well, sometimes it's opposite.

I think there's a lot of ways in which finance has shaped me. Like, my wife all the time says, you never show like any enthusiasm or get too high or too lower. Like, you're always just kind of in the middle. I'm the opposite. But I think being involved in finance has kind of done that to me where like I don't get too worked up about things because in the markets you try to teach yourself, never get too worked up.

I think this is a personality thing. The market didn't do this to you. You did this to you. It could be. That's possible. Because I've been doing this almost as long as you. have, and I still am flying where the market is going. But my point is, the Friday after Thanksgiving, the stock market fell more than 2%. And that's what it took for my dumb finance brain to think,

oh, this new variant actually matters. And it happened really quick when the news started to come out. So you take your cues from the virus based on the stock market's reaction, which I shouldn't do, but I do because I have a dumb finance brain. Where else are you supposed to get it from? Like, no offense, but like USA Today or Good Morning America, how else? Basically, Twitter in the stock market is how I figured this stuff out. I don't know. So the S&P was down 2% for the first time since September. Before that, it'd only been down 2%. The last time was May. There's not many bumps in the road this year. It's been an extraordinarily calm market. So a 2% down day, which happens all the time, might have felt worse than it did. It was also Friday going to a long

weekend. And it was also the nature of the drop, particularly because you see the companies that were leading on the day, Zoom, Palatine. You're like, oh, here we go again. And they take off, yes. The companies that were getting killed. And even like Clorox. You haven't seen Clorox on the leaderboard for like a year and a half. I mean, you could say, well, it's all algorithms and there's no liquidity and whatever. That doesn't matter. But where are you mentally with this still being here almost two years later?

Because for me, it's gone from March 2020 was fear, crippling uncertainty, what is going to happen. And then finally you get some hope from the vaccine. And now, to me, it's just kind of annoying that it's still here. I think how you personally have been impacted by the virus really impacts how you see it. Totally. After I got COVID, I've just come around to, this is me thinking through my personal experience, I think everyone's going to get it. I don't know that for sure, but I think if it keeps hanging around like this and morphing

and changing, obviously you could say ahead of it with boosters and different vaccines and stuff, but I think eventually pretty much everyone is going to get it. So that's why after I got it, besides being sick and that just being terrible and sucking for a month or whatever it was, I was kind of relieved. to have it out of the way and know that I was going to be okay. Here's what I'm nervous about. If this gets really bad, the variant, cases start to spike again, if the government tries to do something, some sort of mandate, whatever,

I'm nervous. That's going to go really, really, really, really. Really poorly. I think people are done being told what they can and can't do rightly or wrongly. I really hope it doesn't get to that point. For, you know, for health reasons, for societal reasons. So we're at the point in Michigan where we're the worst state in the country right now. We have been for a few weeks.

What is that? Meaning case numbers. We have the worst. No, I'm saying what's that about? Why is it that? Maybe the variance is already here. After the waves go through like the northeast and the south, somehow they get Michigan last. That seems like we've had three huge waves.

But our hospitals are sending out word that they're full, basically. I've heard stories from family members who went to the ER for legitimate reason and got turned away because there was no beds left. Our pediatrician sent out an email a couple weeks ago saying, we're basically full from people coming in for appointments in the morning. We can't take any more people. and they have like a 25% positivity rate. But the crazy thing is, is we've all become kind of numb to it at this point because it's been going on so long. So Jim Bianco tweeted on Friday, the 10-year treasury yield ends down 16 basis points most since

March 2020. The reason is the same as March. And oh, shit, moment about COVID. The 10 years at 1.4% as we speak. How high did it get? 1.7 maybe. So the market's bouncing a little bit, the 10-year. It's coming off the lows, but wow, that was a big, that was a big, big drop.

So I'm doing my part to get rid of this virus. Interest rates are just never going to rise again, I think. We talk about us all the time. What is it going to take? Anyway, go ahead. So we had Tarek, the founder of Kalshi. That's K-A-L-S-H-I. I had a lot of people email me.

How do you spell it? Kalshi. What does Kalshi do? Let me read it right from the horse's mouth. Well, it's betting markets on binary outcomes of world events. You don't need to read it. That's the sales pitch. That's true.

So you can bet on what you think is going to happen with real world events, which we think has enormous implications for the potential, I don't say betting markets, for the investing markets, because if you are going to like try and hedge the election, remember all of that in November, all that shit is never going away. When there was a date coming and people are trying to like jockey and position themselves, well, if this happens, then I think the dollar is going to do this. And then I think because of that, here's what rates are going to do. And then here's what I think is, just bet on the event.

Instead of betting, what are the markets going to do after Brexit? Because remember, everyone thought the markets were going to get crushed after Brexit? Just bet on Brexit. All right. So I put my money where my math is, although there's only a hundred bucks. But I do not want to see the Omicron, or wherever we're calling it. I don't want to see the Omicron spread. So what I did was, I bet, no, Omicron will not make up greater than 1% of U.S. COVID cases by the new.

year, which... I love how you think that means that's you doing your part. I'm trying. I'm trying. I bet against it. But I was late. I was late because I looked at the betting market on like, what day is today? I looked at the betting market on, I don't know, Friday maybe.

And yes, was 74. No was 29. So this says, Will Omer Crown make up greater than 1% of U.S. COVID cases by the new year? And the stipulation is, is it estimated by the CDC to be strictly greater than 1% of total U.S. COVID cases? This is by January 5th is when this expires. So I'm one. wondering, I have nothing to basis on, Michigan has their crazy case counts. That's got to be in

there already. Like, I bet we're probably already at 1% as it is. And we just don't know it. Is that possible? I said yes. You took the other side of me because you're a hater and you're not a patriot like I am. But the market went against me. So I could have got no for 29 cents the other day. What did I pay? 34 cents. So the market is saying that yes, you idiot, of course. Right now it's saying there's basically a 70% chance that case will be for this variant will be over 1% by the end of the year, in a month, basically. Who's a contrarian? This guy.

