Animal Spirits Podcast - How the Financial Crisis Affected Millennials (EP.46)

Episode Date: September 12, 2018

How the financial crisis impacted young people, why the Fed pays attention to the 1970s, AQR's recent struggles, the difference between insurance and investing, how much money you'll spend in retirement, Kevin Garnett's accountant, Rusty the stock-picking bull 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. This is the week of the 10th anniversary of the Great Financial Crisis when Lehman failed. And what's pretty remarkable is that obviously there's been an insane run in the stock market since the bottom. But even since the top things have done okay, over the last 10 years, the S&P 500 is up 185%, which includes that 45% drawdown, which is pretty remarkable. Right. Yeah, I figured, so let's say you bought the Friday before Lehman went bankrupt, which was on a Monday, I think September 15th was the date. Yeah, you would have lost like 46% over the next six months. But from that date, if you would have held on, you're up over 185% in total. So something for everyone in that one. Yeah, that's wild. And of course, this has shaped people's view of the market and in turn how they allocate their money. And what's sort of interesting in all of these polls and studies, and surveys is we can't seem to reach a conclusion. I feel like it's always one thing says something else and all things that were feuded by each other. So an average of just 31% of people

ages 18 to 29 held stocks from 2009 to 2017, according to Gallup, versus 42% in that aged cohort in the years from 2001 to 2008. So that's on the one hand. But then on the other hand, Vanguard did a study showing that most millennials, those born from 1980 to 2000, have aggressive allocations with millennials investing about 90% of their money in equities at the median. So, which is it? This is why we're an anti-survey podcast, because you can never tell the difference between these different. And I think the Vanguard one was looking at just taxable accounts and IRA, so it didn't even include 401Ks, which I'm guessing the majority of young people, if you include things like target date funds, probably have more equity exposure than, say, their parents

did at the same age. So it's hard to, it's hard to make that comparison if you're not talking about generational years talking about from a decade ago or whatever it is. Well, furthermore, when you're investing in a retirement account, you're much more likely to be appropriately positioned whereas with a taxable account may be you're saving for a wedding or a car or a house or daycare or whatever the case may be. So looking at allocations inside of a taxable account may not tell the full picture. Yeah, I mean, taxable account, that's where you should probably hold your gold exposure, physical. Well, speaking of this, there was an incredible quote in this Barron's article, and it's not incredible because this is

what financial panics do to people. So Karen Coons, a 63-year-old associate professor from the University of West Virginia said, quote, I am not in the market for the long term and we'll get out quickly. If I stay for a whole summer, that's already too long. I have available cash and investments in metals and crypto because I think they're a good alternative to the stock market, end quote. And that is the way that a lot of people feel after what we just saw 10 years ago. And the funny part of this is people try to get after millennials about everything these days, it seems, but this is not new to them. This happens to every generation. So have you ever read the death of equities piece before? So everyone knows the cover. I've actually read the piece.

And this is one of my favorite stats, which I wrote about a while ago. And so this is from 1979. And this is following the 73, 74 bear market and then the nasty inflation that came afterwards where stocks basically went nowhere for 14 or 15 years. And it says, the problem is not merely that there are 7 million fewer shareholders than there were in 1970. Young investors in particular are avoiding stocks. Between 1970 and 1975, the number of investors declined in every age group but one, individual is 65 and older. While the number of investors under 65 dropped by 25 percent, the number of investors over 65 jumped by more than 30 percent. So it says only the elderly who have not understood the changes in the nationals financial markets or who are unable to

adjust to them are sticking with stocks. So it's kind of funny that they poke fun at these older investors for sticking with stocks and kind of actually give the younger investors some credit, which is kind of the different between, you know, it's kind of the other way around now. It kind of like price drives a narrative. But it happened to people after the Depression. It happened after the 70s. Anytime we have one of these big economic calamities and stock market crashes, young people are going to be scared away. Yeah, we spoke about this last week or maybe two weeks ago.

Somebody emailed us about the 70s being worse than what we saw recently. And this is just one anecdote. So it's impossible to know the truth. But Neil Koshkari did an interview with Marketplace. And he said, quote, they're scarring from the financial crisis, yes, but they're scarring, bigger scarring from the inflation of the 1970s. And I think that is persuading us more than anything else and why we're so biased towards. You know, we say that we have asymmetric view of inflation. We don't mind if it's 2.1 and 1.9, but in our practice and what we actually do, we are much more worried about high inflation than we are low inflation.