Your payout could be higher. But I think this, yes, this is very cool how you can bet on these kind of things. And by the time we get to the 2024 election, I'm guessing these markets are going to be massive, especially for that stuff. If people can actually bet on the outcome of the election, who's going to win the Republican primary, who's going to be the president, it's going to be huge. What are those numbers that like we see on election night? Is that predicted?

I don't know what site that is, but you can. Now we can follow the graphs for these. Now we can actually unleash our real inner D-Gens. My whole thing with the variant in the markets is I think there's people who are trying to say like, it's time to worry and people say, no, it's time to not worry. Like, this is the time for me to say, I don't know. Until they say definitively, this thing can puncture the vaccine or it can't, whatever. I'm not going to make a statement either way.

I don't care. Do you think that this is just algorithms at this point? Probably because all this happens so fast. Like Peloton spikes? The interesting thing to me about like why my. my dump finance brain reacted to it is the market hasn't reacted to COVID news in a long, long time. It hasn't cared about anything. It didn't really care about the Delta variant at all, right? They were selling from the second wave. The 5% correction was maybe part of that.

My point is, do you think that any human being saw the Omicron or however the hell will you pronounce it and said, I'm going to buy Peloton stock? Probably not. Of course not. But Peloton spiked on that day. It probably fell since. Here's what I did last weekend, though, that maybe this is very related, maybe it's not. I bought a new Bowflex from my gym in my basement. A new bowflex. I had a bowflex. It's probably seven years old. Those bendy things that they have, they get a little worn out. I said, you know what? Nice flex. I got my Boefex last year and they're still brand new. You can't even talk that I've been pumping iron. I don't have the dumbbells. Like you have the whole contraption, like the home, everything in one, like the Nautilus. How are your lats?

Let me see your lats. That's what the pull-up bar is for. This is one of the changes for me is I thought I'd go back to the gym and now I'm thinking like, I don't think I need to, to go back to the gym. I don't have the desire to go back to the gym. I've created enough of a home gym where it's easier for me to just work out of home. Do you walk around with like the cutouts here and like the string in the back? The big milk jug of water. Yeah. Are you that guy or did you just wear a t-shirt? You can't work out on a bullflex and be like a power lifter. I'm not doing any power lifting like squats and that kind of stuff. So do you grunt at the gym? No, I'm not a grunter. Any feelings on Jack Dorsey being out of Twitter? I don't know. It was interesting. It was interesting.

I mean, it's interesting how the stock goes up like 11% when he says he's gone and then they hire someone from internally on Twitter and that whole gain is wiped away. That's got to be kind of messed with your mind a little bit for both gentlemen. I mean, we've talked about this before, but has there ever been a company that's more culturally relevant that has had worse financial results than Twitter in this new era of new companies in this century? Hear me now. I'm going to talk about this with Josh Nod on what are your thoughts. So since Twitter went public, back in 2013, the stock is up 2%. Over that same time, Ben, the Global X social media ETF is up 210%. If you would have told someone back then... 2,110 basis points. Listen, in Twitter Republic, you could have said in this next decade, Twitter is basically going to elect a new president.

If you'd just said, should I buy Twitter stock, you would have said emphatically yes, but didn't matter. basis points. Let the record show. Versus two. It initially, in that first month after it went public, it screamed up to like 70 bucks. It's still down 43% from that level right now. Just a horror show. All right. Dollar 25 tree L-O-L-L-O-L. What are your thoughts? It's amazing that they've never raised their prices. Have they not raised their prices in 20 years? I think they probably changed the size of their stuff for the quality of their stuff. I don't. This was a Rorschart test for people who want to push inflation

For 35 years, dollar trade has managed through inflationary periods to maintain. So basically, they broke the buck. But yeah, I think you're right. The packages were probably getting small. I mean, obviously, they're running a business. But if this is your hyperinflation case, get the f*** out of here. The funny thing is, they still have huge margins at their business. They make a ton of money still.

Have you ever brought your kids to the dollar store? I went this weekend. So my kids, they think that's a treat. If we go to the dollar store and be like, you can pick out three things here. They think that's like the greatest place on earth. It's all junk unless you get, I don't know, food. food or shampoo or... Not even close to true.

You don't think so? The dollar tree that I went to has... The kid's stuff that we get, like the toys. Oh, yeah, of course, of course. It ends up being thrown away the same day. Yeah, but they do have stuff you can use. I agree. I'm just looking at the margins because you pointed them out.

So I just want to take a peek. This looks pretty low. Whatever. I'm sure they make gobs of money. You can't find it? The margins are not the point. No, but it just looks very low. Okay, no, no, no.

Here it is. As of January 2021, on revenue of $25.5 billion, they had a gross profit of nearly eight billion. billion. Where are you looking at? On their income statement. If you look at their income statement, they have operating revenue with $25.5 billion in gross profit of $7.8 billion. I'm not their income statement. So they have like a 30% margin. That's pretty darn good on a gross basis, a gross margin of 30% basically. All right, not bad. All right. I'm looking

quarterly. Are you at dollar tree? Yes. All right. Whatever. Whatever. Whatever. That was my on an Schrelli impression. Oh, here's where the inflation has been. I found it. There's this thing, listen, I like the Wall Street Journal. I like it a lot. I'm a subscriber. There's this thing called W.S.S.J. Pro, private equity. You ever see this? No, I did not. Is that a new subscription thing? It's newish. I've seen it before. Never really paid it much mine. But it says Josh Kushner's Thrive Capital gains more flexibility to invest in crypto, public stocks. They're registering as an RAA. Oh, we're an RIA. This is a story that I'm interested in. I wanted to click in it. So it's says, our intelligence, your advantage. Sign in and subscribe. So I try to sign in with my

username. No, no, no. It says subscribe. It's all right. I'll hit subscribe. What's going on? Let me see how I read this article. Request information. Ooh, fancy. Request information. All right, I'll request information. I hit that. This takes you to the next piece of the puzzle. Guess how much this cost a month? A lot. $192 a month. Who, if you're paying $192 a month, no offense to the Wall Street Journal. You're not getting your news from the Wall Street Journal. You're not getting your news from the Wall Street Journal. Well, no, that's knowing your audience. That's knowing that private equity people will pay for it.

That's the whole idea. Really? Don't you think? No, I think that private equity people have their own sources. They don't need, like, to pay the Wall Street Journal. Private equity people are definitely paying for this. Come on. How many subscriptions do you think they have sold?

I don't know. I'm going to guess 64. I've never heard of it. By the way, have you ever subscribed to a local newspaper before you have to pay now to read it online? We've got Newsday, and I don't think I subscribe. actually did the local Detroit free press. I used to live over there. I still like to follow that. I subscribe and get the couple of free months or whatever, and then you pay like a dollar. So I did that so I could read some Michigan football stories, which shout out to Michigan, finally beating Ohio State. Thank you very much. I think I almost cried on Saturday when it happened finally.

Were you drinking beers? No, I wasn't actually. To cancel a newspaper for a local paper, you have to call an actual number and talk to someone. You cannot cancel it online. How big of a racket is that? It's local. I mean, listen, they're struggling. What do we got next? Speaking of, why are you canceling your your local newspaper. You really are in a Patriot. I'm not going to read it anymore. All right. Shame on you. You know, Ben, I rugged myself again, but not really. Not really. So for the Constitution Dow, they didn't buy the Constitution. I meant to ask you about this. They were going to give people money back via the people token, which I was super stoked to get in on. But I'm a little bit bitter about this. There was a redeem button. So I hit redeem and all of a sudden I see my eth come back. I'm like, I thought I was getting people token. What the hell? So I'm like,

no, no. I want my people token yet to like scroll down further. I can't remember the exact thing, but it was not intuitive at all. Wait, how much was the people token up? Because I saw it going crazy. I invested 500 bucks. It would be worth 15,000. And I have to be honest. That stinks. Oh, that's perfect. That really stings, but I'm not the only one. You had to pay gas fees to get it back too, right? Yeah, I think so wait. So of your $500 that you put into this thing, how much did you pay in gas fees?

$400? No, no, no, no. I think I put in $500 and I ended up probably spending $80 on gas fees on the way. By the way, this is why crypto bros complain so much about inflation. They complain that the dollar tree is raising their prices from a dollar to $1.25, but we'll gladly pay $300 in gas fees on a $400 purchase. Yeah. This one stings because my intention was to get the token, and it was not at all intuitive.

I hit redeem. It should have said, like, redeemed to Eath or redeemed to people. Yeah, that's a way better story, though. 15 grand. Yikes. Anyhow, somebody tweeted, inspired by the success of Constitution Dow, Swartz Dow, which sounds Swartz, it sounds like a knockoff of baseballs or something. Swartz Dow is a decentralized organization with the goal of acquiring paywalled academic journals

and publishing all of their content under open access licenses. How cool is that? I mean, that sounds like a lawsuit to me. Why? They're buying it. They want to buy all these journals and open them up? With the goal of acquiring paywalled academic journals. So I think people are going to contribute to this Dow.

They're going to buy these academic shit and just open it up. I like it because everyone's in a while I'll do a financial. Analyst Journal one or something. And you click on it and you can't get on it. What the f***? $500 for an article. I just want to one article. So, boom.

What do you think of that? That's a good Dow. I like it. Will you support the staff? I mean, I'm not going to, okay. You don't even support your local newspaper. You're not supporting this Dow. Get out of you.

I do too. I subscribe for six months. It's still earning season. You're still going? I thought you were done for a while. I'm still going. Listen, promises made, promises kept. I told them we were going to do this.

I'm doing it. Let's talk about the gap first. I remember. When I first found out that the Gap owned Banana Republic, Old Navy, did they ever own J. Crew? No. What was that separate? That was separate. Oh, Big J. Crew guy.

We haven't spoken about J. Crew in like a year or two. You still shopping there? Are they still around? I believe this sweater is a J. Crew sweater. Nailed it. You got me. I remember this is straight Ram Capital, not, I don't think he's J. Crew. Probably Haynes.

Anyway, I remember when I first found out that the Gap owned these stores, my head exploded. I didn't have any concept of like businesses, forget about public, but like just business in general. For some reason, that is like a flashbolt moment with me because I was in the mall and I remember like young Michael was like the whoa Keanu moment. So there's this book called Wild Company, the untold story of Banana Republic and it's by the husband and wife. I think I mentioned in this show a couple years ago, husband and wife who founded Banana Republic. It's a really cool business startup story and they got to the point where they needed to kind of sell out and Gap bought them way back in the day. But the reason it's

called Binary Republic. They actually would buy these threads that came from Africa and Italy that looked like you were going on a jungle safari. Interesting. So, all right, let's start with Gap. Big sprayed all over the conference call was the fact that there's port delays. For example, Q3 2021 financial highlights. Here's the first thing it says. Port delays in factory closures, especially in Vietnam, materially impacted Q3 performance and fiscal year 21 outlook. There's Despite strong demand for our breads, which is hilarious. It's like, listen, people really want gap, but we can't. How long do you think after the supply chain crisis is over, these companies will still be using that as an excuse?