And I think that is the scar from the 1970s. This is interesting, the fact that even the Fed, like those people in the Fed all grew up learning about this stuff. and becoming scared of the 70s and what happened then. And, you know, they all prepared for it and then the exact opposite has happened. And yeah, I found that this was a really sort of refreshingly honest piece from him. I'm kind of surprised he said a lot of this stuff. So is the takeaway that young people are more susceptible to be molded by current events than people that have already seen one or two cycles? Or maybe the lesson is how in your formative years, those events are going to shape what happens to you.

So the Fed is still hanging onto this stuff and those people are all gray hairs. Whereas younger people, I think, yeah, I think maybe the first big one that you remember is the one that sticks with you. And then you're constantly fighting that last war throughout your life. Yeah. So our colleague Blair Dukene wrote a post about life insurance not being an investment. And I got into the life insurance industry at the tail end of 2008 or maybe the beginning of 2009. So that was that was my experience in the GFC. I didn't really know what was going on, but I saw life insurance in particular being pitched

as an investment strategy. Actually, I was usually maybe not directly indirectly, but that's not true. It was a direct pitch for life investment as an investment strategy. And I think there was all these regulations about policies not being overfunded because people were using them as an investment vehicle. And when you're showing somebody an illustration of, you know, 4% returns a year from life insurance after the stock market just got cut in half, that was very appealing. to people and obviously guaranteed annuities, strategies exploded after that. And the final straw

for me, I think, in sort of realizing what was going on was, I read a book called The Bank on Yourself, which was basically a why you should just buy permanent life insurance and not invests in the stock market. And I think that I was reading Josh Brown at the time, his reformed broker blog and what he was writing resonated so strongly because I saw the same practices. And I think the difference between what goes on pitching shitty stocks versus life insurance is I think that the life insurance salesmen or saleswoman, but usually salesmen, actually believe what they're doing. And it's just a complete brainwashing that they don't necessarily think that they're screwing people over. They actually believe, I think in certain cases, that life insurance is like the

right answer for people. And a lot of it is incentive structure. But I think true, like, of course, life insurance should be part of any financial plan for a lot of people. And so Blair in her post quoted Jonathan Novi, who is one of our advisors at Rittholz and has worked on the insurance industry for most of his career. And he said, a person should buy life insurance, generally speaking, for one reason, because there will be a financial impact on his business or family if they were to die. And so I think any long-term financial plan should have life insurance. as a component, but that doesn't mean it should be your entire financial plan. And so I think there's a difference between mitigating risk and building up your assets. And so there are probably

a room for both, but I agree with you. There probably are some people who think that it is the be all end all. And I don't think that's the case. So there was one person that I remember in particular who was very upfront. He said, I sell life insurance. That's what I do. That's my job. If you want insurance, come talk to me. But most people that I saw positioned myself as a holistic financial planner, And what they would do is they would, like, in some cases, redirect money that you're putting into your 401k for life insurance payments, which is just so despicable. And what they would do is they would show these illustrations. And if you're 35 years old and you're paying $15,000 into a life insurance policy,

this is the pile that you have when you're 85 years old. And, like, literally showing somebody a 50-year illustration and a terminal dollar amount when you're 85 after the stock market I just got and cut in half was really seductive to a lot of people. So I can't imagine, I can only imagine actually, how many people were misled into thinking that life insurance should be an investment versus investing in the stock market and bonds and things like that. And a lot of it does touch on the buzzwords that get people that make people feel comfortable. So if people aren't comfortable seeing their portfolio chopped in half, then life insurance has a lot of insurance-related strategies, has a lot of stuff

that can sort of offset those fears. So I think for a lot of people, it's, it just comforts them to think that they have a much safer way of doing this. And of course, as we know, you can never like get rid of risk. It can only, it just changes shape and changes form. And so just putting all your money into a life insurance product is not going to take away financial risk. It's just going to shift it. So sticking with the GFC as an anchor, in the 10 years since, it's been really difficult for, it's been great time for plain vanilla beta. But any. anything in terms of hedging or diversifying away from the United States or into different strategies within the U.S. stocks has been difficult from value to trend following. It's not