They can get a couple more quarters out of it at least? Yes, for sure. They said that they estimated, so gross margin hit, approximately $100 million in air freight costs. Inventory, 11% decline. Sales estimated $550 to $650 million laws due to inventory constraints. Guess what? Market did not care about excuses. The stock was down 24%. Have you shoped at the gap in the last few years? I got a lot of my clothes from the gap because my wife gets me my clothes from there. Okay. I'm a simple man. I just like their plaintiffs. Most of their clothes,

though, fell off a cliff five years ago. In terms of quality, honestly, I don't think I would notice. Fashion wise, yes. If you're getting- Oh, fashion-wise. Yeah. No more gap shopping for me. Sorry. Okay. I'm an elitist. Clearly, the gap fell 24% that day. Man, it's still falling. The stock was 37 bucks it was on a great run the stock was 37 bucks at may it's now 16 geez how hard is picking stocks a few people only talk about the winners here's another one nordstrom same type of thing and actually the stock looks a little bit different northstrom fell 29 percent so northstrom had a black monday i don't know if this was on monday i don't think it was northchum had a black monday after they reported same deal as gap stock is still falling you know what's not falling very different

story. I don't know exactly why is Dix. And I remember talking about Dix because when Dix was above its 2019 high, this is just fairly early on. I said, you're telling me that Dix is in better financial shape now than it was pre-pandemic. You're telling me the business doing better now than it was before. Yes. The answer is yes. And your stock picking thing. The cool smart thing to say if your stock picker is it's not a stock market, it's a market of stocks. It's a stock market. It's a stock market. Because if you look at the consumer discretion or ETF, XLY, it's up 30% this year. You want to know why? 21% is Amazon, 19% is Tesla, 10% is Home Depot.

All these other little stocks at Gap and Nordstrom and all these ones getting killed do not matter. Do not matter. Market cap weighted. The market of stocks doesn't matter. The biggest stocks are the only thing that matters. It's the market. Market cap for the win. Yes.

So, all right, Dix, it was the strongest Q3 in company. history. Again, I don't know how they didn't have any supply issues, but they didn't. Strongest Q3 in company history. Revenue of 14%. Same store sales up 12%. E-commerce sales was 13% to 2019. It's now 19% today. We'll share some of the charts. I mean, the financial performance, this company's on fire. The Omni Channel on fire. You ever buy your black Nike hats from Dix? They're crushing. How do you have? A lot. I bought you one once as a present and you didn't like the fit. Oh, really?

You don't remember that? Vagely. I probably have like four of these. But the ones that I really like, the ones that I really like had like the mesh here. They don't make them anymore. Can't find them. That's a good reminder because that's a hat that I like.

It was like a Nike golf hat. Come on, damn it. I don't make them anymore. That's a shame. Anyway, Dix is on fire. Zoom. We were joking. Or I was joking with Jeff Mackie.

I think you and I were talking about. Zoom was another one of those stocks down 50% going into earnings. All the bad news is in the name. L. The stock got freaking annihilated. Let's see. Oh, this was interesting on the earnings call. So the stock got creamed.

I forget what it fell, 15% the next day. The stock was down. How much is this stock down from its high? It peaked at ExxonMobil and now it's at Dick's Sporting goods. That's another thing. You can see the drawdowns, but if you look at what some of these market caps used to be, like Peloton went from almost a $50 billion market cap to eight now or something

like that. That's the crazy thing to me is the market cap. Come on Robin Hood. Robin Hood's like a $20 billion. All-time low, correct? I'm not kidding. I think the valuation is becoming very attractive at Robin Hood, even though it's hard to catch a bottom. Do you think this is at all saying that like the day trading craziness of what's going on is abating a little? That's exactly what it's saying. But still,

$20 billion, I think is a fair price. Someone asked you at, so you talk about, VanGard should buy Robin Hood. There you go. You talk about Zoom getting killed. Someone asked us, replied to the show last week, said, hey, I got destroyed in Teladoc. I got greedy after winning big on the first bubble. can you or Michael give any insights onto what indications trigger your sell instincts? Or am I just a Neanderthal for being in risky stocks like T-Doc and not watching my account like a hawk? I think there's two ways to think about this is if you're investing growth stocks. If you're going to hold onto these stocks, you're going to get killed occasionally. Correct. Have to. You cannot sidestep that. You're going to get crushed. Otherwise, price is the only indicator there is. For something

like this, if you want to use technicals to get out, if you have some sort of trailing, whatever, moving average, trailing, whatever it is. Other than that, I don't know what else you can do because looking at the fundamentals of these things versus the stock price, people are pulling forward so much stock price now of what the future could be that it's hard to mesh up those fundamentals with the current price at all anymore. I think if you're investing in growth stocks, hypergrowth stocks straight at ridiculous valuations, you need to have some sort of risk management, my opinion, because your risk management is either I will never, ever, ever sell, which you're probably fooling yourself because guess what? Most stocks are not Amazon. Most

stocks are not Tesla. Most stocks that fall 70% empirically never come back, that agony in the XSCPs that we always talk about. So if you're going to invest, I don't care if it's a moving average, a trailing stop, a price point, whatever, I think most people should manage risk with gross stocks. But getting back to Zoom, a few questions about the Metaverse, I thought was interesting. Somebody asked, this is the first question, I think it was the first question. I'm wondering, as you think about the over 400 million business phone users that are on legacy technology, how do you anticipate capitalizing that opportunity? Whoa, 400 million business phones in this Mark? In this economy? Haven't most of them? Four hundred million business phones? What do you think

Zoom users are? Do they say? How do they categorize them? I'm saying like what percentage of that are Zoom users now? It's got to be a large percentage at this point. I don't think Zoom is that big. So their quarter of a quarter revenue was only up 3%. Year over year, it's still up huge, but still that's not great. So they break down their customer base by more than 10 employees or less. Customers with over 10 employees grew by just 1.4%. I'm sorry. You're selling a 30 times sales. This isn't going to cut it. You're going to get bushwhacked. That's exactly what happened. But at least, in the case of Zoom, $295 million in operating cash flow.

They've got $5 billion on the balance sheet. Unlike Peloton, I don't know what their cash position is. Actually, I do. It's not great. What are you saying? Zoom should pay a dividend now? I think Zoom is going to be fine. I mean, easy for me to say, I don't own the stock.

But anyway, that's what we got for a great quarter guys. And actually, not a great quarter guys. That's from the quarter app. It's from us. But go to the quarter app if you haven't downloaded it already. Q-U-A-R-T-R finance is a quarter finance. quarter invest. I don't know. It's something like that. All right. So we talked about Robin Hood, maybe people slowing down a little.

Apparently, they're not with Tesla. So this is from the FT. It's that the nominal trading value of Tesla options has averaged $241 billion a day in recent weeks. That's according to Goldman Sachs. That compares with $138 billion for Amazon and $112 billion for the rest of the S&P combined. So basically all the options in the S&P 500 stocks are on Tesla and Amazon. This is wild. What's the circular reasoning here behind? Are the options moving Tesla or is Tesla moving so much, getting people to bet on the options, and then, like, how much of that just feeds on itself? Don't know. I mean, Corey and Hofstein and people like that spend a lot of time on this on how much is the tail wagging the dog of the options market? It's funny to me that

people think that, like, people buying index funds are going to impact the market. I would think this option type of activity has a way bigger impact on individual names than being included in the SP 500 or whatever. For sure. All right. Here is from Reuters. This was a revision from Morgan Stanley. This is a few days before we had the variant hit. So this may be in jeopardy. Incorporating the wealth of data today, including GDP revisions to Q321, more robust spending, strong inventory, strong durable goods orders, and upside and new home sales. We significantly raise our Q4 GDP tracking from 3% to 8.7%. And if I'm not mistaken, that's real. That's that's real. That's after inflation. So with inflation, we're talking, I don't know, 14% nominal GDP growth

annualized for the quarter. Let's bet on that. I'm taking the other side. You're saying, so because of the variant or just because you think that's too overboard? 14% nominal GDP growth. Annualized. No, I understand. My wife has 5% of that with her holiday shopping so far. She got duped. Did they not dupe everyone into saying buy all your stuff early because of supply crisis?

We've had no problem getting anything for the last two months. Have you? I don't know. No, we haven't. The boys get eight presents each. You see, that's the beauty of Hanukkah. you have a set cap on your presence. Oh, I never thought about it that way.

We don't have that. You have like a rules based. You have like portfolio rules for your presents for Hanukkah. Yeah, you get seven like, what do you remember? You get seven like trinkets and you get one big gift. I complained about my trees to you a few months ago. I have another tree issue. We went to go get a Christmas tree last week.

As you know, I'm a big tree guy, so go ahead. We went to get a Christmas tree last week. And it's one of these ones where you cut it down yourself. Oak, cherry. We go in to cut the Christmas tree down. And all the ones in the field, we walk, like for miles and miles, those trees. Hold on. Hold on. First of all, I have no idea what you're talking about. Go to a Christmas tree farm and you can cut it down yourself. Oh, no kidding. With what? A chainsaw?

They give you a saw that you can do yourself. A manual saw. Yes, it sounds way better in theory than in practice. So we get out there. That sounds awful. Yeah, it was, frankly. We're walking over. The kids can't decide on which tree we should get. And all the trees have like three more years to grow until they're tall enough to get a big one like we want. So the problem is they had cut down all the big ones and already had them ready to go at the front. So we didn't have to cut. So we walked all way back and got one that looked really nice. We bring it back and they put it in the little machine that shakes all the needles off. I'm ready to go. I strap it on my car with like around eight times with rope like I know what I'm doing. Luckily it doesn't move. Get back to the house

and we're putting it up and pine needles are going everywhere. The guy's like, well, you got to put water in the first half hour you get it back. Like otherwise it's going to be dry. And we're like, I don't know anything about this. What does the base of the tree sit on? The tree stand, this big green thing and you put some screws into it so it holds it up. And we got, I mean, we're talking to the top of our nine-foot ceilings, the star is touching. I had to trim someone so it would fit. It was huge. Every time my dog would walk under it, one of the kids would brush past it, the needles are falling off. And this is a huge tree. This is like a nine-foot tree.

Is that unusual? Yes, they should not, especially if you're water. We're like, okay, maybe it's supposed to see me water. They gave us a bad tree. It died, basically. All the needles fell off. You got a lemon. Yes, we had a lemon of a tree. So now what? Pita, spent a hundred bucks on it. Do I go back and ask for a refund? We threw it in the backyard. Now my wife is going to get a fake tree. This is my nightmare. I love real trees. And now we're a fake tree family. I blame the Christmas tree farm for selling us a lemon anyway.

Interesting. Does Christmas trees have anything to do with lumber? Like, what were the prices? That's probably normal. I did hear people say you got to get your Christmas tree early because they might not have enough. But I think that's for places. If you're like in New York City and you're buying one because there's no farms, they're like, we have Christmas tree farms all over the place. I don't think it's a problem for us to get one in Michigan.