been an easy 10 years to say the least. So Cliff Asness at AQR wrote a piece about this and wanted to know your thoughts. It was definitely refreshing. And obviously, I think AQR's had some funds that have had some difficulty. So this part of it was being necessary, but I love the fact that they were so sort of blunt and open and honest. And he starts it off. I love the opening paragraph. He said, this is one of those notes, you know, one from an investment manager who has recently been doing crappy. I've written them before, but not for a while, so I'm a bit out of practice. I must admit up front that they all kind of sound alike to me. And he says, performance attribution sounds like an excuse as if describing what's causing the pain is an attempt

to avoid responsibility for it. And it's so true because I've read hundreds of these letters over the years that try to move the goalposts or, you know, shift the blame. And I do like the fact that Cliff and AQR kind of tackle this head on and say, you know, let's take a step back and look at, you know, why you invest in our kinds of funds to begin with in how we can think about them going forward after this period of poor performance. Yeah, I thought that this was just absolutely terrific. He really opened up and talked about like how he deals with it personally. And of course, he's not susceptible to any, you know, the same biases. Of course, he doesn't, you know, AQR's not acting on how, on Cliffs emotions. But a great line was, he said, being smart often

means being better and more creative at coming up with stories for why now is different. So he said that having a higher IQ can actually work against you because it's easy to say that maybe just things have changed forever. So you have to be open-minded enough, but not too open-minded and striking that right balance is, uh, is not easy. And he brings up some good points in here. And the way that he explains stuff, I think, is really good because a lot of quants have a hard time explaining to the layperson what their strategy is supposed to do. And I think that is a big part of the problem. I've mentioned this before that I think a lot of investors in these products, whether they're retail investors, institutional investors or financial advisors, don't really understand them and don't have the right expectations going in that even in a raging bull market in stocks, some of these strategies can do very poorly on not just a relative basis, but on an absolute basis because of some of them have, as we've talked about, have seen losses. And so I think he does a good job of setting expectations and not making promises that they can't keep. But, you know, I think they also look at things from a very evidence-based

perspective. And he sort of lays some of that out without saying, you know, we know exactly when this is going to come back or if it's going to come back. And I think, I wonder if a lot of people don't misuse liquid alts or have unrealistic, unrealistic expectations. So he said, Let's start with the wrong reason to pursue liquid alts. You do not want a liquid alt because you're bearish on stocks or more generally traditional assets. That kind of timing is difficult to do well. Plus, if you're convinced traditional assets are going to plummet, you want to be short, not alternative. In other words, liquid alts are a diversifier, not a hedge. I thought that was really well put. Right. And a lot of people after 2008 were not looking for a diversifier. They were

looking for a hedge. And unfortunately, as he said, that's kind of not what these things do. They perform differently for better or for worse. And sometimes that means performing really crappy when stocks are doing well. And there's nothing that says that these strategies are going to hold up well when stocks get hammered either. They may fall less, but they probably will fall too in a lot of cases. Do you feel that when you're being complimentary of Cliff, it feels like ask kissing because he reads what we write in some cases and might be listening, whereas if this was written by somebody who we don't know or somebody that's not alive, it would feel a lot different. Honestly, it's kind of weird, but I've gotten to the point where I don't eat, when I write

something, I don't even really think about the audience. For me, it's like I'm writing for an audience of one and sometimes I even forget that like there's people on the other end of it. So maybe subconsciously, I think this, but I guess my way of viewing these things is if someone's, if I been reading someone for a number of years and I have sort of grown to respect their work. I will give them the benefit of the doubt. But if he put something out that was total crap and it was moving the goalposts and making promises and going against everything he said in the past, then I'd be more apt to call it. All right. So Cliff, this is a warning to you. If you put out shit, we will call you out. Pretty much. But again, I don't know if this reading something like