All right. So Elizabeth Warren got ratioed. She tweeted, wondering why your Thanksgiving groceries cost more this year? It's because greedy corporations are charging Americans. extra just to keep their stock prices high. This is outrageous. I saw her getting ratioed. Hot take. I agree with her. Oh. I kind of agree with her. Listen, there's a lot of stuff Elizabeth Warren says. She wanted to get rid of Powell, like, give me a break. She wanted to like get rid of buybacks. You will not stand for that. Yes, I will not stand for Jerome Powell slander.

But you're with her on this? Okay, look at this next chart. Look at the S&P 500 profit margins. And then look at the next chart here. Consumer discretionary and consumer staple profit margins. These things are at all time highs. If they're really having a problem with inflation? Why are their profit margins at all time highs? I agree with her. They're raising prices to keep their margins high and they're passing on higher prices to consumers. They're not only experiencing a little inflation, their profit margins have gone up for consumer stable consumer discretionary companies in the S&P. She is right. This is greedy corporations. What if she brought data to her tweet, would she have still gotten ratioed? People don't care about

data, though. That's the problem. People just care about emotion on Twitter. Okay. All right, there was a tweet from Mike Simonson, who is a real estate expert, and he showed the inventory of homes for sale in the U.S. And you can see over time every year, it's seasonal. It spikes. It goes down. It spikes goes down. You get more inventory in the summer and then it sort of abates, and you should expect to see inventory rise when you get away from the summer. Inventory rise in the winter because not as many people are buying homes. It hasn't really happened yet. And he's saying, this is kind of odd. We're not seeing the seasonality hit like we did before. Connorson from Bloomberg gave a hot take here that said the simplest read of the housing market data right now is that home prices are still

too low. I don't want to open up this can of worms again, but he says, Yeah, next time. Inventory is historically low and May said an all-time low in early 2022. Price cut percentages are below normal. Incomes are growing rapidly. What does that have to do with prices, though? It's a supply thing.

He's saying, if we don't have inventory come back on board or mortgage rates go way up, home prices are going to continue to rise and are probably too low based on those factors. And I tend to agree with him that if we don't have mortgage rates scream higher and I don't see what's going to cause inventory to all of a sudden flood the market, you're probably in a situation where home prices are going to continue to get away from people that are waiting. Put your money where your mouth is. Oh, this could be another Cal She bet we could make. Because I will take the other side of you right now. Is there a real estate section? We're going to have to talk to them. What would that look like?

Will Case Schiller, right? That's the home price index. Is it a 20 city index? Yeah. There's a national one. What do you think it's going to be in the next six months? Cumulative. Connor said bet on 0.5 to 1% monthly. No, what do you say? What do you say, sir? I'm saying in the next 18 months, housing prices will not fall.

18 months. 18, 24. Give me a number, 36. Housing prices are not going down. I'm not making a 36 month bet. That's so. Okay, 12 months. Over the next 12 months, housing prices will not fall in the United States.

Dude, you're like saying that home prices are going to keep going up and then you're like home prices will not drop? Well, which is it? Are they going up a lot? are they not dropping? Come on. That means if they don't drop, they're still going up, correct? Do the math. Come on, come on, Zach Alfenacus. This is ridiculous. If they don't drop, they're still rising.

Prices are going to keep rising a lot, I say, and then I will bet. The next 12 months, U.S. housing prices are up at least 7% or the next 12 months. 10. 10 and you got a bet. 8.5. Split the difference. No. All right. Let's talk about inflation in the metaverse. Oh, God. Do we have to do this? Yeah, I have to read this. I have to read this. Here's a quote from the Wall Street Journal.

Investors' interest in virtual real estate got a boost last month after Facebook renamed itself Meta Platforms, Inc, and said it would focus on online worlds commonly called the Metaverse. That interest reached a new peak on Tuesday when Republic Realm, a firm that develops real estate in the Metaverse, said it paid $4.3 million for land in the world's sandbox, the biggest virtual real estate sale publicized to date, according to the company and to date from the website, nonfungible.com, which tracks digital land sales. Let me ask you this, end quote. Let me ask you this, Ben. When is Zillow going to buy nonfungible.com? What's this estimate for some of these digital real estate? My eyes just rolled in the back of the head. The problem is that real estate is probably going to worth like $2 billion in like 17 months.

And it's going to look smart. So I don't know who said this. Chris Dexter or somebody, all big things are looking like a toy. I'm sorry. I've read the wrong quote. Here's the actual quote that I wanted to read. That's going to make your eyebrows go to the back of your brain. A landlord said, and then we charge rent.

The company employs an asset manager to deal with tenants, complaints, and change requests. Its developments include a mall which leases to retailers selling fashion for avatars and a master planned community of around the 100 villas on private islands that is sold to individuals. Tokens.com which is publicly traded is currently developing an 18-story skyscraper

into Centralland that it hopes to lease to lawyers or crypto currency exchanges. Why do you think they stopped at 18? Do you think they have some? Building codes for that? There must be codes in the Metaverse. I don't know.

I'm the old man yelling at the cloud right now. Me too, but this is going to be huge. I just started reading Ready Player 2, the follow-up to Ready Player 1. And it's all about, again, living in the Metaverse and, like, plugging in this thing to your brain that you plug on the headset and it connects to your brain. And everything that you're experiencing this Ready Player 2 Metaverse, you can feel. If you eat something, you can actually taste it. It, like, messes with your taste buds, basically. I'm sorry, that's just a world that I don't want.

Call me an old man, get off my lawn kind of thing. This stuff is coming. This is just a world that I think I would rather tell people, Get outside and get some sunlight. How about this? That's all easy. Get outside and go for a jog or bike ride. Okay, you can do both.

Stop. Why would you plant a flag when you don't even know what you're talking about? Let's just give a time and set. Like, you don't have to decide right now before there even is a Metaverse. You don't have to decide. Did you ever see the Bruce Willis called like Impostors or something where everyone was plugged into their metaverse, but Bruce Willis refused to do it? You would plug in in your house and your robot person of you would be living in the world. Never heard of this.

I can't remember what the name is. But Bruce Willis was anti. And so the idea was. You can never get hurt if you just sit in your home with your headset on and have your avatar be in the real world for you. And Bruce Willis was anti and wouldn't do it. I'm Bruce Willis in this scenario. Oh, it's, I Googled Bruce Willis' Metaverse movie. It's called Surrogates.

Serrogates, that's it. Yes. So your surrogate lives the world for you and you have your headset on and you can never get hurt technically. Bruce Willis said, screw it. I'm going to live in the real world and go against it. I like that. Not a great movie, but not a bad one. Kind of like a poor man's eye robot.

Oh, we were talking about Waystar Royco's market cap. Well, I tried to figure out what the drawdown is. So, Jamie Powell at the FT figured this out, and I must have missed this. So this is, what's the guy's name, Adrian Brody's character? I don't think there's too many spoiler alerts. People say that we do spoilers too much for succession, but I don't think we do. So this guy... Oh, I have not seen the most recent episode.

I'm not going to spoil anything. So this says that Adrian Brody's character says he lost $350 million or 10% on his 4% position. Backing that out, that's like an 80 billion. company. And they also said, Roman Roy, on the recent retired janitors of Idaho episode, said we're talking about an $85 billion baby here. So that they've basically said, and I most have missed it. Here's my hot take on the new season of succession, without getting any spoilers. I loved season one and two. Remember before the season started? I said I rewatched season one and two, and I think it's got top five potential. I loved season one and two. I like season three.

I think I'm going to need a bombshell in the last three episodes to bring me to love. Because You haven't seen the last episode yet They're doing everything in their power To make you hate these characters You're never supposed to like them because they're rich But well the scene two episodes ago Where Logan forces shift To get into the picture with that dirt baby politician

Who by the way was amazing in weeds I love that guy That was the episode where they're picking the president Like that was like whole I like that episode People are bad But these people are beautiful bad So entourage

Did you watch Entourage? The first few seasons are amazing And hilarious By the end of the show You didn't like any of the characters but there also was a bad plot so you can't have unlikable characters

and a bad plot if you're gonna have unlikable characters like I'm breaking bad you need to have an amazing plot so my problem is this season they're making all the characters

even more unlikable but they're not moving forward the plot at all I'm still rolling with succession I like it if I'm gonna love it I'm gonna need some plot bombshell

in the last three episodes that's what I'm saying while we're on this topic you know what's for me has gone very far south very quickly and I'm not happy about it Yellowstone oh really I'm still in

I mean nothing's happening That show is so over the top that I'm along for the ride. No, I understand, but nothing's happening. I love RIP so much. He could do anything and I'd be on board. I know, but no, I agree. RIP is great, but just nothing's happening. I'm bored.

But conversely, you know what just keeps getting better? He's the 20th season. Curb keeps getting better. Yes, it does. He set a very high bar and he keeps staying high. Did we talk about the two-tone? The shirt? The blue and gray.

Vince Vaughn is finally rounding into a good character for me, too. All right, one thing on movies here, before we get to some recommendations. No Time to Die is the new James Bond movie. It says it eclips $730 million in global ticket sales. Not a great movie. Okay, I didn't see it. I thought the last one was just okay, too. So I don't know, maybe I'll rent it when it comes out.

It says it's the highest grossing film since COVID, so since 2019. However, it costs more to produce, $100 million to promote, tens of millions more to postpone it. They're basically saying it needs to make $900 just to break even. Is inflation killing the movie business? I did my part. I went to the theater. You didn't go. Is inflation killing the movie theater business?

I mean, are they going to charge $40 for... That's where you're worried about inflation, the movie theater business, Ben? Yeah, tongue-in-cheek, sorry. Did you see the squid game thing? This guy, Mr. Beast, YouTube Sensation, recreated the actual squid game contest. See this? Yeah, he got 100 million views or something. Let's see what's up to now.

I didn't watch the whole thing. I watched the first few minutes. Oh, that's cute. I get it. 125 million views. Good Lord. Okay. People keep saying this is a positive for the creator economy.

This guy's not a creator. He just, he recreated something. It's the recreatter economy. I'm joking. I'm just kidding. No, I understand, but he's also the, I don't want to say the Jim Kramer. That was a weird analogy. He's the top of the top of the top of the top. Yes, this guy has figured out. He's figured out YouTube. Yeah, he's not a random.

No, no, yes, I know. There was a good story in Bloomberg on him six or eight months ago, and he's figured out YouTube, basically. Recommendations. I'll go first. Do you listen to the Big Picture podcast ever? Occasionally. Okay. They did one on Ridley Scott because he did the last house of Gucci. Is that the name of the movie, the House of Gucci? I love Ridley Scott. Probably my favorite filmmaker of all time. Okay.

I always get him confused with his brother, though, as far as... Tony Scott? I need the IMDB side by side. So, Ridley Scott did the alien movies and Prometheus, right? Tony Scott does all the action films. He did Man on Fire. Yes. He did Man on Fire.

I love that movie. He did the train movie with Denzel, I believe. Unstoppable. What's the Gene Hackman movie on the subway with Denzel? Oh, yeah. I know you're talking about. He did Tarantino's first movie. So Ridley Scott is more of the sci-fi one.

Ridley Scott, he was in the Hollywood Reporter. He's blaming millennials for the last duals box office performance. Shame on me. I didn't get to go see it. He said what it boils down to are the audiences who are brought up on cell phones. But the millennian, he calls it the millennian who do not ever want to be taught anything unless you're told it on the cell phone. Ooh. Come on, Ridley.