this makes investors in these funds feel better or worse because, again, it doesn't, I think it's harder to have sort of a mean reversion in these type of strategies and bank on a mean reversion because I feel like these types of strategies can, the market structure can change much more drastically than regular markets. And maybe I'll regret to say that someday, but I think that's, that's the case. Okay, I will slightly push back on that. I think that these, that systematic strategies are much more likely to mean regress than say discretionary managers, and I think you would agree with that. But to your point and also to why I think so highly of Cliff, he did not oversell and he did not say that, you know, he's like, I would love to say that now is a great time

to go all in on these strategies. But the spreads between value and growth are just not at the extreme. So this could get a whole lot worse before it gets better, which is, you know, something that you don't hear many active managers saying. They would much, they would be much more likely to say, like, well, now it's a great time, et cetera. True. Right. Stocks are up huge. Time to, yeah, rebalance and go into these. Right. I agree. Okay. Time for crappy survey of the week. I saw this headline tweeted out, I don't know, 50 times. And so it says nearly half of Facebook's young users have deleted the app from their phone in the last year, says study. Which sounds pretty crazy, because when you consider Facebook has two billion users, many of which are young people,

if half of them deleted it, that's probably not a good thing for Facebook. There's no way that this is true. This is a survey of 3,400 Facebook users aged 18 to 29. And there's no way that's representative when there are that many users. Don't you think the language of the question alone could sway somebody's answer? Yes. Yes, I agree. And probably there's probably a lot of people who delete the app for like a day or 24 hours

and then put it back on because they're trying to limit their social media intake and can't do it. Have you ever deleted the Twitter app before? You've done that before, right? Well, I actually just reinstalled it. I had the Twitter app deleted for six months, but then I was just using my internet browser. So I said, this is the dumbest thing ever. Why don't it just make it easier myself? Giving yourself an extra step. Exactly. You can't delete the internet. Okay. So there's another headline that I'm going to take the other side of, and this is from CNBC. It says Harvard Business School professor says half of American colleges will be bankrupt in 10 to 15 years. And this isn't just anyone. This is Clayton Christensen, who is, A well-known author researcher, he wrote in 1997, the book The Innovators Dilemma, which pretty much all tech people point to as something of a Bible in that space. And he's basically saying that the rise of online educational platforms will lead to a downfall for colleges, which I just can't see happening. Yeah, I agreed with you earlier when we spoke about this. But now I think, you know, when I thought about half the colleges disappearing, I guess I thought of things that come to mind really quickly, Duke and Penn and stuff. And of course, those aren't going anywhere. But, oh my goodness, there's over 4,000 colleges. So maybe half is a bit on the high end, but could one out of four of them disappear?

I mean, could it be a lot of the for-profit colleges? That would make a little more sense in my book because a lot of them have been shown to have some. shadier practices. But I think some of these colleges are so entrenched. And I do agree that eventually the amount that they charge in tuition, like something has to give. But 10 to 15 years in that lifespan, I think, is not that long. And I feel like a lot would have to happen in that time. Yeah, I agree. I'm still, I'm still preparing for my one child and I suspect my future child to go to college. Yes, definitely. And because the fact is that there is a ton of free education now.

A lot of the, even a lot of the Ivy League schools offer free online courses that you can just get online yourself. But getting people to do those on their own is really hard. So there's something to be said for getting people to show up in the physical building, whether that makes sense logically or not. People just really won't do it on their own, I think in a lot of cases, even if it's out there for free. So speaking of free, there is a lot of free information on the internet.

Am I right? I can't argue with you there. And one of the problems that the average person runs into when they're looking for information is that there is so much conflicting opinions. So you could see one person say that Apple is a great opportunity and another person say that Apple is overvalued. And to that end, there was an article in the Wall Street Journal last week that you wrote an article about by Dan Ariely and somebody else.

Sorry, I don't know who else wrote it. And the just was that you're probably going to spend a lot more than you. you think in retirement because they did a, I don't know if it was a study or a survey, and most people said that they were expecting to spend around 70% in retirement as what they spend now. But then what they did was they brought these people inside and they gave them more detailed questions. And it turns out that when you're not working, it's almost like you know, it's almost like the weekend, 24-7. And actually, these people expect to spend now 130% of what they spend were in their working years. And you found a article in Vanguard that says,

pretty much the exact opposite. And they, Vanguard looked at specifically health care spending. And it's called How to Think About Healthcare Costs in Retirement. And they gave an interesting stat here and they said, well, a lot of people say that you're going to spend $250,000 or more in health care costs on average. And they had an interesting way of putting it out because it's a big scary number. And they said the reality is nobody talks with you about your food that way. Nobody talks about other things that you spend on a year-to-year basis that way.