Shots fired. This movie looks good. I'm going to definitely watch it when it comes out on my TV. Listen to this guy. He did The Martian, of course, Blade Runner, Gladiator, all the. aliens movies, which I was thinking about this. Aliens in Jurassic Park are my two favorite, and then Terminator, my favorite stories. Sci-Fi?

Universes. No, my favorite trilogies, multiple, anything aliens I'm in. Prometheus Covenant, love it. Love it, love it, love it. James Miller was on a podcast with Bill Simmons. James Miller is the guy that does like those long stories. He did a book on ESPN. I read his ESPN book.

It's very good. He does the Origins podcast. He did almost famous that we spoke about a while ago. And they were talking about, so he just did a long book on HBO, which I'm I'm definitely not going to read, but I'm glad to listen to the podcast. They were talking about, like, all the comedy specials. I didn't realize that Eddie Murphy's specials, Delirious and Raw, premiered on HBO, did you? Well, yeah, that was like, even as recently as like Chris Rock's big specials were always on HBO, too, back in the day. That's right. Yeah, HBO used to own comedy,

now it's Netflix. Did you watch the DMX documentary? No, those 90s music documentaries aren't really piquing my interest. Okay, very heavy. It was made before he passed. This is not an after the fact thing. It was like a day in the life of DMX. And that guy was like gigantic in the 90s. Remember Flesh and My Flesh, Blood of My Blood. Remember the cover of that album? Anyway, that was very good. Lastly, lastly, shout to Ben C for putting this on my radar. True Story. Did you watch any of that at all? I didn't check it out yet. Okay. True story is on Netflix. It's with Kevin Hart, who plays Kevin Hart, basically, and his deadbeat brother Wesley Snipes, who's coming to him for money. And I'm mad at Wesley Snipes. I'm mad that he left us.

that he went to jail for so long. He needed a better tax advisor. That's the problem. He should have talked to Bill Sweet. I'm mad at the whole situation because he was such a good actor. He was my favorite action. Remember Pass No, 57? Of course, of course.

Love that movie. Always bet I'm black. Love that guy. Love that guy. So anyway, he was in this show and he was incredible. He was so good. And this show is like sort of like a, I don't want to give anything away, but it's got serious uncut gems vibes in terms of the,

amount of discomfort and anxiety you feel watching it because shit goes bad and for the first time of my life. So I was upstate on Saturday. I had all day to do nothing. Robin was with the boys. It was a perfect setup for me. So I binged seven episodes in a day. First time in like, I don't know, a decade I've done something like that. The reason why I was able to do it was because I watched on 1.25 times speed. I didn't realize you could do that on Netflix. I've never done that in my life. And I don't know that I would do this for like a Paul Thomas Sanderson movie, but for something like this, I didn't notice any difference because all that it did really was kill the dead time. It just sped it up. So anyway, I'm going to give that seven

episode series a giant stamp. Very good. A lot of fun. We watched Stillwater this weekend, which is the Matt Damon movie where he plays. Amanda Knox's. Yeah, it's kind of like an Amanda Knox, that kind of story. It was way too long. It was like two hours and 15 minutes. It should have been an hour and 45 minutes probably. How was it? I liked it. He was awesome as he played like this redneck from Oklahoma who goes over to the south of France to try to save his daughter. And I don't know if you would like it because it was a kind of a coming age story of a person finding themselves and also a little bit of a love story. But then it also had this murder mystery detective twist to it. And it had a very good twist ending actually. I don't know that you would like it. But I

really enjoyed it. And Matt Damon as this oil rigged guy, Redneck from Oklahoma, was so good and believable. I love when you tell me to stay away from movies, unironically, because guess what, I'm not going to watch it. I like that. I don't think you'd like it. I'm not going to watch it. Let me just get back to Rudy Scott, because I just want to give the man his proper do. So he made Alien in 1979, obviously one of the best movies of all time. Then he made Blade Runner three years later. So he took a break. Thelman Lewis in 1991, huge movie. Do you remember when Gladiator came out? It was 2000. That was one of the biggest blockbusters. in my lifetime.

Remember the Kid Rock commercial, like the Kid Rock song? Oh, yeah, right. For the coming attraction. He did Hannibal, which was eh, Black Hawk Down, matchstick men, one of my favorites.

That is a good one. Underrated. American gangster, good, not great. Body of lies, eh. Robert had sucked. All right, then he comes back with Prometheus, the Martian,

Alien Covenant. I mean, House of Gucci. He's like 80 years old, by the way. Is that a resume or what? Not bad. All right. I'm looking for listeners

support for this one. This weekend I watch Just Friends and Office Christmas Party. Listener support. Why? What are you about to say? I'm trying to think most of the good holiday Christmas movies are old ones from the 80s, 90s, even before that. What are the best movies of this century? So I'm thinking Family Man, Just Friends. Office Christmas Party is 60% of a good movie? Is just friends with Ryan Reynolds? Yes. I think it's some of his best work. Is that when he gets fat or he was fat growing up? He wears the fat suit, yes. It's on Netflix. That was fun. I find that hilarious. So I'm looking at. for, send me your best Christmas movies of this century. I'm complying a list.

What do you got so far? Well, what's on the list? Family man, Nicholas Cage. I think the family stone is underrated. Just Friends, Office Christmas Party. I need some more. All right. Listener, send me the best Hanukkah movies. All right. Next Monday, we have Scott Lynn from Masterworks back on to talk about the contemporary art market and becoming a unicorn. I think that was our best episode with Scott yet. We had a good one. and what it's like to become a unicorn, send us an email Animal Spiritspot at gmail.com.