A 65-year-old couple could expect to live 27 years on average at the joint. life expectancy, you take any number and multiply it by 27 years, it's going to become a big number. So I think if you add it up the cumulative you're going to spend on something like food in your 30, 40 years of retirement, it would sound like an astronomical number. And a lot of people would think there's no way I'm going to be able to afford food in retirement. So I think that's kind of the way they're thinking of it. And the other thing is that the point I made in my post is that you have to, this is kind of why you and I are so anti-survey, because you have to watch what people do, now what they say. And these people say they're going to spend 130% of their

current income in retirement, but what they actually do, there's no way it can match up with that because their financial circumstances won't allow it. They would be in the breadline. This is why most surveys should be done under physical intimidation. So people tell the truth. Gun to your head, literally. All right, so let's move on to some stories that we've seen recently. There are two Michigan men in your neck of the woods have been busted. Charged with fraud for running what was supposed to be a sophisticated day trading platform. What in reality, it only gave investors access to J trading training platforms. I just, every time I read one of these, I shake my head.

But it sounds like these guys, like, didn't even try to make a Ponzi scheme. They literally just took these people's money and kept it and never did anything with it. Well, they were banking on the fact that 99% of people, probably more than that, maybe 150% of people lose money, day, trading. Yes. By the way, I remember going back and remembering one of your early posts that I think really went viral that made me think of this from day trading, you looked at the hurdle rate you would have to have to be a successful day trader when taking into account short-term taxes. Yeah. And it was a, I can't remember off the top of my head. I'm sure we can track this one down, but it was a massive number when you include the sort of short-term capital gains taxes you have to pay just to beat the market through your day trading,

Correct? Yeah, I did that a long time ago, so I would, I'm just guessing that my numbers are all way off, but the premise holds. That's possible. Yeah, the premise holds that it just, if you're trading on a regular basis, on a short-term basis, not only is the competition going to be harder, but there's a higher hurdle rate to make that profitable, especially after fees and taxes. Yeah, it's not going to happen.

But if you did it in crypto, then, eh. Is crypto tax as a collectible? I honestly, I'm not sure. All right. I will have to ask Bill Sweet. Speak to a lawyer or an accountant. Okay. All right.

So this is pretty gross. Purdue Pharma, the maker of OxyContin, has received a patent designed to treat opioid addiction. Ooh. Yeah. So they're getting people hooked and then treating it after the fact. Yeah. And the article says that Purdue Pharma, not surprisingly, is the subject of many lawsuits for allegedly fueling the opioid epidemic.

Wow. Yeah. it's pretty gross. So I don't have much to add just like, oh, man, this, this, this, this sucks. So Kevin Garnett is suing his quote unquote accountant for $77 million in lost wages, which I think is, I think someone said is like half of his earnings over the course of his career. The funniest part of this to me was this is actually the same accountant that swindled Tim Duncan. So how do you become an accountant or financial person for these? these huge professional teams and be able to pull this off.

Like, shouldn't they have people that look at them beforehand and understand? Anthony Davis, if you're listening, watch out. We're pro-unibrow. Yeah, no, this is crazy. I mean, this stuff happens all of the time. And honestly, I don't know how these people get. I know in the NFL you need to be like officially affiliated with the NFLPA or something like that. I don't know if the same thing holds it true in basketball, but, yeah.

Well, I mean, on the Rocks show, what's it called, the football show he has in HBO? No, not billions. Ballers, I'm sorry. Ballers, there you go. I watched it for, I don't know, two seasons. It was okay. It was not bad. He charged 3% of assets.

So, take that for what it's worth. So somebody sent us a chart from Tom Lee asked if we would weigh in. And this is showing, let's see, the MSCI World Growth, and value relative price performance over the past 45 years. And there's two circles, three circles. And they all say key moment. And I guess the implication is that are we at a key juncture? And I haven't really given this much thought into where the previous two turns were.

So my overall feeling on charts like this is I don't really love doing technical analysis on like value versus growth like this. I just, there's a lot of ways to lose money and this just seems like one of them. I think some of my least favorite charts are the ones that take a prior peak and just draw a straight line to now and show that's why things are going to end bet. Like there's all these charts going around that say dot com bubble, real estate bubble, and now this one is called the everything bubble. And they show a chart that shows we're all at the same place and that means tomorrow the world is going to end. Well, let me take you to technical analysis school if you don't mind. Okay.

All right. Let's say that a stock goes to 80, right? and then it falls to 65 in the next two months get that smile off your face this is serious and then three months later it rebounds to wherever i said 85 dollars and it starts to struggle there the idea is that people that bought at the previous peak are waiting to get back to even and that's where supply is potential supply is right so that like i understand why that would in theory make sense at least that people you know wait to get back to eat even before selling, so whatever.

But for stuff like this, where the last circle was in 2000, I mean, nobody that's underwater for 18 years is going to still have supply to put back onto the market. So these super long-term charts, I find suspect, especially comparing like something like value and growth. It's just not for me, not my company. And doing this sort of technical analysis on a like relationship and not just on a price. it like that's like doing it on economic data or something i think it's not quite as criminal but i don't know i mean it's yeah i mean it's no pie chart but how about this at best this is

interesting okay fair but yeah i think once you get this many lines on a chart it very quickly starts to lose any value in using as a signal and most signals are only known in hindsight anyway by the way speaking of speaking of your technical analysis i have to give you credit at least for two months worth of credit. I said I should have bought Facebook after it had the big drop. You said, no, too early. Now it does look like Facebook, after a little comeback, after they had all their problems, has dropped further.

So your technical analysis did wonders on that one. Thank you. I appreciate that. I should have listened to your Fibonacci retracement. So David Ingalls had a chart called Getting Contagious, Story Count with the word contagion included. And there was a spike right now, I guess, talking to, you know, thinking about emerging markets. And, okay, this is not a chart crime by any means, but using a Google search. This is a data crime.

Yeah, you know, I mean, I've done it. You know, it's good. It works well in a tweet. It works well on a blog post. But if this is part of an actual investment thesis, something. Yeah. Like, think about explaining this to your wife. why did you sell out of stocks three years ago? Well, I did a Google trend search on the word

contagion and like, yeah, it doesn't matter. Although a technical analysis on Google search trends has not failed me yet. That's fair. You sent me an interesting what if, which I love, I love these kind of things like what if this would have happened. And I think you could say one of the ultimate ones is what if Lehman wouldn't have failed? What if Buffett would have been allowed to invest in them? Did you say Lehman or Lehman? I say Lehman. Lehman? Okay. Which one is it?

We're going to have to do a survey on this to really, I don't know. I don't think this is the Bezos. Bezos. I think it's Lehman. Okay. I'll take your word for it. All right. So I have no clue. All right. So you sent me this interesting, what if when a lot of people don't realize that Barclays actually had the I shares company and they were divesting assets after Lehman, layman.

and Goldman actually bid for those assets. So Goldman could have been the owner of Ishares, which eventually went to BlackRock and is now the largest asset managed in the world with almost $7 trillion in assets. So the what if is, would I shares have died if they went to Goldman or would Goldman have done the same thing that BlackRock has done? And Goldman, to their credit, does have a lot of low-cost ETFs, but the question is, would I-shares still be the same if it was at Goldman?

or would it have not done as well. Well, we don't know, but I would say that it would look nothing like the way it does now. That's probably fair. Yeah, but it is interesting, and I'm surprised that they actually bid on it at the time and instead of launch their own. I don't know how successful with their ETF businesses. Maybe someone can tell us, but yeah, that was a good what-if. Okay, let's get to a few listener questions and emails.

We only have one question and a couple follow-up emails on some previous shows. So here's a question. I'm 26 years old saving a percentage of my salary on a monthly basis, and after a few months, I then invest the money into shares, funds, or investment trust. Do you have any specific advice on what else can I be doing or other ways that I can save for the future? No. Do you? Well, I think a lot of people get to this place when you're young. But honestly, like, if you can just start saving on a regular basis and increase the amount you save over time and put money into the markets, however you see fit or however you're

comfortable, I think that gets you 90% of the way there. Just develop good. saving habits. I mean, you could give any optimized allocation advice or portfolio advice and it probably wouldn't matter that much over the grand scheme of things, especially since he's only 26. So the best thing you can do is just keep saving, increase the amount you save and don't look at the, don't look at the results for a long time. So this listener email, was there a question involved or what are we doing with this one? Okay. So last week I said, do you think you could just pick five randos off the street and they could beat a group of professional money manager? So someone emailed in and said, when I lived in the Dallas-Fort Worth area, the Fort Worth Star

Telegramer ran a contest each year. Rusty the Bull would pick stocks versus a professional stock analyst. Rusty beat the stock analyst seven out of eight years I lived there. How did Rusty pick? They laid the paper in his pen. Whatever he pooped on were his stock picks. And apparently it ended where Rusty died and the stock analyst refused to continue to do the competition. So I don't know. I think it'd be pretty hard to beat a bull because I mean the name bull I mean and so anyway that was kind of I thought that was kind of funny all right and one more we talked about the fire stuff last week the financially independent retire early and we got a ton of feedback some people agree to those some people

didn't we did hear from a lot of people who actually have gone through it themselves and I think that's some pretty good people to to discuss and so one of them was someone on twitter handle is at liberty RPF and actually follow them and And they kind of set up the record straight on a few things, and I think it's worth hearing. So this is the tweet storm they gave us. On the fire topic, just know that journalists tend to focus on different things and the actual fire people do. I'm one of those.

Drop my job at 34, married with two kids, not because I hated it, because I like even more to own all of my time. It's not about working and sitting around and doing nothing. It's about freedom to do what you want to do. And he went on to say a bunch of other stuff, but he said the part about fire people becoming lifestyle bloggers is kind of a bias. He said if you check the forums, there are people who do 10,000 different things of their time, but the fire people are the only ones that they are really visible and what they write about.

So this was interesting. He just said he was looking for less stress, more freedom. Maybe people like us have more flexibility of their jobs. So we're happy working, and a lot of these people really aren't. So it was good to hear their side of the story being someone who actually did retire in their 30s and seems quite content about it. That's right, Ben. All right. Any good recommendations?

Why don't you start? Okay. I started reading the book, Peak. by Anders Erickson, and it's called Secrets from the New Science of Expertise. Have you read this one before? No, but this thing that you're about to read is pretty amazing. Okay, so they talk about how deliberate practice can help you improve in a number of ways. And it's pretty amazing.

So he did these studies on college students. They tried to figure out ways to help them memorize numbers. So they'd give them a string of numbers, and they could start out memorizing five and six and seven. And eventually they'd reach a peak where it was like 10 numbers and then they'd forget. But after they figured out different ways to teach them, they found they could remember, you know, dozens and dozens of numbers. And it's kind of interesting. So they show in 1973, a guy from Canada memorized more digits of pie than any person before. And it was 511 digits of pie he memorized. Five years later, there was a guy from America who committed 10,000 digits of pie to his memory. And then in 2015, a guy from India memorized 70,000 digits of pie. It kind of shows how different methods of practicing can actually like shape the brain and take us to places that seem unimaginable. So this, and there's a lot of different examples of like this in the book is really good.

This is insane. So the 70,000 digits took him nine hours and seven minutes to recite. Yes, it's bonkers. And they kind of showed different like games these people play to remember it. Like they think of them as like a time on a clock. I think I'm in four-digit increments and just try to remember those. And it's really bizarre. The other one was, and I think you talked about, you watched two, we finished the second season of Ozark pretty quick. I loved it. I thought it was better than the first season. It was, I mean, a few minor quibbles

here and there, but it was, I mean, it was like a, it's like a long movie. I loved it. Yeah, I was, uh, when I saw the, the first season, I very much endured it, but I felt like I didn't really need a second helping. Like, I was just very content. I didn't think that they could make it that they could pick up where they left off. But they did, and it was better. It was absolutely better in the first season. I was blown away. And they left it where there's a lot of stuff still to happen in season three, I believe. They left. Yeah, I'm very much, I'm put it this way. I'm much more excited about season three than I was about season two. Okay. Why don't you give some of your recommendations? Then we'll go on to our Elon Musk stuff. Okay. I saw the darkest hour,

the Winston Churchill movie, and it was just fantastic. Did you see it? I'm about halfway through. I mean, it was, you know, slow. It was not like a very exciting movie, but Gary, the guy playing him was amazing. It obviously carried it. He was so, so, so good. So I would highly recommend that. I listened to a podcast from your favorite Atlantic contributor, Derek Thompson.

Yes, his podcast is really good, and it's pretty quick, too. And it was talking about the future of automobiles. I don't know why I just said automobiles. Ben, are you listening? What's that? So Americans are spending $4.5 trillion a year on cars, which is insane. And they did a study in Ann Arbor where they have 120,000 cars. And the thing is, with cars, of course, most of them spend 90% of their lives parked on a street.

And it would take only 18,000 cars to replace the 120,000 cars. And just a lot of interesting stuff in there. And speaking of cars, the Elon Musk, Joe Oakon podcast, I said I wasn't going to listen to it, but I did. I did too, and I had to. And I'm glad I did because it didn't match the headlines nor the memes, although the memes, some of the memes were pretty good. Not going to lie, I took part in some of those on Twitter. But it was, here's my theory on him. I think it's worth a listen. It's like two hours long. But here's my theory with him. You know how in grade school when you have, the one really, really smart kid in your class who kind of gets bored after they figure stuff out way quicker than everyone else. That's like him with humanity. He just thinks he is so smart and everyone else is like almost so beneath him because he's so smart. And I feel like he in some ways can't handle it when people challenge him or challenge what he's doing. And I think

that's why he like, he's almost bored. And so some of this erratic behavior, I feel like is him just, like, lashing out because he's bored and he can't believe people are actually calling into question his ideas or his company. And obviously, I think a lot of times the smartest people are often the most socially awkward. And that's part of the reason that he is just, like, he's not good as a sociable person. And some of the stuff he says to people, like, on Twitter is just so insane. But to him, I think it's almost like he takes it as like, why don't these people recognize is how much of a genius I am. So, I mean, I get the sense that he's a really smart guy.

I think he's just, he's not well-suited to be a CEO of a company. He seems like he's just more of an engineer or someone who should be building and creating things instead of trying to, like being a CEO is basically like being a politician. And he is a terrible politician. That's what I took from that podcast. Yeah, there were, there were parts that bored me, but overall it was a good listen. And, yeah, I mean, I actually thought that he came off okay. Like, he's certainly, if you look at the words and his demeanor did not match the Twitter feed.

No, people calling it erratic behavior. I did not think if you listen to it doesn't sound that erratic. He just is all over the play. The craziest one to me was towards the end, Rogan kept asking him, like, how do you do all this stuff? How do you have so much time? And even Musk said, like, you wouldn't, he's like, what does it like to be Elon Musk? And he said, you wouldn't want to be me. He's like, it's not that much fun.

Like, it's almost like people like that are so smart get trapped in their own head. And that was kind of similar to like the Jim Carrey story on New York Times from this weekend. I don't know if you saw that. Yeah. But I feel like if you reach a certain level of fame, success, wealth, intelligence, whatever it is, sometimes it's almost like your worst enemy. And I think that's kind of what's been happening to him lately and part of the reason for his downfall. So the stock was down, I don't know, maybe 9%.

And the headlines were because he smoked blunt on a podcast. I can't prove this because I don't know when the stock fell. But I feel like the chief accounting officer leaving. He has a lot of defections from the firm. So I think that was probably a huge contributor to the fall. Yes. But I mean, it's interesting. I posted something about it on Twitter today.

And from both sides, people like, it's so crazy how volatile the opinions are on this, like on each side where just people are so set in their ways. I just can't imagine having such a set in stone opinion about this. person or company because I think there's just no way to know. There's great people, Ben, on both sides. Oh, my God. Okay. It's probably a good place to leave it.

Yeah, I think that's it. Send us a, we've been getting a lot of good read your email, feedback, that sort of thing. So I think we do have a tremendously smart audience. So send us an email. Animal Spiritspod. com, and we'll talk to you next week.